LOAN AND SECURITY AGREEMENT

Dated as of June 30, 2015

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SKECHERS U.S.A., INC.,

SKECHERS U.S.A., INC. II

and

SKECHERS BY MAIL, INC.
as Borrowers,

THE OTHER PERSONS FROM TIME TO TIME PARTY HERETO,
as Guarantors,

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CERTAIN FINANCIAL INSTITUTIONS,
as Lenders,

BANK OF AMERICA, N.A.,
as Agent,

MUFG UNION BANK, N.A.
as Syndication Agent,

HSBC BANK USA, NATIONAL ASSOCIATION,
as Managing Agent

and

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BANK OF AMERICA, N.A.,

as Sole Lead Arranger and Sole Bookrunner

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TABLE OF CONTENTS

Page

      SECTION 1.
1.1
1.2
1.3
1.4
SECTION 2.
2.1
2.2
2.3
SECTION 3.
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
SECTION 4.
4.1
4.2
4.3
4.4
4.5
4.6
SECTION 5.
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
SECTION 6.
6.1
6.2
6.3
SECTION 7.
7.1
7.2
7.3
7.4
7.5
7.6
SECTION 8.
8.1
8.2
8.3
8.4
8.5
8.6
8.7
SECTION 9.
9.1
9.2
SECTION 10.
10.1
10.2
10.3
SECTION 11.
11.1
11.2
11.3
11.4
11.5
SECTION 12.
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
12.10
12.11
12.12
12.13
12.14
SECTION 13.
13.1
13.2
13.3
13.4
SECTION 14.
14.1
14.2
14.3
14.4
14.5
14.6
14.7
14.8
14.9
14.10
14.11
14.12
14.13
14.14
14.15
14.16
14.17
14.18  
DEFINITIONS; RULES OF CONSTRUCTION
Definitions.
Accounting Terms.
Uniform Commercial Code.
Certain Matters of Construction.
CREDIT FACILITIES
Revolver Commitment
2.1.1Revolver Loans
2.1.2Notes
2.1.3Use of Proceeds
2.1.4Voluntary Reduction or Termination of Revolver Commitments.
2.1.5Overadvances
2.1.6Protective Advances
2.1.7Increase in Revolver Commitments
[Intentionally Omitted].
Letter of Credit Facility
2.3.1Issuance of Letters of Credit
2.3.2Reimbursement; Participations.
2.3.3Cash Collateral
2.3.4Resignation of Issuing Bank
INTEREST, FEES AND CHARGES
Interest.
3.1.1Rates and Payment of Interest.
3.1.2Application of LIBOR to Outstanding Loans.
3.1.3Interest Periods
3.1.4Interest Rate Not Ascertainable
Fees.
3.2.1Unused Line Fee
3.2.2LC Facility Fees
3.2.3Closing Fee
3.2.4Fee Letters
Computation of Interest, Fees, Yield Protection.
Reimbursement Obligations.
Illegality.
Inability to Determine Rates.
Increased Costs; Capital Adequacy.
3.7.1Increased Costs Generally
3.7.2Capital Requirements
3.7.3LIBOR Loan Reserves
3.7.4Compensation
Mitigation.
Funding Losses.
LOAN ADMINISTRATION
Manner of Borrowing and Funding Revolver Loans.
4.1.1Notice of Borrowing.
4.1.2Fundings by Lenders.
4.1.3Swingline Loans; Settlement.
4.1.4Notices.
Defaulting Lender.
4.2.1Reallocation of Pro Rata Share; Amendments.
4.2.2Payments; Fees.
4.2.3Status; Cure.
Number and Amount of LIBOR Loans; Determination of Rate.
Borrower Agent.
One Obligation.
Effect of Termination.
PAYMENTS
General Payment Provisions.
Repayment of Revolver Loans.
[Intentionally Omitted].
Payment of Other Obligations.
Marshaling; Payments Set Aside.
Application and Allocation of Payments.
5.6.1Application
5.6.2Post-Default Allocation
5.6.3Erroneous Application
Dominion Account.
Account Stated.
Taxes.
5.9.1Payments Free of Taxes; Obligation to Withhold; Tax Payment
5.9.2Payment of Other Taxes
5.9.3Tax Indemnification
5.9.4Evidence of Payments
5.9.5Treatment of Certain Refunds
5.9.6Survival
Lender Tax Information
5.10.1Status of Lenders
5.10.2Documentation
5.10.3Redelivery of Documentation
Guaranty; Nature and Extent of Liability.
5.11.1Guaranty; Joint and Several Liability
5.11.2Permitted Actions
5.11.3Waivers
5.11.4Extent of Liability; Contribution.
5.11.5Qualified ECP and Swap Obligations.
5.11.6Joint Enterprise.
5.11.7Subordination.
5.11.8Subrogation.
5.11.9Independent Obligations.
5.11.10Stay of Acceleration.
CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
Conditions Precedent to Initial Loans
Conditions Precedent to All Credit Extensions.
Conditions Subsequent.
COLLATERAL
Grant of Security Interest.
Lien on Deposit Accounts and Securities Accounts; Cash Collateral.
7.2.1Deposit Accounts and Securities Accounts
7.2.2Cash Collateral
Pledged Collateral.
7.3.1Pledged Equity.
7.3.2Covenants
7.3.3Other Rights.
7.3.4Additional Interests
7.3.5Registration Rights
Other Collateral
7.4.1Commercial Tort Claims
7.4.2Certain After-Acquired Collateral
Limitations.
Further Assurances.
COLLATERAL ADMINISTRATION
Borrowing Base Reports.
Accounts.
8.2.1Records and Schedules of Accounts
8.2.2Taxes
8.2.3Account Verification
8.2.4Maintenance of Dominion Account
8.2.5Proceeds of Collateral
Inventory.
8.3.1Records and Reports of Inventory
8.3.2Returns of Inventory
8.3.3Acquisition, Sale and Maintenance
Equipment.
8.4.1Records and Schedules of Equipment
8.4.2Dispositions of Equipment
8.4.3Condition of Equipment
Deposit Accounts and Securities Accounts.
8.5.1Accounts Generally
8.5.2Retail Deposit Accounts
General Provisions.
8.6.1Location of Collateral
8.6.2Insurance of Collateral
8.6.3Protection of Collateral
8.6.4Defense of Title
Power of Attorney
REPRESENTATIONS AND WARRANTIES
General Representations and Warranties.
9.1.1Organization and Qualification
9.1.2Power and Authority
9.1.3Enforceability
9.1.4Capital Structure
9.1.5Title to Properties; Priority of Liens
9.1.6Accounts
9.1.7Financial Statements
9.1.8Surety Obligations
9.1.9Taxes
9.1.10Brokers
9.1.11Intellectual Property
9.1.12Governmental Approvals
9.1.13Compliance with Laws
9.1.14Compliance with Environmental Laws
9.1.15Burdensome Contracts
9.1.16Litigation
9.1.17No Defaults
9.1.18ERISA
9.1.19Trade Relations
9.1.20Labor Relations
9.1.21Payable Practices
9.1.22Not a Regulated Entity
9.1.23Margin Stock
9.1.24OFAC
9.1.25Anti-Corruption Laws.
Complete Disclosure.
COVENANTS AND CONTINUING AGREEMENTS
Affirmative Covenants.
10.1.1Inspections; Appraisals
10.1.2Financial and Other Information
10.1.3Notices
10.1.4Landlord and Storage Agreements
10.1.5Compliance with Laws
10.1.6Taxes
10.1.7Insurance
10.1.8Licenses
10.1.9Future Subsidiaries
10.1.10Anti-Corruption Laws
10.1.11Business Locations.
Negative Covenants.
10.2.1Permitted Debt
10.2.2Permitted Liens
10.2.3[Intentionally Omitted]
10.2.4Distributions; Upstream Payments
10.2.5Restricted Investments
10.2.6Disposition of Assets
10.2.7Loans
10.2.8Restrictions on Payment of Certain Debt
10.2.9Fundamental Changes
10.2.10Subsidiaries
10.2.11Organic Documents
10.2.12Tax Consolidation
10.2.13Accounting Changes
10.2.14Restrictive Agreements
10.2.15Hedging Agreements
10.2.16Conduct of Business
10.2.17Affiliate Transactions
10.2.18Plans
10.2.19Amendments to Subordinated Debt
Financial Covenants.
10.3.1Fixed Charge Coverage Ratio
EVENTS OF DEFAULT; REMEDIES ON DEFAULT
Events of Default.
Remedies upon Default.
License.
Setoff.
Remedies Cumulative; No Waiver.
11.5.1Cumulative Rights
11.5.2Waivers
AGENT
Appointment, Authority and Duties of Agent
12.1.1Appointment and Authority
12.1.2Duties
12.1.3Agent Professionals.
12.1.4Instructions of Required Lenders.
Agreements Regarding Collateral and Borrower Materials
12.2.1Lien Releases; Care of Collateral
12.2.2Possession of Collateral
12.2.3Reports
Reliance By Agent.
Action Upon Default.
Ratable Sharing.
Indemnification.
Limitation on Responsibilities of Agent.
Successor Agent and Co-Agents.
12.8.1Resignation; Successor Agent.
12.8.2Co-Collateral Agent.
Due Diligence and Non-Reliance.
Remittance of Payments and Collections.
12.10.1Remittances Generally.
12.10.2Failure to Pay
12.10.3Recovery of Payments
Individual Capacities.
Titles.
Bank Product Providers.
No Third Party Beneficiaries.
BENEFIT OF AGREEMENT; ASSIGNMENTS
Successors and Assigns.
Participations.
13.2.1Permitted Participants; Effect
13.2.2Voting Rights
13.2.3Participant Register
13.2.4Benefit of Setoff
Assignments.
13.3.1Permitted Assignments
13.3.2Effect; Effective Date
13.3.3Certain Assignees
13.3.4Register.
Replacement of Certain Lenders.
MISCELLANEOUS
Consents, Amendments and Waivers.
14.1.1Amendment
14.1.2Limitations
14.1.3Payment for Consents
Indemnity.
Notices and Communications.
14.3.1Notice Address
14.3.2Communications
14.3.3Platform
14.3.4Public Information
14.3.5Non-Conforming Communications
Performance of Obligors’ Obligations; Lien Waivers
Credit Inquiries.
Severability.
Cumulative Effect; Conflict of Terms.
Counterparts; Execution.
Entire Agreement.
Relationship with Lenders.
No Advisory or Fiduciary Responsibility.
Confidentiality.
[Intentionally Omitted].
GOVERNING LAW.
Consent to Forum.
14.15.1Forum
14.15.2Other Jurisdictions
14.15.3Judicial Reference
Waivers by Obligors.
Patriot Act Notice.
NO ORAL AGREEMENT.

LIST OF EXHIBITS AND SCHEDULES

     
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Schedule P-1
Schedule 1.1
Schedule 2.3.1
Schedule 7.3
Schedule 8.6.1
Schedule 9.1.4(a)
Schedule 9.1.4(b)
Schedule 9.1.11
Schedule 9.1.14
Schedule 9.1.15
Schedule 9.1.16
Schedule 9.1.18
Schedule 9.1.20
Schedule 10.2.2
Schedule 10.2.5
Schedule 10.2.7
Schedule 10.2.17
  Assignment
Form of Note
Form of Compliance Certificate
Assignment Notice
Permitted Holders
Commitments of Lenders
Existing Letters of Credit
Pledged Equity
Business Locations
Names and Capital Structure
Closing Date Debt
Patents, Trademarks, Copyrights and Licenses
Environmental Matters
Restrictive Agreements
Commercial Tort Claims
Pension Plans
Labor Contracts
Existing Liens
Closing Date Investments
Closing Date Intercompany Loans
Existing Affiliate Transactions

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is dated as of June 30, 2015, among SKECHERS
U.S.A., INC., a Delaware corporation (“Skechers”), SKECHERS U.S.A., INC. II, a
Delaware corporation (“Skechers II”), SKECHERS BY MAIL, INC., a Delaware
corporation (“Skechers By Mail” and, together with Skechers and Skechers II,
collectively, the “Borrowers” and, individually, each a “Borrower”), the other
Persons party to this Agreement from time to time as Guarantors (the
“Guarantors”), the financial institutions party to this Agreement from time to
time as Lenders, and
BANK OF AMERICA, N.A., a national banking association, as agent for the Lenders
(“Agent”).

R E C I T A L S:

Borrowers have requested that Lenders provide a credit facility to Borrowers to
finance their mutual and collective business enterprise. Lenders are willing to
provide the credit facility on the terms and conditions set forth in this
Agreement.

      NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties agree as follows:

SECTION 1.DEFINITIONS; RULES OF CONSTRUCTION
1.1
 
Definitions. As used herein, the following terms have the meanings set forth
below:
 
   

Account: as defined in the UCC, including all rights to payment for goods sold
or leased, or for services rendered.

Account Debtor: a Person obligated under an Account, Chattel Paper or General
Intangible.

Accounts Formula Amount: 85% of the Value of Eligible Accounts; provided, that
(a) no greater than $10,000,000 of the Accounts Formula Amount may be derived
from Eligible Extended Terms Accounts, and (b) no greater than $10,000,000 of
the Accounts Formula Amount may be derived from Eligible U.S. Government
Accounts. If any single Account would constitute both an Eligible Extended Terms
Account and an Eligible U.S. Government Account, the full amount of such Account
shall be included for purposes of calculating both of the sublimits described in
clauses (a) and (b) above.

Acquisition: a transaction or series of transactions resulting in
(a) acquisition of a business, division or substantially all assets of a Person;
(b) record or beneficial ownership of 50% or more of the Equity Interests of a
Person; or (c) merger, consolidation or combination of any Borrower or
Subsidiary with another Person.

Affiliate: with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified; provided, that if any Obligor
or Subsidiary owns, directly or indirectly, 10% or more of the outstanding
Equity Interests of any Person (including any joint venture), such Person shall
be deemed to be an Affiliate of such Obligor or Subsidiary.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

Allocable Amount: as defined in Section 5.11.4.

Anti-Terrorism Law: any law relating to terrorism or money laundering, including
the Patriot Act.

Applicable Law: all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, common law and equitable principles, and
all provisions of constitutions, treaties, statutes, rules, regulations, orders
and decrees of Governmental Authorities.

Applicable Margin: for any date of determination, the applicable margin set
forth below opposite the average daily Availability for the most recently
completed Fiscal Quarter:

                      Level   Average Daily   Base Rate Revolver   LIBOR
Revolver Loans     Availability   Loans         I  
Greater than or equal
to $150,000,000
  0.25%

  1.25%

II  
Greater than or equal
to $75,000,000 but
less than
$150,000,000
  0.50%

  1.50%

III  
Less than $75,000,000
    0.75 %     1.75 %

Until September 30, 2015, margins shall be determined as if Level I were
applicable. Thereafter, margins shall be subject to increase or decrease by
Agent on the first day of the calendar month following each Fiscal Quarter end.
If Agent is unable to calculate average daily Availability for a Fiscal Quarter
due to Borrowers’ failure to deliver any Borrowing Base Report when required
hereunder, then, at the option of Agent or Required Lenders, margins shall be
determined as if Level III were applicable until the first day of the calendar
month following its receipt.

Applicable Reporting Date: (a) with respect to quarterly reports, the close of
business of the most recently ended Fiscal Quarter, (b) with respect to monthly
reports, the close of business of the most recently ended month, (c) with
respect to weekly reports, the close of business of the most recently ended
week, and (d) with respect to reports due on any Applicable Reporting Deadline
set by Agent pursuant to clause (c) of the definition thereof, the close of
business of such day Agent may require in its Permitted Discretion.

Applicable Reporting Deadline: quarterly Borrowing Base Reports will be
delivered to Agent within thirty (30) days after the end of each Fiscal Quarter;
provided that (a) while Availability is less than $100,000,000 and/or during any
Dominion Period, monthly Borrowing Base Reports will be delivered to Agent
within thirty (30) days after the end of each month, (b) during a Dominion
Period, in addition to the monthly Borrowing Base Reports required pursuant to
clause (a) above, weekly Borrowing Base Report roll-forwards will be delivered
to Agent weekly, by Wednesday of each week for the report covering the preceding
week, and (c) during the existence of an Event of Default, in addition to the
monthly and weekly Borrowing Base Reports and roll-forwards required pursuant to
clauses (a) and (b) above, Borrowing Base Report roll-forwards will be delivered
to Agent with such frequency as Agent may require in its sole discretion;
provided, further that, unless otherwise agreed by Agent and Borrower Agent, no
Applicable Reporting Deadline shall be deemed to have occurred earlier than 5
Business Days following delivery to Borrower Agent of the draft ineligible
Account information initially prepared by Agent as described in Section 8.1.

Approved Fund: any Person (other than a natural Person) engaged in making,
purchasing, holding or otherwise investing in commercial loans in its ordinary
course of activities and which is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

Asset Disposition: a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor, including any disposition in connection
with a sale-leaseback transaction or synthetic lease.

Assignment: an assignment agreement between a Lender and Eligible Assignee, in
the form of Exhibit A or otherwise satisfactory to Agent.

Availability: the Borrowing Base minus Revolver Usage.

Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) the Bank Product Reserve; (d) the
aggregate amount of liabilities secured by Liens upon Eligible Inventory,
Eligible In-Transit Inventory or Eligible Accounts that are senior to Agent’s
Liens (but imposition of any such reserve shall not waive an Event of Default
arising therefrom); (e) the Dilution Reserve; (f) reserves, if any, as the Agent
in its Permitted Discretion may elect to impose in respect of (and not to exceed
the amount of) judgments, orders or awards for the payment of money entered or
filed against an Obligor or any of its Subsidiaries (or with respect to any of
their respective assets) for which the applicable insurer has issued a denial of
coverage or a reservation of rights therefor, if either (i) there is a period of
30 consecutive days at any time after the entry of any such judgment, order, or
award during which the same is not discharged or satisfied or a stay of
enforcement thereof is not in effect, or (ii) enforcement proceedings are
commenced upon such judgment, order, or award; and (g) such additional reserves,
if any, in such amounts and with respect to such matters, as Agent in its
Permitted Discretion may elect to impose from time to time, including without
limitation with respect to accrued Royalties, whether or not then due and
payable by a Borrower.

Bank of America: Bank of America, N.A., a national banking association, and its
successors and assigns.

Bank of America Indemnitees: Bank of America and its officers, directors,
employees, Affiliates, agents and attorneys.

Bank Product: any of the following products, services or facilities extended to
any Obligor or Subsidiary by a Lender or any of its Affiliates: (a) Cash
Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; (d) supply chain, inventory
floor-planning and other similar types of financings; and (e) other banking
products or services, other than Letters of Credit.

Bank Product Reserve: the aggregate amount of reserves, if any, established by
Agent from time to time in its Permitted Discretion in respect of Secured Bank
Product Obligations, based upon Agent’s reasonable determination of the credit
exposure of the Obligors in respect of Secured Bank Product Obligations.

Bankruptcy Code: Title 11 of the United States Code.

Base Rate: for any day, a per annum rate equal to the greater of (a) the Prime
Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%;
(c) LIBOR for a 30 day interest period as of such day, plus 1.0%.

Base Rate Loan: any Loan that bears interest based on the Base Rate.

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base
Rate.

Board of Directors: the board of directors (or comparable managers) of Skechers
or any committee thereof duly authorized to act on behalf of the board of
directors (or comparable managers).

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrower Agent: as defined in Section 4.4.

Borrower Materials: Borrowing Base Reports, Compliance Certificates and other
information, reports, financial statements and other materials delivered by any
Borrower hereunder, as well as other Reports provided by Agent to Lenders.

Borrowing: a group of Loans that are made or converted together on the same day
and have the same interest option and, if applicable, Interest Period.

Borrowing Base: on any date of determination, an amount equal to the lesser of
(a) the aggregate Revolver Commitments; or (b) the sum of the Accounts Formula
Amount, plus the Inventory Formula Amount, minus the Availability Reserve.

Borrowing Base Report: a report of the Borrowing Base by Borrowers, in form and
substance reasonably satisfactory to Agent.

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, North Carolina or California, and if such day relates to a LIBOR
Loan, any such day on which dealings in Dollar deposits are conducted in the
London interbank market.

Capital Expenditures: all liabilities incurred or expenditures made by any
Borrower or Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto, in each case to the extent the
same is a capital expenditure in accordance with GAAP; provided that Capital
Expenditures shall only include the amount by which the purchase price of such
fixed asset (or improvement, replacement, substitution or addition
thereto) exceeds (i) the credit granted by the seller of such fixed asset (or
improvement, replacement, substitution or addition thereto) for any other asset
being traded in at the time of purchase and (ii) the amount of any net cash
insurance proceeds used by such Borrower or Subsidiary to purchase such fixed
asset (or improvement, replacement, substitution or addition thereto), as
applicable.

Capital Lease: any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Agent to Cash Collateralize any Obligations.

Cash Collateral Account: a demand deposit, money market or other account
established by Agent at such financial institution as Agent may select in its
discretion, which account shall be subject to a Lien in favor of Agent.

Cash Collateralize: the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 105%
of the aggregate LC Obligations, and (b) with respect to any inchoate or
contingent Obligations (including any inchoate or contingent Secured Bank
Product Obligations) with respect to which a claim therefor has been asserted,
Agent’s good faith estimate of the amount due or to become due, including fees,
expenses and indemnification hereunder. “Cash Collateralization” has a
correlative meaning.

Cash Equivalents: (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either S&P or Moody’s, (c) commercial paper maturing no more than 270 days from
the date of creation thereof and, at the time of acquisition, having a rating of
at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit,
time deposits, overnight bank deposits or bankers’ acceptances maturing within
1 year from the date of acquisition thereof issued by any bank organized under
the laws of the United States or any state thereof or the District of Columbia
or any United States branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000, (e) deposit
accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the full amount maintained with any such
other bank is insured by the Federal Deposit Insurance Corporation,
(f) repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or recognized securities dealer having combined
capital and surplus of not less than $250,000,000, having a term of not more
than seven days, with respect to securities satisfying the criteria in clauses
(a) or (d) above, (g) debt securities with maturities of six months or less from
the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the criteria described in clause (d) above, and
(h) investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (g) above.

Cash Management Services: services relating to operating, collections, payroll,
trust, or other depository or disbursement accounts, including automated
clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled
disbursement, overdraft, depository, information reporting, lockbox and stop
payment services.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

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

Change in Law: the occurrence, after the date hereof, of (a) the adoption or
taking effect of any law, rule, regulation or treaty; (b) any change in any law,
rule, regulation or treaty or in the administration, interpretation or
application thereof by any Governmental Authority; or (c) the making, or
issuance of any request, guideline, requirement or directive (whether or not
having the force of law) by any Governmental Authority; provided, however, that
“Change in Law” shall include, regardless of the date enacted, adopted or
issued, all requests, rules, guidelines, requirements or directives (i) under or
relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or
(ii) promulgated pursuant to Basel III by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any similar
authority) or any other Governmental Authority.

Change of Control: (a) Permitted Holders fail to own and control, directly or
indirectly, the Majority Voting Equity Interests, (b) the acquisition of direct
or indirect Control of Skechers by any “person” or “group” (within the meaning
of Sections 13(d) and 14(d) of the Securities Exchange Act), other than
Permitted Holders, (c) Skechers fails to own and control, directly or
indirectly, 100% of the Equity Interests of each other Obligor (except pursuant
to a transaction expressly permitted hereunder), or (d) the sale or transfer of
all or substantially all of assets of an Obligor, except to another Obligor or
in a transaction otherwise expressly permitted hereunder.

Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary
Expenses) at any time (including after Full Payment of the Obligations or
replacement of Agent or any Lender) incurred by any Indemnitee or asserted
against any Indemnitee by any Obligor or other Person, in any way relating to
(a) any Loans, Letters of Credit, Loan Documents, Borrower Materials, or the use
thereof or transactions relating thereto, (b) any action taken or omitted in
connection with any Loan Documents, (c) the existence or perfection of any Liens
granted under any of the Loan Documents, or realization upon any Collateral,
(d) exercise of any rights or remedies under any Loan Documents or under
Applicable Law with respect to the relationships established by the Loan
Documents, or (e) failure by any Obligor to perform or observe any terms of any
Loan Document, in each case including all costs and expenses relating to any
investigation, litigation, arbitration or other proceeding (including an
Insolvency Proceeding or appellate proceedings), whether or not the applicable
Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Code: the Internal Revenue Code of 1986.

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations.

Commitment: for any Lender, such Lender’s Revolver Commitment. “Commitments”
means the aggregate amount of all Revolver Commitments.

Commitment Termination Date: the earliest to occur of (a) the Revolver
Termination Date; (b) the date on which Borrowers terminate the Revolver
Commitments pursuant to Section 2.1.4; or (c) the date on which the Revolver
Commitments are terminated pursuant to Section 11.2.

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

Competitor: any Person that is, or is directly or indirectly Controlled by any
Person, primarily engaged in the footwear business.

Compliance Certificate: a certificate, in the form of Exhibit C, duly completed.

Connection Income Taxes: Other Connection Taxes that are imposed on or measured
by net income (however denominated), or are franchise or branch profits Taxes.

Contingent Obligation: any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt (“primary
obligations”) of another obligor (“primary obligor”) in any manner, whether
directly or indirectly, including any obligation of such Person under any
(a) guaranty, endorsement, co-making or sale with recourse of an obligation of a
primary obligor; (b) obligation to make take-or-pay or similar payments
regardless of nonperformance by any other party to an agreement; and
(c) arrangement (i) to purchase any primary obligation or security therefor,
(ii) to supply funds for the purchase or payment of any primary obligation,
(iii) to maintain or assure working capital, equity capital, net worth or
solvency of the primary obligor, (iv) to purchase Property or services for the
purpose of assuring the ability of the primary obligor to perform a primary
obligation, or (v) otherwise to assure or hold harmless the holder of any
primary obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be the stated or determinable amount of the
primary obligation (or, if less, the maximum amount for which such Person may be
liable under the instrument evidencing the Contingent Obligation) or, if not
stated or determinable, the maximum reasonably anticipated liability with
respect thereto.

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

Covenant Testing Period: the period (a) commencing at any time Availability is
less than 10.0% of all Revolver Commitments; and (b) continuing until, at all
times during each of the preceding 30 consecutive days: (i) no Event of Default
has existed and (ii) Availability has been greater than 10.0% of all Revolver
Commitments.

Credit Card Issuer: any Person who issues or whose members issue credit cards,
check cards, debit cards, stored value cards or other similar cards used by
customers of Borrowers to purchase goods, including Household, Carte Blanche,
Diners, Discover, MasterCard, VISA and American Express.

Credit Card Processor: PayPal, Inc. and any other servicing or processing agent
or any factor or financial intermediary who facilitates, services, processes or
manages the credit authorization, billing transfer and/or payment with respect
to any sales transactions of Borrowers involving (a) credit card, check card,
debit card, stored value card or other similar card purchases by consumers using
credit cards, check cards, debit cards, stored value cards or other similar
cards issued by any Credit Card Issuer or (b) purchases by consumers using an
account of such Credit Card Processor.

Credit Card Receivables: all Accounts consisting of the rights of Borrowers to
payment by Credit Card Issuers or Credit Card Processors for merchandise sold to
customers of Borrowers who have purchased such goods using a credit card, check
card, debit card, stored value card or other similar card issued by a Credit
Card Issuer or using an account of a Credit Card Processor.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: (a) all obligations for borrowed money, including, in the case of any
Obligor, the Obligations, (b) all obligations evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
in respect of letters of credit, bankers acceptances, or other financial
products, (c) all obligations as a lessee under Capital Leases, (d) all
obligations or liabilities of others secured by a Lien on any asset of a Person,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (other than trade
payables incurred in the ordinary course of business and repayable in accordance
with customary trade practices, and which are not evidenced by a note or similar
instrument), (f) all obligations owing under Hedging Agreements (which amount
shall be calculated based on the amount that would be payable by such Person if
the Hedging Agreement were terminated on the date of determination), (g) all
Prohibited Preferred Stock, and (h) all Contingent Obligations and other
obligations guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any
obligation of any other Person that constitutes Debt under any of clauses
(a) through (g) above. For purposes of this definition, (i) the amount of any
Debt represented by a guaranty or other similar instrument shall be the lesser
of the principal amount of the obligations guaranteed and still outstanding and
the maximum amount for which the guaranteeing Person may be liable pursuant to
the terms of the instrument embodying such Debt, (ii) the amount of any Debt
described in clause (d) above shall be the lower of the amount of the obligation
and the fair market value of the assets securing such obligation, and (iii) the
Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer, unless such Debt is
expressly made non-recourse to such Person.

Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.

Defaulting Lender: any Lender that (a) has failed to comply with its funding
obligations hereunder, and such failure is not cured within two Business Days;
(b) has notified Agent or any Borrower that such Lender does not intend to
comply with its funding obligations hereunder or under any other credit
facility, or has made a public statement to that effect; (c) has failed, within
three Business Days following request by Agent or any Borrower, to confirm in a
manner satisfactory to Agent and Borrowers that such Lender will comply with its
funding obligations hereunder; or (d) has, or has a direct or indirect parent
company that has, become the subject of an Insolvency Proceeding (including
reorganization, liquidation, or appointment of a receiver, custodian,
administrator or similar Person by the Federal Deposit Insurance Corporation or
any other regulatory authority); provided, however, that a Lender shall not be a
Defaulting Lender solely by virtue of a Governmental Authority’s ownership of an
equity interest in such Lender or parent company unless the ownership provides
immunity for such Lender from jurisdiction of courts within the United States or
from enforcement of judgments or writs of attachment on its assets, or permits
such Lender or Governmental Authority to repudiate or otherwise to reject such
Lender’s agreements.

Deposit Account Control Agreement: a control agreement satisfactory to Agent in
its Permitted Discretion executed by an institution maintaining a Deposit
Account for an Obligor, to perfect Agent’s Lien on such account.

Designated Jurisdiction: a country or territory that is the subject of a
Sanction.

Dilution Percent: the percent, determined for the most recent six calendar month
period, equal to (a) Borrowers’ bad debt write-downs or write-offs, discounts,
returns, promotions, credits, credit memos and other dilutive items with respect
to Accounts, divided by (b) Borrowers’ gross sales.

Dilution Reserve: as of any date of determination, a reserve against the
Eligible Accounts equal to 1.0% for each whole percentage point (or portion
thereof) by which the Dilution Percent exceeds five percent (5.0%).

Distribution: any declaration or payment of a distribution, interest or dividend
on any Equity Interest (other than payment-in-kind or stock split) or purchase,
redemption, or other acquisition or retirement for value of any Equity Interest.

Dollars: lawful money of the United States.

Domestic Subsidiary: any Subsidiary that is not a Foreign Subsidiary.

Dominion Account: a special account subject at all times to a Deposit Account
Control Agreement, established by Borrowers at Bank of America or another bank
acceptable to Agent in its Permitted Discretion, over which Agent has exclusive
control during any Dominion Period for withdrawal purposes.

Dominion Period: the period (a) commencing at any time that an Event of Default
occurs or at any time Availability is less than 12.5% of all Revolver
Commitments; and (b) continuing until, at all times during each of the preceding
30 consecutive days: (i) no Event of Default has existed and (ii) Availability
has been greater than 12.5% of all Revolver Commitments.

EBITDA: determined for Skechers on a Consolidated Basis, net income, calculated
before interest expense, provision for income taxes, depreciation and
amortization (including deferred financing costs and intangibles) expense, gains
or losses arising from the sale of capital assets, any extraordinary gains,
non-cash extraordinary losses, and non-cash stock compensation expenses (in each
case, to the extent included in determining net income). For the purposes of
calculating EBITDA for any period of 4 consecutive Fiscal Quarters (each, a
“Reference Period”), if at any time during such Reference Period (and after the
Closing Date), Borrowers or any of its Subsidiaries shall have made a Permitted
Acquisition, EBITDA for such Reference Period shall be calculated after giving
pro forma effect thereto (including pro forma adjustments arising out of events
which are directly attributable to such Permitted Acquisition, are factually
supportable, and are expected to have a continuing impact, in each case to be
mutually and reasonably agreed upon by Borrowers and Agent) or in such other
manner acceptable to Agent as if any such Permitted Acquisition or adjustment
occurred on the first day of such Reference Period.

Eligible Account: an Eligible Standard Account, Eligible Extended Terms Account
or Eligible U.S. Government Account.

Eligible Assignee: a Person that is (a) a Lender, Affiliate of a Lender or
Approved Fund; (b) an assignee approved by Borrower Agent (which approval shall
not be unreasonably withheld or delayed, and shall be deemed given if no
objection is made within five (5) Business Days after notice of the proposed
assignment) and Agent; provided, it is acknowledged and agreed that it will not
be unreasonable for Borrower Agent to withhold its approval for an assignment to
a Competitor; and (c) during an Event of Default, any Person acceptable to Agent
in its discretion.

Eligible Extended Terms Account: an Account that meets the requirements of an
Eligible Standard Account, except clause (a) of such definition, provided that
such Account (a) has selling terms of greater than 90 days, but not more than
120 days, and (b) is not unpaid for more than 120 days after the original
invoice date.

Eligible In-Transit Inventory: Inventory owned by a Borrower that would be
Eligible Inventory if it were not subject to a Document and in transit from a
foreign location to a location of the Borrowers owned or leased within the
United States; provided, that without limiting the foregoing, no Inventory shall
be Eligible In-Transit Inventory unless (a) it is subject to purchase orders and
other sale documentation satisfactory to Agent in its Permitted Discretion and
is subject to a negotiable Document showing Agent (or, with the consent of
Agent, the applicable Borrower) as consignee, and which Document is in the
possession of (i) Agent, or (ii) a customs broker, a freight forwarder, or other
handler of Inventory that has executed a Lien Waiver; (b) it is insured in a
manner satisfactory to Agent in its Permitted Discretion; (c) it is not sold by
a vendor with respect to whom any Borrower is in default of any obligations;
(d) title to such Inventory has passed to a Borrower; (e) it is shipped by a
common carrier that is not affiliated with the vendor and is not subject to any
Sanction or on any specially designated nationals list maintained by OFAC; and
(f) it is not determined by Agent in its Permitted Discretion to be ineligible
for any other reason. Notwithstanding clause (a) above, Inventory in transit
from a foreign location to a location of a Borrower within the United States
that is not in compliance with clause (a) may continue to be considered Eligible
In-Transit Inventory as long as no Default or an Event of Default exists and
Availability (calculated without giving effect to Availability based on any
Eligible In-Transit Inventory) is in an amount greater than 25% of all Revolver
Commitments.

Eligible Inventory: Inventory owned by a Borrower that (a) is finished goods or
raw materials, and not work-in-process, packaging or shipping materials, labels,
samples, display items, bags, replacement parts or manufacturing supplies;
(b) is not held or placed on consignment, nor subject to any deposit or down
payment; (c) is in new (or returned undamaged and resaleable in Borrowers’
Ordinary Course of Business) and saleable condition and is not damaged,
defective, shopworn or otherwise unfit for sale; (d) is not slow-moving,
perishable, obsolete or unmerchantable, and does not constitute returned or
repossessed goods (other than goods returned that are undamaged and resalable in
Borrowers’ Ordinary Course of Business); (e) meets all standards imposed by any
Governmental Authority, has not been acquired from a Person subject to any
Sanction or on any specially designated nationals list maintained by OFAC, and
does not constitute hazardous materials under any Environmental Law;
(f) conforms with the covenants and representations herein; (g) is subject to
Agent’s duly perfected, first priority Lien, and no other Lien other than
Permitted Liens; (h) is within the continental United States, is not in transit
except between locations of Borrowers, and is not consigned to any Person;
(i) is not subject to any warehouse receipt or negotiable Document unless such
warehouse receipt or negotiable Document shows Agent (or, with the consent of
Agent, the applicable Borrower) as consignee, and which warehouse receipt or
negotiable Document is in the possession of (i) Agent, or (ii) a customs broker,
a freight forwarder, or other handler of Inventory that has executed a Lien
Waiver; (j) is not subject to any License or other arrangement that restricts
such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has
received an appropriate Lien Waiver; (k) is not located on premises leased from
a Person other than an Obligor (except for leased retail locations) or in the
possession of a warehouseman, processor, repairman, mechanic, shipper, freight
forwarder or other Person, unless the lessor or such Person has delivered a Lien
Waiver or an appropriate Rent and Charges Reserve has been established; (l) is
not located in any Landlord Lien Retail Location unless (i) otherwise agreed by
the Agent in its Permitted Discretion, (ii) a Lien Waiver has been delivered
with respect to such location or (iii) an appropriate Rent and Charges Reserve
has been established with respect to such location; (m) is not located on any
Obligor’s owned Real Estate that is subject to a mortgage, unless the applicable
mortgagee has delivered a Lien Waiver or an appropriate Rents and Charges
Reserve has been established in respect thereof; (n) is reflected in the details
of a current perpetual inventory report; and (o) is not determined by Agent in
its Permitted Discretion to be ineligible for any other reason.

Eligible Standard Account: an Account owing to a Borrower that arises in the
Ordinary Course of Business from the sale of goods (but not from the provision
of services or the possession, use or operation by any Person other than
Skechers of any Equipment) and is payable in Dollars; provided, that without
limiting the foregoing, no Account shall be an Eligible Standard Account if
(a)(i) it has selling terms of greater than 90 days or (ii) it is unpaid for
more than 60 days after the original due date or more than 90 days after the
original invoice date; (b) 50% or more of the Accounts owing by the Account
Debtor are not Eligible Standard Accounts under the foregoing clause (a)(ii) and
do not otherwise qualify as Eligible Extended Terms Accounts due to failure of
the Account Debtor to make payment thereon within 120 days of original invoice
date; (c) when aggregated with other Accounts owing by the Account Debtor, it
exceeds 15% of the aggregate Eligible Standard Accounts (or such higher
percentage(s) as Agent may establish for the Account Debtor from time to
time)(it being understood that only the Account or portion thereof in excess of
such concentration limit shall be excluded); (d) it does not conform with a
covenant or representation herein; (e) it is owing by a creditor or supplier
which has or has asserted a right of, or is otherwise subject to, offset,
counterclaim, dispute, deduction, discount, recoupment, reserve, defense,
chargeback, credit or allowance (but ineligibility shall be limited to the
amount thereof); (f) an Insolvency Proceeding has been commenced by or against
the Account Debtor; or the Account Debtor has failed, has suspended or ceased
doing business, is liquidating, dissolving or winding up its affairs, is not
Solvent, or is subject to any Sanction or on any specially designated nationals
list maintained by OFAC; or a Borrower is not able to bring suit or enforce
remedies against the Account Debtor through judicial process; (g) the Account
Debtor is organized or has its principal offices or principal assets outside the
United States or Canada, unless the Account is supported by a letter of credit
(delivered to and directly drawable by Agent) or credit insurance satisfactory
in all respects to Agent in its Permitted Discretion; (h) it is owing by a
Governmental Authority, unless the Account Debtor is the United States or any
department, agency or instrumentality thereof and the Account has been assigned
to Agent in compliance with the federal Assignment of Claims Act; (i) it is not
subject to a duly perfected, first priority Lien in favor of Agent, or is
subject to any other Lien other than a Permitted Lien; (j) the goods giving rise
to it have not been shipped and billed to the Account Debtor or it otherwise
does not represent a final sale; (k) it is evidenced by Chattel Paper or an
Instrument of any kind, or has been reduced to judgment; (l) its payment has
been extended or the Account Debtor has made a partial payment; (m) it arises
from a sale to an Affiliate, from a sale on a cash-on-delivery, bill-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment, or other
repurchase or return basis, or from a sale for personal, family or household
purposes; (n) it represents a progress billing or retainage; (o) it includes a
billing for interest, fees or late charges, but ineligibility shall be limited
to the extent thereof; (p) it is an Account that constitutes debit memos; (q) it
is an Account with respect to which a Borrower has agreed to grant the Account
Debtor a discount on the amount of the Account if the Account Debtor pays the
discounted amount of the Account within a certain time period, solely to the
extent of the maximum proposed discount with respect to the applicable Account;
(r) it is a receivable in the form of royalties or other payments from licensing
activities; (s) it is a Credit Card Receivables; or (t) it is determined by
Agent in its Permitted Discretion to be ineligible for any other reason. In
calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than 90 days old will be excluded.

Eligible U.S. Government Account: an Account owing by the United States or any
department, agency or instrumentality thereof and that otherwise meets the
requirements of Eligible Standard Account, except clause (h) of such definition.

Enforcement Action: any action to enforce any Obligations (other than Secured
Bank Product Obligations) or Loan Documents or to exercise any rights or
remedies relating to any Collateral (whether by judicial action, self-help,
notification of Account Debtors, setoff or recoupment, credit bid, action in an
Obligor’s Insolvency Proceeding or otherwise).

Environmental Laws: Applicable Laws (including programs, permits and guidance
promulgated by regulators) relating to public health (other than occupational
safety and health regulated by OSHA) or the protection or pollution of the
environment, including CERCLA, RCRA and CWA.

Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any possible noncompliance with, investigation of a
possible violation of, litigation relating to, or potential fine or liability
under any Environmental Law, or with respect to any Environmental Release,
environmental pollution or hazardous materials, including any complaint,
summons, citation, order, claim, demand or request for correction, remediation
or otherwise.

Environmental Release: a release of hazardous materials regulated pursuant to
any Environmental Law (including, without limitation, CERCLA).

Equity Interest: the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest.

ERISA: the Employee Retirement Income Security Act of 1974.

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

ERISA Event: (a) a Reportable Event with respect to a Pension Plan;
(b) withdrawal of an Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) complete or
partial withdrawal by an Obligor or ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) filing of a
notice of intent to terminate, the treatment of a Pension Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the institution of
proceedings by the PBGC to terminate a Pension Plan; (e) determination that any
Pension Plan is considered an at-risk plan or a plan in critical or endangered
status under the Code or ERISA; (f) an event or condition that constitutes
grounds under Section 4042 of ERISA for termination of, or appointment of a
trustee to administer, any Pension Plan; (g) imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon any Obligor or ERISA Affiliate; or (h) failure by an
Obligor or ERISA Affiliate to meet all applicable requirements under the Pension
Funding Rules in respect of a Pension Plan, whether or not waived, or to make a
required contribution to a Multiemployer Plan.

Event of Default: as defined in Section 11.1.

Excluded Accounts: any of the following (i) accounts exclusively used in the
Ordinary Course of Business for payroll, payroll taxes, employee wages or
employee benefits, (ii) accounts containing not more than $2,000,000 in the
aggregate at any time, (iii) Retail Deposit Accounts, or (iv) accounts
maintained with Bank of America that are used in the Ordinary Course of Business
solely for disbursement activities.

Excluded Assets: as defined in Section 7.1.

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to
which, and only to the extent that, such Obligor’s guaranty of or grant of a
Lien as security for such Swap Obligation is or becomes illegal under the
Commodity Exchange Act because the Obligor does not constitute an “eligible
contract participant” as defined in the act (determined after giving effect to
any keepwell, support or other agreement for the benefit of such Obligor and all
guarantees of Swap Obligations by other Obligors) when such guaranty or grant of
Lien becomes effective with respect to the Swap Obligation. If a Hedging
Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or
portions thereof described in the foregoing sentence shall be Excluded Swap
Obligation(s) for the applicable Obligor.

Excluded Taxes: Any of the following Taxes imposed on or with respect to a
Recipient or required to be withheld or deducted from a payment to a Recipient
(a) Taxes imposed on or measured by a Recipient’s net income (however
denominated), franchise Taxes and branch profits Taxes (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or applicable Lending Office located in, the jurisdiction imposing such
Tax (or any political subdivision thereof), or (ii) constituting Other
Connection Taxes; (b) U.S. federal withholding Taxes imposed on amounts payable
to or for the account of a Lender with respect to its interest in a Loan or
Commitment pursuant to a law in effect when the Lender acquires such interest
(except pursuant to an assignment request by Borrower Agent under
Section 13.4) or changes its Lending Office, unless the Taxes were payable to
its assignor immediately prior to such assignment or to the Lender immediately
prior to its change in Lending Office; (c) Taxes attributable to a Recipient’s
failure to comply with Section 5.10; and (d) U.S. federal withholding Taxes
imposed pursuant to FATCA.

Existing Letters of Credit: the Letters of Credit set forth on Schedule 2.3.1.

Extraordinary Expenses: all reasonable costs, expenses or advances that Agent
may incur during a Default or Event of Default, or during the pendency of an
Insolvency Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan Documents,
Letters of Credit or Obligations, including any lender liability or other
Claims; (c) the exercise, protection or enforcement of any rights or remedies of
Agent in, or the monitoring of, any Insolvency Proceeding with respect to an
Obligor or Affiliate of an Obligor; (d) settlement or satisfaction of taxes,
charges or Liens with respect to any Collateral; (e) any Enforcement Action; and
(f) negotiation and documentation of any modification, waiver, workout,
restructuring or forbearance with respect to any Loan Documents or Obligations.
Such reasonable costs, expenses and advances include transfer fees, Other Taxes,
storage fees, insurance costs, permit fees, utility reservation and standby
fees, legal fees, appraisal fees, brokers’ and auctioneers’ fees and
commissions, accountants’ fees, environmental study fees, wages and salaries
paid to employees of any Obligor or independent contractors in liquidating any
Collateral, and travel expenses.

FATCA: Sections 1471 through 1474 of the Code as of the date hereof (or any
amended or successor version if substantively comparable and not materially more
onerous to comply with), and any agreements entered into pursuant to
Section 1471(b)(1) of the Code.

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on the applicable Business Day (or on the preceding
Business Day, if the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if no such
rate is published on the next Business Day, the average rate (rounded up, if
necessary, to the nearest 1/8 of 1%) charged to Bank of America on the
applicable day on such transactions, as determined by Agent; provided, if the
Federal Funds Rate as determined above is less than 0.0% per annum, then the
Federal Funds Rate shall be deemed to be 0.0% per annum.

Fiscal Quarter: each period of three months, commencing on the first day of a
Fiscal Year.

Fiscal Year: the fiscal year of Borrowers and Subsidiaries for accounting and
tax purposes, ending on December 31 of each year.

Fixed Charge Coverage Ratio: the ratio, determined for Skechers on a
Consolidated Basis for the most recent 12 months, of (a) EBITDA minus Capital
Expenditures made (except those financed with Debt other than Revolver
Loans) and cash taxes paid, to (b) Fixed Charges.

Fixed Charges: the sum of interest expense (other than payment-in-kind) paid in
cash, scheduled principal payments made on Debt, and Distributions made (other
than Distributions made in-kind and excluding, for the avoidance of doubt, any
Upstream Payments).

FLSA: the Fair Labor Standards Act of 1938.

Foreign Lender: any Lender that is not a U.S. Person.

Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States; or (b) mandated by a government other than the United States
for employees of any Obligor or Subsidiary.

Foreign Subsidiary: any Subsidiary that is not organized or incorporated in the
United States or any State or territory thereof.

Fronting Exposure: a Defaulting Lender’s interest in LC Obligations, Swingline
Loans and Protective Advances, except to the extent Cash Collateralized by the
Defaulting Lender or allocated to other Lenders hereunder.

Full Payment or Full Payment of the Obligations: with respect to any
Obligations, (a) the full and indefeasible cash payment of all Obligations that
are due and payable, including any interest, fees and other charges accruing
during an Insolvency Proceeding or that would have accrued but for the
commencement of any Insolvency Proceeding (whether or not allowed in the
proceeding), (b) if such Obligations are LC Obligations, Cash Collateralization
thereof (or delivery of a standby letter of credit acceptable to Agent in its
Permitted Discretion, in the amount of required Cash Collateral), and (c) if
such Obligations are inchoate or contingent in nature (other than LC
Obligations) and a claim has been asserted with respect thereto, Cash
Collateralization thereof (or delivery of a standby letter of credit acceptable
to Agent in its Permitted Discretion, in the amount required Cash Collateral).
No Loans shall be deemed to have been paid in full unless all Commitments
related to such Loans have terminated.

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: any federal, state, local, foreign or other agency,
authority, body, commission, court, instrumentality, political subdivision,
central bank, or other entity or officer exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions for any
governmental, judicial, investigative, regulatory or self-regulatory authority
(including the Financial Conduct Authority, the Prudential Regulation Authority
and any supra-national bodies such as the European Union or European Central
Bank).

Guarantors: Savva’s Cafe, Inc., BrandBlack, LLC and each other Person that
guarantees payment or performance of Obligations.

Guaranty: each guaranty agreement executed by a Guarantor in favor of Agent,
including pursuant to Section 5.11 of this Agreement.

Hedging Agreement: a “swap agreement” as defined in Section 101(53B)(A) of the
Bankruptcy Code.

HF Logistics: means HF Logistics I, LLC, a Delaware limited liability company.

Immaterial Subsidiary: means any non-operating Subsidiary of the Obligors that
holds or owns assets with an aggregate net book value of $1,000,000 or less; and
“Immaterial Subsidiaries” means all of them; provided, however, that if any
Subsidiary that previously constituted an Immaterial Subsidiary ever either
(a) holds or owns assets with an aggregate net book value of greater than
$1,000,000 or (b) becomes an operating Subsidiary, then such Subsidiary shall
immediately and automatically cease to be an Immaterial Subsidiary and the
Borrowers shall be required to comply with the provisions of Section 10.1.9 of
this Agreement with respect to such Subsidiary.

Incur: to issue, create, assume, guarantee, incur or otherwise become liable
for; the terms “Incurred” and “Incurrence” have meanings correlative to the
foregoing.

Indemnified Taxes: (a) Taxes, other than Excluded Taxes, imposed on or relating
to any payment of an Obligation; and (b) to the extent not otherwise described
in clause (a), Other Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and
Bank of America Indemnitees.

Insolvency Event: any case or proceeding commenced by or against any Obligor
under any state, federal or foreign law for, or any agreement of such Obligor
to, (a) the entry of an order for relief under the Bankruptcy Code, or any other
insolvency, debtor relief or debt adjustment law; (b) the appointment of a
receiver, trustee, liquidator, administrator, conservator or other custodian for
such Obligor or any substantial part of its Property; or (c) an assignment or
trust mortgage for such Obligor or any substantial part of its Property for the
benefit of creditors.

Insolvency Proceeding: any case or proceeding commenced by or against a Person
under any state, federal or foreign law for, or any agreement of such Person to,
(a) the entry of an order for relief under the Bankruptcy Code, or any other
insolvency, debtor relief or debt adjustment law; (b) the appointment of a
receiver, trustee, liquidator, administrator, conservator or other custodian for
such Person or any part of its Property; or (c) an assignment or trust mortgage
for such Person or any part of its Property for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights, trademarks, service marks,
trade names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit
or otherwise) that any Borrower or any Subsidiary’s ownership, use, marketing,
sale or distribution of any Inventory, Equipment, Intellectual Property or other
Property violates another Person’s Intellectual Property.

Interest Period: as defined in Section 3.1.3.

Inventory: as defined in the UCC, including all goods intended for sale, lease,
display or demonstration; all work in process; and all raw materials, and other
materials and supplies of any kind that are or could be used in connection with
the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in a Borrower’s business
(but excluding Equipment).

Inventory Formula Amount: the sum of (a) the lesser of (i) 75% of the aggregate
Value of Eligible Inventory consisting of Inventory to be sold at wholesale and
(ii) 85% of the NOLV Percentage of the aggregate Value of Eligible Inventory
consisting of Inventory to be sold at wholesale, plus (b) the lesser of (i) 75%
of the aggregate Value of Eligible Inventory consisting of Inventory to be sold
at retail and (ii) 85% of the NOLV Percentage of the aggregate Value of Eligible
Inventory consisting of Inventory to be sold at retail, plus (c) the lesser of
(i) 75% of the aggregate Value of Eligible In-Transit Inventory and (ii) 85% of
the NOLV Percentage of the aggregate Value of Eligible In-Transit Inventory.

Inventory Reserve: reserves established by Agent in its Permitted Discretion to
reflect factors that may negatively impact the Value of Inventory, including
change in salability, obsolescence, seasonality, theft, shrinkage, imbalance,
change in composition or mix, duties, freight, markdowns and vendor chargebacks.

Investment: an Acquisition, an acquisition of record or beneficial ownership of
any Equity Interests of a Person, or an advance or capital contribution to or
other investment in a Person.

Investment Property: the Investment Property (as such term is defined in the
UCC) of any Obligor, other than Excluded Assets.

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Agent, as security for
its Obligations.

IRS: the United States Internal Revenue Service.

Issuers: all issuers of Investment Property or Pledged Equity.

Issuing Bank: Bank of America (including any Lending Office of Bank of America),
or any replacement issuer appointed pursuant to Section 2.3.4.

Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees,
Affiliates, agents and attorneys.

Landlord Lien Retail Location: those leased retail store locations where any
Inventory of any Obligor is located and either (i) such location is located in
Washington, Pennsylvania, Virginia and any other state or other jurisdiction in
which a landlord’s claim for rent is entitled to priority over Agent’s Lien on
any of the Collateral, or (ii) the landlord with respect to such location
otherwise has a perfected contractual Lien on any Collateral that is entitled to
priority over Agent’s Lien on any of the Collateral.

LC Application: an application by a Borrower Agent to Issuing Bank for issuance
of a Letter of Credit, in form and substance reasonably satisfactory to Issuing
Bank and Agent.

LC Conditions: the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6.2 (or in the case of a
Letter of Credit to be issued on the Closing Date, Sections 6.1 and 6.2);
(b) after giving effect to such issuance, total LC Obligations do not exceed the
Letter of Credit Subline, no Overadvance exists and Revolver Usage does not
exceed the Borrowing Base; (c) the Letter of Credit and payments thereunder are
denominated in Dollars or other currency satisfactory to Agent and Issuing Bank;
and (d) the purpose and form of the proposed Letter of Credit are satisfactory
to Agent and Issuing Bank in their reasonable discretion.

LC Documents: all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by Borrowers or any other Person to Issuing Bank
or Agent in connection with any Letter of Credit.

LC Obligations: the sum (without duplication) of (a) all amounts owing by
Borrowers for drawings under Letters of Credit; and (b) the Stated Amount of all
outstanding Letters of Credit.

LC Request: a request for issuance of a Letter of Credit, to be provided by
Borrower Agent to Issuing Bank, in form reasonably satisfactory to Agent and
Issuing Bank.

Lender Indemnitees: Lenders and Secured Bank Product Providers, and their
officers, directors, employees, Affiliates, agents and attorneys.

Lenders: lenders party to this Agreement (including Agent in its capacity as
provider of Swingline Loans) and any Person who hereafter becomes a “Lender”
pursuant to an Assignment, including any Lending Office of the foregoing.

Lending Office: the office (including any domestic or foreign Affiliate or
branch) designated as such by a Lender or Issuing Bank by notice to Agent and
Borrower Agent.

Letter of Credit: any standby or documentary letter of credit, foreign guaranty,
documentary bankers acceptance or similar instrument issued by Issuing Bank for
the account or benefit of any Borrower or Affiliate of a Borrower, including the
Existing Letters of Credit.

Letter of Credit Subline: $100,000,000.00.

LIBOR: the per annum rate of interest (rounded up to the nearest 1/8th of 1% and
in no event less than zero) determined by Agent at or about 11:00 a.m. (London
time) two Business Days prior to an Interest Period, for a term equivalent to
such period, equal to the London Interbank Offered Rate, or comparable or
successor rate approved by Agent, as published on the applicable Reuters screen
page (or other commercially available source designated by Agent from time to
time); provided, that any comparable or successor rate shall be applied by
Agent, if administratively feasible, in a manner consistent with market
practice. Notwithstanding the foregoing, if LIBOR as determined above is less
than 0.0% per annum, then LIBOR shall be deemed to be 0.0% per annum.

LIBOR Loan: each set of LIBOR Revolver Loans having a common length and
commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

License: any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of Collateral, any use of Property or any other
conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

Lien: any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, lien (statutory or other), security interest,
statutory trust, reservation of title, or other security arrangement and any
other preference, priority or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention
agreement, the interest of a lessor under a Capital Lease and any synthetic or
financing lease having substantially the same economic effect as any of the
foregoing.

Lien Waiver: an agreement, in form and substance satisfactory to Agent in its
Permitted Discretion, by which (a) for any Collateral located on leased or
mortgaged premises, the lessor or mortgagee waives or subordinates any Lien it
may have on the Collateral, and agrees to permit 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, customs broker 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 Agent, and agrees to deliver
the Collateral to Agent upon request; (c) for any Collateral held by a
repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or
subordinates any Lien it may have on the Collateral, and agrees to deliver the
Collateral to Agent upon request; and (d) for any Collateral subject to a
Licensor’s Intellectual Property rights, the Licensor grants to Agent the right,
vis-à-vis such Licensor, to enforce Agent’s Liens with respect to the
Collateral, including the right to dispose of it with the benefit of the
Intellectual Property, whether or not a default exists under any applicable
License.

Loan: a Revolver Loan.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Loan Year: each 12 month period commencing on the Closing Date and on each
anniversary of the Closing Date.

Majority Voting Equity Interests: Equity Interests representing greater than 51%
of the Equity Interests of Skechers having the right to vote for the election of
members of the Board of Directors.

Margin Stock: as defined in Regulation U of the Board of Governors.

Master Intercompany Subordinated Note: that certain Master Intercompany
Subordinated Note, dated as of the Closing Date, made by the Obligors and
certain of their Subsidiaries, as amended, restated, supplemented or otherwise
modified from time to time in accordance with this Agreement.

Material Adverse Effect: (a) a material adverse effect on the business,
operations, Properties, prospects or condition (financial or otherwise) of
Obligors (taken as a whole) or of Skechers and its Subsidiaries (taken as a
whole), on the value of any material Collateral, or on the enforceability of any
Loan Documents; (b) a material impairment of Skechers and its Subsidiaries’
ability to perform their obligations under the Loan Documents to which they are
parties or of Agent’s ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
Agent’s Liens with respect to the Collateral (in each case with respect to
clause (c), other than as a result of an action taken by the Agent or an action
not taken that is solely in the control of Agent).

Material Contract: any agreement or arrangement to which any Obligor or any
Subsidiary is party (other than the Loan Documents) (a) that is deemed to be a
material contract under any securities law applicable to such Person, including
the Securities Act; (b) for which breach, termination, nonperformance or failure
to renew could reasonably be expected to have a Material Adverse Effect; or
(c) that relates to Debt (including Subordinated Debt) in an aggregate amount of
$25,000,000 or more.

Moody’s: Moody’s Investors Service, Inc., and its successors.

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

Net Proceeds: with respect to an Asset Disposition of Collateral, proceeds
(including, when received, any deferred or escrowed payments) received by any
Borrower or Subsidiary in cash from such disposition, net of (a) reasonable and
customary costs and expenses actually incurred in connection therewith,
including legal fees and sales commissions; (b) amounts applied to repayment of
Debt secured by a Permitted Lien senior to Agent’s Liens on Collateral sold;
(c) transfer or similar taxes; and (d) reserves for indemnities, until such
reserves are no longer needed.

NOLV Percentage: the net orderly liquidation value of Inventory, expressed as a
percentage, expected to be realized at an orderly, negotiated sale held within a
reasonable period of time, net of all liquidation expenses, as determined from
the most recent appraisal of Borrowers’ Inventory performed by an appraiser and
on terms reasonably satisfactory to Agent.

Notice of Borrowing: a request by Borrower Agent of a Borrowing of Revolver
Loans, in form reasonably satisfactory to Agent.

Notice of Conversion/Continuation: a request by Borrower Agent of a conversion
or continuation of any Loans as LIBOR Loans, in form reasonably satisfactory to
Agent.

Obligations: all (a) principal of and premium, if any, on the Loans, (b) LC
Obligations and other obligations of Obligors with respect to Letters of Credit,
(c) interest, expenses, fees, indemnification obligations, Extraordinary
Expenses and other amounts payable by Obligors under Loan Documents, (d) Secured
Bank Product Obligations, and (e) other Debts, obligations and liabilities of
any kind owing by Obligors pursuant to the Loan Documents, whether now existing
or hereafter arising, whether evidenced by a note or other writing, whether
allowed in any Insolvency Proceeding, whether arising from an extension of
credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several;
provided, that Obligations of an Obligor shall not include its Excluded Swap
Obligations.

Obligor: each Borrower or Guarantor.

OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

Ordinary Course of Business: the ordinary course of business of any Borrower or
Subsidiary, undertaken in good faith and consistent with Applicable Law and past
practices.

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, certificate or articles of organization or
formation, limited liability agreement, operating agreement, members agreement,
shareholders agreement, partnership agreement, certificate of partnership,
certificate of formation, voting trust agreement, or similar agreement or
instrument governing the formation or operation of such Person.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: the Master Intercompany Subordinated Note and each LC Document,
fee letter, Lien Waiver, Borrowing Base Report, Compliance Certificate, Borrower
Materials, or other note, document, instrument or agreement (other than this
Agreement or a Security Document) now or hereafter delivered by an Obligor or
other Person to Agent or a Lender in connection with any transactions relating
hereto.

Other Connection Taxes: Taxes imposed on a Recipient due to a present or former
connection between it and the taxing jurisdiction (other than connections
arising from the Recipient having executed, delivered, become party to,
performed obligations or received payments under, received or perfected a Lien
or engaged in any other transaction pursuant to, enforced, or sold or assigned
an interest in, any Loan or Loan Document).

Other Taxes: all present or future stamp, court, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a Lien under, or otherwise with respect to, any Loan
Document, except Other Connection Taxes imposed with respect to an assignment
(other than an assignment made pursuant to Section 13.4(c)).

Overadvance: as defined in Section 2.1.5.

Overadvance Loan: a Base Rate Revolver Loan made when an Overadvance exists or
is caused by the funding thereof.

Participant: as defined in Section 13.2.

Patriot Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to a Borrower,
including those constituting proceeds of any Collateral.

PBGC: the Pension Benefit Guaranty Corporation.

Pension Funding Rules: Code and ERISA rules regarding minimum required
contributions (including installment payments) to Pension Plans set forth in,
for plan years ending prior to the Pension Protection Act of 2006 effective
date, Section 412 of the Code and Section 302 of ERISA, both as in effect prior
to such act, and thereafter, Sections 412, 430, 431, 432 and 436 of the Code and
Sections 302, 303, 304 and 305 of ERISA.

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

Permitted Acquisition: any Acquisition (other than any transaction permitted by
Section 10.2.9(a) (which do not need to meet the requirements of this definition
in order to be permitted)) consummated if (a)(i) both immediately before and
immediately after giving pro forma effect to such Acquisition, Availability is
greater than 10.0% of all Revolver Commitments and no Default or Event of
Default exists or is caused thereby, (ii) the Acquisition is consensual;
(iii) the assets, business or Person being acquired is useful or engaged in the
business of Borrowers and Subsidiaries or any business materially related or
incidental thereto; (iv) no Debt is assumed other than Permitted Debt and no
Liens are assumed other than Permitted Liens; provided that such Permitted Liens
do not attach to Accounts, Inventory, Deposit Accounts or Securities Accounts of
any Obligor (or any proceeds of the foregoing) without the prior written consent
of Agent and Required Lenders in their sole discretion, (v) either (A) the Fixed
Charge Coverage Ratio, determined on a pro forma basis immediately after giving
pro forma effect to such Acquisition (as if such Acquisition were made on the
last day of the most recently ended period for which financial statements have
been delivered pursuant to Section 10.1.2), is greater than 1.0 to 1.0, or
(B) at all times during each of the 30 consecutive days preceding such
Acquisition, Availability (determined on a pro forma basis as if such
Acquisition were made at the start of such 30-day period) has been greater than
17.5% of all Revolver Commitments, and (vi) Borrowers deliver to Agent, at least
10 Business Days prior to such Acquisition, copies of all material agreements
relating thereto and a certificate, in form and substance reasonably
satisfactory to Agent and signed by a Senior Officer, stating that the
Acquisition is a “Permitted Acquisition” and demonstrating compliance with the
foregoing requirements, or (b) approved in writing by Agent and Required Lenders
in their sole discretion.

Permitted Asset Disposition: an Asset Disposition that is (a) a sale of
Inventory in the Ordinary Course of Business; (b) a disposition of Equipment
that, in the aggregate during any 12 month period, has a fair market or book
value (whichever is more) of $5,000,000 or less; (c) a disposition of Inventory
that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course
of Business; (d) termination of a lease of real or personal Property that is not
necessary for the Ordinary Course of Business, could not reasonably be expected
to have a Material Adverse Effect and does not result from an Obligor’s default;
(e) the licensing (i) on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the Ordinary Course of
Business or (ii) on an exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the Ordinary Course of Business so long as
either (A) the patents, trademarks, copyrights, and other intellectual property
subject to such exclusive license are not owned by an Obligor or, if owned by an
Obligor, the territory with respect to which the exclusive license is granted
does not include the United States or a territory within the United States, or
(B) such exclusive license does not grant a right to use such patents,
trademarks, copyrights, and other intellectual property rights in connection
with the manufacture, design, distribution or sale of footwear of any kind;
(f) a use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents,
including, in any event, forfeiture of deposits in connection with proposed
acquisitions that are not consummated; (g) a granting of Permitted Liens; (h) so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom, a sale or discount, in each case without recourse, of Accounts
arising in the Ordinary Course of Business, but only in connection with the
compromise or collection thereof; (i) any involuntary loss, damage or
destruction of property; (j) any involuntary condemnation, seizure or taking, by
exercise of the power of eminent domain or otherwise, or confiscation or
requisition of use of property; (k) a leasing (or subleasing) in the Ordinary
Course of Business of Real Estate owned (or leased) by Skechers or its
Subsidiaries, so long as the same do not materially impede the Ordinary Course
of Business of Skechers or its Subsidiaries; (l) a sale, issuance or split of
Equity Interests (other than Prohibited Preferred Stock) of Skechers; (m) a
making of an Investment other than a Restricted Investment; (n) a payment of
Distributions but only to the extent that they are permitted pursuant to
Section 10.2.4; (o) a termination of contracts, licenses, leases or subleases in
the Ordinary Course of Business to the extent that they are not economically
desirable in the conduct of the Obligors’ business (taken as a whole) and so
long as the termination thereof is not materially adverse to the interests of
the Lenders; (p) a closing of retail stores and dispositions of Inventory or
Equipment in connection therewith, so long as, if after giving effect to any
proposed closure of a retail store by any Obligor or any series of related
retail store closures by any of the Obligors, the aggregate amount of retail
stores closed by the Obligors in the immediately preceding twelve month period
would equal or exceed twenty (20) retail stores, then the Borrowers shall
provide Agent with not less than 45 Business Days prior written notice before
conducting such retail store closure or series of related retail store closures;
(q) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, any disposition of Real Estate, (r) a conveyance, sale,
lease, license, assignment, transfer, or other disposition of patents,
trademarks, copyrights or other intellectual property of Skechers or its
Subsidiaries (including in connection with the settlement or other resolution of
claims, disputes, litigation, arbitration, or other adverse proceedings) to the
extent not necessary in the conduct of Skechers’ and its Subsidiaries’ business,
taken as a whole; (s) so long as no Default or Event of Default has occurred and
is continuing or would result therefrom, a sale of all of the Equity Interests
of the Skechers/HF JV Entity held by Skechers RB to HF Logistics pursuant to the
buy-sell provisions of Article 8 of the Skechers/HF JV LLC Agreement (as in
effect on the date hereof); (t) a disposition of all of the Equity Interests of
the Skechers/HF JV Entity held by Skechers RB in connection with the dissolution
and windup of the Skechers/HF JV Entity pursuant to Section 13.3 of the
Skechers/HF JV LLC Agreement (as in effect on the date hereof); (u) consummated
where both immediately before and immediately after giving pro forma effect
thereto, Availability is greater than 15% of all Revolver Commitments, and no
Default or Event of Default has occurred and is continuing or would result
therefrom; or (v) approved in writing by Agent and Required Lenders; and
provided that the Net Proceeds of any Asset Disposition of Property that
constitutes Collateral are remitted to an account that is subject to a Deposit
Account Control Agreement, which account must be a Dominion Account (or a
lockbox relating to a Dominion Account) to the extent such Net Proceeds are
received during a Dominion Period.

Permitted Contingent Obligations: Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder;
(c) existing on the Closing Date, and any extension or renewal thereof that does
not increase the amount of such Contingent Obligation when extended or renewed;
(d) incurred in the Ordinary Course of Business with respect to surety, appeal,
performance, statutory or bid bonds, or other similar obligations; (e) arising
from customary indemnification obligations in favor of purchasers in connection
with dispositions of Property permitted hereunder; (f) arising under the Loan
Documents; or (g) in an aggregate amount of $5,000,000 or less at any time.

Permitted Debt: as defined in Section 10.2.1.

Permitted Discretion: a determination made in the exercise, in good faith, of
reasonable business judgment (from the perspective of a secured, asset-based
lender).

Permitted Holder: the Persons identified on Schedule P-1.

Permitted Lien: as defined in Section 10.2.2.

Permitted Purchase Money Debt: Purchase Money Debt of Borrowers and Subsidiaries
that is unsecured or secured only by a Purchase Money Lien, as long as the
aggregate principal amount does not exceed $25,000,000 at any time.

Person: any individual, corporation, limited liability company, partnership,
joint venture, association, trust, unincorporated organization, Governmental
Authority or other entity.

Plan: an employee benefit plan (as defined in Section 3(3) of ERISA) maintained
for employees of an Obligor or ERISA Affiliate, or to which an Obligor or ERISA
Affiliate is required to contribute on behalf of its employees.

Platform: as defined in Section 14.3.3.

Pledged Equity: except to the extent any of the following would constitute
Excluded Assets, the Equity Interests listed on Schedule 7.3, together with any
other Equity Interests, certificates, options or rights of any nature whatsoever
in respect of the Equity Interests of any Person that may be issued or granted
to, or held by, any Obligor while this Agreement is in effect.

Preferred Stock: as applied to the Equity Interests of any Person, the Equity
Interests of any class or classes (however designated) that is preferred with
respect to the payment of dividends, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
shares of Equity Interests of any other class of such Person.

Prime Rate: the rate of interest publicly announced by Bank of America from time
to time as its prime rate. Such rate is set by Bank of America on the basis of
various factors, including its costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such rate. Any change in such rate
publicly announced by Bank of America shall take effect at the opening of
business on the day specified in the announcement.

Pro Rata: with respect to any Lender, a percentage (rounded to the ninth decimal
place) determined (a) by dividing the amount of such Lender’s Revolver
Commitment by the aggregate outstanding Revolver Commitments; or (b) following
termination of the Revolver Commitments, by dividing the amount of such Lender’s
Loans and LC Obligations by the aggregate outstanding Loans and LC Obligations
or, if all Loans and LC Obligations have been paid in full and/or Cash
Collateralized, by dividing such Lender’s and its Affiliates’ remaining
Obligations by the aggregate remaining Obligations.

Prohibited Preferred Stock: any Preferred Stock that by its terms is mandatorily
redeemable or subject to any other payment obligation (including any obligation
to pay dividends, other than dividends of shares of Preferred Stock of the same
class and series payable in kind or dividends of shares of common stock) on or
before a date that is less than one year after the Revolver Termination Date,
or, on or before the date that is less than one year after the Revolver
Termination Date, is redeemable at the option of the holder thereof for cash or
assets or securities (other than distributions in kind of shares of Preferred
Stock of the same class and series or of shares of common stock).

Properly Contested: with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment could not have a Material Adverse Effect; (e) no Lien is imposed
on assets of the Obligor, unless bonded and stayed to the satisfaction of Agent
in its Permitted Discretion; and (f) if the obligation results from entry of a
judgment or other order, there is not a period of more than 30 consecutive days
during which a stay of such judgment or order pending appeal or other judicial
review is not in effect.

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

Protective Advances: as defined in Section 2.1.6.

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of
the purchase price of Equipment or other fixed assets; (b) Debt (other than the
Obligations) incurred within 30 days before or after acquisition of any
Equipment or other fixed assets, for the purpose of financing any of the
purchase price or cost thereof; and (c) any renewals, extensions or refinancings
(but not increases) thereof.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only
the Equipment or other fixed assets acquired or leased with such Debt, all
parts, attachments, accessories, accessions, substitutions or replacements
thereto and the proceeds thereof and constituting a Capital Lease or a purchase
money security interest under the UCC.

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that
constitutes an “eligible contract participant” under the Commodity Exchange Act
and can cause another Person to qualify as an “eligible contract participant”
under Section 1a(18)(A)(v)(II) of such act.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: all right, title and interest (whether as owner, lessor or
lessee) in any real Property or any buildings, structures, parking areas or
other improvements thereon.

Real Estate Holding Subsidiary: means a Subsidiary of Skechers which does not
own any property or assets other than (i) Real Estate and other assets necessary
in connection with the ownership of such Real Estate or (ii) Equity Interests in
an Affiliate or joint venture which does not own any Property or assets other
than Real Estate and other assets necessary in connection with the ownership of
such Real Estate, including each of the Subsidiaries identified on Schedule
9.1.4(a) as a “real estate holding company”.

Recipient: Agent, Issuing Bank, any Lender or any other recipient of a payment
to be made by an Obligor under a Loan Document or on account of an Obligation.

Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is
in an aggregate principal amount that does not exceed the principal amount of
the Debt being extended, renewed or refinanced; (b) it has a final maturity no
sooner than, and a weighted average life no less than the Debt being extended,
renewed or refinanced and the interest rate and fees payable with respect
thereto are on market terms at the time of such Refinancing; (c) it is
subordinated to the Obligations at least to the same extent as the Debt being
extended, renewed or refinanced; (d) the representations, covenants and defaults
applicable to it, taken as a whole, are no less favorable to Borrowers than
those applicable to the Debt being extended, renewed or refinanced; (e) no
additional Lien is granted to secure it; (f) no additional Person is obligated
on such Debt; and (g) upon giving effect to it, no Default or Event of Default
exists.

Refinancing Debt: Debt that is the result of an extension, renewal or
refinancing of Debt permitted under Sections 10.2.1(b), (c), (d), (f) or (q).

Reimbursement Date: as defined in Section 2.3.2.

Rents and Charges Reserve: the aggregate of (a) all past due rent, payments and
other amounts owing by an Obligor (or any Affiliate of Skechers that owns any
Real Estate subject to a mortgage) to any mortgagee, landlord, warehouseman,
processor, repairman, mechanic, shipper, freight forwarder, broker or other
Person who possesses any Collateral or leases to such Obligor a location where
any Collateral is stored, and (b) with respect to Landlord Lien Retail Locations
and locations where Collateral is located (other than retail store locations), a
reserve not to exceed three months’ rent, payments and other charges that would
be payable to any such Person, unless (i) a Lien Waiver has been delivered with
respect to such location or (ii) with respect to Landlord Lien Retail Locations,
Agent determines in its discretion not to impose such reserve.

Report: as defined in Section 12.2.3.

Reportable Event: any event set forth in Section 4043(c) of ERISA, other than an
event for which the 30 day notice period has been waived.

Required Lenders: two or more unaffiliated Secured Parties holding more than 50%
of (a) the aggregate outstanding Revolver Commitments; or (b) following
termination of the Revolver Commitments, the aggregate outstanding Loans and LC
Obligations or, if all Loans and LC Obligations have been paid in full, the
aggregate remaining Obligations; provided, however, that Commitments, Loans and
other Obligations held by a Defaulting Lender and its Affiliates shall be
disregarded in making such calculation, but any related Fronting Exposure shall
be deemed held as a Loan or LC Obligation by the Secured Party that funded the
applicable Loan or issued the applicable Letter of Credit.

Restricted Investment: any Investment by an Obligor, other than (a) Investments
in Subsidiaries to the extent existing on the Closing Date; (b) cash and Cash
Equivalents maintained in accordance with Section 8.5; (c) loans and advances
permitted under Section 10.2.7; (d) Permitted Acquisitions; (e) Investments
described on Schedule 10.2.5 hereto outstanding on the Closing Date;
(f) Investments permitted by Section 10.2.9(a); (g) Investments in negotiable
instruments deposited or to be deposited for collection in the Ordinary Course
of Business; (h) deposits on, and advance payments in respect of the purchase
price for, purchases of goods or services in the Ordinary Course of Business;
(i) Investments received in settlement or satisfaction of amounts due to any
Obligor or any of its Subsidiaries effected in the Ordinary Course of Business
or owing to any Obligor or any of its Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of an Obligor or its Subsidiaries; (j) Investments which
constitute Permitted Debt; (k) deposits of cash made in the Ordinary Course of
Business to secure performance of operating leases; and (l) any other Investment
made if (i) both immediately before and immediately after giving pro forma
effect to such Investment, Availability is greater than 10.0% of all Revolver
Commitments and no Default or Event of Default exists or is caused thereby, and
(ii) either (x) the Fixed Charge Coverage Ratio, determined on a pro forma basis
immediately after giving pro forma effect to such Investment (as if such
Investment were made on the last day of the most recently ended period for which
financial statements have been delivered pursuant to Section 10.1.2), is greater
than 1.0 to 1.0, or (y) at all times during each of the 30 consecutive days
preceding such Investment, Availability (determined on a pro forma basis as if
such Investment were made at the start of such 30-day period) has been greater
than 17.5% of all Revolver Commitments at all times.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Borrower or other Obligor to incur or repay the
Obligations, to grant Liens on any Collateral, to declare or make Distributions
or to modify, extend or renew any other agreement evidencing Obligations.

Retail Deposit Accounts: accounts exclusively used by Borrowers’ retail stores
for the deposit of collections in the Ordinary Course of Business.

Revolver Commitment: for any Lender, its obligation to make Revolver Loans and
to participate in LC Obligations up to the maximum principal amount shown on
Schedule 1.1, as hereafter modified pursuant to Sections 2.1.4(b) or 2.1.7 or an
Assignment to which it is a party. “Revolver Commitments” means the aggregate
amount of such commitments of all Lenders.

Revolver Loan: a loan made pursuant to Section 2.1, and any Swingline Loan,
Overadvance Loan or Protective Advance.

Revolver Termination Date: June 30, 2020.

Revolver Usage: (a) the aggregate amount of outstanding Revolver Loans; plus
(b) the aggregate Stated Amount of outstanding Letters of Credit, except to the
extent Cash Collateralized by Borrowers.

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by a Borrower under a License.

S&P: Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill
Companies, Inc., and any successor thereto.

Sanction: any sanction administered or enforced by the U.S. Government
(including OFAC), United Nations Security Council, European Union, Her Majesty’s
Treasury or other sanctions authority.

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

Secured Bank Product Obligations: Debt, obligations and other liabilities with
respect to Bank Products owing by any Obligor or Subsidiary to a Secured Bank
Product Provider; provided, that Secured Bank Product Obligations of an Obligor
shall not include its Excluded Swap Obligations.

Secured Bank Product Provider: (a) Bank of America or any of its Affiliates; and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided such provider delivers written notice to Agent, in form and substance
satisfactory to Agent, within 10 days following the later of the Closing Date or
creation of the Bank Product, (i) describing the Bank Product and setting forth
the maximum amount to be secured by the Collateral and the methodology to be
used in calculating such amount, and (ii) agreeing to be bound by Section 12.13.

Secured Parties: Agent, Issuing Bank, Lenders and Secured Bank Product
Providers.

Securities Account Control Agreement: a control agreement satisfactory to Agent
in its Permitted Discretion executed by an institution maintaining a Securities
Account for an Obligor, to perfect Agent’s Lien on such account.

Securities Act: the Securities Act of 1933, as in effect from time to time.

Securities Exchange Act: the Securities Exchange Act of 1934, as in effect from
time to time.

Security Documents: the Guaranties, IP Assignments, Deposit Account Control
Agreements, Securities Account Control Agreements, and all other documents,
instruments and agreements now or hereafter securing (or given with the intent
to secure) any Obligations.

Senior Officer: the chairman of the board, president, chief executive officer or
chief financial officer of a Borrower or, if the context requires, an Obligor.

Settlement Report: a report summarizing Revolver Loans and participations in LC
Obligations outstanding as of a given settlement date, allocated to Lenders on a
Pro Rata basis in accordance with their Revolver Commitments.

Skechers/HF JV Entity: means HF Logistics-SKX, LLC, a Delaware limited liability
company.

Skechers/HF JV LLC Agreement: means that certain Limited Liability Company
Agreement of HF Logistics-SKX, LLC, dated January 30, 2010, between Skechers RB
and HF Logistics.

Skechers on a Consolidated Basis: the consolidation in accordance with GAAP of
the financial statements of Skechers, its Subsidiaries and each other Person
(including variable interest entities) consolidated therewith in accordance with
GAAP.

Skechers RB: means Skechers R.B., LLC, a Delaware limited liability company.

Solvent: as to any Person, such Person (a) owns Property whose fair salable
value (as defined below) is greater than the amount required to pay all of its
debts as they become due; (b) owns Property whose present fair salable value (as
defined below) is greater than the probable total liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities) of such Person
as they become absolute and matured; (c) is able to pay all of its debts as they
mature; (d) has capital that is not unreasonably small for its business and is
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; (e) is not “insolvent” within the
meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by
way of assumption or otherwise) any obligations or liabilities (contingent or
otherwise) under any Loan Documents, or made any conveyance in connection
therewith, with actual intent to hinder, delay or defraud either present or
future creditors of such Person or any of its Affiliates. “Fair salable value”
means the amount that could be obtained for assets within a reasonable time,
either through collection or through sale under ordinary selling conditions by a
capable and diligent seller to an interested buyer who is willing (but under no
compulsion) to purchase. For purposes of determining whether a Person is
Solvent, the amount of any contingent liability shall be computed as 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.

Specified Obligor: an Obligor that is not then an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 5.11).

Star Wars License: those certain Standard Terms and Conditions, dated
November 1, 2014, by and between Disney Consumer Products, Inc. and Skechers
USA, Inc., as amended by that certain First Amendment to the Standard Terms and
Conditions, dated November 1, 2014, and all related documents and amendments,
whereby Disney Consumer Products, Inc. grants to Skechers the right to use
various Star Wars trademarks on footwear, for wholesale and retail distribution
in various countries throughout the World.

Stated Amount: the outstanding undrawn amount of a Letter of Credit, including
any automatic increase or tolerance (whether or not then in effect) provided by
the Letter of Credit or related LC Documents.

Subordinated Debt: Debt that is expressly subordinate and junior in right of
payment to Full Payment of the Obligations, and is on terms (including maturity,
interest, fees, repayment, covenants and subordination) satisfactory to Agent in
its Permitted Discretion.

Subsidiary: with respect to Skechers:

(a) any corporation, association or other business entity (other than a
partnership, joint venture, limited liability company or similar entity) of
which more than 50% of the total voting power of the Equity Interests entitled
(without regard to the occurrence of any contingency and after giving effect to
any voting agreement or stockholders’ agreement that effectively transfers
voting power) to vote in the election of directors, managers or trustees of the
corporation, association or other business entity is at the time owned or
controlled, directly or indirectly, by that person or one or more of the other
Subsidiaries of Skechers (or a combination thereof); and

(b) any partnership, joint venture or limited liability company or similar
entity of which (i) more than 50% of the Equity Interests having voting power
are owned or controlled, directly or indirectly, by Skechers or one or more of
the other Subsidiaries of Skechers or a combination thereof, whether in the form
of membership, general, special or limited partnership interests or otherwise,
and (ii) Skechers or any Subsidiary of Skechers is a controlling general partner
or equivalent.

Supermajority Lenders: two or more unaffiliated Secured Parties holding 66.66%
or more of (a) the aggregate outstanding Revolver Commitments; or (b) following
termination of the Revolver Commitments, the aggregate outstanding Loans and LC
Obligations or, if all Loans and LC Obligations have been paid in full, the
aggregate remaining Obligations; provided, however, that Commitments, Loans and
other Obligations held by a Defaulting Lender and its Affiliates shall be
disregarded in making such calculation, but any related Fronting Exposure shall
be deemed held as a Loan or LC Obligation by the Secured Party that funded the
applicable Loan or issued the applicable Letter of Credit.

Swap Obligations: with respect to an Obligor, its obligations under a Hedging
Agreement that constitutes a “swap” within the meaning of Section 1a(47) of the
Commodity Exchange Act.

Swingline Loan: any Borrowing of Base Rate Revolver Loans funded with Agent’s
funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

Taxes: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.

Unused Line Fee Rate: a per annum rate equal to 0.25%.

Upstream Payment: a Distribution by a Subsidiary of an Obligor to an Obligor or
another Subsidiary.

U.S. Person: “United States Person” as defined in Section 7701(a)(30) of the
Code.

U.S. Tax Compliance Certificate: as defined in Section 5.10.2(b)(iii).

Value: (a) for Inventory, its value determined on the basis of the lower of cost
or market, calculated on a first-in, first-out basis, and excluding any portion
of cost attributable to intercompany profit among Borrowers and their
Affiliates; and (b) for an Account, its face amount, net of any returns,
rebates, discounts (calculated on the shortest terms), credits, allowances or
Taxes (including sales, excise or other taxes) that have been or could be
claimed by the Account Debtor or any other Person.

1.2 Accounting Terms. Under the Loan Documents (except as otherwise specified
therein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Borrowers delivered to Agent before the Closing Date and
using the same inventory valuation method as used in such financial statements,
except for any change required or permitted by GAAP if Borrowers’ certified
public accountants concur in such change, the change is disclosed to Agent, and
all relevant provisions of the Loan Documents are amended in a manner
satisfactory to Required Lenders to take into account the effects of the change.

1.3 Uniform Commercial Code. As used herein, the following terms are defined in
accordance with the UCC in effect in the State of New York from time to time:
“Chattel Paper,” “Commercial Tort Claim,” “Deposit Account,” “Document,”
“Equipment,” “General Intangibles,” “Goods,” “Instrument,” “Letter-of-Credit
Right”, “Securities Account” and “Supporting Obligation.”

1.4 Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,” and
“to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws include all related regulations, interpretations,
supplements, amendments and successor provisions; (b) any document, instrument
or agreement include any amendments, waivers and other modifications, extensions
or renewals (to the extent permitted by the Loan Documents); (c) any section
mean, unless the context otherwise requires, a section of this Agreement;
(d) any exhibits or schedules mean, unless the context otherwise requires,
exhibits and schedules attached hereto, which are hereby incorporated by
reference; (e) any Person include successors and assigns; (f) time of day means
Pacific time; or (g) discretion of Agent, Issuing Bank or any Lender mean the
sole and absolute discretion of such Person. All references to Value, Borrowing
Base components, Loans, Letters of Credit, Obligations and other amounts herein
shall be denominated in Dollars, unless expressly provided otherwise, and all
determinations (including calculations of Borrowing Base and financial
covenants) made from time to time under the Loan Documents shall be made in
light of the circumstances existing at such time. Borrowing Base calculations
shall be consistent with historical methods of valuation and calculation, and
otherwise satisfactory to Agent in its Permitted Discretion (and not necessarily
calculated in accordance with GAAP). Borrowers shall have the burden of
establishing any alleged negligence, misconduct or lack of good faith by Agent,
Issuing Bank or any Lender under any Loan Documents. No provision of any Loan
Documents shall be construed against any party by reason of such party having,
or being deemed to have, drafted the provision. Reference to a Borrower’s
“knowledge” or similar concept means actual knowledge of a Senior Officer, or
knowledge that a Senior Officer would have obtained if he or she had engaged in
good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter. Any Event of Default shall be deemed to be continuing until waived
in writing by the Required Lenders.

              SECTION 2.   CREDIT FACILITIES 2.1   Revolver Commitment      
2.1.1    
Revolver Loans
           
 

Each Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment,
on the terms set forth herein, to make Revolver Loans to Borrowers from time to
time through the Commitment Termination Date. The Revolver Loans may be repaid
and reborrowed as provided herein. In no event shall Lenders have any obligation
to honor a request for a Revolver Loan if Revolver Usage at such time plus the
requested Loan would exceed the Borrowing Base.

  2.1.2   Notes

Loans and interest accruing thereon shall be evidenced by the records of Agent
and the applicable Lender. At the request of a Lender, Borrowers shall deliver
one or more promissory notes to such Lender in the form of Exhibit B or
otherwise satisfactory to such Lender, Agent and Borrower Agent, evidencing its
Loans.

  2.1.3   Use of Proceeds

The proceeds of Revolver Loans shall be used by Borrowers solely (a) to satisfy
existing Debt; (b) to pay fees and transaction expenses associated with the
closing of this credit facility; (c) to pay Obligations in accordance with this
Agreement; and (d) for lawful corporate purposes of Borrowers, including working
capital. Borrowers shall not, directly or indirectly, use any Letter of Credit
or Loan proceeds, nor use, lend, contribute or otherwise make available any
Letter of Credit or Loan proceeds to any Subsidiary, joint venture partner or
other Person, (i) to fund any activities of or business with any Person, or in
any Designated Jurisdiction, that, at the time of issuance of the Letter of
Credit or funding of the Loan, is the subject of any Sanction; (ii) in any
manner that would result in a violation of a Sanction by any Person (including
any Secured Party or other individual or entity participating in a transaction);
or (iii) for any purpose that would breach the U.S. Foreign Corrupt Practices
Act of 1977, UK Bribery Act 2010 or similar law in any jurisdiction.

  2.1.4   Voluntary Reduction or Termination of Revolver Commitments.

(a) The Revolver Commitments shall terminate on the Revolver Termination Date,
unless sooner terminated in accordance with this Agreement. Upon at least
30 days prior written notice to Agent, Borrowers may, at their option, terminate
the Revolver Commitments and this credit facility. Any notice of termination
given by Borrowers shall be irrevocable. On the termination date, Borrowers
shall make Full Payment of the Obligations.

(b) Borrowers may permanently reduce the Revolver Commitments, on a ratable
basis for all Lenders, upon at least 30 days prior written notice to Agent
delivered at any time after the First Loan Year, which notice shall specify the
amount of the reduction and shall be irrevocable once given. Each reduction
shall be in a minimum amount of $25,000,000, or an increment of $5,000,000 in
excess thereof.

  2.1.5   Overadvances

If Revolver Usage exceeds the Borrowing Base (“Overadvance”) at any time, the
excess amount shall be payable by Borrowers on demand by Agent, but all such
Revolver Loans shall nevertheless constitute Obligations secured by the
Collateral and entitled to all benefits of the Loan Documents. Agent may require
Lenders to honor requests for Overadvance Loans and to forbear from requiring
Borrowers to cure an Overadvance, (a) when no other Event of Default is known to
Agent, as long as (i) the Overadvance does not continue for more than 30
consecutive days (and no Overadvance may exist for at least five consecutive
days thereafter before further Overadvance Loans are required), and (ii) the
Overadvance is not known by Agent to exceed 10% of the Revolving Commitments;
and (b) regardless of whether an Event of Default exists, if Agent discovers an
Overadvance not previously known by it to exist, as long as from the date of
such discovery the Overadvance is not increased by more than $25,000,000 and
does not continue for more than 30 consecutive days. In no event shall
Overadvance Loans be required that would cause Revolver Usage to exceed the
aggregate Revolver Commitments. Any funding of an Overadvance Loan or sufferance
of an Overadvance shall not constitute a waiver by Agent or Lenders of the Event
of Default caused thereby. In no event shall any Borrower or other Obligor be
deemed a beneficiary of this Section nor authorized to enforce any of its terms.

2.1.6 Protective AdvancesAgent shall be authorized, in its discretion, at any
time that any conditions in Section 6 are not satisfied, to make Base Rate
Revolver Loans (“Protective Advances”) (a) up to an aggregate outstanding amount
not known by Agent to exceed 10% of the Revolving Commitments at any time, if
Agent deems such Loans necessary or desirable to preserve or protect Collateral,
or to enhance the collectability or repayment of Obligations, as long as such
Loans do not cause Revolver Usage to exceed the aggregate Revolver Commitments;
or (b) to pay any other amounts chargeable to Obligors under any Loan Documents,
including interest, costs, fees and expenses. Lenders shall participate on a Pro
Rata basis in Protective Advances outstanding from time to time. Required
Lenders may at any time revoke Agent’s authority to make further Protective
Advances under clause (a) by written notice to Agent. Absent such revocation,
Agent’s determination that funding of a Protective Advance is appropriate shall
be conclusive.

  2.1.7   Increase in Revolver Commitments

Borrowers may request an increase in Revolver Commitments from time to time upon
notice to Agent, as long as (a) the requested increase is in a minimum amount of
$10,000,000 and is offered on the same terms as existing Revolver Commitments,
except for a closing fee to be mutually agreed by Agent and Borrowers,
(b) increases under this Section do not exceed $100,000,000.00 in the aggregate
and no more than 4 increases are made, (c) no reduction in Commitments pursuant
to Section 2.1.4 has occurred prior to the requested increase, and (d) the
requested increase does not cause the Commitments to exceed 90% of any
applicable cap under any Subordinated Debt agreement. Agent shall promptly
notify Lenders of the requested increase and, within 10 Business Days
thereafter, each Lender shall notify Agent if and to what extent such Lender
commits to increase its Revolver Commitment. Any Lender not responding within
such period shall be deemed to have declined an increase. If Lenders fail to
commit to the full requested increase, then Eligible Assignees invited to join
by the Borrowers or with the consent of the Borrowers may issue additional
Revolver Commitments and become Lenders hereunder. Agent shall allocate, in its
discretion and in consultation with the Borrower Agent, the increased Revolver
Commitments among committing Lenders and, if necessary, Eligible Assignees
invited to join by the Borrowers or with the consent of the Borrowers. Provided
the conditions set forth in Section 6.2 are satisfied, total Revolver
Commitments shall be increased by the requested amount (or such lesser amount
committed by Lenders and Eligible Assignees) on a date agreed upon by Agent and
Borrower Agent, but no later than 45 days following Borrowers’ increase request.
Agent, Borrowers, and new and existing Lenders shall execute and deliver such
documents and agreements as Agent deems appropriate to evidence the increase in
and allocations of Revolver Commitments. On the effective date of an increase,
the Revolver Usage and other exposures under the Revolver Commitments shall be
reallocated among Lenders, and settled by Agent if necessary, in accordance with
Lenders’ adjusted shares of such Commitments.

              2.2   [Intentionally Omitted]. 2.3   Letter of Credit Facility    
  2.3.1    
Issuance of Letters of Credit
           
 

Issuing Bank shall issue Letters of Credit from time to time until the Revolver
Termination Date (or until the Commitment Termination Date, if earlier), on the
terms set forth herein, including the following:

(a) Each Borrower acknowledges that Issuing Bank’s issuance of any Letter of
Credit is conditioned upon Issuing Bank’s receipt of a LC Application with
respect to the requested Letter of Credit, as well as such other instruments and
agreements as Issuing Bank may customarily require for issuance of a letter of
credit of similar type and amount. Issuing Bank shall have no obligation to
issue any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC
Application at least three Business Days prior to the requested date of
issuance; (ii) each LC Condition is satisfied; and (iii) if a Defaulting Lender
exists, such Lender or Borrowers have entered into arrangements satisfactory to
Agent and Issuing Bank to eliminate any Fronting Exposure associated with such
Lender. If, in sufficient time to act, Issuing Bank receives written notice from
Agent or Required Lenders that a LC Condition has not been satisfied, Issuing
Bank shall not issue the requested Letter of Credit. Prior to receipt of any
such notice, Issuing Bank shall not be deemed to have knowledge of any failure
of LC Conditions.

(b) Letters of Credit may be requested by a Borrower to support obligations
incurred in the Ordinary Course of Business, or as otherwise approved by Agent.
Increase, renewal or extension of a Letter of Credit shall be treated as
issuance of a new Letter of Credit, except that Issuing Bank may require a new
LC Application in its discretion.

(c) Borrowers assume all risks of the acts, omissions or misuses of any Letter
of Credit by the beneficiary; provided, however, that this assumption is not
intended to, and shall not, preclude any Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. In connection with issuance of any Letter of Credit, none
of Agent, Issuing Bank or any Lender shall be responsible for the existence,
character, quality, quantity, condition, packing, value or delivery of any goods
purported to be represented by any Documents; any differences or variation in
the character, quality, quantity, condition, packing, value or delivery of any
goods from that expressed in any Documents; except as expressly set forth in the
Letter of Credit, the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Documents or of any endorsements thereon; the time, place,
manner or order in which shipment of goods is made; partial or incomplete
shipment of, or failure to ship, any goods referred to in a Letter of Credit or
Documents; any deviation from instructions, delay, default or fraud by any
shipper or other Person in connection with any goods, shipment or delivery; any
breach of contract between a shipper or vendor and a Borrower; errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise;
errors in interpretation of technical terms; the misapplication by a beneficiary
of any Letter of Credit or the proceeds thereof; or any consequences arising
from causes beyond the control of Issuing Bank, Agent or any Lender, including
any act or omission of a Governmental Authority. The rights and remedies of
Issuing Bank under the Loan Documents shall be cumulative. Issuing Bank shall be
fully subrogated to the rights and remedies of each beneficiary whose claims
against Borrowers are discharged with proceeds of any Letter of Credit.

(d) In connection with its administration of and enforcement of rights or
remedies under any Letters of Credit or LC Documents, Issuing Bank shall be
entitled to act, and shall be fully protected in acting, upon any certification,
documentation or communication in whatever form believed by Issuing Bank, in
good faith, to be genuine and correct and to have been signed, sent or made by a
proper Person. Issuing Bank may consult with and employ legal counsel,
accountants and other experts to advise it concerning its obligations, rights
and remedies, and shall be entitled to act upon, and shall be fully protected in
any action taken in good faith reliance upon, any advice given by such experts.
Issuing Bank may employ agents and attorneys-in-fact in connection with any
matter relating to Letters of Credit or LC Documents, and shall not be liable
for the negligence or misconduct of agents and attorneys-in-fact selected with
reasonable care.

(e) All Existing Letters of Credit shall be deemed to have been issued pursuant
to this Agreement and from and after the Closing Date shall be subject to and
governed by the terms and conditions of this Agreement, including without
limitation Section 3.2.2.

  2.3.2   Reimbursement; Participations.

(a) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the Issuing Bank shall notify the Borrowers
thereof. If Issuing Bank honors any request for payment under a Letter of
Credit, Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement
Date”), the amount paid by Issuing Bank under such Letter of Credit, together
with interest at the interest rate for Base Rate Revolver Loans from the
Reimbursement Date until payment by Borrowers. The obligation of Borrowers to
reimburse Issuing Bank for any payment made under a Letter of Credit shall be
absolute, unconditional, irrevocable, and joint and several, and shall be paid
without regard to any lack of validity or enforceability of any Letter of Credit
or the existence of any claim, setoff, defense or other right that Borrowers may
have at any time against the beneficiary. Whether or not Borrower Agent submits
a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing
of Base Rate Revolver Loans in an amount necessary to pay all amounts due
Issuing Bank on any Reimbursement Date and each Lender shall fund its Pro Rata
share of such Borrowing whether or not the Commitments have terminated, an
Overadvance exists or is created thereby, or the conditions in Section 6 are
satisfied.

(b) Each Lender hereby irrevocably and unconditionally purchases from Issuing
Bank, without recourse or warranty, an undivided Pro Rata participation in all
LC Obligations outstanding from time to time. Issuing Bank is issuing Letters of
Credit in reliance upon this participation. If Borrowers do not make a payment
to Issuing Bank when due hereunder, Agent shall promptly notify Lenders and each
Lender shall within one Business Day after such notice pay to Agent, for the
benefit of Issuing Bank, the Lender’s Pro Rata share of such payment. Upon
request by a Lender, Issuing Bank shall provide copies of Letters of Credit and
LC Documents in its possession at such time.

(c) The obligation of each Lender to make payments to Agent for the account of
Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit
shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, setoff, qualification or exception whatsoever, and shall be made
in accordance with this Agreement under all circumstances, irrespective of any
lack of validity or unenforceability of any Loan Documents; any draft,
certificate or other document presented under a Letter of Credit having been
determined to be forged, fraudulent, noncompliant, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
any waiver by Issuing Bank of a requirement that exists for its protection (and
not a Borrower’s protection) or that does not materially prejudice a Borrower;
any honor of an electronic demand for payment even if a draft is required; any
payment of an item presented after a Letter of Credit’s expiration date if
authorized by the UCC or applicable customs or practices; or any setoff or
defense that an Obligor may have with respect to any Obligations. Issuing Bank
does not assume any responsibility for any failure or delay in performance or
any breach by any Borrower or other Person of any obligations under any LC
Documents. Issuing Bank does not make to Lenders any express or implied
warranty, representation or guaranty with respect to any Letter of Credit,
Collateral, LC Document or Obligor. Issuing Bank shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of any LC Documents; the validity, genuineness, enforceability,
collectability, value or sufficiency of any Collateral or the perfection of any
Lien therein; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor.

(d) No Issuing Bank Indemnitee shall be liable to any Lender or other Person for
any action taken or omitted to be taken in connection with any Letter of Credit
or LC Document except as a result of its gross negligence or willful misconduct.
Issuing Bank may require that the Lenders provide Issuing Bank with written
instructions (and in its discretion, appropriate assurances) in connection with
the taking of any action with respect to a Letter of Credit.

  2.3.3   Cash Collateral

Subject to Section 2.1.5, if at any time (a) an Event of Default exists, or
(b) the Commitment Termination Date has occurred, then Borrowers shall, at
Issuing Bank’s or Agent’s request, Cash Collateralize all outstanding Letters of
Credit. Borrowers shall, at Issuing Bank’s or Agent’s request at any time, Cash
Collateralize the Fronting Exposure of any Defaulting Lender which has not been
reallocated pursuant to Section 4.2. If Borrowers fail to provide any Cash
Collateral as required hereunder, Lenders may (and shall upon direction of
Agent) advance, as Revolver Loans, the amount of Cash Collateral required
(whether or not the Commitments have terminated, an Overadvance exists or the
conditions in Section 6 are satisfied).

  2.3.4   Resignation of Issuing Bank

Issuing Bank may resign at any time upon not less than thirty (30) days prior
notice to Agent and Borrowers (provided that if a Default or Event of Default
has occurred and is continuing, such resignation may be effective immediately
upon such notice). From the effective date of such resignation, Issuing Bank
shall have no obligation to issue, amend, renew, extend or otherwise modify any
Letter of Credit, but shall continue to have all rights and other obligations of
an Issuing Bank hereunder relating to any Letter of Credit issued by it prior to
such date. Agent shall promptly appoint a replacement Issuing Bank, which, as
long as no Default or Event of Default exists, shall be reasonably acceptable to
Borrowers.

              SECTION 3.   INTEREST, FEES AND CHARGES 3.1   Interest.      
3.1.1    
Rates and Payment of Interest.
           
 

(a) The Obligations shall bear interest (i) if a Base Rate Loan, at the Base
Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR
Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin;
and (iii) if any other Obligation (including, to the extent permitted by law,
interest not paid when due) other than with respect to Letters of Credit, at the
Base Rate in effect from time to time, plus the Applicable Margin for Base Rate
Revolver Loans.

(b) During an Insolvency Event with respect to any Borrower, or during any other
Event of Default if Agent or Required Lenders in their discretion so elect,
Obligations shall bear interest at the Default Rate (whether before or after any
judgment). Each Borrower acknowledges that the cost and expense to Agent and
Lenders due to an Event of Default are difficult to ascertain and that the
Default Rate is a fair and reasonable estimate to compensate Agent and Lenders
for such additional cost and expenses.

(c) Interest shall accrue from the date a Loan is advanced or Obligation (other
than with respect to Letters of Credit) is incurred or payable, until paid in
full by Borrowers. Interest accrued on the Loans shall be due and payable in
arrears, (i) on the first day of each month; (ii) on any date of prepayment,
with respect to the principal amount of Loans being prepaid; and (iii) on the
Commitment Termination Date. Interest accrued on any other Obligations (other
than with respect to Letters of Credit) shall be due and payable as provided in
the Loan Documents and, if no payment date is specified, shall be due and
payable on demand. Notwithstanding the foregoing, interest accrued at the
Default Rate shall be due and payable on demand.

  3.1.2   Application of LIBOR to Outstanding Loans.

(a) Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Loans to,
or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan. During any Default or Event of Default, Agent may (and shall at the
direction of Required Lenders) declare that no Loan may be made, converted or
continued as a LIBOR Loan.

(b) Whenever Borrowers desire to convert or continue Loans as LIBOR Loans,
Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later
than 11:00 a.m. at least two Business Days before the requested conversion or
continuation date. Promptly after receiving any such notice, Agent shall notify
each Lender thereof. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be 30 days if not
specified). If, upon the expiration of any Interest Period for any LIBOR Loan,
Borrowers shall have failed to deliver a Notice of Conversion/Continuation, they
shall be deemed to have elected to convert such Loan into a Base Rate Loan.
Agent does not warrant or accept responsibility for, nor shall it have any
liability with respect to, administration, submission or any other matter
related to any rate described in the definition of LIBOR.

  3.1.3   Interest Periods

In connection with the making, conversion or continuation of any LIBOR Loans,
Borrowers shall select an interest period (“Interest Period”) to apply, which
interest period shall be 30, 60, or 90 days; provided, however, that:

(a) the Interest Period shall begin on the date the Loan is made or continued
as, or converted into, a LIBOR Loan, and shall expire on the numerically
corresponding day in the calendar month at its end;

(b) if any Interest Period begins on a day for which there is no corresponding
day in the calendar month at its end or if such corresponding day falls after
the last Business Day of such month, then the Interest Period shall expire on
the last Business Day of such month; and if any Interest Period would otherwise
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and

(c) no Interest Period shall extend beyond the Revolver Termination Date.

  3.1.4   Interest Rate Not Ascertainable

If, due to any circumstance affecting the London interbank market, Agent
determines that adequate and fair means do not exist for ascertaining LIBOR on
any applicable date or that any Interest Period is not available on the basis
provided herein, then Agent shall immediately notify Borrowers of such
determination. Until Agent notifies Borrowers that such circumstance no longer
exists, the obligation of Lenders to make affected LIBOR Loans shall be
suspended and no further Loans may be converted into or continued as such LIBOR
Loans.

              3.2   Fees.           3.2.1    
Unused Line Fee
           
 

Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders, a fee equal
to the Unused Line Fee Rate times the amount by which the Revolver Commitments
exceed the average daily Revolver Usage during any month. Such fee shall be
payable in arrears, on the first day of each month and on the Commitment
Termination Date.

  3.2.2   LC Facility Fees

Borrowers shall pay (a) to Agent, for the Pro Rata benefit of Lenders, a fee
equal to the Applicable Margin in effect for LIBOR Revolver Loans times the
average daily Stated Amount of Letters of Credit, which fee shall be payable
monthly in arrears, on the first day of each month; (b) to Agent, for its own
account, a fronting fee equal to 0.125% per annum on the Stated Amount of each
Letter of Credit, which fee shall be payable monthly in arrears, on the first
day of each month; and (c) to Issuing Bank, for its own account, all customary
charges associated with the issuance, amending, negotiating, payment,
processing, transfer and administration of Letters of Credit, which charges
shall be paid as and when incurred. During an Event of Default, the fee payable
under clause (a) shall be increased by 2% per annum.

  3.2.3   Closing Fee

On the Closing Date, Borrowers shall pay to Agent, for the Pro Rata benefit of
Lenders, a closing fee of $625,000.

  3.2.4   Fee Letters

Borrowers shall pay all fees set forth in any fee letter executed in connection
with this Agreement.

3.3 Computation of Interest, Fees, Yield Protection. All interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days. Each determination by
Agent of any interest, fees or interest rate hereunder shall be final,
conclusive and binding for all purposes, absent manifest error. All fees shall
be fully earned when due and shall not be subject to rebate, refund or proration
absent manifest error in the calculation thereof. All fees payable under
Section 3.2 are compensation for services and are not, and shall not be deemed
to be, interest or any other charge for the use, forbearance or detention of
money. A certificate as to amounts payable by Borrowers under Section 3.4, 3.6,
3.7, 3.9 or 5.9, submitted to Borrower Agent by Agent or the affected Lender
shall be final, conclusive and binding for all purposes, absent manifest error,
and Borrowers shall pay such amounts to the appropriate party within 10 days
following receipt of the certificate.

3.4 Reimbursement Obligations. Borrowers shall pay all Extraordinary Expenses
promptly upon request. Borrowers shall also reimburse Agent for all reasonable
legal, accounting, appraisal, consulting, and other reasonable fees, costs and
expenses incurred by it in connection with (a) negotiation and preparation of
any Loan Documents, including any amendment or other modification thereof;
(b) administration of and actions relating to any Collateral, Loan Documents and
transactions contemplated thereby, including any actions taken to perfect or
maintain priority of Agent’s Liens on any Collateral, to maintain any insurance
required hereunder or to verify Collateral; and (c) subject to the limits of
Section 10.1.1(b), each inspection, audit or appraisal with respect to any
Obligor or Collateral, whether prepared by Agent’s personnel or a third party.
All legal, accounting and consulting fees shall be charged to Borrowers by
Agent’s professionals at their full hourly rates, regardless of any alternative
fee arrangements that Agent, any Lender or any of their Affiliates may have with
such professionals that otherwise might apply to this or any other transaction.
Borrowers acknowledge that counsel may provide Agent with a benefit (such as a
discount, credit or accommodation for other matters) based on counsel’s overall
relationship with Agent, including fees paid hereunder. If, for any reason
(including inaccurate reporting in Borrower Materials), it is determined that a
higher Applicable Margin should have applied to a period than was actually
applied, then the proper margin shall be applied retroactively and Borrowers
shall immediately pay to Agent, for the ratable benefit of Lenders, an amount
equal to the difference between the amount of interest and fees that would have
accrued using the proper margin and the amount actually paid. All amounts
payable by Borrowers under this Section shall be due on demand.

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

3.6 Inability to Determine Rates. Agent will promptly notify Borrower Agent and
Lenders if, in connection with any Loan or request for a Loan, (a) Agent
determines that (i) Dollar deposits are not being offered to banks in the London
interbank Eurodollar market for the applicable Loan amount or Interest Period,
or (ii) adequate and reasonable means do not exist for determining LIBOR for the
Interest Period; or (b) Agent or Required Lenders determine for any reason that
LIBOR for the Interest Period does not adequately and fairly reflect the cost to
Lenders of funding the Loan. Thereafter, Lenders’ obligations to make or
maintain affected LIBOR Loans and utilization of the LIBOR component (if
affected) in determining Base Rate shall be suspended until Agent (upon
instruction by Required Lenders) withdraws the notice. Upon receipt of such
notice, Borrower Agent may revoke any pending request for a LIBOR Loan or,
failing that, will be deemed to have requested a Base Rate Loan.

              3.7   Increased Costs; Capital Adequacy.       3.7.1    
Increased Costs Generally
           
 

If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except any reserve requirement reflected in calculating LIBOR) or Issuing Bank;

(b) subject any Recipient to Taxes (other than (i) Indemnified Taxes, (ii) Taxes
described in clauses (b) through (d) of the definition of Excluded Taxes, and
(iii) Connection Income Taxes) with respect to any Loan, Letter of Credit,
Commitment or other obligations, or its deposits, reserves, other liabilities or
capital attributable thereto; or

(c) impose on any Lender, Issuing Bank or interbank market any other condition,
cost or expense (other than Taxes) affecting any Loan, Letter of Credit,
participation in LC Obligations, Commitment or Loan Document;

and the result thereof shall be to increase the cost to a Lender of making or
maintaining any Loan or Commitment, or converting to or continuing any interest
option for a Loan, or to increase the cost to a Lender or Issuing Bank of
participating in, issuing or maintaining any Letter of Credit (or of maintaining
its obligation to participate in or to issue any Letter of Credit), or to reduce
the amount of any sum received or receivable by a Lender or Issuing Bank
hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or Issuing Bank, Borrowers will pay to it such additional
amount(s) as will compensate it for the additional costs incurred or reduction
suffered.

  3.7.2   Capital Requirements

If a Lender or Issuing Bank determines that a Change in Law affecting such
Lender or Issuing Bank or its holding company, if any, regarding capital or
liquidity requirements has or would have the effect of reducing the rate of
return on such Lender’s, Issuing Bank’s or holding company’s capital as a
consequence of this Agreement, or such Lender’s or Issuing Bank’s Commitments,
Loans, Letters of Credit or participations in LC Obligations or Loans, to a
level below that which such Lender, Issuing Bank or holding company could have
achieved but for such Change in Law (taking into consideration its policies with
respect to capital adequacy), then from time to time Borrowers will pay to such
Lender or Issuing Bank, as the case may be, such additional amounts as will
compensate it or its holding company for the reduction suffered.

  3.7.3   LIBOR Loan Reserves

If any Lender is required to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits, Borrowers
shall pay additional interest to such Lender on each LIBOR Loan equal to the
costs of such reserves allocated to the Loan by the Lender (as determined by it
in good faith, which determination shall be conclusive absent manifest error).
The additional interest shall be due and payable on each interest payment date
for the Loan; provided, however, that if the Lender notifies Borrowers (with a
copy to Agent) of the additional interest less than 10 days prior to the
interest payment date, then such interest shall be payable 10 days after
Borrowers’ receipt of the notice.

  3.7.4   Compensation

Failure or delay on the part of any Lender or Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of its right
to demand such compensation, but Borrowers shall not be required to compensate a
Lender or Issuing Bank for any increased costs or reductions suffered more than
nine months (plus any period of retroactivity of the Change in Law giving rise
to the demand) prior to the date that the Lender or Issuing Bank notifies
Borrower Agent of the applicable Change in Law and of such Lender’s or Issuing
Bank’s intention to claim compensation therefor.

3.8 Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if Borrowers are required to pay any
Indemnified Taxes or additional amounts with respect to a Lender under
Section 5.9, then at the request of Borrower Agent, such Lender shall use
reasonable efforts to designate a different Lending Office or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment
(a) would eliminate the need for such notice or reduce amounts payable or to be
withheld in the future, as applicable; and (b) would not subject the Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
it or unlawful. Borrowers shall pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or assignment.

3.9 Funding Losses. Except as expressly set forth in Section 5.2, if for any
reason (a) any Borrowing, conversion or continuation of a LIBOR Loan does not
occur on the date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn), (b) any repayment or
conversion of a LIBOR Loan occurs on a day other than the end of its Interest
Period, (c) Borrowers fail to repay a LIBOR Loan when required hereunder, or
(d) a Lender (other than a Defaulting Lender) is required to assign a LIBOR Loan
prior to the end of its Interest Period pursuant to Section 13.4 due to a
request of Borrower Agent, then Borrowers shall pay to Agent its customary
administrative charge and to each Lender all losses, expenses and fees arising
from redeployment of funds or termination of match funding. For purposes of
calculating amounts payable under this Section, a Lender shall be deemed to have
funded a LIBOR Loan by a matching deposit or other borrowing in the London
interbank market for a comparable amount and period, whether or not the Loan was
in fact so funded.

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

              SECTION 4.   LOAN ADMINISTRATION 4.1   Manner of Borrowing and
Funding Revolver Loans.       4.1.1    
Notice of Borrowing.
           
 

(a) Whenever Borrowers desire a funding of Revolver Loans, Borrower Agent shall
give Agent a Notice of Borrowing. Such notice must be received by Agent by
11:00 a.m. (i) on the requested funding date, in the case of Base Rate Loans,
and (ii) at least two Business Days prior to the requested funding date, in the
case of LIBOR Loans. Notices received after such time shall be deemed received
on the next Business Day. Each Notice of Borrowing shall be irrevocable and
shall specify (A) the amount of the Borrowing, (B) the requested funding date
(which must be a Business Day), (C) whether the Borrowing is to be made as a
Base Rate Loan or LIBOR Loan, and (D) in the case of a LIBOR Loan, the
applicable Interest Period (which shall be deemed to be 30 days if not
specified).

(b) Unless payment is otherwise made by Borrowers, the becoming due of any
Obligation (whether principal, interest, fees or other charges, including
Extraordinary Expenses, LC Obligations, Cash Collateral and Secured Bank Product
Obligations) shall be deemed to be a request for a Base Rate Revolver Loan on
the due date in the amount due and the Loan proceeds shall be disbursed as
direct payment of such Obligation. In addition, Agent may, at its option, charge
such amount against any operating, investment or other account of a Borrower
maintained with Agent or any of its Affiliates.

(c) If a Borrower maintains a disbursement account with Agent or any of its
Affiliates, then presentation for payment in the account of a Payment Item when
there are insufficient funds to cover it shall be deemed to be a request for a
Base Rate Revolver Loan on the presentation date, in the amount of the Payment
Item. Proceeds of the Loan may be disbursed directly to the account.

  4.1.2   Fundings by Lenders.

Except for Borrowings to be made as Swingline Loans, Agent shall endeavor to
notify Lenders of each Notice of Borrowing (or deemed request for a
Borrowing) by 1:00 p.m. on the proposed funding date for a Base Rate Loan or by
3:00 p.m. at least two Business Days before a proposed funding of a LIBOR Loan.
Each Lender shall fund its Pro Rata share of a Borrowing in immediately
available funds not later than 3:00 p.m. on the requested funding date, unless
Agent’s notice is received after the times provided above, in which case Lender
shall fund by 11:00 a.m. on the next Business Day. Subject to its receipt of
such amounts from Lenders, Agent shall disburse the Borrowing proceeds on the
requested funding date as directed by Borrower Agent. Unless Agent shall have
received (in sufficient time to act) written notice from a Lender that it does
not intend to fund its share of a Borrowing, Agent may assume that such Lender
has deposited or promptly will deposit its share with Agent, and Agent may
disburse a corresponding amount to Borrowers. If a Lender’s share of a Borrowing
or of a settlement under Section 4.1.3(b) is not received by Agent, then
Borrowers agree to repay to Agent on demand the amount of such share, together
with interest thereon from the date disbursed until repaid, at the rate
applicable to the Borrowing. A Lender or Issuing Bank may fulfill its
obligations under Loan Documents through one or more Lending Offices, and this
shall not affect any obligation of Obligors under the Loan Documents or with
respect to any Obligations.

  4.1.3   Swingline Loans; Settlement.

(a) To fulfill any request for a Base Rate Revolver Loan hereunder, Agent may in
its discretion advance Swingline Loans to Borrowers, up to an aggregate
outstanding amount of $25,000,000. Swingline Loans shall constitute Revolver
Loans for all purposes, except that payments thereon shall be made to Agent for
its own account until Lenders have funded their participations therein as
provided below.

(b) Settlement of Loans, including Swingline Loans, among Lenders and Agent
shall take place on a date determined from time to time by Agent (but at least
weekly, unless the settlement amount is de minimis), on a Pro Rata basis in
accordance with the Settlement Report delivered by Agent to Lenders. Between
settlement dates, Agent may in its discretion apply payments on Revolver Loans
to Swingline Loans, regardless of any designation by Borrowers or any provision
herein to the contrary. Each Lender hereby purchases, without recourse or
warranty, an undivided Pro Rata participation in all Swingline Loans outstanding
from time to time until settled. If a Swingline Loan cannot be settled among
Lenders, whether due to an Obligor’s Insolvency Proceeding or for any other
reason, each Lender shall pay the amount of its participation in the Loan to
Agent, in immediately available funds, within one Business Day after Agent’s
request therefor. Lenders’ obligations to make settlements and to fund
participations are absolute, irrevocable and unconditional, without offset,
counterclaim or other defense, and whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied.

  4.1.4   Notices.

Borrowers may request, convert or continue Loans, select interest rates and
transfer funds based on telephonic or e-mailed instructions to Agent. Borrowers
shall confirm each such request by prompt delivery to Agent of a Notice of
Borrowing or Notice of Conversion/Continuation, if applicable, but if it differs
materially from the action taken by Agent or Lenders based on the telephonic or
e-mailed instructions given by Borrowers, the records of Agent and Lenders shall
govern. Neither Agent nor any Lender shall have any liability for any loss
suffered by a Borrower as a result of Agent or any Lender acting upon its
understanding of telephonic or e-mailed instructions from a person believed in
good faith by Agent or any Lender to be a person authorized to give such
instructions on a Borrower’s behalf.

              4.2   Defaulting Lender. Notwithstanding anything herein to the
contrary:      
 
    4.2.1     Reallocation of Pro Rata Share; Amendments.
 
           

For purposes of determining Lenders’ obligations or rights to fund, participate
in or receive collections with respect to Loans and Letters of Credit (including
existing Swingline Loans, Protective Advances and LC Obligations), Agent shall
reallocate such obligations and rights to the non-Defaulting Lenders in
accordance with their Pro Rata shares by excluding a Defaulting Lender’s
Commitments and Loans from the calculation of shares. A Defaulting Lender shall
have no right to vote on any amendment, waiver or other modification of a Loan
Document, except as provided in Section 14.1.1(c).

  4.2.2   Payments; Fees.

Agent shall receive and retain any amounts payable to a Defaulting Lender under
the Loan Documents, and a Defaulting Lender shall be deemed to have assigned to
Agent such amounts until all Obligations owing to Agent, non-Defaulting Lenders
and other Secured Parties have been paid in full. Agent shall use such amounts
to cover the Defaulting Lender’s defaulted obligations, to Cash Collateralize
such Lender’s Fronting Exposure, to readvance the amounts to Borrowers or to
repay Obligations. A Lender shall not be entitled to receive any fees accruing
hereunder while it is a Defaulting Lender and its unfunded Commitment shall be
disregarded for purposes of calculating the unused line fee under Section 3.2.1.
If any LC Obligations owing to a Defaulted Lender are reallocated to other
Lenders, fees attributable to such LC Obligations under Section 3.2.2 shall be
paid to such Lenders. Agent shall be paid all fees attributable to LC
Obligations that are not reallocated.

  4.2.3   Status; Cure.

Agent may determine in its discretion that a Lender constitutes a Defaulting
Lender and the effective date of such status shall be conclusive and binding on
all parties, absent manifest error. Borrowers, Agent and Issuing Bank may agree
in writing that a Lender has ceased to be a Defaulting Lender, whereupon Pro
Rata shares shall be reallocated without exclusion of the reinstated Lender’s
Commitments and Loans, and the Revolver Usage and other exposures under the
Revolver Commitments shall be reallocated among Lenders and settled by Agent
(with appropriate payments by the reinstated Lender, including payment of any
breakage costs for reallocated LIBOR Loans) in accordance with the readjusted
Pro Rata shares. Unless expressly agreed by Borrowers, Agent and Issuing Bank,
no reinstatement of a Defaulting Lender shall constitute a waiver or release of
claims against such Lender. The failure of any Lender to fund a Loan, to make a
payment in respect of LC Obligations or otherwise to perform obligations
hereunder shall not relieve any other Lender of its obligations under any Loan
Document. No Lender shall be responsible for default by another Lender (provided
that nothing in this sentence shall limit, impair or otherwise modify the terms
of Section 4.2.1 or the reallocation of rights and obligations of a Defaulting
Lender set forth therein).

4.3 Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of
LIBOR Loans when made shall be in a minimum amount of $1,000,000, plus an
increment of $1,000,000 in excess thereof. No more than 10 Borrowings of LIBOR
Loans may be outstanding at any time, and all LIBOR Loans having the same length
and beginning date of their Interest Periods shall be aggregated together and
considered one Borrowing for this purpose. Upon determining LIBOR for any
Interest Period requested by Borrowers, Agent shall promptly notify Borrowers
thereof by telephone or electronically and, if requested by Borrowers, shall
confirm any telephonic notice in writing.

4.4 Borrower Agent. Each Borrower hereby designates Skechers as its
representative and agent for all purposes under the Loan Documents (in such
capacity, the “Borrower Agent”), including requests for and receipt of Loans and
Letters of Credit, designation of interest rates, delivery or receipt of
communications, delivery of Borrower Materials, payment of Obligations, requests
for waivers, amendments or other accommodations, actions under the Loan
Documents (including in respect of compliance with covenants), and all other
dealings with Agent, Issuing Bank or any Lender. Borrower Agent hereby accepts
such appointment. Agent and Lenders shall be entitled to rely upon, and shall be
fully protected in relying upon, any notice or communication (including any
notice of borrowing) delivered by Borrower Agent on behalf of any Borrower.
Agent and Lenders may give any notice or communication with a Borrower hereunder
to Borrower Agent on behalf of such Borrower. Each of Agent, Issuing Bank and
Lenders shall have the right, in its discretion, to deal exclusively with
Borrower Agent for all purposes under the Loan Documents. Each Borrower agrees
that any notice, election, communication, delivery, representation, agreement,
action, omission or undertaking on its behalf by Borrower Agent shall be binding
upon and enforceable against it.

4.5 One Obligation. The Loans, LC Obligations and other Obligations constitute
one general obligation of Borrowers and (except to the extent otherwise
expressly provided in any Loan Document) are secured by Agent’s Lien on all
Collateral; provided, however, that Agent and each Lender shall be deemed to be
a creditor of, and the holder of a separate claim against, each Obligor to the
extent of any Obligations jointly or severally owed by such Obligor.

4.6 Effect of Termination. On the effective date of the termination of all
Commitments, the Obligations (other than any Secured Bank Product Obligations
which are not terminated by the applicable Secured Bank Product Provider) shall
be immediately due and payable, and each Secured Bank Product Provider may
terminate its Bank Products. Until Full Payment of the Obligations, all
undertakings of Borrowers contained in the Loan Documents shall continue, and
Agent shall retain its Liens in the Collateral and all of its rights and
remedies under the Loan Documents. Agent shall be required to terminate its
Liens upon receipt of Full Payment of the Obligations and hereby agrees, at the
expense of the Obligors, to provide evidence of such termination as may be
reasonably requested by the Obligors; provided, however, that Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent’s opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse, representation, or warranty. Sections 2.3, 3.4, 3.6, 3.7, 3.9,
5.5, 5.9, 5.10, 12, 14.2, this Section, and each indemnity or waiver given in
any Loan Document, shall survive Full Payment of the Obligations.

    SECTION 5. PAYMENTS

5.1 General Payment Provisions. All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free and clear of
(and without deduction for) any Taxes, and in immediately available funds, not
later than 12:00 noon on the due date. Any payment after such time shall be
deemed made on the next Business Day. Any payment of a LIBOR Loan prior to the
end of its Interest Period shall be accompanied by all amounts due under
Section 3.9. Subject to Sections 5.2 and 5.6, Borrowers agree that Agent shall
have the continuing, exclusive right to apply and reapply payments and proceeds
of Collateral against the Obligations, in such manner as Agent deems advisable,
but whenever possible, any prepayment of Loans shall be applied first to Base
Rate Loans and then to LIBOR Loans.

5.2 Repayment of Revolver Loans. Revolver Loans shall be due and payable in full
on the Revolver Termination Date, unless payment is sooner required hereunder.
Revolver Loans may be prepaid from time to time, without penalty or premium.
Subject to Section 2.1.5, if an Overadvance exists at any time, Borrowers shall,
on the sooner of Agent’s demand or the first Business Day after any Borrower has
knowledge thereof, repay Revolver Loans in an amount sufficient to reduce
Revolver Usage to the Borrowing Base. For any Asset Disposition of Accounts or
Inventory, Borrowers shall apply the Net Proceeds of such Asset Disposition of
Accounts or Inventory to repay Revolver Loans equal to the greater of (a) the
net book value of such Accounts and Inventory, or (b) the reduction in Borrowing
Base resulting from the disposition; provided that, any such Net Proceeds shall
be applied first to any Base Rate Loans, and, then to any LIBOR Loans, provided,
further that if application of such Net Proceeds toward payment of a LIBOR Loan
would be on a day other than the last day of the applicable Interest Period and
would result in Borrowers having any liability under Section 3.9, Agent shall,
unless a Default or Event of Default has occurred and is continuing or unless
otherwise requested by Borrower Agent, hold the amount of such payment of Net
Proceeds as Cash Collateral for the Obligations until the last day of such
Interest Period and then apply such Net Proceeds to the payment of the
applicable LIBOR Loan on such last day.

  5.3   [Intentionally Omitted].

5.4 Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided
in the Loan Documents or, if no payment date is specified, on demand.

5.5 Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any payment by or on behalf of Borrowers is made to Agent,
Issuing Bank or any Lender, or if Agent, Issuing Bank or any Lender exercises a
right of setoff, and any of such payment or setoff is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by Agent, Issuing Bank or a Lender in
its discretion) to be repaid to a trustee, receiver or any other Person, then
the Obligation originally intended to be satisfied, and all Liens, rights and
remedies relating thereto, shall be revived and continued in full force and
effect as if such payment or setoff had not occurred.

              5.6   Application and Allocation of Payments.       5.6.1    
Application
           
 

Payments made by Borrowers hereunder shall be applied (a) first, as specifically
required hereby; (b) second, to Obligations then due and owing; (c) third, to
other Obligations specified by Borrowers; and (d) fourth, as determined by Agent
in its discretion.

  5.6.2   Post-Default Allocation

Notwithstanding anything in any Loan Document to the contrary, during an Event
of Default, monies to be applied to the Obligations, whether arising from
payments by Obligors, realization on Collateral, setoff or otherwise, shall be
allocated as follows:

(a) first, to all fees, indemnification, costs and expenses, including
Extraordinary Expenses, owing to Agent;

(b) second, to all amounts owing to Agent on Swingline Loans, Protective
Advances, and Loans and participations that a Defaulting Lender has failed to
settle or fund;

(c) third, to all amounts owing to Issuing Bank;

(d) fourth, to all Obligations (other than Secured Bank Product
Obligations) constituting fees, indemnification, costs or expenses owing to
Lenders;

(e) fifth, to all Obligations (other than Secured Bank Product
Obligations) constituting interest;

(f) sixth, to Cash Collateralize all LC Obligations;

(g) seventh, to all Loans, and to Secured Bank Product Obligations arising under
Hedging Agreements (including Cash Collateralization thereof) up to the amount
of Reserves existing therefor;

(h) eighth, to all other Secured Bank Product Obligations;

(i) ninth, to all remaining Obligations; and

(j) last, to the Borrower Agent or as otherwise required by Applicable Law.

Amounts shall be applied to payment of each category of Obligations only after
Full Payment of amounts payable from time to time under all preceding
categories. If amounts are insufficient to satisfy a category, they shall be
paid ratably among outstanding Obligations in the category. Monies and proceeds
obtained from an Obligor shall not be applied to its Excluded Swap Obligations,
but appropriate adjustments shall be made with respect to amounts obtained from
other Obligors to preserve the allocations in any applicable category. Agent
shall have no obligation to calculate the amount of any Secured Bank Product
Obligation and may request a reasonably detailed calculation thereof from a
Secured Bank Product Provider. If the provider fails to deliver the calculation
within five days following request, Agent may assume the amount is zero. The
allocations set forth in this Section 5.6.2 are solely to determine the rights
and priorities among Secured Parties, and may be changed by agreement of the
affected Secured Parties, without the consent of any Obligor. This Section 5.6.2
is not for the benefit of or enforceable by any Obligor, and each Obligor
irrevocably waives the right to direct the application of any payments or
Collateral proceeds subject to this Section 5.6.2.

  5.6.3   Erroneous Application

Agent shall not be liable for any application of amounts made by it in good
faith and, if any such application is subsequently determined to have been made
in error, the sole recourse of any Lender or other Person to which such amount
should have been made shall be to recover the amount from the Person that
actually received it (and, if such amount was received by a Secured Party, the
Secured Party agrees to return it).

5.7 Dominion Account. During any Dominion Period, the ledger balance in the main
Dominion Account as of the end of a Business Day shall be applied to the
Obligations at the beginning of the next Business Day. If a credit balance
results from such application, it shall not accrue interest in favor of
Borrowers and shall be made available to Borrowers as long as no Event of
Default exists.

5.8 Account Stated. Agent shall maintain, in accordance with its customary
practices, loan account(s) evidencing the Debt of Borrowers hereunder. Any
failure of Agent to record anything in a loan account, or any error in doing so,
shall not limit or otherwise affect the obligation of Borrowers to pay any
amount owing hereunder. Entries made in a loan account shall constitute
presumptive evidence of the information contained therein. If any information
contained in a loan account is provided to or inspected by any Person, the
information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.

              5.9   Taxes.           5.9.1    
Payments Free of Taxes; Obligation to Withhold; Tax Payment
           
 

(a) All payments of Obligations by Obligors shall be made without deduction or
withholding for any Taxes, except as required by Applicable Law. If Applicable
Law (as determined by Agent in its good faith discretion) requires the deduction
or withholding of any Tax from any such payment by Agent or an Obligor, then
Agent or such Obligor shall be entitled to make such deduction or withholding
based on information and documentation provided pursuant to Section 5.10.

(b) If Agent or any Obligor is required by the Code to withhold or deduct Taxes
from any payment under the Loan Documents, then (i) Agent shall pay the full
amount that it determines is to be withheld or deducted to the relevant
Governmental Authority pursuant to the Code, and (ii) to the extent the
withholding or deduction is made on account of Indemnified Taxes, the sum
payable by the applicable Obligor shall be increased as necessary so that the
Recipient receives an amount equal to the sum it would have received had no such
withholding or deduction been made.

(c) If Agent or any Obligor is required by any Applicable Law other than the
Code to withhold or deduct Taxes from any payment under the Loan Documents, then
(i) Agent or such Obligor, to the extent required by Applicable Law, shall
timely pay the full amount to be withheld or deducted to the relevant
Governmental Authority, and (ii) to the extent the withholding or deduction is
made on account of Indemnified Taxes, the sum payable by the applicable Obligor
shall be increased as necessary so that the Recipient receives an amount equal
to the sum it would have received had no such withholding or deduction been
made.

  5.9.2   Payment of Other Taxes

Without limiting the foregoing, Borrowers shall timely pay to the relevant
Governmental Authority in accordance with Applicable Law, or at Agent’s option,
timely reimburse Agent for payment of, any Other Taxes.

  5.9.3   Tax Indemnification

(a) Each Borrower shall indemnify and hold harmless, on a joint and several
basis, each Recipient against any Indemnified Taxes (including those imposed or
asserted on or attributable to amounts payable under this Section) payable or
paid by a Recipient or required to be withheld or deducted from a payment to a
Recipient, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. Each
Borrower shall indemnify and hold harmless Agent against any amount that a
Lender or Issuing Bank fails for any reason to pay indefeasibly to Agent as
required pursuant to this Section. Each Borrower shall make payment within
10 days after demand for any amount or liability payable under this Section. A
certificate as to the amount of such payment or liability delivered to Borrowers
by a Lender or Issuing Bank (with a copy to Agent), or by Agent on its own
behalf or on behalf of any Recipient, shall be conclusive absent manifest error.

(b) Each Lender and Issuing Bank shall indemnify and hold harmless, on a several
basis, Agent (i) against any Indemnified Taxes attributable to such Lender or
Issuing Bank (but only to the extent Borrowers have not already paid or
reimbursed Agent therefor and without limiting Borrowers’ obligation to do so),
(ii) against any Taxes attributable to such Lender’s failure to maintain a
Participant register as required hereunder, and (iii) against any Excluded Taxes
attributable to such Lender or Issuing Bank, in each case, that are payable or
paid by Agent in connection with any Obligations, and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
Each Lender and Issuing Bank shall make payment within 10 days after demand for
any amount or liability payable under this Section. A certificate as to the
amount of such payment or liability delivered to any Lender or Issuing Bank by
Agent shall be conclusive absent manifest error. Each Lender hereby authorizes
Agent to set off and apply any and all amounts at any time owing to such Lender
under any Loan Document or otherwise payable by Agent to such Lender from any
other source against any amount due to Agent under this paragraph (b).

  5.9.4   Evidence of Payments

If Agent or an Obligor pays any Taxes pursuant to this Section, then upon
request, Agent shall deliver to Borrower Agent or Borrower Agent shall deliver
to Agent, respectively, a copy of a receipt issued by the appropriate
Governmental Authority evidencing the payment, a copy of any return required by
Applicable Law to report the payment, or other evidence of payment reasonably
satisfactory to Agent or Borrower Agent, as applicable.

  5.9.5   Treatment of Certain Refunds

Unless required by Applicable Law, at no time shall Agent have any obligation to
file for or otherwise pursue on behalf of a Lender or Issuing Bank, nor have any
obligation to pay to any Lender or Issuing Bank, any refund of Taxes withheld or
deducted from funds paid for the account of a Lender or Issuing Bank. If a
Recipient determines in its sole good faith discretion that it has received a
refund of any Taxes as to which it has been indemnified by Borrowers or with
respect to which a Borrower has paid additional amounts pursuant to this
Section, it shall pay Borrowers an amount equal to such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by such Borrower
with respect to the Taxes giving rise to such refund), net of all out-of-pocket
expenses (including Taxes) incurred by such Recipient, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided that Borrowers agree, upon request by the
Recipient, to repay the amount paid over to Borrowers (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Recipient if the Recipient is required to repay such refund to the Governmental
Authority. Notwithstanding anything herein to the contrary, no Recipient shall
be required to pay any amount to Borrowers if such payment would place the
Recipient in a less favorable net after-Tax position than it would have been in
if the Tax subject to indemnification and giving rise to such refund had not
been deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid. In no event
shall Agent or any Recipient be required to make its tax returns (or any other
information relating to its taxes that it deems confidential) available to any
Obligor or other Person.

  5.9.6   Survival

Each party’s obligations under Sections 5.9 and 5.10 shall survive the
resignation or replacement of Agent or any assignment of rights by or
replacement of a Lender or Issuing Bank, the termination of the Commitments, and
the repayment, satisfaction, discharge or Full Payment of any Obligations.

  5.10   Lender Tax Information5.10.1 Status of Lenders

Any Lender that is entitled to an exemption from or reduction of withholding Tax
with respect to payments of Obligations shall deliver to Borrowers and Agent, at
the time or times reasonably requested by Borrowers or Agent, properly completed
and executed documentation reasonably requested by Borrowers or Agent as will
permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if reasonably requested by Borrowers or
Agent, shall deliver such other documentation prescribed by Applicable Law or
reasonably requested by Borrowers or Agent to enable them to determine whether
such Lender is subject to backup withholding or information reporting
requirements. Notwithstanding the foregoing, such documentation (other than
documentation described in Sections 5.10.2(a), (b) and (d)) shall not be
required if a Lender reasonably believes delivery of the documentation would
subject it to any material unreimbursed cost or expense or would materially
prejudice its legal or commercial position.

  5.10.2   Documentation

Without limiting the foregoing, if any Borrower is a U.S. Person,

(a) Any Lender that is a U.S. Person shall deliver to Borrowers and Agent on or
prior to the date on which such Lender becomes a Lender hereunder (and from time
to time thereafter upon reasonable request of Borrowers or Agent), executed
originals of IRS Form W-9, certifying that such Lender is exempt from U.S.
federal backup withholding Tax;

(b) Any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrowers and Agent (in such number of copies as shall be requested
by the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender hereunder (and from time to time thereafter upon reasonable request of
Borrowers or Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party, (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or
W-8BEN-E establishing an exemption from or reduction of U.S. federal withholding
Tax pursuant to the “interest” article of such tax treaty, and (y) with respect
to other payments under the Loan Documents, IRS Form W-8BEN or W-8BEN-E
establishing an exemption from or reduction of U.S. federal withholding Tax
pursuant to the “business profits” or “other income” article of such tax treaty;

(ii) executed originals of IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate in form
satisfactory to Agent to the effect that such Foreign Lender is not a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the
Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of
the Code (“U.S. Tax Compliance Certificate”), and (y) executed originals of IRS
Form W-8BEN or W-8BEN-E; or

(iv) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or
W-8BEN-E, a U.S. Tax Compliance Certificate in form satisfactory to Agent, IRS
Form W-9, and/or other certification documents from each beneficial owner, as
applicable; provided that if the Foreign Lender is a partnership and one or more
direct or indirect partners of such Foreign Lender are claiming the portfolio
interest exemption, such Foreign Lender may provide a U.S. Tax Compliance
Certificate on behalf of each such direct and indirect partner;

(c) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrowers and Agent (in such number of copies as shall be requested
by the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender hereunder (and from time to time thereafter upon the reasonable request
of Borrowers or Agent), executed originals of any other form prescribed by
Applicable Law as a basis for claiming exemption from or a reduction in U.S.
federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by Applicable Law to permit Borrowers or
Agent to determine the withholding or deduction required to be made; and

(d) if payment of an Obligation to a Lender would be subject to U.S. federal
withholding Tax imposed by FATCA if such Lender 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), such Lender shall deliver to Borrowers
and Agent at the time(s) prescribed by law and otherwise as reasonably requested
by Borrowers or Agent such documentation prescribed by Applicable Law (including
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by Borrowers or Agent as may be necessary for them to
comply with their obligations under FATCA and to determine that such Lender has
complied with its obligations under FATCA or to determine the amount to deduct
and withhold from such payment. Solely for purposes of this clause (d), “FATCA”
shall include any amendments made to FATCA after the date of this Agreement.

  5.10.3   Redelivery of Documentation

If any form or certification previously delivered by a Lender pursuant to this
Section expires or becomes obsolete or inaccurate in any respect, such Lender
shall promptly update the form or certification or notify Borrowers and Agent in
writing of its legal inability to do so.

              5.11   Guaranty; Nature and Extent of Liability.       5.11.1    
Guaranty; Joint and Several Liability
           
 

Each Obligor agrees that it is jointly and severally liable for, and absolutely
and unconditionally guarantees to Agent and Lenders, the prompt payment and
performance of all Obligations, except its Excluded Swap Obligations. Each
Obligor agrees that all of the Obligations shall be the joint and several
obligations of each Obligor without preferences or distinction among them. If
and to the extent that any Obligor shall fail to make any payment with respect
to any of the Obligations as and when due or to perform any of the Obligations
in accordance with the terms thereof, then in each such event the other Obligors
will make such payment with respect to, or perform, such Obligation until the
Full Payment of the Obligations. Each Obligor agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and
performance and not of collection, that such obligations shall not be discharged
until Full Payment of the Obligations, and that such guaranty obligations are
absolute and unconditional, irrespective of, and will not be discharged,
impaired, or affected by: (a) the genuineness, validity, regularity,
enforceability, subordination or any future modification of, or change in, any
Obligations or Loan Document, or any other document, instrument or agreement to
which any Obligor is or may become a party or be bound, or the power or
authority or lack thereof of any other Obligor to incur its Obligations; (b) the
absence of any action to enforce this Agreement (including this Section) or any
other Loan Document, or any waiver, consent or indulgence of any kind by Agent
or any Lender with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or
guaranty for any Obligations or any action, or the absence of any action, by
Agent or any Lender in respect thereof (including the release of any security or
guaranty); (d) the insolvency of any Obligor; (e) any election by Agent or any
Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of
the Bankruptcy Code; (f) any borrowing by any Borrower or grant of a Lien by any
Obligor, as debtor-in-possession under Section 364 of the Bankruptcy Code or
otherwise; (g) the disallowance of any claims of Agent or any Lender against any
Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy
Code or otherwise; (h) any payment of the Obligations at any time or from time
to time, except Payment in Full of the Obligations; (i) the existence or
non-existence of any Obligor as a legal entity; (j) any transfer by any Obligor
of all or any part of any Collateral; (k) any statute of limitations affecting
the liability of any other Obligor hereunder or under any of the other Loan
Documents or the ability of Agent or any Lender to enforce this Agreement, this
Section 5.11, or any other provision of any Loan Document; (l) any right of
offset, counterclaim or defense of any Obligor, including those that have been
waived by the Obligors pursuant to this Section 5.11; (m) any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, including any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 5.11 afford grounds for terminating, discharging or relieving any
Obligor, in whole or in part, from any of its Obligations under this
Section 5.11. Each Obligor represents and warrants to Agent and each Lender that
such Obligor is currently informed of the financial condition of the other
Obligors and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Obligor
further represents and warrants to Agent and each Lender that such Obligor has
read and understands the terms and conditions of the Loan Documents. Each
Obligor hereby covenants that such Obligor will continue to keep informed of the
Obligors’ financial condition and of all other circumstances which bear upon the
risk of nonpayment or nonperformance of the Obligations. If at any time, any
payment, or any part thereof, made in respect of any of the Obligations, is
rescinded or must otherwise be restored or returned by Agent or any Lender upon
the insolvency, bankruptcy or reorganization of any Obligor, or otherwise, the
provisions of this Section 5.11 will forthwith be reinstated in effect, as
though such payment had not been made. Each Obligor hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Obligor will not demand, sue for or otherwise attempt to collect any
indebtedness of any other Obligor owing to such Obligor until the Obligations
shall have been repaid in full in cash. If, notwithstanding the foregoing
sentence, such Obligor shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Obligor as trustee for Agent, and such Obligor shall deliver any such
amounts to Agent for application to the Obligations.

  5.11.2   Permitted Actions

Except as otherwise expressly provided by this Agreement, Agent and Lenders may
from time to time, in their sole discretion and without notice to any Obligor,
take any or all of the following actions: (a) retain or obtain Liens in any
assets of any other Obligor or any other Person, with the agreement of such
other Obligor or other Person, to secure any of the Obligations; (b) retain or
obtain the primary or secondary obligation of any obligor or obligors, in
addition to the Obligors, with respect to any of the Obligations; (c) extend or
renew for one or more periods (whether or not longer than the original period),
or, with the agreement of the Obligors, alter or exchange any of the
Obligations; (d) waive, ignore, or forbear from taking action or otherwise
exercising any of its default rights or remedies with respect to any default by
the Obligors under the Loan Documents; (e) release, waive, or compromise any
obligation of the Obligors hereunder or any obligation of any nature of any
other obligor primarily or secondarily obligated with respect to any of the
Obligations; (f) release Agent’s Liens in, or surrender, release or permit any
substitution or exchange for, all or any part of the Collateral now or hereafter
securing any of the Obligations or any obligation hereunder, or extend or renew
for one or more periods (whether or not longer than the original period) or
release, waive, compromise, alter or exchange any obligations of any nature of
any Obligor with respect to any such property; and (g) demand payment or
performance of any of the Obligations from any Obligor at any time or from time
to time, whether or not Agent or any Lender has exercised any of its rights or
remedies with respect to any property securing any of the Obligations or any
obligation hereunder or proceeded against any other Obligor or other Person
primarily or secondarily liable for payment or performance of any of the
Obligations.

  5.11.3   Waivers

(a) Each Obligor expressly waives, to the extent not prohibited by Applicable
Law, and except to the extent otherwise expressly required pursuant to this
Agreement or any other Loan Document: (i) notice of acceptance by Agent or any
Lender; (ii) notice of the existence, creation, payment, nonpayment, performance
or nonperformance of all or any of the Obligations; (iii) notice of the
occurrence of any Default or Event of Default, (iv) presentment, demand, notice
of dishonor, protest, notice of protest and all other notices whatsoever with
respect to the payment or performance of the Obligations or the amount thereof
or any payment or performance by the Obligors hereunder; (v) notice of any
extension or postponement of the time for the payment of any of the Obligations,
the acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or any Lender at any time or times in respect of any default by any
Obligor in the performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever by Agent
or any Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of the Obligations or the addition, substitution or release, in
whole or in part, of any Obligor, (vi) all diligence in collection or protection
of or realization upon the Obligations or any thereof, any obligation hereunder
or any security for or guaranty of any of the foregoing; (vii) any right to
direct or affect the manner or timing of Agent’s or any Lender’s enforcement of
its rights or remedies; and (viii) any and all defenses that would otherwise
arise upon the occurrence of any event or contingency described in
Section 5.11.1 or Section 5.11.2 hereof or upon the taking of any action by
Agent or any Lender permitted hereunder.

(b) Each Obligor expressly waives all rights that it may have now or in the
future under any statute, at common law, in equity or otherwise, to compel Agent
or Lenders to marshal assets or to proceed against any other Obligor, other
Person or security for the payment or performance of any Obligations before, or
as a condition to, proceeding against such Obligor. Each Obligor waives all
defenses available to a surety, guarantor or accommodation co-obligor other than
Full Payment of Obligations and waives, to the maximum extent permitted by law,
any right to revoke any guaranty of Obligations as long as it is an Obligor. It
is agreed among the Obligors, Agent and Lenders that the provisions of this
Section 5.11 are of the essence of the transaction contemplated by the Loan
Documents and that, but for such provisions, Agent and Lenders would decline to
make Loans and issue Letters of Credit. Each Obligor acknowledges that its
guaranty pursuant to this Section is necessary to the conduct and promotion of
its business, and can be expected to benefit such business.

(c) Agent and Lenders may, in their discretion, pursue such rights and remedies
as they deem appropriate, including realization upon Collateral by judicial
foreclosure or nonjudicial sale or enforcement, without affecting any rights and
remedies under this Section 5.11. If, in taking any action in connection with
the exercise of any rights or remedies, Agent or any Lender shall forfeit any
other rights or remedies, including the right to enter a deficiency judgment
against any Obligor or other Person, whether because of any Applicable Laws
pertaining to “election of remedies” or otherwise, each Obligor consents to such
action and waives any claim based upon it, even if the action may result in loss
of any rights of subrogation that such Obligor might otherwise have had. Any
election of remedies that results in denial or impairment of the right of Agent
or any Lender to seek a deficiency judgment against any Obligor shall not impair
any other Obligor’s obligation to pay the full amount of the Obligations. Agent
may bid Obligations, in whole or part, at any foreclosure, trustee or other sale
and the amount of such bid need not be paid by Agent but shall be credited
against the Obligations. The amount of the successful bid at any such sale,
whether Agent or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 5.11, notwithstanding that any present or future law or court
decision may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.

(d) Each Obligor waives all rights and defenses that such Obligor may have
because any of the Obligations may after the date of this Agreement become
secured by real property. This means, among other things: (i) Agent or any
Lender may collect from any Obligor without first foreclosing on any real or
personal property collateral pledged by the other Obligors; and (ii) if Agent or
any Lender forecloses on any real property collateral pledged by the other
Obligors: (A) the amount of the Obligations may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price, and (B) Agent or any Lender may collect from any
Obligor even if such Agent or Lender, by foreclosing on the real property
collateral, has destroyed any right any Obligor may have to collect from any
other Obligor. This is an unconditional and irrevocable waiver of any rights and
defenses any Obligor may have because any of the Obligations may become, after
the date of this Agreement, secured by real property. These rights and defenses
include, but are not limited to, any rights or defenses based upon Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure. Without limiting
the foregoing, each Obligor waives all rights and defenses arising out of an
election of remedies by Agent or any Lender, even though that election of
remedies, such as a non-judicial foreclosure with respect to security for a
guaranteed obligation, has destroyed such Obligor’s rights of subrogation and
reimbursement against any other Person, including such Obligor’s rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the California Code of Civil Procedure.

(e) Each Obligor understands and acknowledges that if Lender forecloses
judicially or nonjudicially against any real property security for the
Obligations, that foreclosure could impair or destroy any ability that such
Obligor may have to seek reimbursement, contribution, or indemnification from
any other Obligor or others based on any right such Obligor may have of
subrogation, reimbursement, contribution, or indemnification for any amounts
paid by such Obligor under this Agreement. Each Obligor further understands and
acknowledges that in the absence of this paragraph, such potential impairment or
destruction of such Obligor’s rights, if any, may entitle such Obligor to assert
a defense to this Agreement based on Section 580d of the California Code of
Civil Procedure as interpreted in Union Bank v. Gradsky, 265 Cal. App. 2d 40
(1968). By executing this Agreement, each Obligor freely, irrevocably, and
unconditionally: (i) waives and relinquishes that defense and agrees that such
Obligor will be fully liable under this Agreement even though Lender may
foreclose, either by judicial foreclosure or by exercise of power of sale, any
deed of trust securing the Obligations; (ii) agrees that such Obligor will not
assert that defense in any action or proceeding which Lender may commence to
enforce this Agreement; (iii) acknowledges and agrees that the rights and
defenses waived by Lender in this Agreement include any right or defense that
Lender may have or be entitled to assert based upon or arising out of any one or
more of Sections 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure or Section 2848 of the California Civil Code or any similar laws of
any other applicable jurisdiction; and (iv) acknowledges and agrees that Lender
is relying on this waiver in creating the Obligations, and that this waiver is a
material part of the consideration which Lender is receiving for creating the
Obligations.

(f) Each Obligor waives any right or defense it may have at law or equity,
including California Code of Civil Procedure Section 580a, to a fair market
value hearing or action to determine a deficiency judgment after a foreclosure.

(g) Each Obligor waives all rights of subrogation, reimbursement,
indemnification, and contribution and any other rights and defenses that are or
may become available to the Guarantors by reason of Sections 2787 to 2855,
inclusive, 2899, and 3433 of the California Code of Civil Procedure or any
similar laws of any other jurisdiction.

(h) As provided in Section 14.14, this Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York. To the extent
the foregoing provisions of this Section 5.11.3 refer to California law, such
references have been included in this Agreement out of an abundance of caution,
and the inclusion of such provisions shall not be deemed to affect or limit in
any way the choice of New York law by the parties hereto.

  5.11.4   Extent of Liability; Contribution.

(a) Notwithstanding anything herein to the contrary, each Obligor’s liability
under this Section 5.11 shall not exceed the greater of (i) all amounts for
which such Obligor is primarily liable, as described in clause (c) below, and
(ii) such Obligor’s Allocable Amount.

(b) If any Obligor makes a payment under this Section 5.11 of any Obligations
(other than amounts for which such Obligor is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments previously or
concurrently made by any other Obligor, exceeds the amount that such Obligor
would otherwise have paid if each Obligor had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Obligor’s
Allocable Amount bore to the total Allocable Amounts of all Obligors, then such
Obligor shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Obligor for the amount of such excess,
ratably based on their respective Allocable Amounts in effect immediately prior
to such Guarantor Payment. The “Allocable Amount” for any Obligor shall be the
maximum amount that could then be recovered from such Obligor under this
Section 5.11 without rendering such payment voidable under Section 548 of the
Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.

(c) Section 5.11.4(a) shall not limit the liability of any Obligor to pay or
guarantee Loans made directly or indirectly to it (including Loans advanced
hereunder to any other Person and then re-loaned or otherwise transferred to, or
for the benefit of, such Obligor), LC Obligations relating to Letters of Credit
issued to support its business, Secured Bank Product Obligations incurred to
support its business, and all accrued interest, fees, expenses and other related
Obligations with respect thereto, for which such Obligor shall be primarily
liable for all purposes hereunder. Agent and Lenders shall have the right, at
any time in their discretion, to condition Loans and Letters of Credit upon a
separate calculation of borrowing availability for each Obligor and to restrict
the disbursement and use of Loans and Letters of Credit to an Obligor based on
that calculation.

  5.11.5   Qualified ECP and Swap Obligations.

Each Obligor that is a Qualified ECP when its guaranty of or grant of Lien as
security for a Swap Obligation becomes effective hereby jointly and severally,
absolutely, unconditionally and irrevocably undertakes to provide funds or other
support to each Specified Obligor with respect to such Swap Obligation as may be
needed by such Specified Obligor from time to time to honor all of its
obligations under the Loan Documents in respect of such Swap Obligation (but, in
each case, only up to the maximum amount of such liability that can be hereby
incurred without rendering such Qualified ECP’s obligations and undertakings
under this Section 5.11 voidable under any applicable fraudulent transfer or
conveyance act). The obligations and undertakings of each Qualified ECP under
this Section shall remain in full force and effect until Full Payment of the
Obligations. Each Obligor intends this Section to constitute, and this Section
shall be deemed to constitute, a guarantee of the obligations of, and a
“keepwell, support or other agreement” for the benefit of, each Obligor for all
purposes of the Commodity Exchange Act.

  5.11.6   Joint Enterprise.

Each Obligor has requested that Agent and Lenders make this credit facility
available to Borrowers on a combined basis, in order to finance Obligors’
business most efficiently and economically. Obligors’ business is a mutual and
collective enterprise, and the successful operation of each Obligor is dependent
upon the successful performance of the integrated group. Obligors believe that
consolidation of their credit facility will enhance the borrowing power of each
Obligor and ease administration of the facility, all to their mutual advantage.
Obligors acknowledge that Agent’s and Lenders’ willingness to extend credit and
to administer the Collateral on a combined basis hereunder is done solely as an
accommodation to Obligors and at Obligors’ request.

  5.11.7   Subordination.

Each Obligor hereby irrevocably subordinates any claims, including any rights at
law or in equity to payment, subrogation, reimbursement, exoneration,
contribution, indemnification or set off, that it may have at any time against
any other Obligor, howsoever arising, to the Full Payment of the Obligations.

  5.11.8   Subrogation.

No Obligor will exercise any rights that such Obligor may acquire by way of
subrogation under this Section 5.11, by any payment hereunder or otherwise,
until Full Payment of the Obligations. If any amount shall be paid to any
Obligor on account of such subrogation rights at any other time, such amount
shall be held in trust for the benefit of Agent and shall be forthwith paid to
Agent to be credited and applied to the Obligations, whether matured or
unmatured, in such order as provided for in this Agreement. Notwithstanding
anything to the contrary contained herein, no Obligor may exercise any rights of
subrogation, contribution, indemnity, reimbursement or other similar rights
against, and may not proceed or seek recourse against or with respect to any
property or asset of, any other Obligor, including after Full Payment of the
Obligations, if all or any portion of the Obligations have been satisfied in
connection with an exercise of remedies in respect of the Equity Interests of
such other Obligor, whether pursuant to this Agreement or otherwise.

  5.11.9   Independent Obligations.

The obligations of each Obligor hereunder are those of primary obligor, and not
merely as surety, and are independent of the Obligations and the obligations of
any other Obligor, and a separate action may be brought against any Obligor to
enforce its guaranty hereunder, whether or not any Borrower or any other Obligor
or any other person or entity is joined as a party.

  5.11.10   Stay of Acceleration.

If acceleration of the time for payment of any of the Obligations is stayed, in
connection with any case commenced by or against any Obligor under any
Insolvency Proceeding, or otherwise, all such amounts shall nonetheless be
payable by such Obligor immediately upon demand by Agent or any Lender.

      SECTION 6.
6.1  
CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT
Conditions Precedent to Initial Loans
   
 

In addition to the conditions set forth in Section 6.2, Lenders shall not be
required to make the initial extensions of credit to Borrowers hereunder until
the date (“Closing Date”) that each of the following conditions has been
satisfied:

(a) Each Loan Document shall have been duly executed and delivered to Agent by
each of the signatories thereto, and each Obligor shall be in compliance with
all terms thereof.

(b) Agent shall have received acknowledgments of all filings or recordations
necessary to perfect its Liens in the Collateral, as well as UCC and Lien
searches and other evidence satisfactory to Agent that such Liens are the only
Liens upon the Collateral, except Permitted Liens.

(c) Agent shall have received certificates, in form and substance satisfactory
to it, from a knowledgeable Senior Officer of each Borrower certifying that,
after giving effect to the initial Loans and transactions hereunder, (i) such
Borrower is Solvent; (ii) no Default or Event of Default exists; (iii) the
representations and warranties set forth in Section 9 are true and correct in
all material respects (except that any representation and warranty that is
qualified as to “materiality” or “Material Adverse Effect” shall be true and
correct in all respects) as of the Closing Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects (except that any
representation and warranty that is qualified as to “materiality” or “Material
Adverse Effect” shall be true and correct in all respects) as of such earlier
date; and (iv) such Borrower has complied with all agreements and conditions to
be satisfied by it under the Loan Documents.

(d) Agent shall have received a certificate of a duly authorized officer of each
Obligor, certifying (i) that attached copies of such Obligor’s Organic Documents
are true and complete, and in full force and effect, without amendment except as
shown; (ii) that an attached copy of resolutions authorizing execution and
delivery of the Loan Documents is true and complete, and that such resolutions
are in full force and effect, were duly adopted, have not been amended, modified
or revoked, and constitute all resolutions adopted with respect to this credit
facility; and (iii) to the title, name and signature of each Person authorized
to sign the Loan Documents. Agent may conclusively rely on this certificate
until it is otherwise notified by the applicable Obligor in writing.

(e) Agent shall have received a written opinion of Sheppard, Mullin, Richter &
Hampton LLP, as well as any local counsel to Borrowers or Agent, in form and
substance reasonably satisfactory to Agent.

(f) Agent shall have received copies of the charter documents of each Obligor,
certified by the Secretary of State or other appropriate official of such
Obligor’s jurisdiction of organization. Agent shall have received good standing
certificates for each Obligor, issued by the Secretary of State or other
appropriate official of such Obligor’s jurisdiction of organization and each
jurisdiction where such Obligor’s conduct of business or ownership of Property
necessitates qualification.

(g) Agent shall have received copies of policies, certificates of insurance and
endorsements (including additional insured and lenders loss payable
endorsements) for the insurance policies carried by the Obligors, all in
compliance with the Loan Documents.

(h) Agent shall have completed its business, financial and legal due diligence
of Obligors, including a roll-forward of its previous field examination, with
results reasonably satisfactory to Agent. No material adverse change in the
financial condition of the Obligors, taken as a whole, or in the quality,
quantity or value of the Collateral, taken as a whole, shall have occurred since
December 31, 2014;

(i) Borrowers shall have paid all fees and expenses due to Agent and Lenders on
the Closing Date.

(j) Agent shall have received a Borrowing Base Report as of March 31, 2015. Upon
giving effect to the initial funding of Loans and issuance of Letters of Credit,
and the payment by Borrowers of all fees and expenses incurred in connection
herewith as well as any payables stretched beyond their customary payment
practices, Availability shall be at least $50,000,000.

(k) Agent shall have received a Lien Waiver from HF Logistics-SKX T1, LLC (or
its successor as landlord prior to the Closing Date, if any) with respect to the
leased premises commonly known as 29800 Eucalyptus Avenue, Moreno Valley,
California 92555.

(l) Agent shall have received a Lien Waiver from OHL International, as the
Borrowers’ customs broker.

(m) All (i) corporate and other proceedings, and all documents, instruments and
other legal matters in connection with the transactions contemplated hereby
shall be satisfactory in form and substance to Agent and its counsel, and
(ii) documents, instruments and agreements required to be delivered by or on
behalf of the Obligors pursuant to the “closing checklist” provided by Agent’s
counsel in connection with this Agreement shall be delivered in form and
substance satisfactory to Agent and its counsel.

6.2 Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and
Lenders shall not be required to fund any Loans, arrange for issuance of any
Letters of Credit or grant any other accommodation to or for the benefit of
Borrowers, unless the following conditions are satisfied:

(a) No Default or Event of Default shall exist at the time of, or result from,
such funding, issuance or grant;

(b) The representations and warranties of each Obligor in the Loan Documents
shall be true and correct in all material respects (except that any
representation and warranty that is qualified as to “materiality” or “Material
Adverse Effect” shall be true and correct in all respects) on the date of, and
upon giving effect to, such funding, issuance or grant (except for
representations and warranties that expressly relate to an earlier date, in
which case such representations and warranties shall be true and correct in all
material respects (except that any representation and warranty that is qualified
as to “materiality” or “Material Adverse Effect” shall be true and correct in
all respects) as of such earlier date);

(c) No event shall have occurred or circumstance exist that has or could
reasonably be expected to have a Material Adverse Effect; and

(d) With respect to issuance of a Letter of Credit, the LC Conditions shall be
satisfied.

(e) Each request (or deemed request) by Borrowers for funding of a Loan,
issuance of a Letter of Credit or grant of an accommodation shall constitute a
representation by Borrowers that the foregoing conditions are satisfied on the
date of such request and on the date of such funding, issuance or grant.

6.3 Conditions Subsequent. Agent, Issuing Bank and Lenders shall not be required
to fund any Loans, arrange for issuance of any Letters of Credit or grant any
other accommodation to or for the benefit of Borrowers, unless the following
conditions are satisfied on or before the date applicable thereto (and the
failure by Borrowers to so satisfy or cause such conditions to be satisfied as
and when required by the provisions of this Section 6.3 shall constitute an
immediate Event of Default):

(a) Within 30 days of the Closing Date, Borrowers shall have established a
Dominion Account and related lockbox at Bank of America;

(b) Within 120 days of the Closing Date, Borrowers shall have either closed or
delivered a Deposit Account Control Agreement with respect to (i) the lockbox
account maintained with Wells Fargo Bank, N.A. with an account number ending in
6192, and (ii) the lockbox maintained with CIT Commercial Services with a P.O.
Box number ending in 37989.

(c) Within 120 days of the Closing Date, Borrowers shall have closed all Deposit
Accounts (other than Excluded Accounts) that are not subject to a Deposit
Account Control Agreement and all Securities Accounts that are not subject to a
Securities Account Control Agreement.

(d) Within 60 days of the Closing Date, Borrowers shall have delivered to Agent
an original executed stock certificate, evidencing 15,300 issued shares of
Skechers (Thailand) Ltd. owned by Skechers, together with an undated instrument
of transfer covering such certificate duly executed in blank by Skechers.

    SECTION 7. COLLATERAL

7.1 Grant of Security Interest. To secure the prompt payment and performance of
its Obligations, each Obligor hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all personal Property
of such Obligor, including all of the following Property, whether now owned or
hereafter acquired, and wherever located (the “Collateral”):

(a) all Accounts;

(b) all Chattel Paper, including electronic chattel paper;

(c) all Commercial Tort Claims, including those shown on Schedule 9.1.16;

(d) all Deposit Accounts;

(e) all Documents;

(f) all General Intangibles, including Intellectual Property;

(g) all Goods, including Inventory, Equipment and fixtures;

(h) all Instruments;

(i) all Investment Property and all Pledged Equity;

(j) all Letter-of-Credit Rights;

(k) all Securities Accounts;

(l) all Supporting Obligations;

(m) all monies, whether or not in the possession or under the control of Agent,
a Lender, or a bailee or Affiliate of Agent or a Lender, including any Cash
Collateral;

(n) all accessions to, substitutions for, and all replacements, products, and
cash and non-cash proceeds of the foregoing, including proceeds of and unearned
premiums with respect to insurance policies, and claims against any Person for
loss, damage or destruction of any Collateral; and

(o) all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to the
foregoing;

provided, however, that notwithstanding anything contained in this Agreement to
the contrary, the term “Collateral” shall not include, and the security interest
created by this Agreement shall not extend to, the following (the “Excluded
Assets”): (i)(A) the Equity Interests of any Foreign Subsidiary that is not a
first tier Foreign Subsidiary of an Obligor, and (B) the voting stock of any CFC
solely to the extent that such voting stock represents more than 65% of the
outstanding voting stock of such CFC; provided, that the foregoing exclusion in
clause (B) shall, with respect to any Foreign Subsidiary that is a CFC at the
time of grant of such pledge or hypothecation, automatically cease to apply at
any time such Foreign Subsidiary is no longer a CFC, (ii) any rights or interest
in any contract, lease, permit, license, or license agreement covering real or
personal Property of any Obligor if under the terms of such contract, lease,
permit, license, or license agreement, or applicable law with respect thereto,
the grant of a security interest or lien therein is prohibited, would constitute
a breach or default thereunder, would result in the termination thereof, or
would require the consent of any non-Obligor party thereto and such applicable
prohibition or restriction has not been waived or the consent of the other party
to such contract, lease, permit, license, or license agreement has not been
obtained, (iii) any rights or interests in any governmental licenses or state or
local franchises, charters, and authorizations of any Obligor if under the terms
of such licenses, franchises, charters or authorizations, or applicable law with
respect thereto, the grant of a security interest or lien therein is prohibited,
would constitute a breach or default thereunder, would result in the termination
thereof, or would require the consent of any non-Obligor party thereto and such
applicable prohibition or restriction has not been waived or the consent of the
other party to such licenses, franchises, charters, or authorizations has not
been obtained, (iv) to the extent prohibited by the terms of any applicable
Organic Documents, including joint venture agreements or shareholders’
agreements, Equity Interests in any joint venture or non-wholly owned Subsidiary
of Borrowers and such prohibition has not been waived or the consent of the
requisite parties to such documents has not been obtained; provided that such
prohibition is a general prohibition on the granting of a Lien in any Equity
Interests held by any shareholder or joint-venturer and was not created in
contemplation of this Agreement, (v) any personal property (including property
acquired through acquisition or merger of another entity) if the granting of a
security interest therein or the pledge thereof is prohibited by any License
(including the Star Wars License), contract or other agreement (including that
certain Master Loan and Security Agreement dated as of December 29, 2010 by and
among Skechers, Banc of America Leasing & Capital, LLC and Bank of Utah), to the
extent and for so long as such License, contract or other agreement prohibits
such security interest or pledge (so long as such prohibition is not incurred in
contemplation of this Agreement or such acquisition) (provided, that, (A) the
foregoing exclusions of clauses (ii), (iii), (iv) or (v) shall in no way be
construed (1) other than with respect to the Star Wars License (as to the Star
Wars License itself, any Intellectual Property of third parties licensed to the
Obligors thereunder and any Inventory that is subject to the Star Wars
License) to apply to the extent that any described prohibition or restriction is
ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the UCC or other
applicable law, or (2) to apply to the extent that any consent or waiver has
been obtained that would permit Agent’s security interest or lien to attach
notwithstanding the prohibition or restriction on the pledge of such contract,
lease, permit, license, or license agreement, and (B) the foregoing exclusions
of clauses (i), (ii), (iii), (iv), and (v) shall in no way be construed to
limit, impair, or otherwise affect any of Agent’s, any Lender’s or any other
Secured Party’s continuing security interests in and liens upon any rights or
interests of any Obligor in or to (1) monies due or to become due under or in
connection with any described contract, lease, permit, license, license
agreement, licenses, franchises, charters, authorizations, or Equity Interests
(including any Accounts or Equity Interests), or (2) any proceeds (including
Accounts) arising from the sale, license, lease, or other dispositions of any
such contract, lease, permit, license, license agreement, licenses, franchises,
charters, authorizations, Equity Interests, or Inventory that is subject to the
Star Wars License), (vi) any United States intent-to-use trademark applications
to the extent that, and solely during the period in which, the grant of a
security interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under applicable federal law, provided that
upon submission and acceptance by the United States Patent and Trademark Office
of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any
successor provision), such intent-to-use trademark application shall be
considered Collateral, (vii) Equipment or other fixed assets, all parts,
attachments, accessories, accessions, substitutions or replacements thereto and
proceeds thereof that are the subject of Permitted Purchase Money Debt or
Purchase Money Debt Incurred permitted pursuant to Section 10.2.1, to the extent
the granting of a security interest hereunder is prohibited by the documents
evidencing such Debt and such prohibition has not been waived or the consent of
the other party to such documents has not been obtained; provided, that the
foregoing exclusions of this clause (vii) shall in no way be construed (1) to
apply to the extent that any described prohibition or restriction is
unenforceable under the UCC or other applicable law, or (2) to apply to the
extent that any consent or waiver has been obtained that would permit Agent’s
security interest or Lien notwithstanding the prohibition, (viii) any Margin
Stock, or (ix) any Real Estate; provided, further, that Excluded Assets shall
not include any Proceeds, substitutions or replacements of any Excluded Assets
referred to in any of clauses (i) through (ix) above to the extent such
Proceeds, substitutions or replacements are not and do not, in and of
themselves, constitute Excluded Assets.

              7.2   Lien on Deposit Accounts and Securities Accounts; Cash
Collateral.
 
    7.2.1     Deposit Accounts and Securities Accounts
 
           

To further secure the prompt payment and performance of its Obligations, each
Obligor hereby grants to Agent a continuing security interest in and Lien upon
all amounts credited to any Deposit Account or Securities Account of such
Obligor, including sums in any blocked, lockbox, sweep or collection account.
Each Obligor hereby authorizes and directs each bank or other depository to
deliver to Agent, upon request, all balances in any Deposit Account or
Securities Account maintained for such Obligor, without inquiry into the
authority or right of Agent to make such request.

  7.2.2   Cash Collateral

At the request and direction of the applicable Obligor, Cash Collateral may be
invested, at Agent’s discretion, but Agent shall have no duty to do so,
regardless of any agreement or course of dealing with any Borrower, and shall
have no responsibility for any investment or loss with respect to any investment
made in accordance with the foregoing. As security for its Obligations, each
Obligor hereby grants to Agent a security interest in and Lien upon all Cash
Collateral held from time to time and all proceeds thereof, whether held in a
Cash Collateral Account or otherwise. Agent may apply Cash Collateral to the
payment of such Obligations as they become due, in such order as Agent may
elect. Each Cash Collateral Account and all Cash Collateral shall be under the
sole dominion and control of Agent, and no Borrower or any other Person shall
have any right to any Cash Collateral, until Full Payment of the Obligations.

              7.3   Pledged Collateral.       7.3.1    
Pledged Equity.
           
 

(a) Schedule 7.3 lists all Investment Property and Pledged Equity owned by any
Obligor. Such Obligor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property and Pledged Equity pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of, any
other Person, except Permitted Liens.

(b) Except as set forth on Schedule 7.3, the Pledged Equity pledged by each
Obligor hereunder constitutes all the issued and outstanding Equity Interests of
all classes of Equity Interests of each Issuer owned by such Obligor.

(c) Except as set forth on Schedule 7.3, all Pledged Equity has been duly and
validly issued and is fully paid and nonassessable.

7.3.2 CovenantsAs long as any Commitments or Obligations are outstanding, each
Obligor shall:

(a) If such Obligor shall become entitled to receive or shall receive any
certificate, option or right in respect of the equity interests of any Issuer,
whether in addition to, in substitution of, as a conversion of, or in exchange
for, any of the Pledged Equity, or otherwise in respect thereof, such Obligor
shall accept the same as the agent of Agent for the ratable benefit of the
Secured Parties, hold the same in trust for Agent for the ratable benefit of the
Secured Parties and deliver the same forthwith to Agent in the exact form
received, duly indorsed by such Obligor to Agent, if required, together with an
undated instrument of transfer covering such certificate duly executed in blank
by such Obligor and with, if Agent so requests, signature guarantied, to be held
by Agent, subject to the terms hereof, as additional Collateral for the
Obligations. Upon the occurrence and during the continuance of an Event of
Default, (i) any sums paid upon or in respect of the Investment Property (other
than Excluded Assets) or Pledged Equity upon the liquidation or dissolution of
any Issuer shall be paid over to Agent to be held by it hereunder as additional
Collateral for the Obligations, and (ii) in case any distribution of capital
shall be made on or in respect of the Investment Property (other than Excluded
Assets) or Pledged Equity or any property shall be distributed upon or with
respect to the Investment Property (other than Excluded Assets) or Pledged
Equity pursuant to the recapitalization or reclassification of the capital of
any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected Lien in favor of
Agent, be delivered to Agent to be held by it hereunder as additional Collateral
for the Obligations. Upon the occurrence and during the continuance of an Event
of Default, if any sums of money or property so paid or distributed in respect
of the Investment Property (other than Excluded Assets) or Pledged Equity shall
be received by such Obligor, such Obligor shall, until such money or property is
paid or delivered to Agent, hold such money or property in trust for Agent for
the ratable benefit of the Secured Parties, segregated from other funds of such
Obligor, as additional Collateral for the Obligations.

(b) Without the prior written consent of Agent, such Obligor will not (i) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, any Pledged Equity or proceeds thereof (except pursuant to a
transaction expressly permitted hereunder), (ii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Investment Property (other than Excluded Assets) or Pledged
Equity or proceeds thereof, or any interest therein, except for Permitted Liens,
or (iii) enter into any agreement or undertaking restricting the right or
ability of such Obligor or Agent to sell, assign or transfer any of the
Investment Property (other than Excluded Assets) or Pledged Equity or proceeds
thereof,

(c) In the case of each Obligor which is an Issuer, such Obligor agrees that
(i) it will be bound by the terms of this Agreement relating to the Investment
Property and Pledged Equity issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify Agent promptly in
writing of the occurrence of any of the events described in Section
7.3.2(a) with respect to the Investment Property (other than Excluded
Assets) and Pledged Equity issued by it and (iii) the terms of Sections 7.3.3
shall apply to such Obligor with respect to all actions that may be required of
it pursuant to Section 7.3.3 regarding the Investment Property and Pledged
Equity issued by it.

(d) At any time and from time and to time, take such steps as Agent may
reasonably request for Agent to obtain “control” (as defined in the UCC) of any
Investment Property (other than Excluded Assets) and Pledged Equity with any
agreements establishing control to be in form and substance reasonably
satisfactory to Agent.

(e) In addition, none of the operative agreements governing any of the
Investment Property (other than Excluded Assets) or Pledged Equity issued under
any limited liability company operating agreement or partnership agreement
provides or shall provide that such Investment Property or Pledged Equity
constitutes securities governed by Article 8 of the Uniform Commercial Code as
in effect in any relevant jurisdiction; provided, however, that the such
governing agreements may provide that such Investment Property or Pledged Equity
constitutes securities governed by Article 8 of the applicable Uniform
Commercial Code so long as the applicable Obligor granting a Lien in such
Investment Property or Pledged Equity provides Agent with (i) prior written
notice thereof and (ii) if such securities are certificated, delivery of such
certificates, or if such securities are not certificated, a control agreement
with respect to such securities.

  7.3.3   Other Rights.

(a) Unless an Event of Default shall have occurred and be continuing and Agent
shall have given notice to the relevant Obligor of Agent’s intent to exercise
its corresponding rights pursuant to Section 7.3.3(b), each Obligor shall be
permitted to receive all cash dividends and distributions (other than dividends
payable in Equity Interests) paid in respect of the Pledged Equity or Investment
Property to the extent permitted hereunder, and to exercise all voting and
corporate, limited liability company or other organizational rights with respect
to the Pledged Equity or Investment Property; provided, that no vote shall be
cast or other right exercised or action taken which could impair the Collateral
or which would conflict with or result in any violation of any provision of this
Agreement or any other Loan Document.

(b) If an Event of Default shall occur and be continuing and Agent shall give
notice of its intent to exercise such rights to the relevant Obligor or
Obligors, (i) Agent shall have the right to receive any and all cash dividends
and distributions, payments (including sums paid upon the liquidation or
dissolution of any Issuer or in connection with any distribution of capital) or
other proceeds paid in respect of the Investment Property and Pledged Equity and
make application thereof to the Obligations in such order as Agent may determine
and (ii) any or all of the Investment Property and Pledged Equity shall be
registered in the name of Agent or its nominee, and Agent or its nominee may
thereafter exercise (x) all voting, corporate, limited liability company and
other rights pertaining to such Investment Property and Pledged Equity at any
meeting of holders of Equity Interests of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Investment
Property and Pledged Equity as if it were the absolute owner thereof (including
the right to exchange at its discretion any and all of the Investment Property
and Pledged Equity upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by any Obligor or
Agent of any right, privilege or option pertaining to such Investment Property
and Pledged Equity, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property and Pledged Equity with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as Agent may determine), all without liability except
to account for property actually received by it, but Agent shall have no duty to
any Obligor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing. If any sums of money
paid or distributed in respect of Investment Property or Pledged Equity, which
Agent shall be entitled to receive pursuant to clause (i) above, shall be
received by an Obligor, such Obligor shall, until such money is paid to Agent,
hold such money in trust for Agent and the other Secured Parties as additional
collateral for the Obligations.

(c) Each Obligor hereby authorizes and instructs each Issuer of any Investment
Property or Pledged Equity pledged by any Obligor hereunder to (i) comply with
any instruction received by it from Agent in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Obligor, and each Obligor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends, distributions or other payments with
respect to the Investment Property or Pledged Equity directly to Agent. Each
Obligor that is an Issuer of any Investment Property or Pledged Equity pledged
by any Obligor hereunder hereby agrees that it will not recognize, acknowledge,
or permit the pledge, transfer, grant of “control” (within the meaning of the
UCC), or other disposition of any Investment Property or Pledged Equity pledged
by any Obligor hereunder other than to, or as requested by, Agent.

7.3.4 Additional InterestsIf any Obligor shall at any time acquire or hold any
additional Pledged Equity, including any Pledged Equity issued by any Issuer not
listed on Schedule 7.3 hereto which are required to be subject to a Lien
pursuant to this Agreement by the terms hereof (any such shares being referred
to herein as the “Additional Interests”), such Obligor shall deliver to Agent
for the ratable benefit of the Secured Parties a supplement reaffirming and
acknowledging such Obligor’s grant of security interests in its Pledged Equity
hereunder and granting to Agent a security interest in such Additional
Interests, such supplement to be in form and substance reasonably acceptable to
Agent and duly completed and executed by such Obligor. Each Obligor shall comply
with the requirements of this Section 7.3.4 concurrently with the acquisition of
any such Additional Interests; provided, however, that the failure to comply
with the provisions of this Section 7.3.4 shall not impair the Lien on
Additional Interests conferred hereunder.

7.3.5 Registration Rights(a) If, during the continuance of an Event of Default,
Agent shall determine to exercise its right to sell all or any of the Pledged
Equity pursuant to Section 11.2, and if, in the opinion of Agent, it is
necessary or advisable to have the Pledged Equity, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Obligor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of Agent, necessary or advisable to register the Pledged
Equity, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use commercially reasonable efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Equity, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of
Agent, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the SEC applicable thereto.
Each Obligor agrees to cause such Issuer to comply with the provisions of the
securities or “Blue Sky” Laws of any and all jurisdictions which Agent shall
designate and to make available to its security holders, as soon as practicable,
an earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.

(b) Each Obligor recognizes that Agent may be unable to effect a public sale of
any or all the Pledged Equity, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Obligor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. Agent shall be under no obligation to delay a sale of any of
the Pledged Equity for the period of time necessary to permit the Issuer thereof
to register such securities or other interests for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.

(c) Each Obligor agrees to use commercially reasonable efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Equity pursuant to this Section 7.3.5 valid
and binding and in compliance with any and all other Applicable Laws. Each
Obligor further agrees that a breach of any of the covenants contained in this
Section 7.3.5 will cause irreparable injury to the Secured Parties, that the
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 7.3.5 may
be specifically enforceable against such Obligor, and such Obligor hereby
waives, to the fullest extent permitted by Applicable Law, and agrees not to
assert, any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under this
Agreement.

              7.4   Other Collateral       7.4.1    
Commercial Tort Claims
           
 

Each Obligor shall promptly notify Agent in writing if such Obligor has a
Commercial Tort Claim (other than, as long as no Default or Event of Default
exists, a Commercial Tort Claim for less than $1,000,000), shall promptly amend
Schedule 9.1.16 to include such claim, and shall take such actions as Agent
deems appropriate to subject such claim to a duly perfected, first priority Lien
in favor of Agent.

  7.4.2   Certain After-Acquired Collateral

Each Obligor shall promptly notify Agent in writing if, after the Closing Date,
such Obligor obtains any interest in any Collateral consisting of Deposit
Accounts, Securities Accounts, Chattel Paper, Documents, Instruments,
Intellectual Property or Letter-of-Credit Rights and, upon Agent’s request,
shall promptly take such actions as Agent deems appropriate to effect Agent’s
duly perfected, first priority Lien upon such Collateral, including obtaining
any appropriate possession, control agreement or Lien Waiver; provided that
(a) Lien Waivers will not be required for any retail store location (it being
acknowledged and agreed that Agent may in its Permitted Discretion impose Rent
and Charges Reserves), and (b) control agreements shall not be required for
Excluded Accounts. If any Collateral, other than Collateral which is in-transit
or in for repair or servicing, is in the possession of a Person other than an
Obligor, Subsidiary of an Obligor or Secured Party, then, at Agent’s request,
the Obligors shall obtain an acknowledgment that such third party holds such
Collateral for the benefit of Agent.

7.5 Limitations. The Lien on Collateral granted hereunder is given as security
only and shall not subject Agent or any Lender to, or in any way modify, any
obligation or liability of any Obligor relating to any Collateral. In no event
shall the grant of any Lien under any Loan Document secure an Excluded Swap
Obligation of the granting Obligor.

7.6 Further Assurances. All Liens granted to Agent under the Loan Documents are
for the benefit of Secured Parties. Promptly upon request, except to the extent
otherwise expressly set forth herein, Obligor shall deliver such instruments and
agreements, and shall take such actions, as Agent deems appropriate under
Applicable Law to evidence or perfect its Lien on any Collateral, or otherwise
to give effect to the intent of this Agreement. Each Obligor authorizes Agent to
file any financing statement that describes the Collateral as “all assets” or
“all personal property” of such Obligor, or words to similar effect (it being
understood that no such description shall be deemed to amend, alter or otherwise
modify the description of the Collateral set forth herein or the description of
the Excluded Assets), and ratifies any action taken by Agent before the Closing
Date to effect or perfect its Lien on any Collateral.

    SECTION 8. COLLATERAL ADMINISTRATION

8.1 Borrowing Base Reports. On or before each Applicable Reporting Deadline,
Borrowers shall deliver to Agent (and Agent shall promptly deliver same to
Lenders) a Borrowing Base Report as of the Applicable Reporting Date therefor.
All information (including calculation of Availability) in a Borrowing Base
Report shall be prepared and certified by Borrowers (other than the calculation
of ineligible Accounts, which shall, unless otherwise agreed by Borrower Agent
and Agent, initially be calculated by Agent based on information available to
Agent, including any information provided to Agent pursuant to Section 8.2
below, but shall be subsequently reviewed and certified by Borrowers). Agent may
from time to time adjust any such report (a) due to collections received in the
Dominion Account; and (b) to the extent any information or calculation does not
comply with this Agreement; provided that any changes made by Agent which have
not been approved by Borrowers shall not be considered to have been certified by
Borrowers.

              8.2   Accounts.       8.2.1    
Records and Schedules of Accounts
           
 

Each Borrower shall keep accurate and complete records of its Accounts,
including all payments and collections thereon, and shall submit to Agent sales,
collection, reconciliation and other reports in form reasonably satisfactory to
Agent, on such periodic basis as Agent may request. Each Borrower shall also
provide to Agent, on or before the twentieth (20th) day after the end of each
fiscal quarter (or, while Availability is less than $100,000,000 or during any
Dominion Period, on or before the twentieth (20th) day after the end of each
month), a detailed aged trial balance of all Accounts as of the close of
business of the most recently ended fiscal quarter (or, while Availability is
less than $100,000,000 or during any Dominion Period, as of the close of
business of the most recently ended month), specifying each Account’s Account
Debtor name and address, amount, invoice date and due date, showing any
discount, allowance, credit, authorized return or dispute, and including such
proof of delivery, copies of invoices and invoice registers, copies of related
documents, repayment histories, status reports and other information as Agent
may reasonably request. If Accounts in an aggregate face amount of $5,000,000 or
more cease to be Eligible Accounts, Borrowers shall notify Agent of such
occurrence promptly (and in any event within three Business Days) after
Borrowers have knowledge thereof. Without limiting the foregoing, upon Agent’s
request Borrowers shall promptly (and in any event within three Business
Days) notify Agent of all Accounts included in the current Accounts Formula
Amount that have ceased to be Eligible Accounts.

  8.2.2   Taxes

To the extent not otherwise paid by Borrowers when due, if an Account of any
Borrower includes a charge for any Taxes, Agent is authorized, in its
discretion, to pay the amount thereof to the proper taxing authority for the
account of such Borrower and to charge Borrowers therefor; provided, however,
that neither Agent nor Lenders shall be liable for any Taxes that may be due
from Borrowers or with respect to any Collateral.

  8.2.3   Account Verification

Whether or not a Default or Event of Default exists, Agent shall have the right
at any time, in the name of Agent, any designee of Agent or any Borrower, to
verify the validity, amount or any other matter relating to any Accounts of
Borrowers by mail, telephone or otherwise; provided, however, that unless an
Event of Default exists, Agent shall provide Borrowers not less than three
Business Days’ prior written notice of such verifications and shall consult with
the Borrower Agent on the manner and method of verification (so as to minimize
any impact on Borrowers business operations). Borrowers shall cooperate fully
with Agent in an effort to facilitate and promptly conclude any such
verification process.

  8.2.4   Maintenance of Dominion Account

Subject to Section 6.3, Borrowers shall maintain each Dominion Account pursuant
to lockbox or other arrangements acceptable to Agent in its Permitted
Discretion. Subject to Section 6.3, each Obligor shall obtain an agreement (in
form and substance reasonably satisfactory to Agent) from each lockbox servicer
and Dominion Account bank, establishing Agent’s control over and Lien in the
lockbox or Dominion Account, which may be exercised by Agent during any Dominion
Period, requiring immediate deposit of all remittances received in the lockbox
to a Dominion Account, and waiving offset rights of such servicer or bank,
except for customary exclusions thereto. If a Dominion Account is not maintained
with Bank of America, Agent may, during any Dominion Period, require immediate
transfer of all funds in such account to a Dominion Account maintained with Bank
of America. Agent and Lenders assume no responsibility to Obligors for any
lockbox arrangement or Dominion Account, including any claim of accord and
satisfaction or release with respect to any Payment Items accepted by any bank.

  8.2.5   Proceeds of Collateral

Borrowers shall request in writing and otherwise take all necessary steps to
ensure that all payments on Accounts are made directly to a Dominion Account (or
a lockbox relating to a Dominion Account). Except for funds received in Retail
Deposit Accounts in the Ordinary Course of Business, if any Obligor or
Subsidiary receives cash or Payment Items with respect to any Collateral, it
shall hold same in trust for Agent and promptly (not later than the next
Business Day) deposit same into an account that is subject to a Deposit Account
Control Agreement (which account must be a Dominion Account (or a lockbox
relating to a Dominion Account) to the extent such cash or Payment Items are
received during a Dominion Period). Except for funds received in Retail Deposit
Accounts in the Ordinary Course of Business, Borrowers shall request in writing
and otherwise take all necessary steps to ensure that all other Net Proceeds of
Collateral that are remitted by wire or other electronic transfer are remitted
directly to, and if any Obligor or Subsidiary otherwise receives Net Proceeds of
any Collateral it shall hold same in trust for Agent and promptly (not later
than the next Business Day) deposit same into, an account that is subject to a
Deposit Account Control Agreement (which account must be a Dominion Account (or
a lockbox relating to a Dominion Account) to the extent such Net Proceeds are
received during a Dominion Period).

              8.3   Inventory.       8.3.1    
Records and Reports of Inventory
           
 

Each Obligor shall keep accurate and correct records itemizing and describing
the type, quality, and quantity of its Inventory and the book value thereof. On
or before the later of (i) the thirtieth (30th) day after the end of each fiscal
quarter (or, while Availability is less than $100,000,000 or during any Dominion
Period, on or before the thirtieth (30th) day after the end of each month) or
(ii) 5 Business Days following delivery to Borrower Agent of the draft
ineligible Account information initially prepared by Agent as described in
Section 8.1, Borrower Agent shall submit to Agent inventory and reconciliation
reports in form reasonably satisfactory to Agent, as of the close of business of
the most recently ended fiscal quarter (or, while Availability is less than
$100,000,000 or during any Dominion Period, as of the close of business of the
prior month). Upon the request of Agent, which such request may not be made more
than once per calendar year (unless an Event of Default exists, in which case
Agent may make such a request once per Fiscal Quarter), each Obligor shall
conduct a physical inventory and cycle count consistent with historical
practices, and shall provide to Agent a report based on each such inventory and
count promptly upon completion thereof, together with such supporting
information as Agent may reasonably request. Agent may participate in and
observe each physical count.

  8.3.2   Returns of Inventory

No Obligor shall return any Inventory included in the calculation of Inventory
Formula Amount to a supplier, vendor or other Person, whether for cash, credit
or otherwise, unless (a) such return is in the Ordinary Course of Business;
(b) no Default, Event of Default or Overadvance exists or would result
therefrom; and (c) any payment received by an Obligor for a return is promptly
remitted to Agent for application to the Obligations. Without limiting the
foregoing, upon Agent’s request Borrowers shall promptly (and in any event
within three Business Days) notify Agent of all Inventory included in the
current Inventory Formula Amount that has been returned by Obligor to any
supplier, vendor or other Person.

  8.3.3   Acquisition, Sale and Maintenance

Each Obligor shall take reasonable steps to assure that all Inventory is
produced in accordance with Applicable Law, including the FLSA, and that no
convicted, forced or indentured labor (as defined under U.S. law) nor child
labor (as defined in the law of the manufacturer’s country) will be used in the
production of Inventory. Obligors shall use, store and maintain all Inventory
with reasonable care and caution, in accordance in all material respects with
applicable standards of any insurance and in conformity in all material respects
with all Applicable Law, and shall make current rent payments (within applicable
grace periods provided for in leases) at all locations where any Collateral is
located, subject to Obligor’s rights under any such lease agreements to dispute,
retain, offset or withhold rent or other similar rights for any reason in
accordance with such lease agreements; but provided, that in such cases Agent
may in its Permitted Discretion impose a reserve for the amount of such withheld
rent.

              8.4   Equipment.       8.4.1    
Records and Schedules of Equipment
           
 

Each Obligor shall keep accurate and complete records of its Equipment, and
shall submit to Agent, on such periodic basis, but not more frequently than
monthly, as Agent may request, a summary thereof, in form reasonably
satisfactory to Agent. Promptly upon request, Obligors shall deliver to Agent
such other documents and information as Agent may reasonably request from time
to time in connection with Obligor’s Equipment.

  8.4.2   Dispositions of Equipment

No Obligor shall sell, lease or otherwise dispose of any Equipment, without the
prior written consent of Agent, other than (a) a Permitted Asset Disposition;
and (b) replacement of Equipment that is worn, damaged or obsolete with
Equipment of like function and value, if the replacement Equipment is acquired
substantially contemporaneously with such disposition and is free of Liens other
than Permitted Liens.

  8.4.3   Condition of Equipment

The Equipment is in good operating condition and repair in all material
respects, and all necessary replacements and repairs have been made so that the
value and operating efficiency of the Equipment is preserved in all material
respects at all times, reasonable wear and tear excepted. Each Obligor shall
ensure that the Equipment is mechanically and structurally sound in all material
respects, and capable of performing the functions for which it was designed, in
accordance with manufacturer specifications.

  8.5   Deposit Accounts and Securities Accounts. 8.5.1 Accounts Generally

Obligors have disclosed to Agent in writing all Deposit Accounts and Securities
Accounts maintained by any Obligor as of the Closing Date, and Obligors shall
promptly notify Agent of any opening or closing of a Deposit Account or
Securities Account after the Closing Date. Each Obligor shall take all action
necessary to establish Agent’s control of each Deposit Account and each
Securities Account maintained by such Obligor, other than Excluded Accounts.
Each Obligor shall be the sole account holder of each Deposit Account and
Securities Account and shall not allow any other Person (other than Agent) to
have control over any Deposit Account or Securities Account or any Property
deposited therein.

  8.5.2   Retail Deposit Accounts

Borrowers shall not permit Retail Deposit Accounts to contain more than
$25,000,000 in the aggregate at any time. All available funds on deposit in each
Retail Deposit Account shall be transferred by Borrowers to a Dominion Account
promptly following the initial deposit thereof into such Retail Deposit Account
(other than not more than $1,000,000 on deposit in each Retail Deposit Account
at any time); provided that upon Agent’s request during a Dominion Period,
Borrowers shall implement such transfers to a Dominion Account using standing
transfer instructions or other automated transfer procedures acceptable to Agent
with respect to all such funds on deposit in Retail Deposit Accounts (other than
any minimum amount as Agent may approve in its sole discretion).

              8.6   General Provisions.       8.6.1    
Location of Collateral
           
 

All of the Obligors’ Inventory, Equipment, and books and records, other than
(x) Equipment out for repair, (y) Inventory in transit to or between locations
of Obligors, or (z) Inventory out on consignment in the Ordinary Course of
Business, shall at all times be kept by Obligors at the business locations set
forth in Schedule 8.6.1 or Borrowers’ leased retail store locations operated in
the Ordinary Course of Business, except that Obligors may (a) make sales or
other dispositions of Collateral in accordance with Section 10.2.6; and (b) move
Collateral to another location in the United States, upon 30 Business Days prior
written notice to Agent.

  8.6.2   Insurance of Collateral

(a) Each Obligor shall maintain insurance with respect to the Collateral,
covering casualty, hazard, theft and other risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses, in amounts
as is carried generally in accordance with sound business practice by companies
in similar businesses similarly situated and located, with endorsements and with
responsible and reputable insurers reasonably satisfactory to Agent. All
business interruption insurance and all proceeds of Collateral under each policy
shall, subject to the reinvestment rights set forth in Section 8.6.2(b) below,
be payable to Agent. From time to time upon request, Obligors shall deliver to
Agent the originals or certified copies of its insurance policies. Unless Agent
shall agree otherwise, each policy shall include reasonably satisfactory
endorsements (i) showing Agent as loss payee; (ii) requiring 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever (10 days in the case of nonpayment of premiums); and
(iii) specifying that the interest of Agent shall not be impaired or invalidated
by any act or neglect of relevant Obligor or the owner of the Property, nor by
the occupation of the premises for purposes more hazardous than are permitted by
the policy. If any Obligor fails to provide and pay for any insurance, Agent
may, at its option, but shall not be required to, procure the insurance and
charge Obligors therefor. Obligors agree to deliver to Agent, promptly as
rendered, copies of all reports made to insurance companies. While no Event of
Default exists, Obligors may settle, adjust or compromise any insurance claim,
as long as the proceeds are delivered to Agent. If an Event of Default exists,
only Agent shall be authorized to settle, adjust and compromise such claims.

(b) During a Dominion Period, any Net Proceeds of insurance (other than proceeds
from workers’ compensation or D&O insurance) and any awards arising from
condemnation of any Collateral shall be paid to Agent and shall be applied to
payment of the Revolver Loans, and then to other Obligations; provided that, so
long as (i) no Default or Event of Default shall have occurred and is continuing
or would result therefrom, (ii) Borrower Agent shall have given Agent prior
written notice of Borrowers’ intention to apply such Net Proceeds to the costs
of repair or replacement of the properties or assets with respect to which such
Net Proceeds were received or other similar Property useful in the Ordinary
Course of Business, (iii) the Net Proceeds are held in a Deposit Account in
which Agent has a perfected first-priority security interest until used as
contemplated herein, and (iv) Skechers or its Subsidiaries, as applicable,
complete such repair, replacement, purchase, or construction within (A) 365 days
after the date of the initial receipt of such Net Proceeds if such Net Proceeds
relate to the repair, replacement of, or construction in connection with, Real
Estate and (B) in all other cases, 180 days after the date of the initial
receipt of such Net Proceeds, then the Obligor who received such Net Proceeds
shall have the option to apply such Net Proceeds to the costs of repair or
replacement of the properties or assets with respect to which such Net Proceeds
were received or the costs of purchase or construction of other assets useful in
the business of Skechers or such Subsidiary unless and to the extent that such
applicable period shall have expired without such repair, replacement, purchase,
or construction being made or completed, in which case, any amounts remaining in
the cash collateral account shall be paid to Agent and applied in accordance
with Section 5.6.1.

  8.6.3   Protection of Collateral

All expenses of protecting, storing, warehousing, insuring, handling,
maintaining and shipping any Collateral, all Taxes payable with respect to any
Collateral (including any sale thereof), and all other payments required to be
made by Agent to any Person to realize upon any Collateral, shall be borne and
paid by the Obligors. Agent shall not be liable or responsible in any way for
the safekeeping of any Collateral, for any loss or damage thereto (except for
reasonable care in its custody while Collateral is in Agent’s actual
possession), for any diminution in the value thereof, or for any act or default
of any warehouseman, carrier, forwarding agency or other Person whatsoever, but
the same shall be at Obligors’ sole risk.

  8.6.4   Defense of Title

Each Obligor shall defend its title to Collateral and Agent’s Liens therein
against all Persons, claims and demands, except Permitted Liens.

  8.7   Power of Attorney

Each Obligor hereby irrevocably constitutes and appoints Agent (and all Persons
designated by Agent) as such Obligor’s true and lawful attorney (and
agent-in-fact) for the purposes provided in this Section. Agent, or Agent’s
designee, may, without notice and in either its or the relevant Obligor’s name,
but at the cost and expense of such Obligor:

(a) Endorse the relevant Obligor’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and

(b) During an Event of Default, (i) notify any Account Debtors of the assignment
of their Accounts, demand and enforce payment of Accounts by legal proceedings
or otherwise, and generally exercise any rights and remedies with respect to
Accounts; (ii) settle, adjust, modify, compromise, discharge or release any
Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral
upon such terms, for such amounts and at such times as Agent deems advisable;
(iv) collect, liquidate and receive balances in Deposit Accounts or investment
accounts constituting Collateral, and take control, in any manner, of proceeds
of Collateral; (v) prepare, file and sign an Obligor’s name to a proof of claim
or other document in a bankruptcy of an Account Debtor with respect to an
Account of an Obligor, or to any notice, assignment or satisfaction of Lien or
similar document related to an Account of an Obligor; (vi) receive, open and
dispose of mail addressed to an Obligor, and notify postal authorities to
deliver any such mail to an address designated by Agent; (vii) endorse any
Chattel Paper, Document, Instrument, bill of lading, or other document or
agreement relating to any Accounts, Inventory or other Collateral; (viii) use
Obligors’ stationery and sign its name to verifications of Accounts and notices
to Account Debtors; (ix) use information contained in any data processing,
electronic or information systems relating to Collateral; (x) make and adjust
claims under insurance policies (in the case of Property insurance policies,
with respect to Collateral); (xi) take any action as may be necessary or
appropriate to obtain payment under any letter of credit, banker’s acceptance or
other instrument, in each case to the extent constituting Collateral, for which
an Obligor is a beneficiary; and (xii) take all other actions with respect to
the Collateral or Obligors as Agent deems appropriate to fulfill any Obligor’s
obligations under the Loan Documents.

    SECTION 9. REPRESENTATIONS AND WARRANTIES

9.1 General Representations and Warranties. To induce Agent and Lenders to enter
into this Agreement and to make available the Commitments, Loans and Letters of
Credit, each Obligor represents and warrants, on the Closing Date and on each
request (or deemed request) by Borrowers for funding of a Loan, issuance of a
Letter of Credit or grant of an accommodation that:

  9.1.1   Organization and Qualification

Each Obligor is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each Subsidiary that is not an
Obligor is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, except where the failure to be so
organized, existing or in good standing could not reasonably be expected to have
a Material Adverse Effect. Each Obligor and each Subsidiary is duly qualified,
authorized to do business and in good standing as a foreign corporation or
limited liability company in each jurisdiction where failure to be so qualified
could reasonably be expected to have a Material Adverse Effect.

  9.1.2   Power and Authority

Each Obligor is duly authorized to execute, deliver and perform its Loan
Documents. The execution, delivery and performance of the Loan Documents have
been duly authorized by all necessary action, and do not (a) require any consent
or approval of any holders of Equity Interests of any Obligor, except those
already obtained; (b) contravene the Organic Documents of any Obligor;
(c) violate or cause a default under any Applicable Law, Material Contract or
any Subordinated Debt; or (d) result in or require imposition of a Lien (other
than Permitted Liens) on any Obligor’s Property. None of the Organic Documents
of Skechers: (i) provide that the approval of the holders of the Majority Voting
Equity Interests are insufficient to take any corporate action, or (ii) permit
any holders of less than the Majority Voting Equity Interests to prohibit or
block any corporate action otherwise approved by the holders of the Majority
Voting Equity Interests.

  9.1.3   Enforceability

Each Loan Document is a legal, valid and binding obligation of each Obligor
party thereto, enforceable in accordance with its terms, except as
enforceability may be limited by equitable principles or by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally.

  9.1.4   Capital Structure

(a) Schedule 9.1.4(a) shows as of the Closing Date (a) for Skechers, its name,
jurisdiction of organization, and number and classes of authorized and issued
Equity Interests, and (b) for each other Obligor and each of their Subsidiaries
and joint ventures, its name, jurisdiction of organization, authorized and
issued Equity Interests (other than for any Foreign Subsidiary), holders of its
Equity Interests, and shareholder agreements or voting agreements binding on
such holders with respect to such Equity Interests. Except as disclosed on
Schedule 9.1.4(a), in the five years preceding the Closing Date, no Obligor or
Subsidiary has acquired any substantial assets from any other Person nor been
the surviving entity in a merger or combination. Each Obligor has good title to
its Equity Interests in its Subsidiaries and joint ventures, subject only to
Agent’s Liens, and all such Equity Interests are duly issued, fully paid and
non-assessable. Except as disclosed on Schedule 9.1.4(a), there are no
outstanding purchase options, warrants, subscription rights, agreements to issue
or sell, convertible interests or phantom rights or powers of attorney relating
to any Pledged Equity or other Equity Interests of any Issuer. None of the
Subsidiaries identified on Schedule 9.1.4(a) as a “real estate holding company”
owns any property or assets other than Real Estate and other assets necessary in
connection with the ownership of such Real Estate.

(b) Except as set forth on Schedule 9.1.4(b), and other than the Obligations,
Subordinated Debt and Permitted Purchase Money Debt, the Obligors do not have
any Debt outstanding on the Closing Date.

(c) As of the Closing Date, each Domestic Subsidiary of Skechers is an Obligor,
other than (i) Skechers Collection, LLC, Skechers Sport, LLC and SKX Illinois,
LLC, each of which is an Immaterial Subsidiary, and (ii) Sepulveda Blvd.
Properties, LLC, Sepulveda Design Center LLC, Duncan Investments, LLC and
Skechers RB, each of which is a Real Estate Holding Subsidiary.

  9.1.5   Title to Properties; Priority of Liens

Each Obligor and each Subsidiary has good and marketable title to (or valid
leasehold interests in) all of its Real Estate, and good title to all of its
personal Property, including all Property reflected in any financial statements
delivered to Agent or Lenders, in each case except for those assets that are not
necessary for the conduct of the business of the Obligors and their Subsidiaries
taken as a whole, or assets disposed of pursuant to a Permitted Asset
Disposition. All such assets are free and clear of liens other than Permitted
Liens. All Liens of Agent in the Collateral are (other than as a result of an
action taken by the Agent or an action not taken that is solely in the control
of Agent) duly perfected, first priority Liens, subject only to Permitted Liens.

  9.1.6   Accounts

Agent may rely, in determining which Accounts are Eligible Accounts, on all
statements and representations made by Borrowers with respect thereto. Each
Borrower warrants, with respect to each Account shown as an Eligible Account in
a Borrowing Base Report, that:

(a) it is genuine and in all respects what it purports to be;

(b) it arises out of a completed, bona fide sale and delivery of goods in the
Ordinary Course of Business, and substantially in accordance with any purchase
order, contract or other document relating thereto;

(c) it is for a sum certain, maturing as stated in the applicable invoice, a
copy of which has been furnished or is available to Agent on request;

(d) it is not subject to any offset, Lien (other than Agent’s Lien), deduction,
defense, dispute, counterclaim or other adverse condition except as arising in
the Ordinary Course of Business and disclosed to Agent; and it is absolutely
owing by the Account Debtor, without contingency in any respect;

(e) no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to Agent (regardless of whether, under the UCC, the
restriction is ineffective), and the applicable Borrower is the sole payee or
remittance party shown on the invoice;

(f) no extension, compromise, settlement, modification, credit, deduction or
return has been authorized or is in process with respect to the Account, except
discounts or allowances granted in the Ordinary Course of Business for prompt
payment that are reflected on the face of the invoice related thereto and in the
reports submitted to Agent hereunder; and

(g) to the each Borrower’s actual knowledge, (i) there are no facts or
circumstances that are reasonably likely to impair the enforceability or
collectability of such Account; and (ii) the Account Debtor had the capacity to
contract when the Account arose, continues to meet the applicable Borrower’s
customary credit standards, is Solvent, is not contemplating or subject to an
Insolvency Proceeding, and has not failed, or suspended or ceased doing
business.

  9.1.7   Financial Statements

The balance sheets, and related statements of income, cash flow and shareholders
equity, with respect to Skechers on a Consolidated Basis that have been and are
hereafter delivered to Agent and Lenders, are prepared in accordance with GAAP,
and fairly present in all material respects the financial positions and results
of operations of the Persons to which they relate at the dates and for the
periods indicated. All projections delivered from time to time to Agent and
Lenders have been prepared in good faith, based on reasonable assumptions in
light of the circumstances at such time. Since December 31, 2014, there has been
no change in the condition, financial or otherwise, of Borrower or Subsidiary
that could reasonably be expected to have a Material Adverse Effect. No
financial statement delivered to Agent or Lenders at any time contains any
untrue statement of a material fact, nor fails to disclose any material fact
necessary to make such statement not materially misleading. Each Obligor is
Solvent, and Skechers and its Subsidiaries, taken as a whole, are Solvent.

  9.1.8   Surety Obligations

No Obligor or Subsidiary is obligated as surety or indemnitor under any bond or
other contract that assures payment or performance of any obligation of any
Person, except as permitted hereunder.

  9.1.9   Taxes

Each Obligor and each Subsidiary has filed all federal, state and local tax
returns and other reports that it is required by law to file, and has paid, or
made provision for the payment of, all Taxes upon it, its income and its
Properties that are due and payable, except to the extent being Properly
Contested. The provision for Taxes on the books of each Obligor and each
Subsidiary is adequate for all years not closed by applicable statutes, and for
its current Fiscal Year.

  9.1.10   Brokers

There are no brokerage commissions, finder’s fees or investment banking fees
payable in connection with any transactions contemplated by the Loan Documents.

  9.1.11   Intellectual Property

Each Obligor owns or has the lawful right to use all Intellectual Property
necessary for the conduct of its business, without conflict with any rights of
others. Each Subsidiary owns or has the lawful right to use all Intellectual
Property necessary for the conduct of its business, without conflict with any
rights of others, except as could not reasonably be expected to have a Material
Adverse Effect. As of the date of this Agreement, except as disclosed on
Schedule 9.1.11, there is no pending or, to any Obligor’s knowledge, threatened
(in writing) Intellectual Property Claim with respect to any Obligor, any
Subsidiary or any of their Property (including any Intellectual Property) which
could reasonably be expected to result in a Material Adverse Effect. As of the
date of this Agreement, except as disclosed on Schedule 9.1.11, the Obligors do
not pay or owe any Royalty or other compensation to any Person with respect to
any Intellectual Property that is, in the aggregate for all Obligors, in excess
of $1,000,000 for any Fiscal Year. As of the date of this Agreement, all
Intellectual Property owned by any Obligor and which is registered with the
United States Patent and Trademark Office or the United States Copyright Office
is shown on Schedule 9.1.11.

  9.1.12   Governmental Approvals

Each Obligor and each Subsidiary has, is in compliance with, and is in good
standing with respect to, all Governmental Approvals necessary to conduct its
business and to own, lease and operate its Properties. All necessary import,
export or other licenses, permits or certificates for the import or handling of
any goods or other Collateral have been procured and are in effect, and Obligors
and Subsidiaries have complied with all foreign and domestic laws with respect
to the shipment and importation of any goods or Collateral, except where
noncompliance could not reasonably be expected to have a Material Adverse
Effect.

  9.1.13   Compliance with Laws

Each Obligor and each Subsidiary has duly complied, and its Properties and
business operations are in compliance, in all material respects with all
Applicable Law, except where noncompliance could not reasonably be expected to
have a Material Adverse Effect. There have been no citations, notices or orders
of material noncompliance issued to any Obligor or any Subsidiary under any
Applicable Law. All Inventory of the Obligors has been produced in compliance
with the FLSA in all material respects.

  9.1.14   Compliance with Environmental Laws

As of the date of this Agreement, except as disclosed on Schedule 9.1.14, no
Obligor’s or Subsidiary’s operations, Real Estate or other Properties are
subject to any federal, state or local investigation to determine whether any
remedial action is needed to address any environmental pollution, hazardous
material or environmental clean-up. No Obligor or Subsidiary has received any
Environmental Notice which could reasonably be expected to result in a Material
Adverse Effect. No Obligor or Subsidiary has any material contingent liability
with respect to any Environmental Release, environmental pollution or hazardous
material on any Real Estate now or previously owned, leased or operated by it.

  9.1.15   Burdensome Contracts

No Obligor or Subsidiary is a party or subject to any contract, agreement or
charter restriction, the performance of which could reasonably be expected to
have a Material Adverse Effect. As of the Closing Date, no Borrower or other
Obligor is party or subject to any Restrictive Agreement, except as shown on
Schedule 9.1.15. No such Restrictive Agreement prohibits the execution, delivery
or performance of any Loan Document by any Borrower or other Obligor.

  9.1.16   Litigation

There are no proceedings or investigations pending or, to any Obligor’s
knowledge, threatened in writing against any Obligor or any Subsidiary, or any
of their businesses, operations, Properties, prospects or conditions (a) that
relate to any Loan Documents or transactions contemplated thereby; or (b) as to
which there is a reasonable possibility of an adverse determination that could
reasonably be expected (individually or in the aggregate and after giving due
regard to available insurance coverage therefor for which the applicable insurer
has not issued a denial of coverage or a reservation of rights) to result in a
Material Adverse Effect. As of the Closing Date, except as shown on
Schedule 9.1.16, no Obligor has a Commercial Tort Claim (other than, as long as
no Default or Event of Default exists, a Commercial Tort Claim for less than
$1,000,000). No Obligor or Subsidiary is in default in any material respect with
respect to any order, injunction or judgment of any Governmental Authority.

  9.1.17   No Defaults

No event or circumstance has occurred or exists that constitutes a Default or
Event of Default. No Obligor or Subsidiary is in default, and no event or
circumstance has occurred or exists that with the passage of time or giving of
notice would constitute a default, under any Material Contract. There is no
valid basis upon which any party (other than any Obligor or Subsidiary) could
terminate a Material Contract prior to its scheduled termination, except where
such termination could not reasonably be expected to have a Material Adverse
Effect.

  9.1.18   ERISA

Except as disclosed on Schedule 9.1.18:

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code, and other federal and state laws. Each Plan that
is intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the knowledge
of Obligors, nothing has occurred which would prevent, or cause the loss of,
such qualification.

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

(c) No ERISA Event has occurred or is reasonably expected to occur which could
reasonably be expected to have a Material Adverse Effect; (ii) as of the most
recent valuation date for any Pension Plan, the funding target attainment
percentage (as defined in Section 430(d)(2) of the Code) is at least 60%, and no
Obligor or ERISA Affiliate knows of any reason that the funding target
attainment percentage could reasonably be expected to drop below 60%; (iii) no
Obligor or ERISA Affiliate has incurred any material liability to the PBGC
except for the payment of premiums, and no premium payments are due and unpaid;
(iv) no Obligor or ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA; and (v) no Pension Plan has been
terminated by its plan administrator or the PBGC, and no fact or circumstance
exists that could reasonably be expected to cause the PBGC to institute
proceedings to terminate a Pension Plan.

(d) With respect to any Foreign Plan, (i) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if applicable, accrued, in accordance with normal accounting
practices; (ii) the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through insurance, or
the book reserve established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations with respect to all current and former participants in such Foreign
Plan according to the actuarial assumptions and valuations most recently used to
account for such obligations in accordance with applicable generally accepted
accounting principles; and (iii) it has been registered as required and has been
maintained in good standing with applicable regulatory authorities in each case
set forth in clauses (i), (ii) or (iii) except as could not reasonably be
expected to have a Material Adverse Effect.

  9.1.19   Trade Relations

There exists no actual or threatened termination, limitation or modification of
any business relationship between any Obligor and any customer or supplier, or
any group of customers or suppliers, who individually or in the aggregate are
material to the business of such Obligor. There exists no condition or
circumstance that could reasonably be expected to impair the ability of any
Obligor to conduct its business at any time hereafter in substantially the same
manner as conducted on the Closing Date.

  9.1.20   Labor Relations

As of the Closing Date, except as described on Schedule 9.1.20, no Obligor or
Subsidiary is party to or bound by any collective bargaining agreement. There
are no material grievances, disputes or controversies with any union or other
organization of any Obligor’s or any Subsidiary’s employees, or, to any
Obligor’s knowledge, any asserted or threatened strikes, work stoppages or
demands for collective bargaining.

  9.1.21   Payable Practices

No Obligor or Subsidiary has made any material change in its historical accounts
payable practices from those in effect on the Closing Date.

  9.1.22   Not a Regulated Entity

No Obligor is an “investment company” or a “person directly or indirectly
controlled by or acting on behalf of an investment company” within the meaning
of the Investment Company Act of 1940 or subject to regulation under any other
Applicable Law regarding its authority to incur Debt.

9.1.23 Margin StockNo Obligor or Subsidiary is engaged, principally or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit
will be used by Obligors to purchase or carry, or to reduce or refinance any
Debt incurred to purchase or carry, any Margin Stock or for any related purpose
governed by Regulations T, U or X of the Board of Governors.

9.1.24 OFACNo Permitted Holder, Obligor, Subsidiary or Affiliate of any Obligor,
or, to the actual knowledge of any Borrower or Subsidiary, any director,
officer, employee, agent or representative acting on such Borrower’s or
Subsidiary’s behalf, is, is controlled or (other than with respect to
Skechers) is owned in any material amount by any individual or entity that is
currently the subject or target of any Sanction or is located, organized or
resident in a Designated Jurisdiction. To the actual knowledge of any Borrower
or Subsidiary, no individual or entity that is currently the subject or target
of any Sanction or is located, organized or resident in a Designated
Jurisdiction owns Skechers in an amount which results in the transactions
contemplated by this Agreement or the other Loan Documents, or any of Skechers,
any Obligor, Agent, Issuing Bank or any Lender or other Secured Party, being the
subject or target of any Sanction or otherwise in violation of Applicable Law.

  9.1.25   Anti-Corruption Laws.

Each Obligor and each Subsidiary has conducted its business in accordance with
applicable anti-corruption laws and has instituted and maintained policies and
procedures designed to promote and achieve compliance with such laws.

9.2 Complete Disclosure. No Loan Document contains any untrue statement of a
material fact, nor fails to disclose any material fact necessary to make the
statements contained therein not materially misleading. There is no fact or
circumstance that any Obligor has failed to disclose to Agent in writing that
could reasonably be expected to have a Material Adverse Effect.

    SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

10.1 Affirmative Covenants. As long as any Commitments or Obligations are
outstanding, each Obligor shall, and shall cause each Subsidiary to:

  10.1.1   Inspections; Appraisals

(a) Permit Agent from time to time, subject (except when a Default or Event of
Default exists) to reasonable prior notice and (except when a Default or Event
of Default exists) only during normal business hours, to visit and inspect the
Properties of any Obligor, inspect, audit and make extracts from any Obligor’s
books and records, and discuss with its officers, employees, agents, advisors
and independent accountants Obligor’s or any Subsidiary’s business, financial
condition, assets, prospects and results of operations. Lenders may participate
in any such visit or inspection, at their own expense. Neither Agent nor any
Lender shall have any duty to any Obligor to make any inspection, nor to share
any results of any inspection, appraisal or report with any Obligor. Each
Obligor acknowledges that all inspections, appraisals and reports are prepared
by Agent and Lenders for their purposes, and Obligors shall not be entitled to
rely upon them.

(b) Reimburse Agent for all reasonable charges, costs and expenses of Agent in
connection with (i) up to one (1) examination per year (and, during the
existence of an Event of Default, any additional examinations) of any Obligor’s
books and records or any other financial or Collateral matters as Agent deems
appropriate in its Permitted Discretion; and (ii) up to one (1) appraisal per
year (and, during the existence of an Event of Default, any additional
appraisals) of Obligor’s Inventory as Agent deems appropriate in its Permitted
Discretion. Borrowers agree to pay Agent’s then-standard charges for examination
and appraisal activities, including charges for Agent’s internal examination and
appraisal groups, as well as the reasonable charges of any third party used for
such purposes. Unless otherwise agreed in writing by Agent, no Borrowing Base
calculation shall include Collateral acquired in a Permitted Acquisition or
otherwise outside the Ordinary Course of Business until completion of applicable
field examinations and appraisals satisfactory to Agent.

  10.1.2   Financial and Other Information

Keep adequate records and books of account with respect to its business
activities, in which proper entries are made in accordance with GAAP; and
furnish to Agent and Lenders:

(a) as soon as available, and in any event within 90 days after the close of
each Fiscal Year, balance sheets as of the end of such Fiscal Year and the
related statements of income, cash flow and shareholders equity for such Fiscal
Year, for Skechers on a Consolidated Basis, which consolidated statements shall
be audited and certified (without qualification) by a firm of independent
certified public accountants of recognized standing selected by Borrowers and
reasonably acceptable to Agent, and shall set forth in comparative form
corresponding figures for the preceding Fiscal Year;

(b) as soon as available, and in any event within 45 days after the close of
each Fiscal Quarter, unaudited balance sheets as of the end of such Fiscal
Quarter and the related statements of income and cash flow for such Fiscal
Quarter and for the portion of the Fiscal Year then elapsed, for Skechers on a
Consolidated Basis, setting forth in comparative form corresponding figures for
the preceding Fiscal Year and certified by the chief financial officer or other
Senior Officer of Borrower Agent as prepared in accordance with GAAP and fairly
presenting the financial position and results of operations for such Fiscal
Quarter, subject to normal year-end adjustments and the absence of footnotes.

(c) during any Dominion Period, as soon as available, and in any event within
30 days after the end of each month (but within 45 days after the last month of
any Fiscal Quarter), unaudited balance sheets as of the end of such month and
the related statements of income for such month and for the portion of the
Fiscal Year then elapsed, for Skechers on a Consolidated Basis, setting forth in
comparative form corresponding figures for the preceding Fiscal Year and
certified by the chief financial officer or other Senior Officer of Borrower
Agent as prepared in accordance with GAAP and fairly presenting the financial
position and results of operations for such month and period, subject to normal
year-end adjustments and the absence of footnotes;

(d) concurrently with delivery of financial statements under clauses (a) or
(b) above, or more frequently if requested by Agent while an Event of Default
exists, a Compliance Certificate executed by a Senior Officer of the Borrower
Agent; without limiting the foregoing, Obligors shall also furnish to Agent,
within three Business Days following the commencement of each Covenant Testing
Trigger Period, an accurate calculation of the Fixed Charge Coverage Ratio (in
the form attached as Exhibit D to the Compliance Certificate) for the most
recently ended Fiscal Quarter for which financial statements are required to
have been delivered pursuant to Section 10.1.2(b), certified by a Senior Officer
of the Borrower Agent; provided, that notwithstanding anything to the contrary
set forth in Section 6.2, Agent, Issuing Bank and Lenders shall not be required
to fund any Loans, arrange for issuance of any Letters of Credit or grant any
other accommodation to or for the benefit of Borrowers following the
commencement of each Covenant Testing Trigger Period until such Compliance
Certificate has been delivered to Agent as required by this Section 10.1.2(d);

(e) concurrently with delivery of financial statements under clause (a) above,
copies of all management letters and other material reports submitted to
Obligors by their accountants in connection with such financial statements;

(f) not later than 60 days after the commencement of each Fiscal Year,
projections for Skechers on a Consolidated Basis, including consolidated balance
sheets, results of operations, cash flow and Availability for such Fiscal Year,
quarter-by-quarter, and for such Fiscal Year and the following Fiscal Year,
year-by-year;

(g) within ten (10) days of Agent’s request, but in no event more frequently
than monthly unless an Event of Default has occurred and is continuing, a
listing of Borrowers’ trade payables, specifying the trade creditor and balance
due, and a detailed trade payable aging, all in form reasonably satisfactory to
Agent;

(h) promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that Skechers has made generally
available to its shareholders; copies of any regular, periodic and special
reports or registration statements or prospectuses that any Obligor files with
the Securities and Exchange Commission or any other securities exchange; and
copies of any press releases or other statements made available by any Obligor
to the public concerning material changes to or developments in the business of
such Obligor;

(i) promptly after the sending or filing thereof, copies of any annual report to
be filed in connection with each Plan or Foreign Plan;

(j) such other reports and information (financial or otherwise) as Agent may
reasonably request from time to time in connection with any Collateral or any
Borrower’s, Subsidiary’s or other Obligor’s financial condition or business.

  10.1.3   Notices

(a) Notify Agent and Lenders in writing, promptly after an Obligor’s obtaining
knowledge thereof, of any of the following that affects an Obligor: (a) the
filing or commencement of, the threat in writing of, or any material adverse
development in, any action, suit, proceeding, investigation or arbitration by or
before any arbitrator or Governmental Authority against or affecting any Obligor
or Subsidiary not previously disclosed in writing to Agent that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect; (b) any pending or threatened labor dispute, strike or walkout, or the
expiration of any material labor contract; (c) any default under or termination
of a Material Contract or any Subordinated Debt; (d) the existence of any
Default or Event of Default; (e) any judgment in an amount exceeding
$10,000,000; (f) the assertion of, or any material adverse development in, any
Intellectual Property Claim, that could reasonably be expected have a Material
Adverse Effect; (g) any violation or asserted violation of any Applicable Law
(including ERISA, OSHA, FLSA, or any Environmental Laws), that could reasonably
be expected have a Material Adverse Effect; (h) any Environmental Release by an
Obligor or on any Property owned, leased or occupied by an Obligor, or receipt
of any Environmental Notice, in each case which could reasonably be expected to
give rise to liabilities or remediation costs exceeding $10,000,000; (i) the
occurrence of any ERISA Event; (j) the discharge of or any withdrawal or
resignation by any Obligor’s independent accountants; or (k) any opening of a
place of business (other than any leased retail store locations) where
$10,000,000 or more of Inventory may be located at any time, at least 30 days
prior to such opening (such notice to include the address, including city,
county, state and zip code, of such place of business, and the owner or lessor
thereof, as applicable).

(b) Notify Agent and Lenders in writing (including a complete copy of all such
notices), promptly upon any Obligor’s or Subsidiary’s receipt of: (i) any notice
of default or other material notice given or received under Skechers’ lease with
HF Logistics-SKX T1, LLC (or its successor as landlord) with respect to the
leased premises commonly known as 29800 Eucalyptus Avenue, Moreno Valley,
California 92555; and (ii) any notice given or received pursuant to either
Article 8 or Section 13 of the Skechers/HF JV LLC Agreement.

  10.1.4   Landlord and Storage Agreements

Upon Agent’s request, provide Agent with a list (such list to include the
address, including city, county, state and zip code, of such place of business,
and the owner or lessor thereof, as applicable) of leased retail store locations
and copies of all agreements, whether executed prior to or after the Closing
Date, between an Obligor and any landlord (provided that Agent shall afford
Obligors a reasonable period of time for the provision of any agreements with
respect to leased retail store locations based on the number of such agreements
requested), warehouseman, processor, shipper, bailee or other Person that owns
any premises at which any Collateral may be kept or that otherwise may possess
or handle any Collateral.

  10.1.5   Compliance with Laws

Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA,
OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes,
and maintain all Governmental Approvals necessary to the ownership of its
Properties or conduct of its business, unless failure to comply (other than
failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, if any Environmental Release occurs at or on any Properties of
any Obligor or Subsidiary which could reasonably be expected to have a Material
Adverse Effect, it shall act promptly and diligently to investigate and report
to Agent and, to the extent required by Applicable Law, all appropriate
Governmental Authorities the extent of, and, except as could not reasonably be
expected to have a Material Adverse Effect, to make appropriate remedial action
to eliminate, such Environmental Release, whether or not directed to do so by
any Governmental Authority.

  10.1.6   Taxes

Pay and discharge all Taxes prior to the date on which they become delinquent or
penalties attach, unless such Taxes are being Properly Contested.

  10.1.7   Insurance

In addition to the insurance required hereunder with respect to Collateral,
maintain insurance with insurers (with a Best rating of at least A+, unless
otherwise approved by Agent in its discretion) reasonably satisfactory to Agent,
(a) with respect to the Properties and business of Obligors and Subsidiaries of
such type (including product liability, workers’ compensation, larceny,
embezzlement, or other criminal misappropriation insurance), in such amounts,
and with such coverages and deductibles as are customary for companies similarly
situated; and (b) business interruption insurance in an amount not less than
$300,000,000, with deductibles and subject to an insurance assignment reasonably
satisfactory to Agent.

  10.1.8   Licenses

Keep each License affecting any Eligible Inventory or Eligible In-Transit
Inventory (including the manufacture, distribution or disposition of such
Inventory) having a value equal to or greater than 5% of the value of all
Inventory or relating to sales equal to or greater than 5% of all sales, or any
other material Property of Obligors and Subsidiaries in full force and effect;
promptly notify Agent of any proposed modification to any such License, or entry
into any new such License, in each case at least 10 days prior to its effective
date; pay all Royalties on such Licenses when due; and notify Agent of any
default or breach asserted in writing by any Person to have occurred under any
such License.

  10.1.9   Future Subsidiaries

Promptly notify Agent upon (a) any Person becoming a Subsidiary and (b) upon any
Immaterial Subsidiary or Real Estate Holding Subsidiary ceasing to qualify as
such and, if such Person is not an Immaterial Subsidiary, Foreign Subsidiary, or
Real Estate Holding Subsidiary, cause it to guaranty the Obligations in a manner
satisfactory to Agent in its Permitted Discretion, and to execute and deliver
such documents, instruments and agreements and to take such other actions as
Agent shall require to evidence and perfect a Lien in favor of Agent on all
assets, other than assets that would constitute Excluded Assets, of such Person,
including delivery of such legal opinions, in form and substance satisfactory to
Agent in its Permitted Discretion, as it shall deem appropriate.

  10.1.10   Anti-Corruption Laws

Conduct its business in compliance with applicable anti-corruption laws and
maintain policies and procedures designed to promote and achieve compliance with
such laws.

  10.1.11   Business Locations.

Upon Agent’s request, provide Agent with a true, accurate and complete list of
all current business locations (including without limitation all leased retail
store locations) in the United States of any Obligor or Subsidiary.

10.2 Negative Covenants. As long as any Commitments or Obligations are
outstanding, Obligors shall not, and shall cause each Subsidiary not to:

  10.2.1   Permitted Debt

Create, incur, guarantee or suffer to exist any Debt, except the following
(collectively, “Permitted Debt”):

(a) the Obligations;

(b) Subordinated Debt;

(c) Permitted Purchase Money Debt;

(d) Debt (other than the Obligations, Subordinated Debt and Permitted Purchase
Money Debt) set forth on Schedule 9.1.4(b), but only to the extent outstanding
on the Closing Date;

(e) Debt with respect to Bank Products incurred in the Ordinary Course of
Business;

(f) Debt that is in existence when a Person becomes a Subsidiary or that is
secured by an asset when acquired by an Obligor or Subsidiary, as long as such
Debt was not incurred in contemplation of such Person becoming a Subsidiary or
such acquisition, and does not exceed $25,000,000 in the aggregate at any time;

(g) Permitted Contingent Obligations;

(h) Debt owed to any Person providing property, casualty, liability, or other
insurance to Skechers or any of its Subsidiaries, so long as the amount of such
Debt is not in excess of the amount of the unpaid cost of, and shall be incurred
only to defer the cost of, such insurance for the year in which such Debt is
incurred and such Debt is outstanding only during such year;

(i) the incurrence by Skechers or its Subsidiaries of Debt under Hedging
Agreements that are incurred for the bona fide purpose of hedging the interest
rate or foreign currency risk associated with Skechers’ and its Subsidiaries’
operations and not for speculative purposes;

(j) Debt incurred in respect of credit cards, credit card processing services,
debit cards, stored value cards, purchase cards (including so-called
“procurement cards” or “P-cards”), or Cash Management Services, in each case,
incurred in the Ordinary Course of Business;

(k) contingent liabilities (i) in respect of any indemnification obligation,
adjustment of purchase price, non-compete, or similar obligation of Skechers or
any Subsidiary incurred in connection with the consummation of one or more
Permitted Acquisitions or (ii) in respect of any indemnification obligation
under any prior credit agreements, loan agreements, or securities offerings;

(l) Debt secured solely by Real Estate, so long as the aggregate principal
amount of such Debt does not exceed $150,000,000 at any time;

(m) Debt of Foreign Subsidiaries in an aggregate principal amount not to exceed
$50,000,000 at any time and unsecured guaranties thereof by any Obligor or any
Subsidiary; provided, however, that in no event shall any Obligor be permitted
to pledge any of their assets to secure such Debt;

(n) Deferred compensation payable to employees, officers or directors under any
deferred compensation plans entered into in the Ordinary Course of Business, so
long as the amount of total compensation payable to such employees, officers, or
directors, after taking into account such deferred compensation plan, is
consistent with the historical practices of Skechers and its Subsidiaries;

(o) Refinancing Debt as long as each Refinancing Condition is satisfied;

(p) Debt consisting of obligations in respect of intercompany loans and
intercompany advances expressly permitted by Section 10.2.7;

(q) any other Debt that is not secured by a Lien (other than Permitted
Liens) and that is Incurred such that both immediately before and immediately
after such Incurrence, Availability is in excess of 15% of all Revolver
Commitments, and no Default or Event of Default exists or is caused thereby; and

(r) other unsecured Debt in an aggregate outstanding principal amount not to
exceed $10,000,000 at any time.

  10.2.2   Permitted Liens

Create or suffer to exist any Lien upon any of its Property (whether or not
constituting Collateral), except the following (collectively, “Permitted
Liens”):

(a) Liens in favor of Agent securing the Obligations;

(b) Purchase Money Liens securing Permitted Purchase Money Debt or securing
Purchase Money Debt Incurred permitted pursuant to Section 10.2.1(q);

(c) Liens for Taxes not yet delinquent or being Properly Contested;

(d) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising
in the Ordinary Course of Business, but only if (i) payment of the obligations
secured thereby is not yet due or is being Properly Contested, and (ii) such
Liens do not materially impair the value or use of the Property or materially
impair operation of the business of any Obligor or any Subsidiary;

(e) Liens incurred or deposits made in the Ordinary Course of Business to secure
the performance of government tenders, bids, contracts (except those relating to
Debt), statutory obligations and other similar obligations;

(f) Liens on amounts deposited to secure Skechers’ and its Subsidiaries’
obligations in connection with worker’s compensation or other unemployment
insurance;

(g) Liens on amounts deposited to secure Skechers’ and its Subsidiaries’
reimbursement obligations incurred in the Ordinary Course of Business with
respect to performance, surety, statutory, and appeal bonds;

(h) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, and other similar
statutory Liens, incurred in the Ordinary Course of Business and not in
connection with Debt, and which Liens either (i) are for sums not yet
delinquent, or (ii) are Properly Contested;

(i) Liens arising by virtue of a judgment or judicial order or award against any
Obligor or Subsidiary, or any Property of an Obligor or Subsidiary, that do not
constitute an Event of Default under Section 11.1(g);

(j) easements, rights-of-way, restrictions, covenants or other agreements of
record, and other similar charges or encumbrances on Real Estate, that do not
secure any monetary obligation and do not interfere with the Ordinary Course of
Business;

(k) normal and customary rights of setoff upon deposits in favor of depository
institutions, and Liens of a collecting bank on Payment Items in the course of
collection;

(l) Liens on assets (other than Accounts, Inventory, Deposit Accounts or
Securities Accounts of any Obligor (or any proceeds of the foregoing)) acquired
in a Permitted Acquisition, securing Debt permitted by Section 10.2.1(f);

(m) existing Liens shown on Schedule 10.2.2;

(n) the interests of lessors under operating leases and licensors under license
agreements,

(o) licenses (a) on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the Ordinary Course of Business or
(b) on an exclusive basis, of patents, trademarks, copyrights, and other
intellectual property rights in the Ordinary Course of Business so long as
either (i) the patents, trademarks, copyrights, and other intellectual property
subject to such exclusive license are not owned by an Obligor or, if owned by an
Obligor, the territory with respect to which the exclusive license is granted
does not include the United States or a territory within the United States, or
(ii) such exclusive license does not grant a right to use such patents,
trademarks, copyrights, and other intellectual property rights in connection
with the manufacture, design, distribution or sale of footwear of any kind;

(p) Liens that are replacements of Permitted Liens to the extent that the
original Debt is the subject of permitted Refinancing Debt and so long as the
replacement Liens only encumber those assets that secured the original Debt;

(q) Liens granted in the Ordinary Course of Business on the unearned portion of
insurance premiums securing the financing of insurance premiums to the extent
the financing is permitted under the definition of Permitted Debt;

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

(s) Liens resulting from the filing of a precautionary UCC-1 financing
statements relating solely to operating leases of personal property entered into
in the Ordinary Course of Business;

(t) Liens solely on any cash earnest money deposits made by Skechers or any of
its Subsidiaries in connection with any letter of intent or purchase agreement
with respect to a proposed Permitted Acquisition;

(u) Liens on Real Property securing Indebtedness permitted pursuant to
Section 10.2.1(l) or 10.2.1(q);

(v) Liens on assets owned by Foreign Subsidiaries, which Liens secure Debt
permitted pursuant Section 10.2.1(m) or 10.2.1(q);

(w) Liens on patents, trademarks, copyrights, or other Intellectual Property,
which Liens arise pursuant to a Permitted Asset Disposition permitted pursuant
to clause (r) of the definition of Permitted Assets Dispositions, to the extent
such patents, trademarks, copyrights, or other Intellectual Property are not
necessary in the conduct of Skechers’ and its Subsidiaries’ business, taken as a
whole;

(x) other Liens which do not secure Debt and as to which the aggregate amount of
the obligations secured thereby does not exceed $100,000;

(y) any other Lien securing only Debt permitted pursuant to Section 10.2.1 or
obligations not constituting Debt that is granted when Availability is in excess
of 15% of all Revolver Commitments and no Default or Event of Default exists or
is caused thereby to the extent Borrowers have delivered to Agent, at least 5
Business Days prior to such grant, copies of all material agreements relating
thereto and a certificate, in form and substance satisfactory to Agent in its
Permitted Discretion and signed by a Senior Officer, stating that such Lien is
permitted to be granted under this Agreement and demonstrating compliance with
the requirements of this clause (l); provided that (i) in no event shall Liens
be permitted pursuant to this clause (l) that attach to any Obligors’ Accounts,
Inventory, Deposit Accounts or Securities Accounts (or any proceeds of the
foregoing) without the prior written consent of Agent and Required Lenders in
their sole discretion, and (ii) if such Lien attaches to any Collateral, to the
extent required by Agent in its Permitted Discretion such Lien is subject to an
intercreditor, license or access and use agreement in form and substance
satisfactory to Agent.

  10.2.3   [Intentionally Omitted]

  10.2.4   Distributions; Upstream Payments

(a) Declare or make any Distributions, except (i) Upstream Payments, and
(ii) any other Distribution made if (x) both immediately before and immediately
after giving pro forma effect to such Distribution, Availability is greater than
12.5% of the Revolver Commitments and no Default or Event of Default exists or
is caused thereby, and (y) either (1) the Fixed Charge Coverage Ratio,
determined on a pro forma basis immediately after giving pro forma effect to
such Distribution (as if such Distribution were made on the last day of the most
recently ended period for which financial statements have been delivered
pursuant to Section 10.1.2), is greater than 1.0 to 1.0, or (2) at all times
during each of the 30 consecutive days preceding such Distribution, Availability
(determined on a pro forma basis as if such Distribution were made at the start
of such 30-day period) has been greater than 20.0% of all Revolver Commitments
at all times.

(b) Create or suffer to exist any encumbrance or restriction on the ability of
any Obligor to make any Upstream Payment, except for restrictions under the Loan
Documents, under Applicable Law or in effect on the Closing Date as shown on
Schedule 9.1.15, or pursuant to a Restrictive Agreement permitted to be entered
into under Section 10.2.14.

  10.2.5   Restricted Investments

          Make any Restricted Investment.   10.2.6    
Disposition of Assets
       
 

Make any Asset Disposition, except a Permitted Asset Disposition, a disposition
of Equipment under Section 8.4.2, or a transfer of Property by a Subsidiary or
Obligor to an Obligor. Upon request by Borrower Agent in connection with any
Permitted Asset Disposition, together with delivery to Agent of a certificate of
a Senior Officer certifying in writing that the proposed Permitted Asset
Disposition meets all requirements of the Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), Agent will
release (and if requested by Agent, the Lenders will confirm in writing Agent’s
authority to release) Agent’s Liens on particular items of Collateral being so
disposed of in such Permitted Asset Disposition; provided, however, that
(a) Agent shall not be required to execute any document necessary to evidence
such release on terms that, in Agent’s opinion, would expose Agent to liability
or create any obligation or entail any consequence other than the release of
such Lien without recourse, representation, or warranty, and (b) such release
shall not in any manner discharge, affect, or impair the Obligations or any
Liens (other than those expressly being released) upon (or obligations of
Obligors in respect of) all interests retained by Obligors, including, the
proceeds of any sale of Collateral, all of which shall continue to constitute
part of the Collateral.

  10.2.7   Loans

Make any loans or other advances of money to any Person, except (a) advances to
an officer or employee for salary, travel expenses, commissions and similar
items in the Ordinary Course of Business; (b) prepaid expenses and extensions of
trade credit made in the Ordinary Course of Business (including, for the
avoidance of doubt, prepaid expenses and extensions of trade credit made in the
Ordinary Course of Business by any Borrower or any Subsidiary for or to another
Borrower or Subsidiary); (c) deposits with financial institutions permitted
hereunder; (d) as long as no Event of Default exists, intercompany loans made by
an Obligor that do not constitute Restricted Investments (other than pursuant to
clause (c) of the definition thereof); (e) intercompany loans and advances
existing on the Closing Date as set forth on Schedule 10.2.7; (f) intercompany
loans and advances made by a Subsidiary that is not an Obligor to an Obligor;
(g) intercompany loans and advances made by a Subsidiary that is not an Obligor
to another Subsidiary that is not an Obligor; (h) loans or advances in
connection with transactions involving the provision of accounting, management
and other similar services (and consideration therefor), cost sharing
arrangements and expense reimbursement arrangements in each case in this clause
(h) by any Borrower or any Subsidiary to one another in the Ordinary Course of
Business; and (i) in addition to the foregoing, loans or advances to employees
in an aggregate outstanding principal amount not to exceed $500,000 at any time;
provided, that all intercompany loans made by or to any Obligor pursuant to the
foregoing clauses (d), (e) or (f) must be evidenced by the Master Intercompany
Subordinated Note, and in addition, (1) Agent shall have received the following
from each party to such intercompany loans made by or to any Obligor pursuant to
the foregoing clauses (d), (e) or (f): (x) a duly executed counterpart to the
Master Intercompany Subordinated Note or a duly executed joinder agreement to
the Master Intercompany Subordinated Note in the form attached thereto, and
(y) a duly executed endorsement of the Master Intercompany Subordinated Note in
the form attached thereto; and (2) Agent must have possession of the Master
Intercompany Subordinated Note and all such joinders, as pledged to Agent and
duly executed by all parties thereto.

  10.2.8   Restrictions on Payment of Certain Debt

Make any payments (whether voluntary or mandatory, or a prepayment, redemption,
retirement, defeasance or acquisition) with respect to any (a) Subordinated
Debt, except to the extent permitted under any subordination agreement
(including the Master Intercompany Subordinated Note) relating to such Debt; or
(b) Debt (other than the Obligations) prior to its due date under the agreements
evidencing such Debt (other than refinancings made with Refinancing Debt or
other Permitted Debt); provided, however, that with respect to the prepayment of
Debt as described in clause (b) above, such prepayment shall be permitted if
(x) both immediately before and immediately after giving pro forma effect to
such prepayment, Availability is greater than 12.5% of the Revolver Commitments
and no Default or Event of Default exists or is caused thereby, and (y) either
(1) the Fixed Charge Coverage Ratio, determined on a pro forma basis immediately
after giving pro forma effect to such prepayment (as if such prepayment were
made on the last day of the most recently ended period for which financial
statements have been delivered pursuant to Section 10.1.2), is greater than 1.0
to 1.0, or (2) at all times during each of the 30 consecutive days preceding
such prepayment, Availability (determined on a pro forma basis as if such
prepayment were made at the start of such 30-day period) has been greater than
20.0% of all Revolver Commitments at all times.

  10.2.9   Fundamental Changes

Change its name or conduct business under any fictitious name; change its tax,
charter or other organizational identification number; change its form or state
of organization; liquidate, wind up its affairs or dissolve itself; or merge,
combine or consolidate with any Person, whether in a single transaction or in a
series of related transactions, except for (a) mergers or consolidations of
(i) a Borrower with and into another Borrower, provided that if Skechers is a
party to such merger or consolidation, Skechers must be the survivor thereof,
(ii) a Guarantor with and into a Borrower, (iii) a Guarantor with and into
another Guarantor, (iv) a non-Obligor Subsidiary with and into an Obligor, or
(v) a non-Obligor Subsidiary with and into another non-Obligor Subsidiary,
(b) Permitted Acquisitions; (c) name changes of which Agent has been given ten
(10) Business Days prior notice, (d) conduct of business under any fictitious
name of which Agent has been given ten (10) Business Days prior notice, or
(e) change in tax, charter or other organizational identification number (i) of
which Agent has been given ten (10) Business Days prior notice, or (ii) which
were not initiated by such Obligor and are due to actions by any relevant
Governmental Authority, so long as Agent receives notice thereof promptly (and
in any event within ten (10) days) after such Obligor becomes aware of such
change.

  10.2.10   Subsidiaries

Form or acquire any Subsidiary after the Closing Date, except in accordance with
Sections 10.1.9, 10.2.5 and 10.2.9. Permit any Obligor (other than Skechers) or
any Subsidiary to issue any additional Equity Interests except directors’
qualifying shares unless such additional Equity Interests are, and are treated
as, Pledged Equity (except to the extent constituting Excluded Assets). Permit
any Real Estate Holding Subsidiary to own any property or assets other than
(a) in the case of a Real Estate Holding Subsidiary described in clause (i) of
the definition thereof, Real Estate and other assets necessary in connection
with the ownership of such Real Estate or (b) in the case of a Real Estate
Holding Subsidiary described in clause (ii) of the definition thereof, Equity
Interests in an Affiliate or joint venture described in such clause (ii).

  10.2.11   Organic Documents

Unless consented to by Agent, amend, modify or otherwise change any of its
Organic Documents, except in connection with a transaction permitted under
Section 10.2.9 or if the effect thereof, either individually or in the
aggregate, would (i) provide that the approval of the holders of the Majority
Voting Equity Interests are insufficient to take any corporate action by
Skechers, (ii) permit any holders of less than the Majority Voting Equity
Interests to prohibit or block any corporate action by Skechers otherwise
approved by the holders of the Majority Voting Equity Interests, (iii) result in
a Change of Control or (iv) otherwise reasonably be expected to be materially
adverse to the interests of the Secured Parties.

  10.2.12   Tax Consolidation

File or consent to the filing of any consolidated income tax return with any
Person other than Obligors and Subsidiaries.

  10.2.13   Accounting Changes

Make any material change in accounting treatment or reporting practices, except
as required by GAAP and in accordance with Section 1.2; or change its Fiscal
Year.

  10.2.14   Restrictive Agreements

Permit any Obligor to become a party to any Restrictive Agreement, except a
Restrictive Agreement (a) in effect on the Closing Date and set forth on
Schedule 9.1.15; (b) relating to secured Debt permitted hereunder, as long as
the restrictions on Liens in such Restrictive Agreement apply only to the
collateral securing such Debt and such collateral does not constitute
Collateral; or (c) that does not condition or restrict the Agent’s Lien on the
Collateral, is customary in the Ordinary Course of Business, is immaterial to
the performance by the Obligors of their Obligations under the Loan Documents
and could not reasonably be expected to have a Material Adverse Effect.

  10.2.15   Hedging Agreements

Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary
Course of Business and not for speculative purposes.

  10.2.16   Conduct of Business

Engage in any business, other than its business as conducted on the Closing Date
and any activities incidental thereto or reasonably related or ancillary
thereto.

  10.2.17   Affiliate Transactions

Enter into or be party to any transaction with an Affiliate, except
(a) transactions expressly permitted by the Loan Documents; (b) payment of
reasonable compensation and benefits to officers and employees for services
actually rendered, and payment of customary directors’ fees and indemnities;
(c) transactions solely among Obligors or solely among Subsidiaries which are
not Obligors; (d) transactions with Affiliates as shown on Schedule 10.2.17;
(e) transactions with Affiliates in the Ordinary Course of Business, which
transactions under this clause (e) shall be upon fair and reasonable terms fully
disclosed to Agent and no less favorable than would be obtained in a comparable
arm’s-length transaction with a non-Affiliate; and (f) transactions involving
the provision of accounting, management and other similar services (and
consideration therefor), cost sharing arrangements and expense reimbursement
arrangements in each case in this clause (f) by any Borrower or any Subsidiary
to one another in the Ordinary Course of Business.

  10.2.18   Plans

Become party to any Multiemployer Plan or Foreign Plan, other than any in
existence on the Closing Date.

  10.2.19   Amendments to Subordinated Debt

Amend, supplement or otherwise modify any document, instrument or agreement
relating to any Subordinated Debt, except to the extent (a) not prohibited under
the Subordination Agreement related thereto or the subordination provisions
thereof and (b) that such amendment, supplement or modification would not result
in the Obligations losing the benefit of the Subordination Agreement related
thereto or the subordination provisions thereof.

10.3 Financial Covenants. As long as any Commitments or Obligations are
outstanding, Borrower shall:

  10.3.1   Fixed Charge Coverage Ratio

Maintain a Fixed Charge Coverage Ratio for each four consecutive Fiscal Quarter
period of at least 1.1 to 1.0 while a Covenant Testing Period is in effect,
measured for the most recent such four consecutive Fiscal Quarter period for
which financial statements were delivered hereunder prior to the commencement of
the Covenant Testing Period and each such period ending thereafter until the
Covenant Testing Period is no longer in effect.

    SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1 Events of Default. Each of the following shall be an “Event of Default” if
it occurs for any reason whatsoever, whether voluntary or involuntary, by
operation of law or otherwise:

(a) An Obligor fails to pay its Obligations when due (whether at stated
maturity, on demand, upon acceleration or otherwise);

(b) Any representation, warranty or other written statement of an Obligor made
in connection with any Loan Documents or transactions contemplated thereby is
incorrect or misleading in any material respect when given;

(c) An Obligor breaches or fails to perform any covenant contained in
(i) Section 6.3, 7.2, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.2, 10.2 or 10.3 of
this Agreement or (ii) Section 7.4 or 7.6 and such breach or failure under this
clause (ii) shall continue for more than ten (10) Business Days;

(d) An Obligor breaches or fails to perform any other covenant contained in any
Loan Documents, and such breach or failure continues for a period of 30 days
after a Senior Officer of such Obligor has knowledge thereof or receives notice
thereof from Agent, whichever is sooner;

(e) A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an
Obligor or third party denies or contests the validity or enforceability of any
Loan Documents or Obligations, or the perfection or priority of any Lien granted
to Agent; or any Loan Document ceases to be in full force or effect for any
reason (other than (i) due to a termination thereof in accordance with its
terms, (ii) as a result of a disposition of the applicable Collateral in a
transaction permitted by this Agreement, or (iii) a waiver or release by Agent
and Lenders);

(f) Any breach or default of an Obligor occurs under (i) any Hedging Agreement
in excess of $10,000,000 (which amount shall be calculated based on the amount
that would be payable by such Obligor if the Hedging Agreement were terminated
on the date of determination) or (ii) any other instrument or agreement to which
it is a party or by which it or any of its Properties is bound relating to any
Debt (other than the Obligations) in excess of $10,000,000, if the maturity of
or any payment with respect to such Debt may be accelerated or demanded due to
such breach;

(g) One or more judgments, orders or awards for the payment of money are entered
or filed against an Obligor or any of its Subsidiaries (or with respect to any
of their respective assets) involving an aggregate amount of $25,000,000 or more
calculated net of insurance coverage therefor for which the applicable insurer
has not issued a denial of coverage or a reservation of rights therefor, and
either (a) there is a period of 30 consecutive days at any time after the entry
of any such judgment, order, or award during which (i) the same is not
discharged or satisfied, or (ii) a stay of enforcement thereof is not in effect,
or (b) enforcement proceedings are commenced upon such judgment, order, or
award;

(h) A loss, theft, damage or destruction occurs with respect to any Collateral
if the amount not covered by insurance exceeds $25,000,000;

(i) the Obligors and their Subsidiaries, taken as a whole, are (a) enjoined,
restrained, or in any way prevented by court order from (a) continuing to
conduct all or substantially all of their business affairs, or (b) conducting
the business of designing, manufacturing, distributing or selling footwear under
the Skechers brand name.

(j) Except pursuant to a transaction expressly permitted under the Loan
Documents, any of the following occurs: an Insolvency Event is commenced by an
Obligor; an Obligor agrees to or commences any liquidation, dissolution or
winding up of its affairs; an Obligor makes an offer of settlement, extension or
composition to its unsecured creditors generally; a trustee is appointed to take
possession of any substantial Property of or to operate any substantial portion
of the business of an Obligor; or an Insolvency Event is commenced against an
Obligor and the Obligor consents to institution of the proceeding, the petition
commencing the proceeding is not timely contested by the Obligor, the petition
is not dismissed within 60 days after filing, or an order for relief is entered
in the proceeding;

(k) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan
or an Obligor or ERISA Affiliate fails to pay when due any installment payment
with respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan, or any event similar to the foregoing occurs or exists with
respect to a Foreign Plan, in each case where any of the foregoing, individually
or in the aggregate, has resulted or could reasonably be expected to result in
liability of an Obligor to a Pension Plan, Multiemployer Plan or PBGC in excess
of $10,000,000;

(l) An Obligor or any of its Senior Officers is criminally indicted or convicted
for (i) a felony committed in the conduct of the Obligor’s business, or
(ii) violating any state or federal law (including the Controlled Substances
Act, Money Laundering Control Act of 1986 and Illegal Exportation of War
Materials Act) that could lead to forfeiture of any material Property or any
Collateral having a value in excess of $10,000,000; or

(m) A Change of Control occurs.

11.2 Remedies upon Default. If an Event of Default described in
Section 11.1(j) occurs with respect to any Obligor, then to the extent permitted
by Applicable Law, all Obligations (other than Secured Bank Product
Obligations) shall become automatically due and payable and all Commitments
shall terminate, without any action by Agent or notice of any kind. In addition,
or if any other Event of Default exists, Agent may in its discretion (and shall
upon written direction of Required Lenders) do any one or more of the following
from time to time:

(a) declare any Obligations (other than Secured Bank Product
Obligations) immediately due and payable, whereupon they shall be due and
payable without diligence, presentment, demand, protest or notice of any kind,
all of which are hereby waived by Obligors to the fullest extent permitted by
law;

(b) terminate, reduce or condition any Commitment, or make any adjustment to the
Borrowing Base;

(c) require Obligors to Cash Collateralize (or deliver a standby letter of
credit acceptable to Agent in its Permitted Discretion, in the amount of the
required Cash Collateral) their LC Obligations and any inchoate or contingent
Obligations (including inchoate or contingent Secured Bank Product
Obligations) with respect to which a claim therefor has been asserted, and if
Obligors fail to deposit such Cash Collateral or such acceptable standby letter
of credit, then Agent may (and shall upon the direction of Required
Lenders) advance the required Cash Collateral as Revolver Loans (whether or not
an Overadvance exists or is created thereby, or the conditions in Section 6 are
satisfied);

(d) exercise all voting rights, or any other ownership or consensual rights
(including any dividend or distribution rights) in respect of any or all of the
Pledged Equity, but under no circumstances is Agent obligated by the terms of
this Agreement to exercise such rights, and if Agent duly exercises its right to
vote any of such Pledged Equity, each Obligor hereby appoints Agent as such
Obligor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such
Pledged Equity in any manner Agent deems advisable for or against all matters
submitted or which may be submitted to a vote of shareholders, partners or
members, as the case may be. The power-of-attorney and proxy granted hereby is
coupled with an interest and shall be irrevocable; and

(e) exercise any other default rights or remedies afforded under any agreement,
by law, at equity or otherwise, including the rights and remedies of a secured
party under the UCC. Such rights and remedies include the rights to (i) take
possession of any Collateral; (ii) require Obligors to assemble Collateral, at
Obligors’ expense, and make it available to Agent at a place designated by
Agent; (iii) enter any premises where Collateral is located and store Collateral
on such premises until sold (and if the premises are owned or leased by an
Obligor, Obligors agree not to charge for such storage); and (iv) sell or
otherwise dispose of any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale, with such notice
as may be required by Applicable Law, in lots or in bulk, at such locations, all
as Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days
notice of any proposed sale or other disposition of Collateral by Agent shall be
reasonable, and that any sale conducted on the internet or to a licensor of
Intellectual Property shall be commercially reasonable. Agent may conduct sales
on any Obligor’s premises, without charge, and any sale may be adjourned from
time to time in accordance with Applicable Law. Agent shall have the right to
sell, lease or otherwise dispose of any Collateral for cash, credit or any
combination thereof, and Agent may purchase any Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of the purchase
price, may credit bid and set off the amount of such price against the
Obligations.

11.3 License. Agent is hereby granted an irrevocable, non-exclusive license or
other right to use, license or sub-license (without payment of royalty or other
compensation to any Person) any or all Intellectual Property of Obligors,
computer hardware and software, trade secrets, brochures, customer lists,
promotional and advertising materials, labels, packaging materials and other
Property, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to,
any Collateral. Each Obligor’s rights and interests under Intellectual Property
shall inure to Agent’s benefit.

11.4 Setoff. At any time during an Event of Default, Agent, Issuing Bank,
Lenders, and any of their Affiliates are authorized, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by
Agent, Issuing Bank, such Lender or such Affiliate to or for the credit or the
account of an Obligor against its Obligations, whether or not Agent, Issuing
Bank, such Lender or such Affiliate shall have made any demand under this
Agreement or any other Loan Document and although such Obligations may be
contingent or unmatured or are owed to a branch or office of Agent, Issuing
Bank, such Lender or such Affiliate different from the branch or office holding
such deposit or obligated on such indebtedness. The rights of Agent, Issuing
Bank, each Lender and each such Affiliate under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Person
may have.

11.5 Remedies Cumulative; No Waiver.11.5.1 Cumulative RightsAll agreements,
warranties, guaranties, indemnities and other undertakings of Obligors under the
Loan Documents are cumulative and not in derogation of each other. The rights
and remedies of Agent and Lenders under the Loan Documents are cumulative, may
be exercised at any time and from time to time, concurrently or in any order,
and are not exclusive of any other rights or remedies available by agreement, by
law, at equity or otherwise. All such rights and remedies shall continue in full
force and effect until Full Payment of the Obligations.

11.5.2 WaiversNo waiver or course of dealing shall be established by (a) the
failure or delay of Agent or any Lender to require strict performance by any
Obligor under any Loan Document, or to exercise any rights or remedies with
respect to Collateral or otherwise; (b) the making of any Loan or issuance of
any Letter of Credit during a Default, Event of Default or other failure to
satisfy any conditions precedent; or (c) acceptance by Agent or any Lender of
any payment or performance by an Obligor under any Loan Documents in a manner
other than that specified therein. Any failure to satisfy a financial covenant
on a measurement date shall not be cured or remedied by satisfaction of such
covenant on a subsequent date.

      SECTION 12.
12.1  
AGENT
Appointment, Authority and Duties of Agent
   
 

12.1.1 Appointment and AuthorityEach Secured Party appoints and designates Bank
of America as Agent under all Loan Documents. Agent may, and each Secured Party
authorizes Agent to, enter into all Loan Documents to which Agent is intended to
be a party and accept all Security Documents. Any action taken by Agent in
accordance with the provisions of the Loan Documents, and the exercise by Agent
of any rights or remedies set forth therein, together with all other powers
reasonably incidental thereto, shall be authorized by and binding upon all
Secured Parties. Without limiting the generality of the foregoing, Agent shall
have the sole and exclusive authority to (a) act as the disbursing and
collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent
each Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document; (c) act as collateral agent for Secured
Parties for purposes of perfecting and administering Liens under the Loan
Documents, and for all other purposes stated therein; (d) manage, supervise or
otherwise deal with Collateral; and (e) take any Enforcement Action or otherwise
exercise any rights or remedies with respect to any Collateral or under any Loan
Documents, Applicable Law or otherwise. Secured Parties agree that Agent alone
shall be authorized to determine eligibility and applicable advance rates under
the Borrowing Base, whether to impose or release any reserve, or whether any
conditions to funding or issuance of a Letter of Credit have been satisfied,
which determinations and judgments, if exercised in good faith, Secured Parties
agree shall exonerate Agent from liability to any Secured Party or other Person
for any error in judgment.

12.1.2 DutiesThe title of “Agent” is used solely as a matter of market custom
and the duties of Agent are administrative in nature only. Agent has no duties
except those expressly set forth in the Loan Documents, and in no event does
Agent have any agency, fiduciary or implied duty to or relationship with any
Secured Party or other Person by reason of any Loan Document or related
transaction. The conferral upon Agent of any right shall not imply a duty to
exercise such right, unless instructed to do so by Lenders in accordance with
this Agreement.

  12.1.3   Agent Professionals.

Agent may perform its duties through agents and employees. Agent may consult
with and employ Agent Professionals, and shall be entitled to act upon, and
shall be fully protected in any action taken in good faith reliance upon, any
advice given by an Agent Professional. Agent shall not be responsible for the
negligence or misconduct of any agents, employees or Agent Professionals
selected by it with reasonable care.

  12.1.4   Instructions of Required Lenders.

The rights and remedies conferred upon Agent under the Loan Documents may be
exercised without the necessity of joining any other party, unless required by
Applicable Law. In determining compliance with a condition for any action
hereunder, including satisfaction of any condition in Section 6, Agent may
presume that the condition is satisfactory to a Secured Party unless Agent has
received notice to the contrary from such Secured Party before Agent takes the
action. Agent may request instructions from Required Lenders or other Secured
Parties with respect to any act (including the failure to act) in connection
with any Loan Documents or Collateral, and may seek assurances to its
satisfaction from Secured Parties of their indemnification obligations against
Claims that could be incurred by Agent. Agent may refrain from any act until it
has received such instructions or assurances, and shall not incur liability to
any Person by reason of so refraining. Instructions of Required Lenders shall be
binding upon all Secured Parties, and no Secured Party shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting pursuant to instructions of Required Lenders. Notwithstanding the
foregoing, instructions by and consent of specific parties shall be required to
the extent provided in Section 14.1.1. In no event shall Agent be required to
take any action that it determines in its discretion is contrary to Applicable
Law or any Loan Documents or could subject any Agent Indemnitee to liability.

  12.2   Agreements Regarding Collateral and Borrower Materials

12.2.1 Lien Releases; Care of CollateralSecured Parties authorize Agent to
release any Lien with respect to any Collateral (a) upon Full Payment of the
Obligations; (b) that is the subject of a disposition or Lien that Borrowers
certify in writing is a Permitted Asset Disposition or a Permitted Lien entitled
to priority over Agent’s Liens (and Agent may rely conclusively on any such
certificate without further inquiry); (c) that does not constitute a material
part of the Collateral; or (d) subject to Section 14.1, with the consent of
Required Lenders. Secured Parties authorize Agent to subordinate its Liens to
any Purchase Money Lien or other Lien entitled to priority hereunder. Agent has
no obligation to assure that any Collateral exists or is owned by an Obligor, or
is cared for, protected or insured, nor to assure that Agent’s Liens have been
properly created, perfected or enforced, or are entitled to any particular
priority, nor to exercise any duty of care with respect to any Collateral.

12.2.2 Possession of CollateralAgent and Secured Parties appoint each Lender as
agent (for the benefit of Secured Parties) for the purpose of perfecting Liens
in any Collateral held or controlled by such Lender, to the extent such Liens
are perfected by possession or control. If any Lender obtains possession or
control of any Collateral, it shall notify Agent thereof and, promptly upon
Agent’s request, deliver such Collateral to Agent or otherwise deal with it in
accordance with Agent’s instructions.

12.2.3 ReportsAgent shall promptly provide to Lenders, when complete, any field
examination, audit or appraisal report prepared for Agent with respect to any
Obligor or Collateral (“Report”). Reports and other Borrower Materials may be
made available to Lenders by providing access to them on the Platform, but Agent
shall not be responsible for system failures or access issues that may occur
from time to time. Each Lender agrees (a) that Reports are not intended to be
comprehensive audits or examinations, and that Agent or any other Person
performing an audit or examination will inspect only limited information and
will rely significantly upon Borrowers’ books, records and representations;
(b) that Agent makes no representation or warranty as to the accuracy or
completeness of any Borrower Materials and shall not be liable for any
information contained in or omitted from any Borrower Materials, including any
Report; and (c) to keep all Borrower Materials confidential and strictly for
such Lender’s internal use, not to distribute any Report or other Borrower
Materials (or the contents thereof) to any Person (except to such Lender’s
Participants, attorneys and accountants), and to use all Borrower Materials
solely for administration of the Obligations. Each Lender shall indemnify and
hold harmless Agent and any other Person preparing a Report from any action such
Lender may take as a result of or any conclusion it may draw from any Borrower
Materials, as well as from any Claims arising as a direct or indirect result of
Agent furnishing same to such Lender, via the Platform or otherwise.

12.3 Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person. Agent shall have a reasonable and practicable amount of time to act upon
any instruction, notice or other communication under any Loan Document, and
shall not be liable for any delay in acting.

12.4 Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default, or of any failure to satisfy any conditions in
Section 6, unless it has received written notice from Borrowers or Required
Lenders specifying the occurrence and nature thereof. If any Lender acquires
knowledge of a Default, Event of Default or failure of such conditions, it shall
promptly notify Agent and the other Lenders thereof in writing. Each Secured
Party agrees that, except as otherwise provided in any Loan Documents or with
the written consent of Agent and Required Lenders, it will not take any
Enforcement Action, accelerate Obligations (other than Secured Bank Product
Obligations) or assert any rights relating to any Collateral.

12.5 Ratable Sharing. If any Lender obtains any payment or reduction of any
Obligation, whether through set-off or otherwise, in excess of its ratable share
of such Obligation, such Lender shall forthwith purchase from Secured Parties
participations in the affected Obligation as are necessary to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.6.2, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the full amount thereof to Agent for
application under Section 4.2.2 and it shall provide a written statement to
Agent describing the Obligation affected by such payment or reduction. No Lender
shall set off against a Dominion Account without Agent’s prior consent.

12.6 Indemnification. EACH SECURED PARTY SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY
OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR
ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THAT ANY CLAIM AGAINST AN AGENT
INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY
OF AGENT). In Agent’s discretion, it may reserve for any Claims made against an
Agent Indemnitee or Issuing Bank Indemnitee, and may satisfy any judgment, order
or settlement relating thereto, from proceeds of Collateral prior to making any
distribution of Collateral proceeds to Secured Parties. If Agent is sued by any
receiver, trustee or other Person for any alleged preference or fraudulent
transfer, then any monies paid by Agent in settlement or satisfaction of such
proceeding, together with all interest, costs and expenses (including attorneys’
fees) incurred in the defense of same, shall be promptly reimbursed to Agent by
each Secured Party to the extent of its Pro Rata share.

12.7 Limitation on Responsibilities of Agent. Agent shall not be liable to any
Secured Party for any action taken or omitted to be taken under the Loan
Documents, except for losses directly and solely caused by Agent’s gross
negligence or willful misconduct. Agent does not assume any responsibility for
any failure or delay in performance or any breach by any Obligor, Lender or
other Secured Party of any obligations under the Loan Documents. Agent does not
make any express or implied representation, warranty or guarantee to Secured
Parties with respect to any Obligations, Collateral, Liens, Loan Documents or
Obligor. No Agent Indemnitee shall be responsible to Secured Parties for any
recitals, statements, information, representations or warranties contained in
any Loan Documents or Borrower Materials; the execution, validity, genuineness,
effectiveness or enforceability of any Loan Documents; the genuineness,
enforceability, collectability, value, sufficiency, location or existence of any
Collateral, or the validity, extent, perfection or priority of any Lien therein;
the validity, enforceability or collectability of any Obligations; or the
assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor or Account Debtor. No Agent
Indemnitee shall have any obligation to any Secured Party to ascertain or
inquire into the existence of any Default or Event of Default, the observance by
any Obligor of any terms of the Loan Documents, or the satisfaction of any
conditions precedent contained in any Loan Documents.

  12.8   Successor Agent and Co-Agents. 12.8.1 Resignation; Successor Agent.

Agent may resign at any time by giving at least 30 days written notice thereof
to Lenders and Borrowers. Required Lenders may appoint a successor to replace
the resigning Agent, which successor shall be (a) a Lender or an Affiliate of a
Lender; or (b) a financial institution reasonably acceptable to Required Lenders
and (provided no Default or Event of Default exists) Borrowers. If no successor
agent is appointed prior to the effective date of Agent’s resignation, then
Agent may appoint a successor agent that is a financial institution acceptable
to it (which shall be a Lender unless no Lender accepts the role) or in the
absence of such appointment, Required Lenders shall on such date assume all
rights and duties of Agent hereunder. Upon acceptance by any successor Agent of
its appointment hereunder, such successor Agent shall thereupon succeed to and
become vested with all the powers and duties of the retiring Agent without
further act. On the effective date of its resignation, the retiring Agent shall
be discharged from its duties and obligations hereunder but shall continue to
have all rights and protections under the Loan Documents with respect to actions
taken or omitted to be taken by it while Agent, including the indemnification
set forth in Sections 12.6 and 14.2, and all rights and protections under this
Section 12. Any successor to Bank of America by merger or acquisition of stock
or this loan shall continue to be Agent hereunder without further act on the
part of any Secured Party or Obligor.

  12.8.2   Co-Collateral Agent.

If appropriate under Applicable Law, Agent may appoint a Person to serve as a
co-collateral agent or separate collateral agent under any Loan Document. Each
right, remedy and protection intended to be available to Agent under the Loan
Documents shall also be vested in such agent. Secured Parties shall execute and
deliver any instrument or agreement that Agent may request to effect such
appointment. If any such agent shall die, dissolve, become incapable of acting,
resign or be removed, then all the rights and remedies of the agent, to the
extent permitted by Applicable Law, shall vest in and be exercised by Agent
until appointment of a new agent.

12.9 Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that it
has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement and to fund Loans and participate in LC Obligations
hereunder. Each Secured Party has made such inquiries as it feels necessary
concerning the Loan Documents, Collateral and Obligors. Each Secured Party
acknowledges and agrees that the other Secured Parties have made no
representations or warranties concerning any Obligor, any Collateral or the
legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Secured Party will, independently and without reliance upon
any other Secured Party, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and participating in LC Obligations,
and in taking or refraining from any action under any Loan Documents. Except for
notices, reports and other information expressly requested by a Lender, Agent
shall have no duty or responsibility to provide any Secured Party with any
notices, reports or certificates furnished to Agent by any Obligor or any credit
or other information concerning the affairs, financial condition, business or
Properties of any Obligor (or any of its Affiliates) which may come into
possession of Agent or its Affiliates.

  12.10   Remittance of Payments and Collections.12.10.1 Remittances Generally.

All payments by any Lender to Agent shall be made by the time and on the day set
forth in this Agreement, in immediately available funds. If no time for payment
is specified or if payment is due on demand by Agent and request for payment is
made by Agent by 1:00 p.m. (pacific time) on a Business Day, payment shall be
made by Lender not later than 3:00 p.m. (pacific time) on such day, and if
request is made after 1:00 p.m. (pacific time), then payment shall be made by
11:00 a.m. (pacific time) on the next Business Day. Payment by Agent to any
Secured Party shall be made by wire transfer, in the type of funds received by
Agent. Any such payment shall be subject to Agent’s right of offset for any
amounts due from such payee under the Loan Documents.

12.10.2 Failure to PayIf any Secured Party fails to pay any amount when due by
it to Agent pursuant to the terms hereof, such amount shall bear interest, from
the due date until paid in full, at the greater of the Federal Funds Rate or the
rate determined by Agent as customary for interbank compensation for two
Business Days and thereafter at the Default Rate for Base Rate Revolver Loans.
In no event shall Borrowers be entitled to credit for any interest paid by a
Secured Party to Agent, nor shall a Defaulting Lender be entitled to interest on
amounts held by Agent pursuant to Section 4.2.

12.10.3 Recovery of PaymentsIf Agent pays an amount to a Secured Party in the
expectation that a related payment will be received by Agent from an Obligor and
such related payment is not received, then Agent may recover such amount from
the Secured Party. If Agent determines that an amount received by it must be
returned or paid to an Obligor or other Person pursuant to Applicable Law or
otherwise, then Agent shall not be required to distribute such amount to any
Secured Party. If any amounts received and applied by Agent to Obligations held
by a Secured Party are later required to be returned by Agent pursuant to
Applicable Law, such Secured Party shall pay to Agent, on demand, its share of
the amounts required to be returned.

12.11 Individual Capacities. As a Lender, Bank of America shall have the same
rights and remedies under the Loan Documents as any other Lender, and the terms
“Lenders,” “Required Lenders” or any similar term shall include Bank of America
in its capacity as a Lender. Agent, Lenders and their Affiliates may accept
deposits from, lend money to, provide Bank Products to, act as financial or
other advisor to, and generally engage in any kind of business with, Obligors
and their Affiliates, as if they were not Agent or Lenders hereunder, without
any duty to account therefor to any Secured Party. In their individual
capacities, Agent, Lenders and their Affiliates may receive information
regarding Obligors, their Affiliates and their Account Debtors (including
information subject to confidentiality obligations), and shall have no
obligation to provide such information to any Secured Party.

12.12 Titles. Each Lender, other than Bank of America, that is designated in
connection with this credit facility as an “Arranger,” “Bookrunner” or “Agent”
of any kind shall have no right or duty under any Loan Documents other than
those applicable to all Lenders, and shall in no event have any fiduciary duty
to any Secured Party.

12.13 Bank Product Providers. Each Secured Bank Product Provider, by delivery of
a notice to Agent of a Bank Product, agrees to be bound by the Loan Documents,
including Sections 5.6, 12 and 14.3.3. Each Secured Bank Product Provider shall
indemnify and hold harmless Agent Indemnitees, to the extent not reimbursed by
Obligors, against all Claims that may be incurred by or asserted against any
Agent Indemnitee in connection with such provider’s Secured Bank Product
Obligations.

12.14 No Third Party Beneficiaries. This Section 12 is an agreement solely among
Secured Parties and Agent, and shall survive Full Payment of the Obligations.
Except as expressly set forth in this Section 12, this Section 12 does not
confer any rights or benefits upon Borrowers or any other Person. As between
Borrowers and Agent, any action that Agent may take under any Loan Documents or
with respect to any Obligations shall be conclusively presumed to have been
authorized and directed by Secured Parties.

    SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS

13.1 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Borrowers, Agent, Lenders, Secured Parties, and their respective
successors and assigns, except that (a) no Obligor shall have the right to
assign its rights or delegate its obligations under any Loan Documents; and
(b) any assignment by a Lender must be made in compliance with Section 13.3.
Agent may treat the Person which made any Loan as the owner thereof for all
purposes until such Person makes an assignment in accordance with Section 13.3.
Any authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.

  13.2   Participations.13.2.1 Permitted Participants; Effect

Subject to Section 13.3.3, any Lender may sell to a financial institution
(“Participant”) a participating interest in the rights and obligations of such
Lender under any Loan Documents. Despite any sale by a Lender of participating
interests to a Participant, such Lender’s obligations under the Loan Documents
shall remain unchanged, it shall remain solely responsible to the other parties
hereto for performance of such obligations, it shall remain the holder of its
Loans and Commitments for all purposes, all amounts payable by Obligors shall be
determined as if it had not sold such participating interests, and Obligors and
Agent shall continue to deal solely and directly with such Lender in connection
with the Loan Documents. Each Lender shall be solely responsible for notifying
its Participants of any matters under the Loan Documents, and Agent and the
other Lenders shall not have any obligation or liability to any such
Participant. A Participant that would be a Foreign Lender if it were a Lender
shall not be entitled to the benefits of Section 5.9 unless Obligors agree
otherwise in writing.

  13.2.2   Voting Rights

Each Lender shall retain the sole right to approve, without the consent of any
Participant, any amendment, waiver or other modification of a Loan Document
other than that which forgives principal, interest or fees, reduces the stated
interest rate or fees payable with respect to any Loan or Commitment in which
such Participant has an interest, postpones the Commitment Termination Date or
any date fixed for any regularly scheduled payment of principal, interest or
fees on such Loan or Commitment, or releases any Obligor or substantially all
Collateral.

  13.2.3   Participant Register

Each Lender that sells a participation shall, acting as a non-fiduciary agent of
Borrower (solely for tax purposes), maintain a register in which it enters the
Participant’s name, address and interest in Commitments, Loans (and stated
interest) and LC Obligations. Entries in the register shall be conclusive,
absent manifest error, and such Lender shall treat each Person recorded in the
register as the owner of the participation for all purposes, notwithstanding any
notice to the contrary. No Lender shall have an obligation to disclose any
information in such register except to the extent necessary to establish that a
Participant’s interest is in registered form under the Code.

  13.2.4   Benefit of Setoff

Obligors agree that each Participant shall have a right of set-off in respect of
its participating interest to the same extent as if such interest were owing
directly to a Lender, and each Lender shall also retain the right of set-off
with respect to any participating interests sold by it. By exercising any right
of set-off, a Participant agrees to share with Lenders all amounts received
through its set-off, in accordance with Section 12.5 as if such Participant were
a Lender.

  13.3   Assignments. 13.3.1 Permitted Assignments

A Lender may assign to an Eligible Assignee any of its rights and obligations
under the Loan Documents, as long as (a) each assignment is of a constant, and
not a varying, percentage of the transferor Lender’s rights and obligations
under the Loan Documents and, in the case of a partial assignment, is in a
minimum principal amount of $25,000,000 (unless otherwise agreed by Agent in its
discretion, and, if no Event of Default exists, Borrower Agent in its
discretion) and integral multiples of $5,000,000 in excess of that amount;
(b) except in the case of an assignment in whole of a Lender’s rights and
obligations, the aggregate amount of the Commitments retained by the transferor
Lender is at least $25,000,000 (unless otherwise agreed by Agent in its
discretion, and, if no Event of Default exists, Borrower Agent in its
discretion); and (c) the parties to each such assignment shall execute and
deliver an Assignment to Agent for acceptance and recording. Nothing herein
shall limit the right of a Lender to pledge or assign any rights under the Loan
Documents to secure obligations of such Lender, including a pledge or assignment
to a Federal Reserve Bank; provided, however, that no such pledge or assignment
shall release the Lender from its obligations hereunder nor substitute the
pledge or assignee for such Lender as a party hereto.

  13.3.2   Effect; Effective Date

Upon delivery to Agent of an assignment notice in the form of Exhibit D and a
processing fee of $3,500 (unless otherwise agreed by Agent in its discretion),
the assignment shall become effective as specified in the notice, if it complies
with this Section 13.3. From such effective date, the Eligible Assignee shall
for all purposes be a Lender under the Loan Documents, and shall have all rights
and obligations of a Lender thereunder. Upon consummation of an assignment, the
transferor Lender, Agent and Borrowers shall make appropriate arrangements for
issuance of replacement and/or new notes, if applicable. The transferee Lender
shall comply with Section 5.10 and deliver, upon request, an administrative
questionnaire satisfactory to Agent.

  13.3.3   Certain Assignees

No assignment or participation may be made to Obligors, an Affiliate of an
Obligor, a Defaulting Lender or a natural Person. Agent shall have no obligation
to determine whether any assignee is permitted under the Loan Documents.
Assignment by a Defaulting Lender shall be effective only if there is concurrent
satisfaction of all outstanding obligations of the Defaulting Lender under the
Loan Documents in a manner satisfactory to Agent, including payment by the
Eligible Assignee or Defaulting Lender to Agent of an aggregate amount
sufficient upon distribution (through direct payment, purchases of
participations or other methods acceptable to Agent) to satisfy all funding and
payment liabilities of the Defaulting Lender. If assignment by a Defaulting
Lender occurs (by operation of law or otherwise) without compliance with the
foregoing sentence, the assignee shall be deemed a Defaulting Lender for all
purposes until compliance occurs.

  13.3.4   Register.

Agent, acting as a non-fiduciary agent of Borrowers (solely for tax purposes),
shall maintain (a) a copy (or electronic equivalent) of each Assignment
delivered to it, and (b) a register for recordation of the names, addresses and
Commitments of, and the Loans, interest and LC Obligations owing to, each
Lender. Entries in the register shall be conclusive, absent manifest error, and
Borrowers, Agent and Lenders shall treat each Person recorded in such register
as a Lender for all purposes under the Loan Documents, notwithstanding any
notice to the contrary. Agent may choose to show only one Borrower as the
borrower in the register, without any effect on the liability of any Obligor
with respect to the Obligations. The register shall be available for inspection
by Borrowers or any Lender, from time to time upon reasonable notice.

13.4 Replacement of Certain Lenders. If a Lender (a) within the last 120 days
failed to give its consent to any amendment, waiver or action for which consent
of all Lenders was required and Required Lenders consented, (b) is a Defaulting
Lender, or (c) within the last 120 days gave a notice under Section 3.5 or
requested payment or compensation under Section 3.7 or 5.9 (and has not
designated a different Lending Office pursuant to Section 3.8), then Agent or
Borrower Agent may, upon 10 days notice to such Lender, require it to assign its
rights and obligations under the Loan Documents to Eligible Assignee(s),
pursuant to appropriate Assignment(s), within 20 days after the notice. Agent is
irrevocably appointed as attorney-in-fact to execute any such Assignment if such
Lender fails to execute it. Such Lender shall be entitled to receive, in cash,
concurrently with such assignment, all amounts owed to it under the Loan
Documents through the date of assignment.

              SECTION 14.   MISCELLANEOUS 14.1   Consents, Amendments and
Waivers.       14.1.1    
Amendment
           
 

No modification of any Loan Document, including any extension or amendment of a
Loan Document or any waiver of a Default or Event of Default, shall be effective
without the prior written agreement of Agent (with the consent of Required
Lenders) and each Obligor party to such Loan Document; provided, however, that

(a) without the prior written consent of Agent, no modification shall alter any
provision in a Loan Document that relates to any rights, duties or discretion of
Agent;

(b) without the prior written consent of Issuing Bank, no modification shall
alter Section 2.3 or any other provision in a Loan Document that relates to
Letters of Credit or any rights, duties or discretion of Issuing Bank;

(c) without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall (i) increase the Commitment of such
Lender; (ii) reduce the amount of, or waive or delay payment of, any principal,
interest or fees payable to such Lender (except as provided in Section 4.2);
(iii) extend the Revolver Termination Date applicable to such Lender’s
Obligations; or (iv) amend this clause (c);

(d) without the prior written consent of all Lenders (except any Defaulting
Lender), no modification shall (i) alter Section 5.6.2, 7.1 (except to add
Collateral) or 14.1.1; (ii) amend the definition of Pro Rata or Required
Lenders; (iii) release all or substantially all Collateral; or (iv) except in
connection with a merger, disposition or similar transaction expressly permitted
hereby, release any Obligor from liability for any Obligations;

(e) without the prior written consent of the Supermajority Lenders, amend the
definition of Borrowing Base (or any defined term used in such definition) if
the effect of such amendment is to increase borrowing availability; and

(f) without the prior written consent of a Secured Bank Product Provider, no
modification shall affect its relative payment priority under Section 5.6.2.

  14.1.2   Limitations

The agreement of Obligors shall not be required for any modification of a Loan
Document that deals solely with the rights and duties of Lenders, Agent and/or
Issuing Bank as among themselves. Only the consent of the parties to any
agreement relating to fees or a Bank Product shall be required for modification
of such agreement, and no Bank Product provider (in such capacity) shall have
any right to consent to modification of any Loan Document other than its Bank
Product agreement. Any waiver or consent granted by Agent or Lenders hereunder
shall be effective only if in writing and only for the matter specified.

  14.1.3   Payment for Consents

No Obligors will, directly or indirectly, pay any remuneration or other thing of
value, whether by way of additional interest, fee or otherwise, to any Lender
(in its capacity as a Lender hereunder) as consideration for agreement by such
Lender with any modification of any Loan Documents, unless such remuneration or
value is concurrently paid, on the same terms, on a Pro Rata basis to all
Lenders providing their consent.

14.2 Indemnity. EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE,
INCLUDING CLAIMS ASSERTED BY ANY OBLIGOR OR OTHER PERSON OR ARISING FROM THE
NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document
(including the Obligors) have any obligation thereunder to indemnify or hold
harmless an Indemnitee with respect to a Claim that is determined in a final,
non-appealable judgment by a court of competent jurisdiction to result from the
gross negligence or willful misconduct of such Indemnitee.

              14.3   Notices and Communications.       14.3.1    
Notice Address
           
 

Subject to Section 4.1.4, all notices and other communications by or to a party
hereto shall be in writing and shall be given to any Obligor, at Borrower
Agent’s address shown on the signature pages hereof, and to any other Person at
its address shown on the signature pages hereof (or, in the case of a Person who
becomes a Lender after the Closing Date, at the address shown on its
Assignment), or at such other address as a party may hereafter specify by notice
in accordance with this Section 14.3. Each communication shall be effective only
(a) if given by facsimile transmission, when transmitted to the applicable
facsimile number, if confirmation of receipt is received; (b) if given by mail,
three Business Days after deposit in the U.S. mail, with first-class postage
pre-paid, addressed to the applicable address; or (c) if given by personal
delivery, when duly delivered to the notice address with receipt acknowledged.
Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4,
2.3, 3.1.2, or 4.1.1 shall be effective until actually received by the
individual to whose attention at Agent such notice is required to be sent. Any
written communication that is not sent in conformity with the foregoing
provisions shall nevertheless be effective on the date actually received by the
noticed party. Any notice received by Borrower Agent shall be deemed received by
all Obligors.

  14.3.2   Communications

Electronic communications (including e-mail, messaging and websites) may be used
only in a manner acceptable to Agent and only for routine communications, such
as delivery of Borrower Materials, administrative matters, distribution of Loan
Documents and matters permitted under Section 4.1.4. Secured Parties make no
assurance as to the privacy or security of electronic communications. E-mail and
voice mail shall not be effective notices under the Loan Documents.

  14.3.3   Platform

Borrower Materials shall be delivered pursuant to procedures approved by Agent,
including electronic delivery (if possible) upon request by Agent to an
electronic system maintained by Agent (“Platform”). Borrowers shall notify Agent
of each posting of Borrower Materials on the Platform and the materials shall be
deemed received by Agent only upon its receipt of such notice. Borrower
Materials and other information relating to this credit facility may be made
available to Secured Parties on the Platform. The Platform is provided “as is”
and “as available.” Agent does not warrant the accuracy or completeness of any
information on the Platform nor the adequacy or functioning of the Platform, and
expressly disclaims liability for any errors or omissions in the Borrower
Materials or any issues involving the Platform. NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY AGENT WITH RESPECT TO
BORROWER MATERIALS OR THE PLATFORM. No Agent Indemnitee shall have any liability
to Obligors, Secured Parties or any other Person for losses, claims, damages,
liabilities or expenses of any kind (whether in tort, contract or
otherwise) relating to use by any Person of the Platform, including any
unintended recipient, nor for delivery of Borrower Materials and other
information via the Platform, internet, e-mail, or any other electronic platform
or messaging system.

  14.3.4   Public Information

Obligors and Secured Parties acknowledge that “public” information may not be
segregated from material non-public information on the Platform. Secured Parties
acknowledge that Borrower Materials may include Obligors’ material non-public
information, and should not be made available to personnel who do not wish to
receive such information or may be engaged in investment or other market-related
activities with respect to an Obligor’s securities.

  14.3.5   Non-Conforming Communications

Agent and Lenders may rely upon any communications purportedly given by or on
behalf of Obligors even if they were not made in a manner specified herein, were
incomplete or were not confirmed, or if the terms thereof, as understood by the
recipient, varied from a later confirmation. Each Obligor shall indemnify and
hold harmless each Indemnitee from any liabilities, losses, costs and expenses
arising from any electronic or telephonic communication purportedly given by or
on behalf of any Obligor.

14.4 Performance of Obligors’ Obligations; Lien Waivers(a) Agent may, in its
discretion at any time and from time to time, at Obligors’ expense, pay any
amount or do any act either (i) required of any Obligor under any Loan Documents
(to the extent such Obligor has not made payment or taken such action by the
time required under such Loan Document) or (ii) authorized pursuant to this
Agreement or any other Loan Document to (A) enforce any Loan Documents or
collect any Obligations; (B) protect, insure, maintain or realize upon any
Collateral; or (C) defend or maintain the validity or priority of Agent’s Liens
in any Collateral, including any payment of a judgment, insurance premium,
warehouse charge, finishing or processing charge, or landlord claim, or any
discharge of a Lien. All payments, costs and expenses (including Extraordinary
Expenses) of Agent under this Section shall be reimbursed to Agent by Obligors,
on demand, with interest from the date incurred until paid in full, at the
Default Rate applicable to Base Rate Revolver Loans. Any payment made or action
taken by Agent under this Section shall be without prejudice to any right to
assert an Event of Default or to exercise any other rights or remedies under the
Loan Documents.

(b) Agent may, in its discretion at any time and from time to time, give any
notice pursuant to, or otherwise exercise any right available to it under, any
Lien Waiver to the extent that the same is not prohibited by the terms of this
Agreement or the other Loan Documents. Notwithstanding the foregoing, Agent
agrees that, unless a Default or Event of Default exists or Availability
(calculated without giving effect to Availability based on any Eligible
In-Transit Inventory) is in an amount less than or equal to 25% of all Revolver
Commitments, Agent will not make any request under any Lien Waiver to cause any
foreign vendor to require carriers of imported goods to issue only tangible
negotiable bills of lading (as defined in Article 7 of the UCC) to the order of
Borrower as consignee or to the order of “Bank of America, N.A.” as consignee.

14.5 Credit Inquiries. Agent and Lenders may (but shall have no obligation) to
respond to usual and customary credit inquiries from third parties concerning
any Obligor or Subsidiary.

14.6 Severability. Wherever possible, each provision of the Loan Documents shall
be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.

14.7 Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations or measurements to regulate similar matters, and they agree that
these are cumulative and that each must be performed as provided. Except as
otherwise provided in another Loan Document (by specific reference to the
applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document, the provision
herein shall govern and control.

14.8 Counterparts; Execution. Any Loan Document may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall become effective when
Agent has received counterparts bearing the signatures of all parties hereto.
Agent may (but shall have no obligation to) accept any signature, contract
formation or record-keeping through electronic means, which shall have the same
legal validity and enforceability as manual or paper-based methods, to the
fullest extent permitted by Applicable Law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any similar state law based on the Uniform
Electronic Transactions Act.

14.9 Entire Agreement. Time is of the essence with respect to all Loan Documents
and Obligations. The Loan Documents constitute the entire agreement, and
supersede all prior understandings and agreements, among the parties relating to
the subject matter thereof.

14.10 Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent, Lenders or any other Secured
Party pursuant to the Loan Documents or otherwise shall be deemed to constitute
Agent and any Secured Party to be a partnership, joint venture or similar
arrangement, nor to constitute control of any Obligor.

14.11 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated by any Loan Document, Obligors acknowledge and
agree that (a)(i) this credit facility and any arranging or other services by
Agent, any Lender, any of their Affiliates or any arranger are arm’s-length
commercial transactions between Obligors and their Affiliates, on one hand, and
Agent, any Lender, any of their Affiliates or any arranger, on the other hand;
(ii) Obligors have consulted their own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (iii) Obligors are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
Agent, Lenders, their Affiliates and any arranger is and has been acting solely
as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for any Obligor, any Obligor’s Affiliates or any other Person, and has
no obligation with respect to the transactions contemplated by the Loan
Documents except as expressly set forth therein; and (c) Agent, Lenders, their
Affiliates and any arranger may be engaged in a broad range of transactions that
involve interests that differ from those of Obligors and their Affiliates, and
have no obligation to disclose any of such interests to Obligors or its
Affiliates. To the fullest extent permitted by Applicable Law, each Obligor
hereby waives and releases any claims that it may have against Agent, Lenders,
their Affiliates and any arranger with respect to any breach of agency or
fiduciary duty in connection with any transaction contemplated by a Loan
Document.

14.12 Confidentiality. Each of Agent, Lenders and Issuing Bank shall maintain
the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided they are informed of the confidential nature of the Information and
instructed to keep it confidential); (b) to the extent requested by any
governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process (in which case Agent, Lender or
Issuing Bank shall notify Agent Borrower to the extent practicable and lawfully
permitted to do so); (d) to any other party hereto; (e) in connection with any
action or proceeding relating to any Loan Documents or Obligations; (f) subject
to an agreement containing provisions substantially the same as this Section, to
any Transferee or any actual or prospective party (or its advisors) to any Bank
Product or to any swap, derivative or other transaction under which payments are
to be made by reference to an Obligor or Obligor’s obligations; (g) to the
extent such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) is available to Agent, any Lender, Issuing Bank
or any of their Affiliates on a nonconfidential basis from a source (which has
not received such Information as a result of a breach of this provision) other
than Obligors; (h) on a confidential basis to a provider of a Platform; or
(i) with the consent of Borrower Agent. Notwithstanding the foregoing, Agent and
Lenders may publish or disseminate general information concerning this credit
facility for league table, tombstone and advertising purposes, and may, with
prior written consent of the Borrower Agent, use Obligors’ logos, trademarks or
product photographs in advertising materials, which consent shall be perpetual
once granted. As used herein, “Information” means all information received from
an Obligor or Subsidiary relating to it or its business, other than any
information that is available to Agent, any Lender or Issuing Bank on a
nonconfidential basis (other than as a result of a breach of this Section) prior
to disclosure by the Obligor or Subsidiary, provided that, in the case of
information received from an Obligor or Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential. A
Person required to maintain the confidentiality of Information pursuant to this
Section shall be deemed to have complied if it exercises a degree of care
similar to that accorded its own confidential information. Each of Agent,
Lenders and Issuing Bank acknowledges that (i) Information may include material
non-public information; (ii) it has developed compliance procedures regarding
the use of such information; and (iii) it will handle the material non-public
information in accordance with Applicable Law.

  14.13   [Intentionally Omitted].

14.14 GOVERNING LAW. UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL CLAIMS SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION (EXCEPT
FEDERAL LAWS RELATING TO NATIONAL BANKS).

              14.15   Consent to Forum.       14.15.1    
Forum
           
 

EACH OBLIGOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE COURT
SITTING IN NEW YORK COUNTY, NEW YORK OR IN THE UNITED STATES DISTRICT COURT OF
THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE, ACTION, LITIGATION OR OTHER
PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY
DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN
ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL CLAIMS,
OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH COURT’S PERSONAL OR
SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION
14.3.1. A final judgment in any proceeding of any such court shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or any other
manner provided by Applicable Law.

  14.15.2   Other Jurisdictions

Nothing herein shall limit the right of Agent or any Lender to bring proceedings
against any Obligor in any other court, nor limit the right of any party to
serve process in any other manner permitted by Applicable Law. Nothing in this
Agreement shall be deemed to preclude enforcement by Agent of any judgment or
order obtained in any forum or jurisdiction.

  14.15.3   Judicial Reference

If any action, litigation or proceeding relating to any Obligations or Loan
Documents is filed in a court sitting in or applying the laws of California, and
the court determines that notwithstanding Section 14.14, the laws of California
apply to such action, litigation or proceeding or such laws govern the
Obligations or Loan Documents, and each party to such action, litigation or
proceeding does not subsequently effectively waive under California law its
right to a trial by jury, then the court shall, and is hereby directed to, make
a general reference pursuant to Cal. Civ. Proc. Code §638 to a referee (who
shall be an active or retired judge) to hear and determine all issues in such
case (whether fact or law) and to report a statement of decision. Nothing in
this Section shall limit any right of Agent or any other Secured Party to
exercise self-help remedies, such as setoff, foreclosure or sale of any
Collateral, or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, during or after any judicial reference. The
exercise of a remedy does not waive the right of any party to resort to judicial
reference. At Agent’s option, foreclosure under a mortgage or deed of trust may
be accomplished either by exercise of power of sale thereunder or by judicial
foreclosure.

14.16 Waivers by Obligors. To the fullest extent permitted by Applicable Law,
each Obligor waives (a) the right to trial by jury (which Agent and each Lender
hereby also waives) in any proceeding or dispute of any kind relating in any way
to any Loan Documents, Obligations or Collateral; (b) notice after the
occurrence, and during the continuation, of an Event of Default, prior to taking
possession or control of any Collateral; (c) any bond or security that might be
required by a court prior to allowing Agent to exercise any rights or remedies;
(d) the benefit of all valuation, appraisement and exemption laws; (e) any claim
against Agent, Issuing Bank or any Lender, on any theory of liability, for
special, indirect, consequential, exemplary or punitive damages (as opposed to
direct or actual damages) in any way relating to any Enforcement Action,
Obligations, Loan Documents or transactions relating thereto; and (f) notice of
acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a
material inducement to Agent, Issuing Bank and Lenders entering into this
Agreement and that they are relying upon the foregoing in their dealings with
Obligors. Each Obligor has reviewed the foregoing waivers with its legal counsel
and has knowingly and voluntarily waived its jury trial and other rights
following consultation with legal counsel. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.

14.17 Patriot Act Notice. Agent and Lenders hereby notify Obligors that pursuant
to the Patriot Act, Agent and Lenders are required to obtain, verify and record
information that identifies each Obligor, including its legal name, address, tax
ID number and other information that will allow Agent and Lenders to identify it
in accordance with the Patriot Act. Agent and Lenders will also require
information regarding each personal guarantor, if any, and may require
information regarding an Obligor’s management and owners, such as legal name,
address, social security number and date of birth. Each Obligor shall, promptly
upon request, provide all documentation and other information as Agent, Issuing
Bank or any Lender may request from time to time in order to comply with any
obligations under any “know your customer,” anti-money laundering or other
requirements of Applicable Law.

14.18 NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

[Remainder of page intentionally left blank; signatures begin on following
page]IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date set forth above.

 
BORROWER AND BORROWER AGENT:
 
SKECHERS U.S.A., INC.,
a Delaware corporation
By: /s/ David Weinberg
 
Name: David Weinberg
Title: Chief Financial Officer
and Chief Operating Officer
Address:
225 South Sepulveda Blvd.
Manhattan Beach, CA  90266
Attn: Philip Paccione
Telecopy: 310.406.0160
BORROWERS:
 
SKECHERS U.S.A., INC. II,
a Delaware corporation
By: /s/ David Weinberg
 
Name: David Weinberg
Title: Chief Financial Officer
SKECHERS BY MAIL, INC.,
a Delaware corporation
By: /s/ David Weinberg
 
Name: David Weinberg
Title: Chief Financial Officer

1

2

  GUARANTORS: SAVVA’S CAFE, INC., a Delaware corporation By: /s/   David
Weinberg Name: David Weinberg Title: Chief Executive Officer and Chief Financial
Officer BRANDBLACK, LLC, a California limited liability company by: SKECHERS
U.S.A., INC., a Delaware corporation, its sole member and manager By: /s/  
David Weinberg Name: David Weinberg Title: Chief Financial Officer and Chief
Operating Officer

3

  AGENT AND LENDERS: BANK OF AMERICA, N.A., as Agent and Lender By: /s/ Stephen
King Name: Stephen King Title: Senior Vice President Address: 333 South Hope
Street, 13th Floor Los Angeles, CA 90071 Attn: Stephen King Telecopy:
312.453.5167

4

  HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender By: /s/ Jean M. Frammolino
Name: Jean M. Frammolino Title: Vice President Address: HSBC Bank USA, N.A. 452
Fifth Avenue, Fl 4 New York, New York 10018 Attn: Thomas Kainamura, SVP –
Relationship Manager, Asset Based Lending Telecopy: 212-525-2520

  MUFG UNION BANK, N.A.,
as a Lender
By: /s/ Pete Ehlinger
 
Name: Pete Ehlinger
Title: Vice President
Address:
445 South Figueroa Street
13th Floor
Los Angeles, California 90071
Attn: Pete Ehlinger
Telecopy: 213-236-6089

EXHIBIT A
to
Loan and Security Agreement

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Loan and Security Agreement dated as of June 30, 2015,
as amended (“Loan Agreement”), among SKECHERS U.S.A., INC., a Delaware
corporation (“Skechers”), Skechers U.S.A., Inc. II, a Delaware corporation
(“Skechers II”), Skechers by Mail, Inc., a Delaware corporation (“Skechers By
Mail” and, together with Skechers and Skechers II, collectively, the “Borrowers”
and, individually, each a “Borrower”), the other Persons party thereto from time
to time as Guarantors (the “Guarantors”), the financial institutions party
thereto from time to time as Lenders (the “Lenders”), and BANK OF AMERICA, N.A.,
a national banking association, as agent for the Lenders (“Agent”). Unless
defined herein, terms are used herein as defined in the Loan Agreement.

       (“Assignor”) and            (“Assignee”) agree as follows:

1. Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes
from Assignor (a) a principal amount of $      of Assignor’s outstanding
Revolver Loans and $      of Assignor’s participations in LC Obligations, and
(b) the amount of $      of Assignor’s Revolver Commitment (which represents
     % of the total Revolver Commitments) (the foregoing items being,
collectively, “Assigned Interest”), together with an interest in the Loan
Documents corresponding to the Assigned Interest. This Assignment and Acceptance
shall be effective as of the date (“Effective Date”) indicated in the
corresponding Assignment Notice delivered to Agent, provided such Assignment
Notice is executed by Assignor, Assignee, Agent and Borrower Agent, if
applicable. From and after the Effective Date, Assignee hereby expressly
assumes, and undertakes to perform, all of Assignor’s obligations in respect of
the Assigned Interest, and all principal, interest, fees and other amounts which
would otherwise be payable to or for Assignor’s account in respect of the
Assigned Interest shall be payable to or for Assignee’s account, to the extent
such amounts accrue on or after the Effective Date.

2. Assignor (a) represents that as of the date hereof, prior to giving effect to
this Assignment and Acceptance, its Revolver Commitment is $     , and the
outstanding balance of its Revolver Loans and participations in LC Obligations
is $     ; (b) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Loan Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement or any
other instrument or document furnished pursuant thereto, other than that
Assignor is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; and
(c) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrowers or the performance by Borrowers
of their obligations under the Loan Documents. [Assignor is attaching the
promissory note[s] held by it and requests that Agent exchange such note[s] for
new promissory notes payable to Assignee [and Assignor].]

3. Assignee (a) represents and warrants that it is legally authorized to enter
into this Assignment; (b) confirms that it has received copies of the Loan
Agreement and such other Loan Documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment; (c) agrees that it shall, independently and without reliance upon
Assignor and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents; (d) confirms that it is an Eligible
Assignee; (e) appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under the Loan Agreement as are delegated to
Agent by the terms thereof, together with such powers as are incidental thereto;
(f) agrees that it will observe and perform all obligations that are required to
be performed by it as a “Lender” under the Loan Documents; and (g) represents
and warrants that the assignment evidenced hereby will not result in a
non-exempt “prohibited transaction” under Section 406 of ERISA.

4. This Assignment and Acceptance shall be governed by the laws of the State of
New York, without regard to conflicts of law principles that would require the
application of the laws of another jurisdiction (but giving effect to federal
laws relating to national banks). If any provision is found to be invalid under
Applicable Law, it shall be ineffective only to the extent of such invalidity
and the remaining provisions of this Assignment and Acceptance shall remain in
full force and effect.

5. Each notice or other communication hereunder shall be in writing, shall be
sent by messenger, by telecopy or facsimile transmission, or by first-class
mail, shall be deemed given when sent and shall be sent as follows:

  (a)   If to Assignee, to the following address (or to such other address as
Assignee may designate from time to time):

     
     
     

  (b)   If to Assignor, to the following address (or to such other address as
Assignor may designate from time to time):

     
     
     
     

Payments hereunder shall be made by wire transfer of immediately available
Dollars as follows:

If to Assignee, to the following account (or to such other account as Assignee
may designate from time to time):

     
     
ABA No.   
     
Account No.   
Reference:       

If to Assignor, to the following account (or to such other account as Assignor
may designate from time to time):

     
     
ABA No.   
     
Account No.   
Reference:       

5

IN WITNESS WHEREOF, this Assignment and Acceptance is executed as of       .

     
(“Assignee”)

By—

Title:

     
(“Assignor”)

By—

Title:

EXHIBIT B
to
Loan and Security Agreement

FORM OF REVOLVER NOTE

     
           , 20      
  $     

SKECHERS U.S.A., INC., a Delaware corporation (“Skechers”), SKECHERS U.S.A.,
INC. II, a Delaware corporation (“Skechers II”), SKECHERS BY MAIL, INC., a
Delaware corporation (“Skechers By Mail” and, together with Skechers, Skechers
II and any other Person hereinafter joined as a Borrower pursuant to the Loan
Agreement described below, each a “Borrower” and, collectively, “Borrowers”),
for value received, hereby unconditionally promise to pay, on a joint and
several basis, to the order of       (“Lender”), the principal sum of       
($     ), or such lesser amount as may be advanced by Lender as Revolver Loans
and owing as LC Obligations from time to time under the Loan Agreement described
below, together with all accrued and unpaid interest thereon. Terms are used
herein as defined in the Loan and Security Agreement dated as of June 30, 2015,
among Borrowers, the other Persons party thereto from time to time as
Guarantors, Bank of America, N.A., as Agent, Lender, and certain other financial
institutions, as such agreement may be amended, restated, supplemented, renewed,
extended or otherwise modified from time to time (the “Loan Agreement”).

Principal of and interest on this Revolver Note (this “Note”) from time to time
outstanding shall be due and payable as provided in the Loan Agreement. This
Note is issued pursuant to and evidences Revolver Loans and LC Obligations under
the Loan Agreement, to which reference is made for a statement of the rights and
obligations of Lender and the duties and obligations of Borrowers. The Loan
Agreement contains provisions for acceleration of the maturity of this Note upon
the happening of certain stated events, and for the borrowing, prepayment and
reborrowing of amounts upon specified terms and conditions.

The holder of this Note is hereby authorized by Borrowers to record on a
schedule annexed to this Note (or on a supplemental schedule) the amounts owing
with respect to Revolver Loans and LC Obligations, and the payment thereof.
Failure to make any notation, however, shall not affect the rights of the holder
of this Note or any obligations of Borrowers hereunder or under any other Loan
Documents.

Time is of the essence of this Note. Each Borrower and all endorsers, sureties
and guarantors of this Note hereby severally waive demand, presentment for
payment, protest, notice of protest, notice of intention to accelerate the
maturity of this Note, diligence in collecting, the bringing of any suit against
any party, and any notice of or defense on account of any extensions, renewals,
partial payments, or changes in any manner of or in this Note or in any of its
terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity. Borrowers jointly and severally agree
to pay, and to save the holder of this Note harmless against, any liability for
the payment of all costs and expenses (including without limitation reasonable
attorneys’ fees) if this Note is collected by or through an attorney-at-law.

In no contingency or event whatsoever shall the amount paid or agreed to be paid
to the holder of this Note for the use, forbearance or detention of money
advanced hereunder exceed the highest lawful rate permitted under Applicable
Law. If any such excess amount is inadvertently paid by Borrowers or
inadvertently received by the holder of this Note, such excess shall be returned
to Borrowers or credited as a payment of principal, in accordance with the Loan
Agreement. It is the intent hereof that Borrowers not pay or contract to pay,
and that holder of this Note not receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by Borrowers under Applicable Law.

This Note shall be governed by the laws of the State of New York, without regard
to conflicts of law principles that would require the application of the laws of
another jurisdiction (but giving effect to federal laws relating to national
banks).

IN WITNESS WHEREOF, this Revolver Note is executed as of the date first set
forth above.

 
SKECHERS U.S.A., INC.,
a Delaware corporation
By:
 
Name:
 
Title:
 
Skechers U.S.A., Inc. II,
a Delaware corporation
By:
 
Name:
 
Title:
 
Skechers by Mail, Inc.,
a Delaware corporation
By:
 
Name:
 
Title:
 
[Other Borrowers, IF ANY
By:
 
Name:
 
Title: ]
 

EXHIBIT C
to
Loan and Security Agreement

FORM OF COMPLIANCE CERTIFICATE

This COMPLIANCE CERTIFICATE is executed and delivered under and pursuant to the
terms of that certain Loan and Security Agreement, dated as of June 30, 2015 (as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time, the “Loan Agreement”), by and among SKECHERS U.S.A., INC., a
Delaware corporation (“Skechers”), Skechers U.S.A., Inc. II, a Delaware
corporation (“Skechers II”), Skechers by Mail, Inc., a Delaware corporation
(“Skechers By Mail” and, together with Skechers and Skechers II, collectively,
the “Borrowers” and, individually, each a “Borrower”), the other Persons party
thereto from time to time as Guarantors, the financial institutions party to
thereto from time to time as Lenders (the “Lenders”), and BANK OF AMERICA, N.A.,
a national banking association, as agent for the Lenders (in such capacity, the
“Agent”). Initially capitalized terms used but not defined herein have the
respective meanings set forth in the Loan Agreement.

The undersigned, being a duly appointed and acting Senior Officer of the
Borrower Agent, being duly authorized, hereby delivers this Compliance
Certificate to Agent, pursuant to Section 10.1.2(d) of the Loan Agreement.

1. The undersigned hereby delivers to Agent [check as applicable]:

      [      ] the Fiscal Year end balance sheets as of the close of Fiscal Year
20[      ] and the related statements of income, cash flow and shareholders
equity for such Fiscal Year, for Skechers on a Consolidated Basis, setting forth
in comparative form corresponding figures for the preceding Fiscal Year,
together with the report thereon from a firm of independent certified public
accountants of recognized standing reasonably acceptable to Agent as required by
Section 10.1.2(a) of the Loan Agreement, dated as of       ,       ;

      [      ] the Fiscal Quarter end unaudited balance sheets as of the close
of the Fiscal Quarter ended on [      ], 20[      ], and the related statements
of income and cash flow for such Fiscal Quarter and for the portion of the
Fiscal Year then elapsed, for Skechers on a Consolidated Basis, setting forth in
comparative form corresponding figures for the preceding Fiscal Year, as
required by Section 10.1.2(b) of the Loan Agreement. Such financial statements
are complete and correct in all material respects and have been prepared in
accordance with GAAP and fairly present in all material respects the financial
position and results of operations for such Fiscal Quarter, subject to normal
year-end adjustments and the absence of footnotes; or

      [      ] [the month end unaudited balance sheets as of the end of
[      ], 20 [      ], and the related statements of income for such month and
for the portion of the Fiscal Year then elapsed, for Skechers on a Consolidated
Basis, setting forth in comparative form corresponding figures for the preceding
Fiscal Year, as required by Section 10.1.2(c) of the Loan Agreement. Such
financial statements are complete and correct in all material respects and have
been prepared in accordance with GAAP and fairly present in all material
respects the financial position and results of operations for such month and
period, subject to normal year-end adjustments and the absence of footnotes.]1

2. The undersigned hereby certifies that, to the best of each Borrower’s
knowledge [check as applicable]:

      [      ] The Obligors and the Subsidiaries are in compliance in all
material respects with all federal, state, and local Environmental Laws.

      [      ] The Obligors and the Subsidiaries are not in compliance in all
material respects with all federal, state, and local Environmental Laws. The
specific area(s) of non-compliance and Borrowers’ proposed action is listed in
Exhibit A.

3. The undersigned represents and warrants to Agent and the Lenders that, except
as may have been previously or concurrently disclosed to Agent in writing by
Borrowers, the representations and warranties of the Obligors and the
Subsidiaries contained in Section 9 of the Loan Agreement and in the other Loan
Documents are true and correct on and as of the date of this Compliance
Certificate as if made on and as of the date hereof (other than any such
representation or warranty that relates to a specified prior date, such
representations or warranties being true and correct as of the specified date
relative thereto).

4. The undersigned represents and warrants to Agent and the Lenders that, as of
the date of this Compliance Certificate, except as previously or concurrently
disclosed to Agent in writing by Borrowers, the Obligors and the Subsidiaries
are in compliance with all of their respective covenants and agreements in the
Loan Agreement and the other Loan Documents, including without limitation, the
following negative covenants as indicated by circling yes/no under the
“Complies” column below:

          Negative Covenants   Complies?
Section 10.2.1 – Permitted Debt
Section 10.2.2 – Permitted Liens
Section 10.2.4 – Distributions; Upstream Payments
Section 10.2.5 – Restricted Investments
Section 10.2.6 – Disposition of Assets
Section 10.2.7 – Loans
Section 10.2.8 – Restrictions on Payment of Certain Debt
  Yes
Yes
Yes
Yes
Yes
Yes
Yes   No
No
No
No
No
No
No

[Attached hereto as Exhibit B are true, correct and complete copies of all
material agreements relating to: (i) Debt incurred pursuant to clause (i) of
Section 10.2.1 of the Loan Agreement; (ii) Distributions made pursuant to clause
(a)(ii) of Section 10.2.4 of the Loan Agreement; and (iii) Investments made
pursuant to clause (e) of the definition of “Restricted Investment” in the Loan
Agreement, in each case to the extent consummated during the period covered by
the financial statements referenced in Paragraph 1 of this Compliance
Certificate and not otherwise previously provided to Agent by Borrowers.]2

5. The undersigned represents and warrants to Agent and the Lenders that, to the
best of his or her knowledge and based upon an examination sufficient to enable
an informed statement [check as applicable]:

      [      ] No Default or Event of Default exists as of the date hereof.

      [      ] One or more Defaults or Events of Default exist as of the date
hereof. Included within Exhibit C attached hereto is a written description
specifying each such Default or Event of Default, its nature, when it occurred,
whether it is continuing as of the date hereof and the steps being taken by the
Obligors and the Subsidiaries with respect thereto. Except as so specified, no
Default or Event of Default exists as of the date hereof.

6. [Attached hereto as Exhibit D is a true and accurate calculation setting
forth the Fixed Charge Coverage Ratio for the four consecutive Fiscal Quarter
period ended on [      ], 20[      ]]3. [The undersigned represents and warrants
that Borrowers are in compliance with the following financial covenant as
indicated by circling yes/no under the “Complies” column below:

                  Financial Covenants   Required   Actual   Complies
Section 10.3.1 – Fixed Charge Coverage Ratio
  1.10 to 1.0        to          Yes   No]4

7. [Since the [Closing Date]5[date of the last Compliance Certificate delivered
to Agent]:

a) no Obligor has registered any Intellectual Property with, or acquired any
Intellectual Property that is registered with, the United States Patent and
Trademark Office or the United States Copyright Office[, except as set forth on
Exhibit E-1 hereto]; and

b) no Obligor or Subsidiary has become party to or bound by any collective
bargaining agreement[, except as set forth on Exhibit E-2 hereto].]6

Date of execution of this Compliance Certificate:       ,       .

BORROWER AGENT:

SKECHERS U.S.A., INC.,
a Delaware corporation

By:
Name:
Title:

EXHIBIT A

to

COMPLIANCE CERTIFICATE

dated
______________, 20__

The following is attached to and made a part of the above referenced Compliance
Certificate.

[specify non-compliance with Environmental Laws and proposed action]EXHIBIT B

to

COMPLIANCE CERTIFICATE

dated
______________, 20__

The following is attached to and made a part of the above referenced Compliance
Certificate.

[copies of material agreements]7EXHIBIT C

to

COMPLIANCE CERTIFICATE

dated

______________, 20___

[specify Defaults or Events of Defaults]
EXHIBIT D

to

COMPLIANCE CERTIFICATE8

($ in 000’s)

FINANCIAL COVENANT COMPLIANCE

For the month ended __________________, 20__
and calculated as of the trailing twelve month period most recently ended
(“Subject Period”).

                      I.   Section 10.3.1 – Fixed Charge Coverage Ratio9 —      
  A.   EBITDA for Subject Period:         —                   1.    
Net income for Skechers on a Consolidated Basis for
Subject Period:
 
$                     
 
              2.    
Consolidated interest expense for Subject Period:
  $                     
 
              3.    
Consolidated provision for income tax expense for Subject
Period:
 
$                     
 
              4.    
Consolidated depreciation (including deferred financing
costs and intangibles) expenses for Subject Period:
 
$                     
 
              5.    
Consolidated amortization expenses (including deferred
financing costs and intangibles) for Subject Period:
 
$                     
 
              6.    
Consolidated gains arising from the sale of capital assets
for Subject Period:
 
$                     
 
              7.    
Consolidated losses arising from the sale of capital
assets for Subject Period:
 
$                     
 
              8.    
Extraordinary gains for Subject Period:
  $                     
 
              9.    
Non-cash extraordinary losses for Subject Period:
  $                     
 
              10.    
Non-cash stock compensation expenses
  $                     
 
              11.    
EBITDA (Lines I.A.1 + 2 + 3 + 4 + 5 – 6 + 7 – 8 + 9 + 10):
  $                     
 
        B.   Capital Expenditures (other than those financed with Debt other
than Revolver Loans) for Subject Period:   $          —                        
  C.   Cash taxes paid for Subject Period:   $          —                      
    D.   Fixed Charges for Subject Period:         —                   1.    
Interest expense (other than payment-in-kind) paid in cash:
  $                     
 
              2.    
Scheduled principal payments made on Debt:
  $                     
 
              3.    
Distributions made (other than Distributions made in-kind
and excluding, for the avoidance of doubt, any Upstream
Payments):
 

$                     
 
              4.    
Fixed Charges (Lines I.C.1 + 2 + 3):
  $                     
 
        E.   Fixed Charge Coverage Ratio ((Line I.A.12 – Line I.B – Line I.C) ÷
Line I.D.4)   __________ to 1.00     —        

EXHIBIT E-1

to

COMPLIANCE CERTIFICATE

dated

______________, 20___

[List all new registered Intellectual Property since the last Compliance
Certificate or since the
Closing Date]

EXHIBIT E-2

to

COMPLIANCE CERTIFICATE

dated

______________, 20___

[List of all new collective bargaining agreements since the last Compliance
Certificate or since
the Closing Date]

EXHIBIT D
to
Loan and Security Agreement

ASSIGNMENT NOTICE

Reference is made to (1) the Loan and Security Agreement dated as of June 30,
2015, as amended (“Loan Agreement”), among SKECHERS U.S.A., INC., a Delaware
corporation (“Skechers”), Skechers U.S.A., Inc. II, a Delaware corporation
(“Skechers II”), Skechers by Mail, Inc., a Delaware corporation (“Skechers By
Mail” and, together with Skechers and Skechers II, collectively, the “Borrowers”
and, individually, each a “Borrower”), the other Persons party thereto from time
to time as Guarantors (the “Guarantors”), the financial institutions party
thereto from time to time as Lenders (the “Lenders”), and BANK OF AMERICA, N.A.,
a national banking association, as agent for the Lenders (“Agent”); and (2) the
Assignment and Acceptance dated as of       , 20      (“Assignment”), between
       (“Assignor”) and       (“Assignee”). Capitalized terms used and not
defined herein shall have the meanings set forth in the Loan Agreement.

Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign to
Assignee pursuant to the Assignment (a) a principal amount of $      of
Assignor’s outstanding Revolver Loans and $      of Assignor’s participations in
LC Obligations, and (b) the amount of $      of Assignor’s Revolver Commitment
(which represents      % of the total Revolver Commitments) (the foregoing items
being, collectively, the “Assigned Interest”), together with an interest in the
Loan Documents corresponding to the Assigned Interest. This Agreement shall be
effective as of [      ] (the “Effective Date”), provided this Assignment Notice
is executed by Assignor, Assignee, Agent and Borrower Agent, if applicable.
Pursuant to the Assignment contemplated by this Assignment Notice, Assignee has
expressly assumed all of Assignor’s obligations under the Loan Agreement to the
extent of the Assigned Interest, as of the Effective Date.

For purposes of the Loan Agreement, Agent shall deem Assignor’s Revolver
Commitment to be reduced by $     , and Assignee’s Revolver Commitment to be
increased by $     .

The address of Assignee to which notices and information are to be sent under
the terms of the Loan Agreement is:

     
     
     
     

The address of Assignee to which payments are to be sent under the terms of the
Loan Agreement is shown in the Assignment.

This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3
of the Loan Agreement. Please acknowledge your acceptance of this Notice by
executing and returning to Assignee and Assignor a copy of this Notice.

IN WITNESS WHEREOF, this Assignment Notice is executed as of       .

     
(“Assignee”)

By—

Title:

     
(“Assignor”)

By—

Title:

ACKNOWLEDGED AND AGREED,
AS OF THE DATE SET FORTH ABOVE:

BORROWER AGENT:*

      

By—

Title:

• No signature required if Assignee is a Lender, Affiliate of a Lender or
Approved Fund, or if an Event of Default exists.

BANK OF AMERICA, N.A.,
as Agent

By—

Title:

SCHEDULE P-1
to
Loan and Security Agreement

PERMITTED HOLDERS

“Permitted Holders” means Robert Greenberg and any of his Affiliates (other than
Skechers and any of its Subsidiaries), Family Members of Robert Greenberg,
Family Trusts of Robert Greenberg, and any Family Trust of a Family Member of
Robert Greenberg.

For purposes of this Schedule, “Family Member” means, with respect to any
individual, any other individual having a relationship by blood (to the second
degree of consanguinity), marriage, or adoption to such individual and “Family
Trust” means, with respect to any individual, any trust or other estate planning
vehicle established for the benefit of such individual or Family Members of such
individual and in respect of which such individual or a Family Member of such
individual serves as trustee or in a similar capacity.

For the sake of clarification, as of the Closing Date, Permitted Holders
include, without limitation, (a) the Robert Y. Greenberg 2012 Annuity Trust,
executed on March 7, 2012, by and among Robert Y. Greenberg, as the settler, and
Gil N. Schwartzberg, as the trustee, as in effect on March 7, 2012, (b) the
Robert Y. Greenberg 2014 Annuity Trust, executed on January 21, 2014, by and
among Robert Y. Greenberg, as the settler, and Gil N. Schwartzberg, as the
trustee, as in effect on January 21, 2014, (c) the M. Susan Greenberg 2012
Annuity Trust, executed on March 7, 2012, by and among M. Susan Greenberg, as
the settler, and Gil N. Schwartzberg, as the trustee, as in effect on March 7,
2012, and (d) the M. Susan Greenberg 2014 Annuity Trust, executed on January 21,
2014, by and among M. Susan Greenberg, as the settler, and Gil N. Schwartzberg,
as the trustee, as in effect on January 21, 2014.

SCHEDULE 1.1
to
Loan and Security Agreement

COMMITMENTS OF LENDERS

         
Lender
  Revolver Commitment
 
       
Bank of America, N.A.
  $ 100,000,000  
 
       
HSBC Bank USA, National Association
  $ 75,000,000  
 
       
MUFG Union Bank, N.A.
  $ 75,000,000  
 
         

TOTAL:
  $ 250,000,000  
 
       

SCHEDULE 2.3.1
to
Loan and Security Agreement

EXISTING LETTERS OF CREDIT

                                      Customer Reference Bank Reference
Beneficiary Name Applicant Name Issue Date Expiry / Maturity Date Outstanding
Amount-USD Documentary Banker's Acceptance   00000064667184       00000064667184
   
J. YOUNG CO., LTD.
  SKECHERS SARL       20 Jul 2015     56,604.72                  
 
              USD                
 
                      00000064667186       00000064667186    
ASMARA INTERNATIONAL LIMITED
  SKECHERS USA, INC.       10 Jul 2015     81,454.15                  
 
              USD                
 
                      00000064667187       00000064667187    
J. YOUNG CO., LTD.
  SKECHERS SARL       15 Jul 2015     34,469.40                  
 
              USD                
 
                      00000064667191       00000064667191    
J. YOUNG CO., LTD.
  SKECHERS SARL       22 Jul 2015     139,332.90                  
 
              USD                
 
                      Documentary Letters of Credit   10RI1556164    
00000064667186    
ASMARA INTERNATIONAL LIMITED
  SKECHERS USA, INC.   09 Mar 2015   02 Oct 2015     203,332.97                
 
 
              USD                
 
                    10RI1565609     00000064667192    
LUEN THAI MACAO COMMERCIAL
  SKECHERS USA, INC.   24 Jun 2015   08 Sep 2015     100,874.18                
 
 
              USD                
 
                    10RI2413021     00000064667190    
HANGZHOU FUJIE OUTDOOR PRODUCTS IN
  SKECHERS USA, INC.   02 Apr 2015   30 Aug 2015     111,600.00                
 
 
              USD                
 
                    10RI776908     00000064667191    
J. YOUNG CO., LTD.
  SKECHERS SARL   14 Apr 2015   05 Aug 2015     87,410.40                  
 
              USD                
 
                    10RI802920     00000064667184    
J. YOUNG CO., LTD.
  SKECHERS SARL   26 Jan 2015   20 Aug 2015     60,533.40                  
 
              USD                
 
                      Standby Letters of Credit     00000003049706      
00000003049706    
3 TIMES SQUARE ASSOCIATES, LLC
  SKECHERS USA, INC.   21 Jun 2002   31 Oct 2015     108,500.00                
 
 
              USD                
 
                    10RS100504     00000003043561    
FEDERAL INSURANCE COMPANY
  SKECHERS USA, INC.   21 Oct 2004   19 Aug 2015     65,000.00                  
 
              USD                
 
                    10RS675     00000003120611    
SENTRY INSURANCE A MUTUAL COMPANY
  SKECHERS USA, INC.   31 May 2013   31 May 2016     1,475,000.00              
   
 
              USD                
 
                    10RSTRAVELERS     00000003067114    
THE TRAVELERS INDEMNITY COMPANY
  SKECHERS USA, INC.   13 Sep 2005   20 Jul 2015     2,200,000.00              
   
 
              USD                
 
                   

SCHEDULE 7.3
to
Loan and Security Agreement

PLEDGED EQUITY

                                          Pledgor / Obligor   Pledged Company  
Number of Shares or   Class of Interests   Percentage of Class   Percentage of
Class   Certificate Nos.         Units       Owned   Pledged         Skechers
U.S.A., Inc.  
Skechers USA, Inc. II
    1,000     Common     100 %     100 %     1      
 
                                    Skechers U.S.A., Inc.  
Skechers By Mail, Inc.
    100     Common     100 %     100 %     1      
 
                                    Skechers U.S.A., Inc.  
Savva’s Cafe, Inc.
    9,500     Common     100 %     100 %     3      
 
                                    Skechers U.S.A., Inc.  
BrandBlack, LLC
    n/a     LLC Interests     100 %     100 %     n/a      
 
                                    Skechers U.S.A., Inc.  
Skechers Collection, LLC
    n/a     LLC Interests     100 %     100 %     n/a      
 
                                    Skechers U.S.A., Inc.  
Skechers Sport, LLC
    n/a     LLC Interests     100 %     100 %     n/a      
 
                                    Skechers U.S.A., Inc.  
SKX Illinois, LLC
    n/a     LLC Interests     100 %     100 %     n/a      
 
                                    Skechers U.S.A., Inc.  
Duncan Investments, LLC
    n/a     LLC Interests     100 %     100 %     n/a      
 
                                    Skechers U.S.A., Inc.  
Sepulveda Blvd. Properties,
LLC
  n/a

  LLC Interests

  100%

  100%

  n/a

   
 
                                    Skechers U.S.A., Inc.  
Skechers R.B., LLC
    n/a     LLC Interests     100 %     100 %     n/a      
 
                                    Skechers U.S.A., Inc.  
Sepulveda Design Center, LLC
    n/a     LLC Interests     100 %     100 %     n/a      
 
                                    Skechers U.S.A., Inc.  
Skechers USA Canada, Inc.
    100     Common     100 %     65 %     2      
 
                                    Skechers U.S.A., Inc.  
Skechers Holdings Jersey
Limited
  100

  Common

  100%

  65%

  4

   
 
                                    Skechers U.S.A., Inc.  
Skechers International
    n/a     Partnership
Interests   90%

  58.5%

  n/a

   
 
                                    Skechers U.S.A., Inc. II  
Skechers International
    n/a     Partnership
Interests   10%

  6.5%

  n/a

   
 
                                    Skechers U.S.A., Inc.  
Skechers International II
    n/a     Partnership
Interests   8.6%

  8.6%

  n/a

   
 
                                    Skechers U.S.A., Inc.  
Skechers (Thailand) Limited.
    15,300     JV Interests
(Shares)   51%

  51%

  1110

   
 
                                    Skechers U.S.A., Inc.  
Skechers Do Brasil Calcados
Ltda
  n/a

  n/a

  0.01%

  0.01%

  n/a

   
 
                                   

Other Investment Property:

1. See disclosure letter delivered to Agent regarding Deposit Accounts and
Securities Accounts owned by Obligors.

2. See Schedule 9.1.4(a).SCHEDULE 8.6.1
to
Loan and Security Agreement

BUSINESS LOCATIONS

As of the Closing Date, the Obligors have the following business locations:

  a)   228 Manhattan Beach Blvd., Manhattan Beach, CA 90266

  b)   225 South Sepulveda Blvd., Manhattan Beach, CA 90266

  c)   330 South Sepulveda Blvd., Manhattan Beach, CA 90266

  d)   3201 Pacific Coast Highway, Hermosa Beach, CA 90254

  e)   3001 Pacific Coast Highway, Hermosa Beach, CA 90254

  f)   2901 Pacific Coast Highway, Hermosa Beach, CA 90254

  g)   2851 Pacific Coast Highway, Hermosa Beach, CA 90254

  h)   3125 Pacific Coast Highway, Hermosa Beach, CA 90254

  i)   744 Longfellow Avenue, Hermosa Beach, CA 90254

  j)   29800 Eucalyptus Avenue, Moreno Valley, CA 92555

SCHEDULE 9.1.4(a)
to
Loan and Security Agreement

NAMES AND CAPITAL STRUCTURE

1.   Corporate names, jurisdictions of incorporation, and authorized and issued
Equity Interests:

             
Name
  Jurisdiction   Number and Class
of Authorized Shares   Number and Class
of Issued Shares
 
           
Skechers U.S.A., Inc.
  Delaware   100,000,000 Class A
Common shares
60,000,000 Class B
Common shares
10,000,000 Preferred
shares   41,551,376 Class A
Common shares
10,469,918 Class B
Common shares
0 Preferred shares

 
           
Skechers U.S.A., Inc. II
  Delaware   1,000 common shares   1,000 common shares
 
           
Skechers By Mail, Inc.
  Delaware   10,000 common shares   100 common shares
 
           
Savva’s Cafe, Inc.
  Delaware   100,000 common shares   9,500 common shares
 
           
BrandBlack, LLC
  Delaware   LLC Interests   n/a
 
           
Skechers Collection, LLC
  California   LLC Interests   n/a
 
           
Skechers Sport, LLC
  California   LLC Interests   n/a
 
           
SKX Illinois, LLC
  Illinois   LLC Interests   n/a
 
           
Duncan Investments, LLC
  California   LLC Interests   n/a
 
           
Sepulveda Blvd. Properties, LLC
  California   LLC Interests   n/a
 
           
Skechers R.B., LLC
  Delaware   LLC Interests   n/a
 
           
Sepulveda Design Center, LLC
  California   LLC Interests   n/a
 
           
HF Logistics-SKX, LLC11
  Delaware   LLC Interests   n/a
 
           
HF Logistics-SKX T1, LLC12
  Delaware   LLC Interests   n/a
 
           
HF Logistics-SKX T2, LLC13
  Delaware   LLC Interests   n/a
 
            Skechers USA, Ltd.   United Kingdom               Skechers USA
Canada, Inc.   Canada               Skechers USA Iberia, S.L.   Spain          
    Skechers USA Deutschland GmbH   Germany               Skechers USA France
S.A.S.   France               Skechers CEE Kft.   Hungary               Skechers
EDC SPRL   Belgium               Skechers USA Benelux B.V.   Netherlands        
      Skechers USA Italia S.r.l.   Italy               Skechers S.a.r.l.  
Switzerland               Skechers Footwear (Dongguan) Co., Ltd.   China        
      Skechers Holdings Jersey Limited   Jersey               Skechers USA
Mauritius 10   Mauritius               Skechers USA Mauritius 90   Mauritius    
          Skechers China Business Trust   Jersey               Skechers Holdings
Mauritius   Mauritius               Skechers Do Brasil Calcados LTDA   Brazil  
            Skechers Japan GK   Japan               Comercializadora Skechers
Chile
Limitada   Chile               Skechers USA Portugal Unipessoal
Limitada   Portugal               Skechers International   Jersey              
Skechers International II   Jersey               Skechers Singapore Pte. Limited
  Singapore               Skechers (Thailand) Limited   Thailand              
Skechers Malaysia Sdn Bhd   Malaysia               Skechers Trading (Shanghai)
Co. Ltd.   PRC               Skechers China Limited   Hong Kong              
Skechers Hong Kong Limited   Hong Kong               Skechers Guangzhou Co.,
Ltd.   PRC               Skechers Southeast Asia Limited   Hong Kong            
  Skechers Macau Limited   Macau               Skechers South Asia Private
Limited   India               Skechers Retail India Private Limited   India    
          Skechers Panama, LLC   Panama               Skechers Peru, S.A.   Peru
              Skechers Colombia, S.A.S.   Columbia               Sepulveda
Footwear Costa Rica, S.R.L.   Costa Rica               Skechers Latin America,
LLC   Panama              

2.   The record holders of Equity Interests of Borrowers and each Subsidiary
(including the number of issued shares (other than for any Foreign
Subsidiary)) are as follows:

      Name  
Record Owner
   
 
Skechers U.S.A., Inc.  
Class A common shares are publicly traded
The ownership of Class B shares as of the
Closing Date has been separately disclosed to
the Agent.
   
 
Skechers U.S.A., Inc. II  
Skechers U.S.A., Inc. (100%)
   
 
Skechers By Mail, Inc.  
Skechers U.S.A., Inc. (100%)
   
 
Savva’s Cafe, Inc.  
Skechers U.S.A., Inc. (100%)
   
 
BrandBlack, LLC  
Skechers U.S.A., Inc. (100%)
   
 
Skechers Collection, LLC  
Skechers U.S.A., Inc. (100%)
   
 
Skechers Sport, LLC  
Skechers U.S.A., Inc. (100%)
   
 
SKX Illinois, LLC  
Skechers U.S.A., Inc. (100%)
   
 
Duncan Investments, LLC  
Skechers U.S.A., Inc. (100%)
   
 
Sepulveda Blvd. Properties, LLC  
Skechers U.S.A., Inc. (100%)
   
 
Skechers R.B., LLC  
Skechers U.S.A., Inc. (100%)
   
 
Sepulveda Design Center, LLC  
Skechers U.S.A., Inc. (100%)
   
 
HF Logistics-SKX, LLC14  
HF Logistics I, LLC (50%)
Skechers R.B., LLC (50%)
   
 
HF Logistics-SKX T1, LLC15  
HF Logistics-SKX, LLC (100%)
   
 
HF Logistics-SKX T2, LLC16  
HF Logistics-SKX, LLC (100%)
   
 
Skechers USA, Ltd.  
Skechers Sarl (100%)
   
 
Skechers USA Canada, Inc.  
Skechers USA, Inc. (100%)
   
 
Skechers USA Iberia, S.L.  
Skechers Sarl (100%)
   
 
Skechers USA Deutschland GmbH  
Skechers Sarl (100%)
   
 
Skechers USA France S.A.S.  
Skechers Sarl (100%)
   
 
Skechers CEE Kft.  
Skechers Sarl (100%)
   
 
Skechers EDC SPRL  
Skechers International (100%)
   
 
Skechers USA Benelux B.V.  
Skechers International (100%)
   
 
Skechers USA Italia S.r.l.  
Skechers Sarl (100%)
   
 
Skechers S.a.r.l.  
Skechers International (100%)
   
 
Skechers Footwear (Dongguan) Co., Ltd.  
Skechers Holdings Mauritius (100%)
   
 
Skechers Holdings Jersey Limited  
Skechers USA, Inc. (100%)
   
 
Skechers USA Mauritius 10  
Skechers Holdings Jersey Limited (100%)
   
 
Skechers USA Mauritius 90  
Skechers Holdings Jersey Limited (100%)
   
 
Skechers China Business Trust  
Skechers Mauritius 10 (10%)
Skechers Mauritius 90 (90%)
   
 
Skechers Holdings Mauritius  
Skechers China Business Trust (100%)
   
 
Skechers Do Brasil Calcados LTDA  
Skechers USA, Inc. (0.01%)
Skechers Sarl (99.99%)
   
 
Skechers Japan GK  
Skechers Sarl (100%)
   
 
Comercializadora Skechers Chile Limitada  
Skechers International (0.000017%)
Skechers Sarl (99.999983%)
   
 
Skechers USA Portugal Unipessoal
Limitada  
Skechers Sarl (100%)

   
 
Skechers International  
Skechers USA, Inc. (90%)
Skechers USA, Inc. II (10%)
   
 
Skechers International II  
Skechers USA, Inc. (8.6%)
Skechers International (91.4%)
   
 
Skechers Singapore Pte. Limited  
Skechers Southeast Asia Limited (100%)
   
 
Skechers (Thailand) Limited  
Skechers USA, Inc. (51%)
Luen On Investment Holdings Limited (49%)
   
 
Skechers Malaysia Sdn Bhd  
Skechers Southeast Asia Limited (100%)
   
 
Skechers Trading (Shanghai) Co. Ltd.  
Skechers China Limited (100%)
   
 
Skechers China Limited  
Skechers Sarl (50%)
Luen Thai Enterprise Limited
(50%)
   
 
Skechers Hong Kong Limited  
Skechers China Limited (70%)
Onwel Sales Limited (30%)
   
 
Skechers Guangzhou Co., Ltd.  
Skechers China Limited (100%)
   
 
Skechers Southeast Asia Limited  
Skechers Sarl (50%)
Luen On Investment Holdings Limited (50%)
   
 
Skechers Macau Limited  
Skechers Hong Kong Limited (96%)
Skechers Southeast Asia Limited (4%)17
   
 
Skechers South Asia Private Limited  
Skechers USA Benelux B.V. (51%)
Tirumal Trading & Investment Counsultants
Private Limited (49%)
   
 
Skechers Retail India Private Limited  
Skechers Sarl (49%)
Tirumal Trading & Investment Counsultants
Private Limited (49%)
Kamlesh Gupta (2%)
   
 
Skechers Panama, LLC  
Skechers Sarl (100%)
   
 
Skechers Peru, S.A.  
Skechers Sarl (100%)
   
 
Skechers Colombia, S.A.S.  
Skechers Sarl (100%)
   
 
Sepulveda Footwear Costa Rica, S.R.L.  
Skechers Sarl (100%)
   
 
Skechers Latin America, LLC  
Skechers Sarl (100%)
   
 

3.   Each of the following Subsidiaries is a real estate holding company:

•   Duncan Investments, LLC

•   Sepulveda Blvd. Properties, LLC

•   Skechers R.B., LLC

•   Sepulveda Design Center, LLC

SCHEDULE 9.1.4(b)
to
Loan and Security Agreement

CLOSING DATE DEBT

                  Obligor (Debtor)   Lender of Debt   Amount of Debt  
Description Of Debt Skechers U.S.A.,
Inc.   Banc of America
Leasing & Capital,
LLC     15,047,710    
Note payable to
banks, due in
monthly
installments of
$531,400 (includes
principal and
interest),
fixed-rate interest
at 3.54% per annum,
secured by
property, balloon
payment of
$12,635,000 due
December 2015.
Skechers U.S.A.,
Inc.   Banc of America
Leasing & Capital,
LLC     16,543,608    
Note payable to
banks, due in
monthly
installments of
$483,900 (includes
principal and
interest),
fixed-rate interest
at 3.19% per annum,
secured by
property, balloon
payment of
$11,670,000 due
June 2016.

SCHEDULE 9.1.11
to
Loan and Security Agreement

PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

See Next Page.

SCHEDULE 9.1.14
to
Loan and Security Agreement

ENVIRONMENTAL MATTERS

None.

SCHEDULE 9.1.15
to
Loan and Security Agreement

RESTRICTIVE AGREEMENTS

None.

SCHEDULE 9.1.16
to
Loan and Security Agreement

COMMERCIAL TORT CLAIMS
None.SCHEDULE 9.1.18
to
Loan and Security Agreement

PENSION PLAN DISCLOSURES
None.SCHEDULE 9.1.20
to
Loan and Security Agreement

LABOR CONTRACTS

None.

SCHEDULE 10.2.2
to
Loan and Security Agreement

EXISTING LIENS

Security and other interests described in the following UCC Financing Statements
shall constitute existing Liens under this Agreement

Skechers U.S.A., Inc.

         
Filing Office
  File Number and Date   Secured Party
 
       
Delaware Secretary of State
  2011 0003718
01/03/2011   Bank of Utah, as Agent

 
       
Delaware Secretary of State
  2014 0788752
02/24/2014   Navitas Lease Corp.

 
       
California Secretary of State
  13-7362564996
05/16/2013   Navitas Lease Corp.

 
       
Riverside County Recorder
  2011-0007850
01/06/2011   Bank of Utah, as Agent

 
       

SCHEDULE 10.2.5
to
Loan and Security Agreement

CLOSING DATE INVESTMENTS

None.SCHEDULE 10.2.7
to
Loan and Security Agreement

CLOSING DATE INTERCOMPANY LOANS

None.SCHEDULE 10.2.17
to
Loan and Security Agreement

AFFILIATE TRANSACTIONS

That certain Distribution Agreement, dated December 30, 2005, as amended from
time to time, by and between Skechers U.S.A., Inc. II and Skechers U.S.A.
Canada, Inc. pursuant to which Skechers U.S.A., Canada Inc. purchases footwear
products from Skechers U.S.A., Inc. II bearing certain Skechers U.S.A., Inc.
II-owned trademarks for resale within Canada.

1   Per Section 10.1.2(c) of the Loan Agreement, monthly financials are only
required during a Dominion Period

2   Include relevant portions of bracketed paragraphs as applicable.

3   A Compliance Certificate containing this FCCR calculation is required to be
delivered at the start of any Covenant Testing Period, and such FCCR calculation
shall be included for any other Compliance Certificate delivered during a
Covenant Testing Period.

4   Bracketed language regarding compliance only required to be included during
a Covenant Testing Period.

5   Use Closing Date only for the first Compliance Certificate delivered after
the Closing Date.

6   This certification (including sub-clauses (a), (b) and (c)) shall be
included with each quarterly Compliance Certificate.

7   Attach true, correct and complete copies of all material agreements relating
to (i) Debt incurred pursuant to clause (i) of Section 10.2.1 of the Loan
Agreement; (ii) Distributions made pursuant to clause (a)(ii) of Section 10.2.4
of the Loan Agreement; and (iii) Investments made pursuant to clause (e) of the
definition of “Restricted Investment” in the Loan Agreement, in each case to the
extent consummated during the period covered by the financial statements
referenced in Paragraph 1 of this Compliance Certificate.

8   Calculation of Fixed Charge Coverage Ratio is only required to be included
during a Covenant Testing Period.

9   For the purposes of calculating EBITDA for any period of 4 consecutive
Fiscal Quarters (each, a “Reference Period”), if at any time during such
Reference Period (and after the Closing Date), Borrowers or any of its
Subsidiaries shall have made a Permitted Acquisition, EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto (including pro
forma adjustments arising out of events which are directly attributable to such
Permitted Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case to be mutually and reasonably agreed upon by
Borrowers and Agent) or in such other manner acceptable to Agent as if any such
Permitted Acquisition or adjustment occurred on the first day of such Reference
Period.

10   Skechers will deliver to Agent stock certificate number 10, representing
29,999 shares, on the Closing Date. This certificate and does not reflect
Skechers’ actual current ownership of 15,300 shares. Certificate number 10 will
be cancelled and exchanged for a new stock certificate (numbered 11,
representing 15,300 shares) post-closing (see Section 6.3(d)).

11   This entity is a joint venture, not a Subsidiary.

12   This entity is a subsidiary of HF-Logistics-SKX, LLC.

13   This entity is a subsidiary of HF-Logistics-SKX, LLC

14   This entity is a joint venture, not a Subsidiary.

15   This entity is a joint venture, not a Subsidiary.

16   This entity is a subsidiary of HF-Logistics-SKX, LLC

17   Held in trust for Skechers USA, Inc.

6