Revolving Credit Agreement



 Exhibit 10.12 
 REVOLVING CREDIT AGREEMENT 
 DATED
AS OF AUGUST 10, 2007 
 BY AND BETWEEN

 LUMBER LIQUIDATORS, INC. 
 AND 
 BANK OF AMERICA, N.A.








 TABLE OF CONTENTS 
  

							
	ARTICLE 1    DEFINITIONS AND INTERPRETATION	  	1
				
		 	SECTION 1.1	  	DEFINITIONS	  	1
		 	SECTION 1.2	  	INTERPRETATION	  	5
		
	ARTICLE 1A    REVOLVING CREDIT FACILITY	  	6
				
		 	SECTION 1A.1	  	GENERAL DESCRIPTION	  	6
		 	SECTION 1A.2	  	REVOLVING CREDIT NOTE	  	6
		 	SECTION 1A.3	  	PURPOSE	  	6
		 	SECTION 1A.4	  	REPAYMENT TERMS; INTEREST RATE	  	7
		 	SECTION 1A.5	  	MANNER OF BORROWING	  	7
		 	SECTION 1A.6	  	PREPAYMENTS	  	7
		 	SECTION 1A.7	  	UNUSED COMMITMENT FEE	  	8
		 	SECTION 1A.8	  	LETTERS OF CREDIT	  	8
		 	SECTION 1A.9	  	FACILITY REDUCTION	  	8
		 	SECTION 1A.10	  	PAYMENTS AND COMPUTATIONS	  	8
		
	ARTICLE 2    CONDITIONS PRECEDENT	  	10
				
		 	SECTION 2.1	  	APPROVAL OF BANK’S COUNSEL	  	10
		 	SECTION 2.2	  	COMPLIANCE	  	10
		 	SECTION 2.3	  	REVOLVING CREDIT NOTE	  	10
		 	SECTION 2.4	  	SECURITY AGREEMENT AND FINANCING STATEMENTS	  	10
		 	SECTION 2.5	  	COMPANY ORGANIZATIONAL DOCUMENTS; EVIDENCE OF COMPANY ACTION	  	10
		 	SECTION 2.6	  	OPINION OF COUNSEL	  	11
		 	SECTION 2.7	  	BANK AS PRINCIPAL DEPOSITORY	  	11
		 	SECTION 2.8	  	PAYMENT OF FEES	  	11
		 	SECTION 2.9	  	OTHER CONDITIONS	  	11
		
	ARTICLE 3    REPRESENTATIONS AND WARRANTIES	  	11
				
		 	SECTION 3.1	  	SUBSIDIARIES	  	11
		 	SECTION 3.2	  	ORGANIZATION AND EXISTENCE	  	11
		 	SECTION 3.3	  	AUTHORITY	  	11
		 	SECTION 3.4	  	BINDING AGREEMENTS	  	12
		 	SECTION 3.5	  	LITIGATION	  	12
		 	SECTION 3.6	  	NO CONFLICTING AGREEMENTS	  	12
		 	SECTION 3.7	  	FINANCIAL CONDITION	  	12
		 	SECTION 3.8	  	TITLE TO PROPERTIES	  	12
		 	SECTION 3.9	  	EMPLOYEE BENEFIT PENSION PLANS	  	12
		 	SECTION 3.10	  	NO DEFAULTS	  	13
		 	SECTION 3.11	  	TAXES	  	13
		 	SECTION 3.12	  	ENVIRONMENTAL COMPLIANCE	  	13
		 	SECTION 3.13	  	FEDERAL REGULATIONS	  	13
		 	SECTION 3.14	  	ACCURACY OF INFORMATION	  	14
		 	SECTION 3.15	  	COMPLIANCE WITH LAWS	  	14
		
	ARTICLE 4    AFFIRMATIVE COVENANTS	  	14
				
		 	SECTION 4.1	  	FINANCIAL INFORMATION	  	14
		 	SECTION 4.2	  	BANK AS PRINCIPAL DEPOSITORY	  	15
		 	SECTION 4.3	  	TAXES	  	15
		 	SECTION 4.4	  	PAYMENT OF OBLIGATIONS	  	15
		 	SECTION 4.5	  	INSURANCE	  	15
		 	SECTION 4.6	  	EXISTENCE	  	16
		 	SECTION 4.7	  	LICENSES AND PERMITS	  	16

  

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		 	SECTION 4.8	  	MAINTENANCE OF PROPERTIES	  	16
		 	SECTION 4.9	  	EMPLOYEE BENEFIT PENSION PLANS	  	16
		 	SECTION 4.10	  	COMPLIANCE WITH APPLICABLE LAWS	  	16
		 	SECTION 4.11	  	NOTICE OF LIABILITIES	  	16
		 	SECTION 4.12	  	MERGER	  	17
		 	SECTION 4.13	  	FURTHER ASSURANCES	  	17
		
	ARTICLE 4A    FINANCIAL COVENANTS	  	18
				
		 	SECTION 4A.1	  	FIXED CHARGE COVERAGE RATIO	  	18
		 	SECTION 4A.2	  	ADJUSTED FUNDED DEBT TO EBITDAR RATIO	  	18
		
	ARTICLE 5    NEGATIVE COVENANTS	  	18
				
		 	SECTION 5.1	  	INDEBTEDNESS.	  	18
		 	SECTION 5.2	  	MORTGAGES AND PLEDGES	  	18
		 	SECTION 5.3	  	MERGER, ACQUISITION, OR SALE OF ASSETS	  	19
		 	SECTION 5.4	  	CONTINGENT LIABILITIES	  	19
		 	SECTION 5.5	  	LOANS	  	19
		 	SECTION 5.6	  	CHARACTER OF BUSINESS	  	19
		 	SECTION 5.6	  	INVESTMENTS	  	19
		
	ARTICLE 6    EVENTS OF DEFAULT AND REMEDIES	  	20
				
		 	SECTION 6.1	  	EVENTS OF DEFAULT	  	20
		 	SECTION 6.2	  	REMEDIES	  	21
		
	ARTICLE 7    MISCELLANEOUS PROVISIONS	  	22
				
		 	SECTION 7.1	  	INDEMNIFICATION	  	22
		 	SECTION 7.2	  	AUTODEBIT	  	23
		 	SECTION 7.3	  	COSTS AND EXPENSES	  	23
		 	SECTION 7.4	  	CUMULATIVE RIGHTS AND NO WAIVER	  	24
		 	SECTION 7.5	  	ARBITRATION AND WAIVER OF JURY TRIAL	  	24
		 	SECTION 7.6	  	NOTICES	  	25
		 	SECTION 7.7	  	APPLICABLE LAW	  	26
		 	SECTION 7.8	  	MODIFICATIONS	  	26
		 	SECTION 7.9	  	SURVIVORSHIP; SUCCESSORS AND ASSIGNS	  	27
		 	SECTION 7.10	  	EXECUTION IN COUNTERPARTS	  	27
		 	SECTION 7.11	  	HEADINGS	  	27
		 	SECTION 7.12	  	ENTIRE AGREEMENT; CONTROLLING DOCUMENT	  	27
		 	SECTION 7.13	  	USA PATRIOT ACT NOTICE	  	27
		 	SECTION 7.14	  	FINAL AGREEMENT	  	27

  

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 REVOLVING CREDIT AGREEMENT 

THIS REVOLVING CREDIT AGREEMENT
(this “Agreement”) is dated as of the 10th day of August, 2007, by and between LUMBER LIQUIDATORS,
INC. (the “Company”), a Massachusetts corporation, with a principal office located at 3000 John Deere Road, Toano, Virginia 23168, and BANK OF AMERICA, N.A. (the
“Bank”), a national banking association, with an office located at 1111 East Main Street, Richmond, Virginia 23219. 
 The Company has applied to the Bank for a revolving credit facility in an amount not to exceed $25,000,000, the proceeds of which will be used by the Company to refinance certain existing indebtedness of the Company to the Bank, for
short-term working capital and for other general corporate purposes. 
 The Bank is willing to make the Revolving Credit Facility (as
hereinafter defined) available to the Company upon the terms and subject to the conditions contained herein. 
 Accordingly, the Company and
the Bank agree as follows: 
 ARTICLE 1 
 DEFINITIONS AND INTERPRETATION 
 Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings assigned below: 
 “Adjusted Funded Debt to EBITDAR Ratio” means, with respect to the Company on a consolidated basis, the ratio of (i) all outstanding liabilities for borrowed money and other interest-bearing liabilities, including
current and long-term debt, and all liabilities under guaranties (other than the guaranty by the Company of Thomas D. Sullivan’s cash payment obligation to Kevin Sullivan under the stock-based agreement described in the Current Audited
Financial Statements) and letters of credit, plus eight (8) times rent expense with respect to real property, to (ii) net income, after income tax, less income or plus loss from discontinued operations and extraordinary items, plus income
taxes, plus interest expense, plus actual rent paid with respect to real property, plus depreciation, depletion, amortization and other non-cash charges (including without limitation charges relating to non-cash equity compensation plans).

 “Adjustment Date” means initially the date hereof, and thereafter
the first (1st) day of each Interest Period. If the Adjustment Date in any particular month would otherwise fall on a day that is not a banking day
then, at the Bank’s option, the Adjustment Date for that particular month will be the first banking day immediately following thereafter. 
 “Applicable Commitment Fee” means (i) 0.125% for the period from the date hereof through and including the first day of the first month following receipt by the Bank of the Company’s
financial statements described in Section 4.1 for the fiscal quarter ending June 30, 2007, and (ii) thereafter shall be determined by reference to the Funded Debt to EBITDA Ratio in accordance with the following table: 
  

				
	 Funded Debt to EBITDA Ratio
	  	Applicable
Commitment Fee	 
	 Greater than 1.00 to 1.0
	  	0.175	%
		
	 Less than or equal to 1.00 to 1, but greater than 0.50 to 1.0
	  	0.150	%
		
	 Less than or equal to 0.50 to 1.0
	  	0.125	%

  

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 Except during the initial period described in clause (i) above, the Applicable Commitment Fee will
be automatically adjusted as of the first day of the first month following receipt by the Bank of the Company’s financial statements pursuant to Section 4.1(a) or Section 4.1(b) demonstrating to the Bank’s reasonable satisfaction
that there has been a change in the Funded Debt to EBITDA Ratio which would cause a change in the Applicable Commitment Fee in accordance with the preceding table. Notwithstanding the foregoing, if the Company delivers financial statements to the
Bank five (5) or fewer days before the end of a month, the Applicable Commitment Fee will be automatically adjusted as of the first day of the second month following receipt by the Bank of such financial statements. At all times after and
during the continuance of an Event of Default with respect to the Company’s obligations under Section 4.1(a) or Section 4.1(b) until the delivery of the applicable financial statements required pursuant thereto, the Applicable
Commitment Fee shall be 0.175%. 
 “Applicable Margin” means (i) 0.50% for the period from the date hereof through and
including the first day of the first month following receipt by the Bank of the Company’s financial statements described in Section 4.1 for the fiscal quarter ending June 30, 2007, and (ii) thereafter shall be determined by
reference to the Funded Debt to EBITDA Ratio in accordance with the following table: 
  

				
	 Funded Debt to EBITDA Ratio
	  	Applicable Margin	 
	 Greater than 1.00 to 1.0
	  	1.00	%
		
	 Less than or equal to 1.00 to 1, but greater than 0.50 to 1.0
	  	0.75	%
		
	 Less than or equal to 0.50 to 1.0
	  	0.50	%

 Except during the initial period described in clause (i) above, the Applicable Margin will be
automatically adjusted as of the first day of the first month following receipt by the Bank of the Company’s financial statements pursuant to Section 4.1(a) or Section 4.1(b) demonstrating to the Bank’s reasonable satisfaction
that there has been a change in the Funded Debt to EBITDA Ratio which would cause a change in the Applicable Margin in accordance with the preceding table. Notwithstanding the foregoing, if the Company delivers financial statements to the Bank
five (5) or fewer days before the end of a month, the Applicable Margin will be automatically adjusted as of the first day of the second month following receipt by the Bank of such financial statements. At all times after and during the
continuance of an Event of Default with respect to the Company’s obligations under Section 4.1(a) or Section 4.1(b) until the delivery of the applicable financial statements required pursuant thereto, the Applicable Margin shall be
1.00%. 
  

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 “BBA LIBOR” means a rate of interest equal to the rate per annum equal to the British
Bankers Association LIBOR Rate, as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time) as determined for each Adjustment Date at approximately 11:00 a.m. London
time two (2) London Banking Days prior to the Adjustment Date, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term of one month, as adjusted from time to time in the Bank’s sole discretion for
reserve requirements, deposit insurance assessment rates and other regulatory costs. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected
by the Bank. 
 “Business Day” means each day other than a Saturday, a Sunday, or any holiday on which commercial banks in
the Commonwealth of Virginia are closed for business. 
 “Cash Flow” means, with respect to the Company on a consolidated
basis, (a) income before income taxes, (b) less income or plus losses from discontinued operations and extraordinary items, (c) plus depreciation, depletion, amortization and other non-cash charges, (d) plus interest expense on
all obligations, (e) plus actual rent paid with respect to real property, (f) minus dividends, withdrawals and other distributions. 
 “Change in Law” has the meaning assigned to such term in Section 1A.10. 
 “Change of
Control” (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the
date hereof), of shares representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Company; (b) occupation of a majority of the seats (other than vacant seats) on the board
of directors of the Company by Persons who were not nominated in accordance with the Bylaws of the Company; or (c) the acquisition of direct or indirect control of the Company by any Person or group; provided that neither the Merger nor any
public offering of stock in LL Delaware shall be deemed to constitute or result in a Change of Control. 
 “Current Audited Financial
Statements” means the financial statements of the Company as of December 31, 2006, heretofore delivered to the Bank. 
 “Excluded Taxes” means, with respect to the Bank, (i) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the laws of which it is organized or in which its principal office is located or, and (i) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction.

 “Fixed Charge Coverage Ratio” means, with respect to the Company on a consolidated basis, the ratio of (i) Cash Flow
to (ii) the sum of the current portion of long term debt and the current portion of capitalized lease obligations, plus interest expense on all obligations, plus actual rent paid with respect to real property. 
  

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 “Funded Debt to EBITDA Ratio” means, with respect to the Company on a consolidated
basis, the ratio of (i) all outstanding liabilities for borrowed money and other interest-bearing liabilities, including current and long-term debt, and all liabilities under guaranties and standby letters of credit, to (ii) net income,
after income tax, less income or plus loss from discontinued operations and extraordinary items, plus income taxes, plus interest expense, plus depreciation, depletion, amortization and other non-cash charges. 
 “Interest Period” means initially a period of one (1) month, and thereafter, at the election of the Company, a period of
one (1), two (2), three (3) or six (6) months; provided, however, that (i) the first day of each Interest Period must be a London Banking Day, (ii) the last day of each Interest Period and the actual number of days in
each Interest Period will be determined by the Bank using the practices of the London inter-bank market; (iii) each Interest Period will apply to the entire principal amount outstanding under the Revolving Credit Facility; (iv) the Company
shall irrevocably request each Interest Period no later than 12:00 noon on the London Banking Day preceding the day on which the BBA LIBOR will be set, and (v) if the Company fails to request the Interest Period as provided above, the Interest
Period will be the same as the immediately preceding Interest Period. 
 “Letter of Credit” and “Letters of
Credit” have the meanings assigned to such terms in Section 1A.8. 
 “Letter of Credit Documents” has the
meaning assigned to such term in Section 1A.8. 
 “Letter of Credit Sublimit” means Five Million and No/100 Dollars
($5,000,000). 
 “LL Delaware” shall mean Lumber Liquidators, Inc., a Delaware corporation formed or to be formed as a
wholly-owned subsidiary of the Company, and its successors and assigns, including as the surviving corporation of the Merger. 
 “Loan Documents” has the meaning assigned to such term in Section 2.2(a). 
 “London Banking
Day” means a day on which banks in London are open for business and dealing in offshore dollars. 
 “Merger” shall
mean the contemplated merger by the Company with and into LL Delaware, with LL Delaware as the surviving corporation, pursuant to the Merger Documents. 
 “Merger Documents” shall mean, collectively, the Agreement and Plan of Merger, dated on or before the Merger Effective Time, by and between the Company and LL Delaware, the Certificate of Merger
evidencing the Merger and all other agreements, documents and instruments executed, delivered and/or filed in connection therewith or related thereto. 
 “Merger Effective Time” shall mean the date on which the transactions contemplated by the Merger Documents have been consummated and the Merger is effective. 
  

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 “Person” means and includes any individual, corporation, partnership, joint venture,
limited liability company or partnership, trust, unincorporated association, governmental authority or any other organization or entity. 
 “Prime Rate” for any day means the rate of interest equal to the Bank’s “Prime Rate” of interest publicly announced from time to time by the Bank. Any change in the Prime Rate shall take effect at the opening
of business on the day specified in the public announcement of a change in the Bank’s “Prime Rate”. 
 “Revolving
Credit Facility” has the meaning assigned to such term in Section 1A.1. 
 “Revolving Credit Facility Cap”
means Twenty-Five Million and No/100 Dollars ($25,000,000). 
 “Revolving Credit Note” has the meaning assigned to such term
in Section 1A.2. 
 “Revolving Credit Termination Date” has the meaning assigned to such term in Section 1A.1.

 “SEC” means the United Stated Securities and Exchange Commission. 
 “Security Agreement” has the meaning assigned to such term in Section 2.4. 
 Section 1.2 Interpretation. For all purposes of this Agreement and each of the other Loan Documents, except as otherwise expressly required
or unless the context clearly indicates a contrary intent: 
 (a) the capitalized terms shall have the meanings assigned to them in this
Agreement, shall include the plural as well as the singular, and, when used with respect to any Loan Document or any other instrument, contract, agreement or other document, shall include all extensions, modifications, amendments and supplements
from time to time thereto; 
 (b) unless otherwise specified, a reference in this Agreement to a particular article, section, subsection or
exhibit is a reference to that article, section, subsection or exhibit of this Agreement; 
 (c) the words “herein,”
“hereof,” and “hereunder” and other words of similar import refer to this Agreement or such other Loan Document, as applicable, as a whole and not to any particular article, section, or other subdivision hereof or thereof;

 (d) the words “include” and “including” and other words of similar import shall be construed as if followed by the
phrase “without limitation”; 
 (e) any provision of this Agreement or any other Loan Document permitting the recovery of
“attorneys’ fees,” “attorneys’ fees and expenses,” “attorneys’ fees and costs” or “attorneys’ fees, costs and expenses” or any similar term shall be deemed: (i) to include such
reasonable attorneys’ fees, costs and expenses; (ii) to include such reasonable fees, costs and 

  

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expenses incurred in all probate, appellate and bankruptcy proceedings, as well as any post-judgment proceedings to collect or enforce any judgment or order
relating to the obligations of the Company hereunder and under the other Loan Documents; and (iii) shall be deemed to be separate and several, and shall survive merger into judgment; and 
 (f) accounting terms used but not otherwise defined herein shall be determined both as to classification of items and as to amounts in accordance with
generally accepted accounting principles applied on a consistent basis. 
 ARTICLE 1A 
 REVOLVING CREDIT FACILITY 
 Section 1A.1 General Description. Upon the terms and subject to the conditions contained in this Agreement (including, without limitation,
the conditions contained in Article 2), the Bank agrees to make a revolving credit facility (the “Revolving Credit Facility”) available to the Company, and to make advances and re-advances under the Revolving Credit Facility to
the Company from time to time, during the period from the date of this Agreement until the earlier to occur of (i) August 10, 2012, or (ii) the date on which the Bank’s obligation to make further advances under the Revolving
Credit Facility is terminated pursuant to Section 6.2 (the “Revolving Credit Termination Date”); provided that the aggregate principal amount of all outstanding advances under the Revolving Credit Facility plus the aggregate
stated amount of any Letters of Credit issued by the Bank for the account of the Company shall not at any time exceed the Revolving Credit Facility Cap. Within such limits, the Company may borrow, repay and reborrow under the Revolving Credit
Facility on or after the date of this Agreement and prior to the Revolving Credit Termination Date. 
 Section 1A.2 Revolving Credit
Note. The Company’s obligation to repay the advances made under the Revolving Credit Facility will be evidenced by a revolving credit note in the principal amount of the Revolving Credit Facility Cap, made by the Company and payable to the
order of the Bank, and otherwise in form and substance satisfactory to the Bank (as the same may be extended, amended, restated or replaced from time to time, the “Revolving Credit Note”), the terms of which are incorporated herein
by this reference. The Company acknowledges and agrees that the Bank may endorse on the Revolving Credit Note (or any schedule attached thereto) or otherwise make in the Bank’s records an appropriate notation of the date and amount of each
advance made under the Revolving Credit Facility and the date and amount of any payments or prepayments of the Revolving Credit Facility. Such endorsements or other notations shall, in the absence of manifest error, be conclusive as to the
outstanding principal balance of the Revolving Credit Facility; provided, however, the Bank’s error in making or failure to make any such endorsement or notation shall not limit or otherwise affect the obligations of the Company hereunder or
under the Revolving Credit Note. 
 Section 1A.3 Purpose. The Company will use advances under the Revolving Credit Facility to
refinance certain existing indebtedness of the Company to the Bank, for short-term working capital and for other general corporate purposes. 
  

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 Section 1A.4 Repayment Terms; Interest Rate. 
 (a) Accrued interest on the outstanding principal balance of the Revolving Credit Facility as it
exists from time to time will be due and payable (i) in the case of each Interest Period having a duration of one (1), two (2) or three (3) months, on the last day of such Interest Period, (ii) in the case of any Interest
Period having a duration of 6 months, on the last day of the third (3rd) month and on the last day of the sixth (6th) month of such Interest Period, (iii) on any date on which the Revolving Credit Facility is paid in full, and (iv) on the Revolving Credit Termination Date. On the
Revolving Credit Termination Date, the entire outstanding principal balance of the Revolving Credit Facility, together with all unpaid accrued interest thereon and all other amounts then owing thereunder, will be immediately due and payable in full.

 (b) The outstanding principal balance of the Revolving Credit Facility as it exists from time to time will bear interest
(computed on the basis of the actual number of days elapsed over a year of 360 days) at the per annum interest rate equal to BBA LIBOR plus the Applicable Margin. 
 Section 1A.5 Manner of Borrowing. Unless the Company and the Bank agree to the contrary in writing, each advance made by the Bank under the Revolving Credit Facility will be made in U.S. Dollars at the
office of the Bank set forth at the beginning of this Agreement by crediting the amount of such advance to the general deposit account of the Company maintained at the Bank. Without limiting the purposes for which advances may be made by the Bank
under the Revolving Credit Facility, the Company shall be entitled to use advances thereunder to pay accrued interest under the Revolving Credit Facility. The Company acknowledges and agrees that the Bank may make advances under the Revolving Credit
Facility (i) upon receipt of a written or telephonic request therefor from any person the Bank reasonably believes to be an authorized representative of the Company, or (ii) pursuant to the terms of the automatic borrowing feature
described in any AutoBorrow Services Agreement entered into by and between the Company and the Bank on or after the date hereof. 
 Section 1A.6 Prepayments. 
 (a) The Company may, without premium or penalty (subject to any breakage fees or
redeployment costs incurred by the Bank as the result of the Revolving Credit Facility bearing interest at a rate based on BBA LIBOR), prepay amounts outstanding under the Revolving Credit Facility in whole or in part in any amount at any time and
from time to time. 
 (b) If, at any time, the outstanding principal balance of the Revolving Credit Facility plus the aggregate stated
amount of any Letters of Credit issued by the Bank for the account of the Company exceeds the Revolving Credit Facility Cap, the Company will immediately prepay the Revolving Credit Facility, without premium or penalty, in an amount sufficient to
eliminate such excess. 
 (c) Within fifteen (15) days after the sale of any “Collateral” (as defined in the Security
Agreement), except for any Collateral sold in the ordinary course of the Company’s business, the Company shall apply 100% of the net cash proceeds of such sale to prepay amounts outstanding under the Revolving Credit Facility. 
  

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 Section 1A.7 Unused Commitment Fee. Commencing on October 1, 2007 (for the period from
the date hereof until September 30, 2007), and continuing on the first day of each January, April, July and October thereafter and on the Revolving Credit Termination Date, the Company shall pay to the Bank a per annum non-refundable unused
commitment fee equal to the product of (i) the Applicable Commitment Fee, times (ii) the difference between the Revolving Credit Facility Cap and the average outstanding principal balance of the Revolving Credit Facility during the
preceding three (3) month period (or other applicable period), which fee shall be pro rated for the number of days in each such period. 
 Section 1A.8 Letters of Credit. The Company may from time to time apply to the Bank for one or more letters of credit (each, a “Letter of Credit” and, collectively, the “Letters of Credit”)
pursuant to applications and such other documentation as the Bank shall require (collectively, the “Letter of Credit Documents”); provided, however, that (i) the aggregate stated amount of all Letters of Credit issued by the
Bank for the account of the Company shall not at any time exceed the Letter of Credit Sublimit, and (ii) the term of any Letter of Credit shall not extend beyond the Revolving Credit Termination Date. Each Letter of Credit and any related
Letter of Credit Documents shall constitute Loan Documents hereunder. 
 Section 1A.9 Facility Reduction. Provided that no Event
of Default has occurred and is continuing, the Company may, upon not less than thirty (30) days written notice to the Bank permanently reduce the Revolving Credit Facility Cap to an amount not less than the then outstanding principal balance of
the Revolving Credit Facility (including the aggregate stated amount of any Letters of Credit issued by the Bank for the account of the Company); provided, however, that any such partial reduction shall be in an aggregate amount of $100,000 or any
whole multiple of $100,000 in excess thereof, and shall not reduce the Revolving Credit Facility Cap to less than $100,000. Once terminated or reduced in accordance with this Section 1A.9, the Revolving Credit Facility may not be increased
without the approval of the Bank. 
 Section 1A.10 Payments and Computations. Each payment under this Agreement or under the
Revolving Credit Note shall be made not later than 2:00 p.m. Eastern time on the day when due, in lawful money of the United States of America or in Federal or other immediately available funds, by payment of such funds to the Bank at the office of
the Bank set forth at the beginning of this Agreement. Amounts received after 2:00 p.m. Eastern time on any day shall be deemed received on the next succeeding Business Day. Whenever any payment to be made under this Agreement or under the Revolving
Credit Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of interest. Unless otherwise
provided, all interest and fees payable in connection with the Revolving Credit Facility shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. All payments under the Revolving Credit Note shall be applied by
the Bank first to any late charges and accrued interest thereunder and then to the reduction of principal due thereunder, or in such other order as the Bank may determine in its sole discretion. 
  

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 Any and all payments by the Company to or on account of any obligation of the Company hereunder or under
the other Loan Documents shall be made free and clear of and without reduction or withholding for any taxes (other than Excluded Taxes), provided that if the Company shall be required by any applicable law to deduct any taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making all required deductions, the Bank receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Company shall make such
deductions, and (iii) the Company shall timely pay the full amount deducted to the relevant governmental authority in accordance with applicable law. The Company shall indemnify the Bank for the full amount of any taxes (other than Excluded
Taxes) paid by the Bank on or with respect to payments by the Company hereunder and under the other Loan Documents, and any penalties, interest and 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. 
 If, after the date of this Agreement, any of the
following occurs: (a) the adoption or taking effect of any law, rule, regulation or treaty regarding capital requirements, (b) any change in any law, rule, regulation or treaty regarding capital requirements or in the administration,
interpretation or application thereof by any governmental authority, or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) regarding capital requirements by any governmental authority (any
of such events, a “Change in Law”), and the Bank determines that such Change in Law has or would have the effect of reducing the rate of return on the Bank’s capital (or on the capital of Bank of America Corporation) as a
consequence of the Revolving Credit Facility to a level below that which the Bank (or Bank of America Corporation) could have achieved but for such Change in Law (taking into consideration the Bank’s (and Bank of America Corporation’s)
policies with respect to capital adequacy), then from time to time the Company will pay to the Bank such additional amount or amounts as will compensate the Bank (or Bank of America Corporation) for any such reduction suffered. 
 If any Change in Law shall (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Bank, (ii) subject the Bank to any tax of any kind whatsoever with respect to the Revolving Credit Facility, or change the basis
of taxation of payments to the Bank in respect thereof (except for Excluded Taxes), or (iii) impose on the Bank any other condition, cost or expense affecting this Agreement or the Revolving Credit Facility, and the result of any of the
foregoing shall be to increase the cost to the Bank of making or maintaining the Revolving Credit Facility (or of maintaining its obligation to make the Revolving Credit Facility), or to reduce the amount of any sum received or receivable by the
Bank hereunder (whether of principal, interest or any other amount) then, upon request of the Bank, the Company will pay to the Bank such additional amount or amounts as will compensate the Bank for such additional costs incurred or reduction
suffered. 
  

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 ARTICLE 2 
 CONDITIONS PRECEDENT 
 The obligation of the Bank to
make the Revolving Credit Facility available to the Company is subject to the following conditions precedent: 
 Section 2.1 Approval
of Bank’s Counsel. All legal matters incident to the Revolving Credit Facility, including without limitation all documents and opinions, shall be satisfactory to counsel for the Bank. 
 Section 2.2 Compliance. At the time of the execution of this Agreement and the making of each advance under the Revolving Credit Facility:

 (a) Loan Documents. The Company shall have complied and shall then be in compliance with all of the terms, covenants and conditions
of this Agreement, the Revolving Credit Note, the Security Agreement and all other documents, instruments or agreements to which the Company is a party that evidence, secure or otherwise relate to the Revolving Credit Facility (all documents
described in this paragraph (a) being collectively referred to herein as the “Loan Documents”); 
 (b) No Material
Adverse Change. There shall not have occurred any material adverse change in the financial condition or results of operations of the Company, and the Bank shall not have determined in good faith that the prospect of payment or performance of the
Revolving Credit Facility has been materially impaired; 
 (c) No Default. There shall exist no Event of Default and no event shall
have occurred or condition exist which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default; and 
 (d) Representations and Warranties. The representations and warranties contained in Article 3 hereof shall be true as of the date hereof. 
 The acceptance of the each advance under the Revolving Credit Facility shall be deemed a representation that each of the conditions contained in this Section 2.2 has been satisfied. 
 Section 2.3 Revolving Credit Note. The Company shall have executed and delivered to the Bank the Revolving Credit Note. 
 Section 2.4 Security Agreement and Financing Statements. The Company shall have executed and delivered to the Bank a security agreement in
form and substance satisfactory to the Bank (the “Security Agreement”), granting the Bank a first priority security interest in all of the Company’s inventory, whether now existing or hereafter acquired. The Company shall have
delivered to the Bank financing statements in the appropriate form, receipted to show that they have been filed in the appropriate jurisdictions to perfect the security interests granted to the Bank in the Security Agreement. 
 Section 2.5 Company Organizational Documents; Evidence of Company Action. The Company shall have delivered to the Bank (a) a certificate
to the effect that the articles of 

  

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incorporation and the bylaws of the Company previously delivered to the Bank have not been amended, restated or otherwise modified, (b) certified copies
of all actions by the board of directors of the Company authorizing and approving the execution, delivery and performance of the Loan Documents, (c) an incumbency certificate as to the officers of the Company executing the Loan Documents, and
(d) a good standing certificate (or its equivalent) relating to the Company of recent date in the jurisdiction in which the Company is incorporated. 
 Section 2.6 Opinion of Counsel. The Company shall have delivered to the Bank a favorable opinion of counsel for the Company, dated as of the date hereof and satisfactory in form and substance to the Bank.

 Section 2.7 Bank as Principal Depository. The Company shall have established the Bank as its principal depository bank,
including for the maintenance of business, cash management, operating and administrative deposit accounts. 
 Section 2.8
Payment of Fees. The Company shall have paid to the Bank a non-refundable facility fee in the amount of $25,000, which fee shall be earned in full once paid. The Company shall have paid to the Bank all other amounts due and owing to the Bank
including without limitation payment of all costs and expenses incurred by the Bank pursuant to Section 7.3. 
 Section 2.9
Other Conditions. The Bank shall have received any and all other certificates, statements, opinions and other documents required by the terms of this Agreement or otherwise requested by the Bank. 
 ARTICLE 3 
 REPRESENTATIONS AND WARRANTIES 
 The Company represents and
warrants to the Bank (which representations and warranties shall survive the execution of the Revolving Credit Note and the making of each advance thereunder) that: 
 Section 3.1 Subsidiaries. The Company has no subsidiaries other than (a) Lumber Liquidators (Canada), Inc., and (b) upon its formation but prior to the Merger Effective Time, LL Delaware.

 Section 3.2 Organization and Existence. The Company is a corporation duly incorporated, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts, has the requisite power to own its property and carry on its business as now being conducted, and is duly qualified to do business in and is in good standing in each jurisdiction in which the
character of the properties owned by it therein or in which the transaction of its business makes such qualification necessary. 
 Section 3.3 Authority. The Company has full power and authority to (i) execute and deliver this Agreement and the other Loan Documents, (ii) make the borrowings hereunder and thereunder, and (iii) incur the
obligations provided for herein and therein, all of which have been duly authorized by all proper and necessary corporate action. No consent or approval of the stockholders of the Company which has not been obtained and no consent or approval of,
notice 

  

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to or filing with any public authority which has not been obtained or made is required as a condition to the validity of or the performance by it of its
obligations under this Agreement or the other Loan Documents. 
 Section 3.4 Binding Agreements. Each of the Loan Documents
constitutes, or when executed and delivered to the Bank will constitute, its valid and legally binding obligations enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application relating to the enforcement of creditors’ rights generally, and (ii) general principles of equity. 
 Section 3.5 Litigation. Except as previously disclosed to the Bank in writing, there are no actions, suits, proceedings or investigations pending or, so far as its officers, members or managers, as applicable, know, threatened
before any court or administrative agency naming it as a party that, in the opinion of its officers, members or managers, as applicable, will materially adversely affect (i) its financial condition or operations, (ii) its ability to
execute, deliver or perform the terms of this Agreement or the other Loan Documents, or (iii) any of the liens the Company contemplates granting to the Bank hereunder or thereunder. 
 Section 3.6 No Conflicting Agreements. There is no provision of the organizational documents of the Company, and no provision of any existing
mortgage, lease, indenture, contract or agreement binding on it or affecting its property, that would conflict with or in any way prevent the execution, delivery, or carrying out of the terms of the Loan Documents. 
 Section 3.7 Financial Condition. The Current Audited Financial Statements fairly present in all material respects its financial condition and
the results of its operations and changes in financial position as of the dates and for the periods referred to therein and have been prepared in accordance with generally accepted accounting principles and practices applied on a consistent basis
throughout the period involved. There are no liabilities, direct or indirect, fixed or contingent, that have not been disclosed to the Bank in writing. There has been no material adverse change in its financial condition or operations since the date
of the Current Audited Financial Statements. 
 Section 3.8 Title to Properties. It owns and has good and marketable title to, or
has a valid and enforceable leasehold interest in, all of its assets and properties, except to the extent that failure to so own good and marketable title or have a valid and enforceable leasehold interest would not reasonably be expected to have a
material adverse effect on its financial condition or operations or its ability to perform its obligations under the Loan Documents. Except as previously disclosed to the Bank in writing, such assets and properties are free and clear of all liens or
other encumbrances, other than liens or other encumbrances permitted by Section 5.2 hereof. 
 Section 3.9 Employee Benefit
Pension Plans. It is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Neither a Reportable Event (as defined in Section 4043
of ERISA) nor a Prohibited Transaction (as defined in Section 406 of ERISA) for which there is not an applicable exemption has occurred or exists in connection with any employee benefit pension plan covered by ERISA (including any plan of any
member of a controlled group of corporations 

  

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or entities and all trades and businesses (whether or not incorporated) under common control which, together with it, are treated as a single employer under
Section 414 of the Internal Revenue Code of 1986, as amended) (each, a “Plan”). No notice of intent to terminate any Plan has been filed, and no Plan has been terminated. No circumstances exist which might constitute grounds
for the termination of any Plan by the Pension Benefit Guaranty Corporation (the “PBGC”) or for the appointment of any trustee to administer a Plan, nor has the PBGC instituted any such proceedings. No circumstances exist which
might constitute grounds for the imposition of a lien in favor of any Plan pursuant to Section 302 of ERISA. It has not completely or partially withdrawn from a Multiemployer Plan (as described in Section 4001(a)(3) of ERISA). It has met
the minimum funding requirements of ERISA with respect to each of the Plans. It has incurred no liability to the PBGC under ERISA. 
 Section 3.10 No Defaults. It is not in default in the payment of the principal of or any interest on any material indebtedness or in default under any instrument under or subject to which any such indebtedness has been incurred,
and no event has occurred under the provisions of any such instrument which, with the giving of notice or the lapse of time, or both, would constitute a default or an event of default thereunder. 
 Section 3.11 Taxes. It has filed or caused to be filed all tax returns which are required to be filed by it pursuant to applicable law. It
has paid, or made provision for the payment of, all taxes, assessments, fees and other governmental charges which have or may have become due pursuant to those returns or otherwise, or pursuant to any assessment received by it, except such taxes, if
any, that are being contested in good faith and by appropriate proceedings and as to which adequate reserves (determined in accordance with generally accepted accounting principles) have been provided, and no tax liens have been filed and, so far as
its officers, members or managers, as applicable, know, no claims are being asserted against it with respect to any such taxes, fees or other charges. 
 Section 3.12 Environmental Compliance. None of its property or operations violate in any material respects any federal laws, rules or regulations relating to environmental protection (including, without
limitation, regulations of the Environmental Protection Agency) or any applicable local or state law, rule, regulation or rule of common law (or any judicial interpretation thereof) relating to the environment or hazardous materials (collectively,
“Environmental Laws”). It agrees to comply strictly and timely with all remediation plans and other recommendations described in any environmental report now or hereafter prepared with respect to any of its property. 
 Section 3.13 Federal Regulations. No part of the proceeds of the Revolving Credit Facility will be used, directly or indirectly, for
“purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter
in effect (“Regulation U”) or for any other purpose which violates the provisions of any of the Regulations of such Board of Governors. If requested by the Bank, it will furnish to the Bank a statement to the foregoing effect in
conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U. 
  

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 Section 3.14 Accuracy of Information. No document or instrument executed or delivered by it
or information (financial or otherwise) furnished by or on behalf of it in connection with this Agreement, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or
therein not misleading, and it has no knowledge of any fact that it has not disclosed to the Bank in writing that would reasonably be expected to have a material adverse effect on its financial condition or operations or its ability to perform its
obligations under the Loan Documents. 
 Section 3.15 Compliance with Laws. It is in compliance with all governmental laws and
regulations applicable to the conduct of its business, except to the extent that noncompliance would not have a material adverse effect on (i) its financial condition or operations, or (ii) its ability to execute, deliver or perform the
terms of the Loan Documents. 
 ARTICLE 4 
 AFFIRMATIVE COVENANTS 
 So long as the Company may
borrow under the Revolving Credit Facility and until payment in full of the Revolving Credit Facility and the performance of all other obligations of the Company hereunder, the Company shall: 
 Section 4.1 Financial Information. Provide (or cause to be provided) the following financial information and statements in form and content
acceptable to the Bank, and such additional information as reasonably requested by the Bank from time to time: 
 (a) Annual Financial
Statements. The Company’s annual financial statements, within one hundred (100) days after the Company’s fiscal year end, but in no event later than the date on which such statements are required to be filed with the SEC, if
applicable. Such financial statements must be audited (with an unqualified opinion) by a certified public accountant acceptable to the Bank, and prepared on a consolidated basis. 
 (b) Quarterly Financial Statements. The Company’s quarterly financial statements, certified and dated by an authorized financial officer of
the Company, within forty (40) days after the end of each fiscal quarter of the Company (including the last fiscal quarter in each fiscal year), but in no event later than the date on which such statements are required to be filed with the SEC,
if applicable. Such financial statements may be prepared by the Company, and shall be prepared on a consolidated basis. 
 (c) Management
Letters. Promptly, upon sending or receipt, copies of any management letters and correspondence relating to management letters, sent or received by the Company to or from the Company’s auditor, or, if no management letter is prepared,
within thirty (30) days of providing the annual audited financial statements in accordance with paragraph (a) above, a letter from such auditor stating that no deficiencies were noted that would otherwise be addressed in a management
letter. 
 (d) Compliance Certificates. Within the period(s) provided in paragraphs (a) and (b) above, a compliance
certificate in form and substance satisfactory to the Bank, signed by an authorized financial officer of the Company setting forth (i) the information and computations (in sufficient detail) to establish that the Company is in compliance with
all 

  

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financial covenants at the end of the period covered by the financial statements then being furnished, and (ii) whether there existed or had occurred as
of the date of such financial statements, and whether there exists or has occurred as of the date of the certificate, any event or condition which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default and, if
any such event has occurred or condition exists, specifying the nature thereof and the action the Company is taking or proposes to take with respect thereto. 
 Section 4.2 Bank as Principal Depository. Maintain the Bank as its principal depository bank, including for the maintenance of business, cash management, operating and administrative deposit accounts.

 Section 4.3 Taxes. Pay and discharge all taxes, assessments, and governmental charges upon it, its income, and its properties
prior to the date on which penalties are attached thereto, unless and to the extent only that (i) such taxes, assessments, and governmental charges are being contested in good faith and by appropriate proceedings, and (ii) adequate
reserves (determined in accordance with generally accepted accounting principles) have been set aside on its books with respect to such tax, assessment or charge so contested. 
 Section 4.4 Payment of Obligations. Pay and discharge at or before their maturity all of its material indebtedness and other material
obligations and liabilities, unless and to the extent that (i) such indebtedness and other obligations are being contested in good faith and by appropriate proceedings, and (ii) adequate reserves (determined in accordance with generally
accepted accounting principles) have been set aside on its books with respect to such indebtedness, obligation or liability. 
 Section 4.5 Insurance. 
 (a) In addition to any insurance required by the specific terms of the other Loan Documents,
maintain insurance on such of its properties, in such amounts and against such risks as are customarily maintained by similar businesses in the same vicinity. 
 (b) Cause each of the policies of insurance relating to the coverages described above to include a standard mortgagee and loss payable clause in favor of the Bank or show the Bank as an additional insured, as
applicable. 
 (c) Cause each of the policies of insurance relating to the coverages described above to provide for at least thirty
(30) days prior notice to the Bank of any cancellation or termination thereof. 
 (d) Provide to the Bank evidence of the renewal or
replacement of any of the policies of insurance relating to the coverages described above within thirty (30) days of renewal or termination date thereof. 
 (e) Upon the request of the Bank, deliver to the Bank a copy of each insurance policy, or, if permitted by the Bank, a certificate of insurance listing all insurance in force. 
  

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 Section 4.6 Existence. Maintain its existence as a corporation in good standing in its
jurisdiction of organization and maintain its good standing in each jurisdiction in which the character of the properties owned by it therein or in which the transaction of its business makes such qualifications necessary. 
 Section 4.7 Licenses and Permits. Maintain all material permits, licenses, authorizations and approvals required to own and operate its
properties and businesses. 
 Section 4.8 Maintenance of Properties. Maintain, preserve, and protect (i) all of its tangible
property material to the conduct of its business and keep the same in good repair, working order, and condition (ordinary wear and tear excepted), and (ii) all franchises, licenses, copyrights, trademarks and other intangible property material
to the conduct of its business, and permit the Bank and its agents to enter upon and inspect such properties upon reasonable notice and during normal business hours. 
 Section 4.9 Employee Benefit Pension Plans. Promptly during each year, (i) pay contributions that in the judgment of its officers, members or managers, as applicable, after reasonable inquiry, are
believed adequate to meet at least the minimum funding standards set forth in Sections 302 through 305 of ERISA, with respect to each Plan, if any, covered by ERISA, and (ii) file each annual report required to be filed pursuant to
Section 103 of ERISA in connection with each such Plan for each year; and notify the Bank within ten (10) days of the occurrence of a Reportable Event (as defined in Section 4043 of ERISA) that might constitute grounds for termination
of any such Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer any such Plan. 
 Section 4.10 Compliance with Applicable Laws. Comply with all applicable laws, rules, regulations and orders of any governmental authority having jurisdiction over it, including without limitation all Environmental Laws, except
where non-compliance would not adversely affect (i) its financial condition or operations, and (ii) its ability to execute, deliver or perform the terms of the Loan Documents. 
 Section 4.11 Notice of Liabilities. Notify the Bank promptly in writing of (i) any condition, event, claim or act that would reasonably
be expected to materially adversely affect its financial condition or operations, or any of the Bank’s rights or remedies under the Loan Documents, or that would reasonably be expected to result in a material fixed or contingent liability,
(ii) any material litigation filed by or against it, (iii) the occurrence of any event that, with the giving of notice or the lapse of time, or both, would constitute an event of default under any of the Loan Documents, (iv) the
occurrence of any uninsured or partially insured loss by it resulting from fire, theft, liability or property damage if such loss is in excess of $1,000,000, (v) the assumption, guarantee, endorsement or other act causing it to become surety
for or upon any material obligation of any Person, except by the endorsement of negotiable instruments for deposit or collection in the ordinary course of business, (vi) any material dispute between the Company and any governmental authority or
agency, and (vii) any change in the Company’s name, legal structure, jurisdiction of incorporation, place of business or chief executive office. 
  

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 Section 4.12 Merger. With respect to the Merger, the Company represents, warrants and
covenants with the Bank as follows: 
 (a) Conditions. Prior to the Merger Effective Time, the Company shall deliver to
the Bank: 
 (i) a copy of the certificate of incorporation of LL Delaware and all amendments thereto, certified by the
Delaware Secretary of State, and a copy of the By-Laws of LL Delaware and all amendments thereto, certified by the Secretary or Assistant Secretary of LL Delaware; 
 (ii) complete copies of the final Merger Documents, which shall be in form and substance satisfactory to the Bank; 
 (iii) evidence satisfactory to the Bank that the Company and LL Delaware have obtained all necessary consents and approvals to the
execution, delivery and performance of the Merger Documents; and 
 (iv) evidence satisfactory to the Bank that the Merger
Documents have been duly executed and delivered by and to the appropriate parties thereto and the transactions contemplated under the terms of the Merger Documents have been consummated, including evidence that the certificate of merger has been
filed with the Secretary of State of the State of Delaware and the Secretary of State of the Commonwealth of Massachusetts and the Merger is valid and effective in accordance with the terms and provisions of the Merger Documents and the applicable
corporation statutes of the State of Delaware and the Commonwealth of Massachusetts; 
 (b) Continuing Liability. After the Merger
Effective Time, LL Delaware, as the surviving corporation of the Merger, shall be directly and primarily liable in all respects for the obligations of the Company arising under this Agreement and the other Loan Documents, including the indebtedness
of the Company under the Revolving Credit Facility. As of the Merger Effective Time, all references to the “Company” herein and in the other Loan Documents shall be deemed to be references to LL Delaware. 
 (c) Continuation of Security Interest; Financing Statements. After the Merger Effective Time, the Bank shall have a first priority security
interest in all of the inventory owned and acquired by LL Delaware from the Company, as the surviving corporation of the Merger, and all inventory thereafter acquired by LL Delaware pursuant to the Security Agreement. Within five (5) days after
the Merger Effective Date, the Company shall cause financing statements to be filed in the appropriate jurisdictions to continue the perfection of such security interest. 
 (d) Further Assurances. LL Delaware shall execute and deliver to the Bank such reaffirmations, amendments or other documents as the Bank shall reasonably require to confirm or carry out the provisions of this
Section 4.12. 
 Section 4.13 Further Assurances. Take any other action reasonably requested by the Bank to carry out the
intent of this Agreement or any of the other Loan Documents. 
  

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 ARTICLE 4A 
 FINANCIAL COVENANTS 
 So long as the Company may
borrow under the Revolving Credit Facility and until payment in full of the Revolving Credit Facility and the performance of all other obligations of the Company hereunder, the Company shall: 
 Section 4A.1 Fixed Charge Coverage Ratio. Maintain on a consolidated basis a Fixed Charge Coverage Ratio of greater than or equal to 1.25 to
1.0. The Fixed Charge Coverage Ratio will be calculated at the end of each fiscal quarter of the Company, using the results of the twelve-month period ending with such fiscal quarter. The current portion of long-term liabilities will be measured as
of the date twelve months prior to the current financial statements. 
 Section 4A.2 Adjusted Funded Debt to EBITDAR Ratio.
Maintain on a consolidated basis an Adjusted Funded Debt to EBITDAR Ratio not exceeding 2.25 to 1.0. The Adjusted Funded Debt to EBITDAR Ratio will be calculated at the end of each fiscal quarter of the Company, using the results of the twelve-month
period ending with such fiscal quarter. 
 ARTICLE 5 
 NEGATIVE COVENANTS 
 So long as the Company may
borrow under the Revolving Credit Facility and until payment in full of the Revolving Credit Facility and the performance of all other obligations of the Company hereunder, the Company shall not: 
 Section 5.1 Indebtedness. 
 (a)
Create, incur, assume or suffer to exist in any manner, any indebtedness of the Company for borrowed money, deferred payment obligation for the purchase of assets, or other indebtedness of the Company except (i) indebtedness owing to the Bank,
(ii) accounts payable arising in the ordinary course of business and payable on customary terms, (iii) indebtedness disclosed to the Bank in writing and acknowledged by the Bank in writing on or prior to the date of this Agreement (and any
extensions, renewals and replacements of such indebtedness, provided that the outstanding principal balance thereof is not increased), (iv) indebtedness to the extent secured by purchase money security interests described in
Section 5.2(vi), and (v) indebtedness, in an aggregate outstanding amount not to exceed $5,000,000 at any one time. 
 (b) Make any
optional payment or prepayment on or redemption, defeasance or purchase of any indebtedness (other than the Revolving Credit Facility or any other indebtedness owing to the Bank), or amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms relating to the payment or prepayment or principal of or interest on, any such indebtedness, other than any amendment, modification or change which would extend the maturity or reduce the amount of any
payment of principal thereof or which would reduce the rate or extend the date for payment of interest thereon. 
 Section 5.2
Mortgages and Pledges. Create, incur, assume, or suffer to exist any mortgage, pledge, lien, or other encumbrance of any kind upon, or any security interest in, any of 

  

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its property or assets, whether now owned or hereafter acquired, except (i) liens for taxes not yet delinquent or being contested in good faith and by
appropriate proceedings, (ii) liens in connection with worker’s compensation, unemployment insurance, or other social security obligations, (iii) workman’s, carrier’s, warehouseman’s or other like liens (excluding
landlord’s liens) arising in the ordinary course of business with respect to obligations that are not due or that are being contested in good faith, (iv) mortgages, pledges, liens, encumbrances and security interests in favor of the Bank,
(v) unfiled mechanic’s or materialman’s liens; provided that, if any mechanic’s or materialman’s lien is filed on any property or asset of the Company, the Company shall promptly bond off or otherwise effect the release of
such lien, and (vi) purchase money security interests in capital assets of Company if each such purchase money security interest attaches to such capital asset concurrently with the acquisition thereof and if the indebtedness secured by such
purchase money security interest does not exceed the lesser of the cost or fair market value as of the time of acquisition of the asset covered thereby to the Company, provided that no such purchase money security interest shall attach, extend to or
cover any property or asset of the Company other than the related asset. 
 Section 5.3 Merger, Acquisition, or Sale of Assets.
Enter into any merger or consolidation with, or acquire all or substantially all of the assets of, any Person, or sell, assign, lease, or otherwise dispose of all or substantially all of its business, properties or assets, or sell any asset of the
Company with a value of $10,000,000 or more, or form or acquire any subsidiary. Notwithstanding the foregoing sentence, (a) the Company may acquire all or substantially all of the assets of any Person, or form or acquire any subsidiary,
provided that (i) the Company does not incur any additional indebtedness in connection with such transaction, and (ii) such transaction, once consummated, would not result in a default under Section 4A.1 or 4A.2; and (b) the
Company may form LL Delaware and consummate the Merger on the terms and conditions set forth in Section 4.12 and effect a public offering of stock in LL Delaware. 
 Section 5.4 Contingent Liabilities. Assume, guarantee, endorse, or otherwise become surety for or upon the material obligation of any Person, except by the endorsement of negotiable instruments for deposit
or collection in the ordinary course of business. 
 Section 5.5 Loans. Make any loan or extend credit to any Person, except for
(a) trade credit extended in the ordinary course of its business on ordinary business terms, (b) the “Vendor Notes” described in the Current Audited Financial Statements, provided that the outstanding balance of such Vendor Notes
shall not at any time exceed $3,000,000 in the aggregate. 
 Section 5.6 Character of Business. Change the general character of
its business as conducted on the date hereof or engage in any type of business not reasonably related to its business as presently conducted. 
 Section 5.7 Investments. Except as otherwise permitted by Section 5.5, purchase or acquire the obligations or stock of, or any other interest in, any Person, other than (a) cash, (b) cash equivalents,
(c) bank obligations including certificates of deposit, deposit notes, bankers acceptances, bank notes and time deposits with banks that are members of the Federal Reserve System and have total assets of not less than $1,000,000,000,
(d) direct obligations of the United States of America, (e) obligations of agencies of the United States Government if the payment of all principal and interest thereof is guaranteed by the United States of America, (f) money market


  

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mutual funds and enhanced cash funds, (g) commercial paper and corporate bonds and notes, including floating rate instruments, (h) asset-backed
securities (ABS) and short duration mortgage-backed securities (MBS), including collateralized mortgage obligations (CMOs), (i) municipal securities, including variable rate demand notes and auction rate securities, and (j) stock in the
Company. 
 ARTICLE 6  
 EVENTS OF DEFAULT AND REMEDIES 
 Section 6.1 Events of Default. The occurrence of any of the following events (each, an “Event of Default”) shall constitute an event of default under this Agreement: 
 (a) default is made in the payment of any installment of interest or principal on the Revolving Credit Note, when and as the same becomes due and payable,
whether at the stated maturity thereof, by acceleration or otherwise; or 
 (b) default is made in the due observance or performance of any
term, covenant, or agreement contained in Sections 4A.1 or 4A.2 hereof; or 
 (c) default is made in the due observance or performance
of any other term, covenant, or agreement contained in this Agreement (other than those referred to in paragraphs (a) and (b) above), and such default continues unremedied for a period of thirty (30) days after written notice of such
default from the Bank to the Company; or 
 (d) any representation or warranty made herein or in any of the other Loan Documents, or any
statement or representation made in any certificate, report, or opinion delivered pursuant hereto or thereto proves to have been incorrect in any material respect when made; or 
 (e) the Company is generally not paying its debts as such debts become due, becomes insolvent or unable to meet its obligations as they mature, makes an
assignment for the benefit of creditors, consents to the appointment of a trustee or a receiver, or admits in writing its inability to pay its debts as they mature; or 
 (f) a trustee, receiver or custodian is appointed for the Company or for a substantial part of its properties without the consent of the Company and is not discharged within thirty (30) days; or 
 (g) any case in bankruptcy is commenced, or any reorganization, arrangement, insolvency, or liquidation proceedings are instituted, by or against the
Company and, if so commenced or instituted, are consented to by the Company or remain undismissed for a period of thirty (30) days; or 
 (h) any default is made in the performance of any other obligation incurred in connection with any indebtedness for borrowed money of the Company in an aggregate amount in excess of $500,000, if the effect of such default is to permit the
holder of such indebtedness (or a trustee on behalf of such holder) to cause it to become due prior to its stated maturity or to do so with the giving of notice or lapse of time, or both, or any such indebtedness becomes due prior to its stated
maturity or shall not be paid when due; or 
  

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 (i) any final judgment for the payment of money in excess of $1,000,000 which is not adequately insured
or indemnified against is rendered against the Company and the same remains undischarged for a period of twenty (20) days during which time execution shall not be effectively stayed; or 
 (j) any substantial part of the properties of the Company is sequestered or attached and is not returned to the possession of the Company or released
from such attachment within thirty (30) days; or 
 (k) the occurrence of a Reportable Event as defined in Section 4043 of ERISA
which might constitute grounds for termination by the PBGC of any Plan covered by ERISA or grounds for the appointment by the appropriate United States District Court of a trustee to administer any such Plan; or 
 (l) the failure by the Company to make any required contribution to any Plan covered by ERISA which might constitute grounds for the imposition of a lien
in favor of such Plan pursuant to Section 302 of ERISA; or 
 (m) a default or event of default occurs under any of the other Loan
Documents (taking into consideration any notice, grace and/or cure periods provided therein), or any other document, instrument or agreement evidencing, securing or otherwise relating to any indebtedness, obligation or liability of the Company,
whether now existing or hereafter arising, to the Bank or any other subsidiary or affiliate of Bank of America Corporation; or 
 (n) the
Company shall challenge the validity and binding effect of any provision of any of the Loan Documents or shall state its intention to make such a challenge of any of the Loan Documents, or any of the Loan Documents shall for any reason (except to
the extent permitted by its express terms) cease to be effective; or 
 (o) the Bank in its sole discretion shall determine in good faith
that a material adverse change has occurred in the financial condition of the Company; or 
 (p) the occurrence, in one transaction or a
series of transactions, of a Change of Control. 
 Section 6.2 Remedies. 
 (a) Upon the occurrence of an Event of Default described in Section 6.1(g) hereof, (i) the Bank’s obligation to make any further advances
under the Revolving Credit Facility shall automatically and immediately terminate, (ii) the entire outstanding principal balance of the Revolving Credit Facility and all accrued interest thereon and all other amounts owing thereunder shall
automatically become immediately due and payable without presentment, demand, protest, notice of dishonor or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Revolving Credit Note to the
contrary notwithstanding, and (iii) the Bank may proceed to enforce payment of the Revolving Credit Note and to exercise any and all rights and remedies hereunder, under any of the other Loan Documents and/or otherwise available to the Bank at
law or equity. 
  

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 (b) Upon the occurrence and during the continuation of any Event of Default other than an Event of
Default described in Section 6.1(g) hereof, the Bank may, if it deems appropriate, take any or all of the following actions, at the same or different times: (i) terminate forthwith its obligation to make any further advances under the
Revolving Credit Facility, or any of them, (ii) declare the Revolving Credit Note to be forthwith due and payable, both as to principal and interest and all other amounts owing thereunder, without presentment, demand, protest, notice of
dishonor or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Revolving Credit Note to the contrary notwithstanding, and/or (iii) proceed to enforce payment of the Revolving Credit Note,
and to exercise any and all rights and remedies hereunder, under any of the other Loan Documents and/or otherwise available to the Bank at law or equity. 
 (c) The Company agrees that, in addition to the other rights and remedies of the Bank set forth herein and in the other Loan Documents, upon the occurrence of an Event of Default the Bank shall have the right, without
notice or demand to the Company, to set off and apply against any and all of the amounts owing under the Revolving Credit Note, any and all deposits (general or special, time or demand, provisional or final) and any other indebtedness at any time
held or owing by the Bank or any of the Bank’s agents or affiliates to or for the credit of the account of the Company. 
 ARTICLE 7 
 MISCELLANEOUS PROVISIONS 
 Section 7.1 Indemnification. 
 (a) From and at all times after the date of this Agreement, and in addition to all of the Bank’s other rights and remedies against the Company, the Company hereby agrees to hold the Bank harmless from, and to indemnify the Bank
against, all losses, damages, costs and expenses (including, but not limited to, reasonable attorneys’ fees, costs and expenses) incurred by the Bank from and after the date hereof, whether direct, indirect or consequential, as a result of or
arising from or relating to any suit, action or proceeding by any Person other than the Company, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any Person under any statute or regulation, including, but
not limited to, any federal or state securities laws, or under any common law or equitable cause of action or otherwise, arising from or in connection with the negotiation, preparation, execution or performance of, or the financing transaction
contemplated by, this Agreement and the other Loan Documents, or the Bank’s furnishing of funds to the Company pursuant hereto or thereto; provided, however, that the foregoing indemnification shall not protect the Bank from loss, damage, cost
or expense directly attributable to the Bank’s willful misconduct or gross negligence. All of the foregoing losses, damages, costs and expenses of the Bank shall be payable by the Company upon demand by the Bank and shall be secured by the
liens granted to the Bank pursuant to any of the Loan Documents. 
  

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 (b) The Company hereby agrees to indemnify, defend and hold the Bank and its successors and assigns
harmless from and against any and all claims, demands, suits, losses, damages, assessments, fines, penalties, costs or other expenses (including reasonable attorneys’ fees, costs and expenses) arising from or in any way related to actual or
threatened damage to the environment, agency costs of investigation, personal injury or death, or property damage, due to a release of hazardous wastes or toxic substances arising from the Company’s business operations, or gaseous emissions
arising from the Company’s business operations or any other condition existing or arising from the Company’s business operations resulting from the use or existence of hazardous wastes or toxic substances or the violation of any
environmental law. The Company further hereby agrees that its indemnity obligations shall include, but are not limited to, liability for damages resulting from the personal injury or death of an employee of the Company, regardless of whether the
Company has paid the employee under the worker’s compensation laws of any state or other similar federal or state legislation for the protection of employees. The term “property damage” as used in this Section 7.1(b) includes,
but is not limited to, damage to any real or personal property of the Company, the Bank or of any third party. 
 (c) The Company’s
obligations under this Section 7.1 shall survive the termination of this Agreement and repayment of advances under the Revolving Credit Facility. For purposes of this Section 7.1 only, the term “Bank” shall include the Bank, its
parent, subsidiaries, and all of their directors, officers, employees, agents, successors, attorneys and assigns. 
 Section 7.2
Autodebit. The Company hereby authorizes the Bank to automatically deduct from such account of the Company with the Bank as the Company shall designate in writing (or any account of the Company with the Bank if no particular account is so
designated), the amount of each payment of principal (including without limitation the principal payment due on the final maturity date) and/or interest under the Revolving Credit Facility on the dates such payments become due. If the funds in the
account are insufficient to cover any payment, the Bank shall not be obligated to advance funds to cover the payment. This authorization shall not affect the obligation of the Company to pay such sums when due, without notice, if there are
insufficient funds in such account to make such payment in full on the due date thereof, or if the Bank fails to debit such account. 
 Section 7.3 Costs and Expenses. The Company hereby agrees to pay all reasonable out-of-pocket expenses incurred by the Bank in connection with the preparation of the Loan Documents and all related documents (whether or not the
transactions hereby contemplated shall be consummated), including but not limited to the reasonable fees and disbursements of counsel for the Bank; and the Company hereby agrees to pay all expenses associated with recordation and filing fees, survey
costs, title insurance fees, financing statement searches and other costs and expenses associated with the closing of the transactions contemplated by this Agreement and the other Loan Documents. In addition, the Company hereby agrees that it will
pay on demand all reasonable out-of-pocket expenses incurred by the Bank in connection with the preparation of any amendments to or other modifications of any of the foregoing documents, the making and administering of the Revolving Credit Facility,
and the enforcement of the rights of the Bank in connection with this Agreement and the other Loan Documents, including but not limited to the reasonable fees and disbursements of counsel for the Bank. 
  

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 Section 7.4 Cumulative Rights and No Waiver. Each and every right granted to the Bank
hereunder or under any other document delivered hereunder or in connection herewith, or allowed the Bank by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of the Bank to exercise, and no delay in
exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise by the Bank of any right preclude any other or future exercise thereof or the exercise of any other right. 
 Section 7.5 ARBITRATION AND WAIVER OF JURY TRIAL. 
 (A) THIS SECTION CONCERNS THE RESOLUTION OF ANY CONTROVERSIES OR CLAIMS BETWEEN THE PARTIES TO THIS AGREEMENT, WHETHER ARISING IN CONTRACT, TORT OR BY STATUTE, INCLUDING BUT NOT LIMITED TO CONTROVERSIES OR CLAIMS THAT
ARISE OUT OF OR RELATE TO: (I) THIS AGREEMENT (INCLUDING ANY RENEWALS, EXTENSIONS OR MODIFICATIONS), OR (II) ANY DOCUMENT RELATED TO THIS AGREEMENT (INDIVIDUALLY AND COLLECTIVELY, A “CLAIM”). FOR THE PURPOSES OF THIS
SECTION ONLY, THE TERM “PARTIES” SHALL INCLUDE ANY PARENT CORPORATION, SUBSIDIARY OR AFFILIATE OF THE BANK INVOLVED IN THE SERVICING, MANAGEMENT OR ADMINISTRATION OF ANY OBLIGATION DESCRIBED IN OR EVIDENCED BY THIS AGREEMENT. 

(B) AT THE REQUEST OF ANY PARTY TO THIS AGREEMENT, ANY CLAIM SHALL BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT
(TITLE 9, U.S. CODE) (THE “ACT”). THE ACT WILL APPLY EVEN THOUGH THIS AGREEMENT PROVIDES THAT IT IS GOVERNED BY THE LAW OF A SPECIFIED STATE. THE ARBITRATION WILL TAKE PLACE ON AN INDIVIDUAL BASIS WITHOUT RESORT TO ANY FORM OF CLASS
ACTION. 
 (C) ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE WITH THE ACT, THE THEN-CURRENT RULES AND PROCEDURES FOR THE
ARBITRATION OF FINANCIAL SERVICES DISPUTES OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY SUCCESSOR THEREOF (“AAA”), AND THE TERMS OF THIS SECTION. IN THE EVENT OF ANY INCONSISTENCY, THE TERMS OF THIS SECTION SHALL CONTROL. IF AAA IS
UNWILLING OR UNABLE TO (I) SERVE AS THE PROVIDER OF ARBITRATION, OR (II) ENFORCE ANY PROVISION OF THIS SECTION, ANY PARTY TO THIS AGREEMENT MAY SUBSTITUTE ANOTHER ARBITRATION ORGANIZATION WITH SIMILAR PROCEDURES TO SERVE AS THE PROVIDER OF
ARBITRATION. 
 (D) THE ARBITRATION SHALL BE ADMINISTERED BY AAA AND CONDUCTED, UNLESS OTHERWISE REQUIRED BY LAW, IN ANY U.S. STATE WHERE
REAL OR TANGIBLE PERSONAL PROPERTY COLLATERAL FOR THE OBLIGATIONS HEREUNDER IS LOCATED OR IF THERE IS NO SUCH COLLATERAL, IN THE STATE SPECIFIED IN THE GOVERNING LAW SECTION OF THIS AGREEMENT. ALL CLAIMS SHALL BE DETERMINED BY ONE ARBITRATOR;
HOWEVER, IF CLAIMS EXCEED FIVE MILLION DOLLARS ($5,000,000), UPON THE REQUEST OF ANY PARTY, THE CLAIMS SHALL BE DECIDED BY THREE 

  

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ARBITRATORS. ALL ARBITRATION HEARINGS SHALL COMMENCE WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION AND CLOSE WITHIN NINETY (90) DAYS OF
COMMENCEMENT AND THE AWARD OF THE ARBITRATOR(S) SHALL BE ISSUED WITHIN THIRTY (30) DAYS OF THE CLOSE OF THE HEARING. HOWEVER, THE ARBITRATOR(S), UPON A SHOWING OF GOOD CAUSE, MAY EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL
SIXTY (60) DAYS. THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS FOR THE AWARD. THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT HAVING JURISDICTION TO BE CONFIRMED, JUDGMENT ENTERED AND ENFORCED. 
 (E) THE ARBITRATOR(S) WILL GIVE EFFECT TO STATUTES OF LIMITATION IN DETERMINING ANY CLAIM AND MAY DISMISS THE ARBITRATION ON THE BASIS THAT THE CLAIM IS
BARRED. FOR PURPOSES OF THE APPLICATION OF THE STATUTE OF LIMITATIONS, THE SERVICE ON AAA UNDER APPLICABLE AAA RULES OF A NOTICE OF CLAIM IS THE EQUIVALENT OF THE FILING OF A LAWSUIT. ANY DISPUTE CONCERNING THIS SECTION OR WHETHER A CLAIM IS
ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR(S). THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 
 (F) THIS SECTION DOES NOT LIMIT THE RIGHT OF ANY PARTY TO: (I) EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED TO, SETOFF; (II) INITIATE
JUDICIAL OR NON-JUDICIAL FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL; (III) EXERCISE ANY JUDICIAL OR POWER OF SALE RIGHTS, OR (IV) ACT IN A COURT OF LAW TO OBTAIN AN INTERIM REMEDY, SUCH AS BUT NOT LIMITED TO, INJUNCTIVE
RELIEF, WRIT OF POSSESSION OR APPOINTMENT OF A RECEIVER, OR ADDITIONAL OR SUPPLEMENTARY REMEDIES. 
 (G) THE FILING OF A COURT ACTION IS NOT
INTENDED TO CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE SUING PARTY, THEREAFTER TO REQUIRE SUBMITTAL OF THE CLAIM TO ARBITRATION. 
 (H) BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM. FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS SECTION, TO THE EXTENT ANY
CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. 
 Section 7.6 Notices. All notices, requests and other communications required to be given under this Agreement or
any of the other Loan Documents shall be in writing (including facsimile transmission or similar writing) and shall be given to the applicable party at its address or facsimile number set forth below or such other address or facsimile number as such
party may 

  

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hereafter specify in writing for the purpose of communication hereunder by notice to the other party hereto. Each such notice, request or other communication
shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in
the mails, by certified or registered mail, with appropriate first class postage prepaid, addressed as specified in this Section, or (iii) if given by any other means, when actually delivered to the address specified in this Section. Rejection
or refusal to accept, or the inability to deliver because of a changed address of which no notice was given, shall not affect the validity of notice given in accordance with this Section. 
 If to the Company: 
 Lumber Liquidators, Inc. 
 3000 John Deere Road 
 Toano, Virginia 23168 
 Attn: E. Livingston B. Haskell, Esq. 
 Facsimile: 757-259-7299 
 If to the Bank: 
 Bank of America, N.A. 
 380 Knollwood Street, Suite 201 
 Winston-Salem, N.C. 27103 
 Attn: Tom Johnson 
 Facsimile: 336-721-4099 
 with a courtesy copy to: 
 Troutman Sanders LLP 
 1001 Haxall Point (23219) 
 P.O. Box 1122 
 Richmond, Virginia 23218-1122 
 Attn: Christopher E. Vinyard, Esq. 
 Facsimile: 804-698-5126 
 Section 7.7 Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Virginia. 
 Section 7.8 Modifications. No modification, amendment or waiver of any provision of this Agreement, nor consent to any departure by the Company therefrom shall in any event be effective unless the same
shall be in writing and signed by the Bank and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand upon the Company in any case shall entitle the Company to any
other or further notice or demand in the same or similar circumstances. The Company acknowledges and agrees that neither the payment by the Company under, nor the acceptance by the Bank of any principal or interest on, the Revolving Credit Facility
after the occurrence of an Event of Default shall constitute a waiver of any Event of Default, or any amendment to this Agreement, or otherwise prejudice or limit any other rights or remedies of the Bank. 
  

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 Section 7.9 Survivorship; Successors and Assigns. All covenants, agreements, representations
and warranties made herein and in any certificates delivered pursuant hereto shall survive the execution and delivery of this Agreement and the making of each advance under the Revolving Credit Facility, and shall continue in full force and effect
so long as any obligation of the Company hereunder or thereunder is outstanding and unpaid. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and
all covenants, promises and agreements by or on behalf of the Company which are contained in this Agreement shall bind the successors and assigns of the Company and inure to the benefit of the successors and assigns of the Bank. The Company shall
not have the right to assign any of its rights or obligations hereunder. The Bank may from time to time sell participations in all or any portion of the Revolving Credit Facility without notice to, or the consent or approval of, the Company.

 Section 7.10 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 
 Section 7.11 Headings. Article and Section headings in this Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. 
 Section 7.12 Entire Agreement; Controlling Document. This Agreement
and the other Loan Documents represent the final agreement of the Company and the Bank with respect to the subject matter hereof and thereof, and may not be contradicted, modified or supplemented in any way by evidence of any prior or
contemporaneous written or oral agreements of the Company and the Bank. To the extent of any conflict between the provisions of this Agreement and the provisions of any other Loan Documents with respect to any specific matters covered herein, the
provisions of this Agreement with respect to such matters shall control. 
 Section 7.13 USA PATRIOT Act Notice. The Bank hereby
notifies the Company that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), the Bank is required to obtain, verify and record information that
identifies the Company, which information includes the name and address of the Company and other information that will allow the Bank to identify the Company in accordance with the Act. 
 Section 7.14 Final Agreement. This Agreement and the other Loan Documents represent the final agreement between the Company and the Bank with
respect to the subject matter hereof and thereof, and may not be contradicted, modified or supplemented in any way by evidence of any prior or contemporaneous written or oral agreements of the Company and the Bank. 
 [Signatures appear on following page] 
  

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 IN WITNESS WHEREOF, each of the Company and the Bank has
caused this Agreement to be duly executed by its duly authorized officer, all as of the day and year first above written. 
  

			
	COMPANY:
	
	LUMBER LIQUIDATORS, INC.,
	  a Massachusetts corporation
		
	By:	 	 /s/ Jeffrey W. Griffiths

	Name:	 	Jeffrey W. Griffiths
	Title:	 	 President and
 Chief Executive
Officer

		
	BANK:	 	
	
	 BANK OF AMERICA, N.A.,
   a national banking association

		
	By:	 	 /s/ Tom Johnson

	Name:	 	Tom Johnson
	Title:	 	Senior Vice President


  

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 REVOLVING CREDIT NOTE 
  

			
	$25,000,000.00	  	August 10, 2007
		  	Richmond, Virginia

 FOR VALUE RECEIVED, LUMBER
LIQUIDATORS, INC. (the “Company”), a Massachusetts corporation, promises to pay to the order of BANK OF AMERICA, N.A. (the “Bank”) at its
office at 1111 East Main Street, Richmond, Virginia 23219, or at such other place as the holder hereof may from time to time designate in writing, the principal sum of TWENTY-FIVE MILLION
AND NO/100 DOLLARS ($25,000,000.00), or such lesser principal amount as may be advanced or re-advanced hereunder by the Bank, payable on the terms and dates and in the amounts as hereinafter provided, and
to pay interest on the outstanding principal balance of this Note as it exists from time to time from the date hereof as provided herein. 
 This Note is the “Revolving Credit Note” and one of the “Loan Documents” described in, and (to the extent not inconsistent with the terms of this Note) is subject to the terms and conditions of, a Revolving Credit
Agreement dated as of even date herewith (as the same may be extended, amended, restated or replaced from time to time, the “Loan Agreement”), by and between the Company and the Bank. Capitalized terms used and not otherwise defined
in this Note shall have the meanings set forth in the Loan Agreement. 
 The outstanding principal balance of this Note as it exists from
time to time will bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at the per annum interest rate equal to BBA LIBOR plus the Applicable Margin. 
 Accrued interest on the outstanding principal balance of this Note as it exists from time to time
will be due and payable (i) in the case of each Interest Period having a duration of one (1), two (2) or three (3) months, on the last day of such Interest Period, (ii) in the case of any Interest Period having a duration of
6 months, on the last day of the third (3rd) month and on the last day of the sixth (6th) month of such Interest Period, (iii) on any date on which this Note is paid in full, and (iv) on the Revolving Credit Termination Date. On the Revolving Credit
Termination Date, the entire outstanding principal balance of this Note, together with all unpaid accrued interest thereon and all other amounts then owing thereunder, will be immediately due and payable in full. 
 The Company acknowledges and agrees that the Bank may endorse on this Note (or any schedule attached hereto) or otherwise make in the Bank’s records
an appropriate notation of the date and amount of each advance made hereunder and the date and amount of any payments or prepayments hereof. Such endorsements or other notations shall, in the absence of manifest error, be conclusive as to the
outstanding principal balance of this Note; provided, however, the Bank’s error in making or failure to make any such endorsement or notation shall not limit or otherwise affect the obligations of the Company under this Note. 
 Notwithstanding the foregoing or any other provision of this Note to the contrary, upon the occurrence of an Event of Default, the outstanding principal
balance of this Note will bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at the per annum rate of interest (the “Default Rate”) equal to BBA LIBOR plus the Applicable 








 
Margin plus two percent (2.00%). The Default Rate will be effective on the first date as of which the applicable Event of Default occurs, notwithstanding the
fact that such Event of Default may not be reported or otherwise discovered until a subsequent date, and such Default Rate will continue until such Event of Default is cured, at which time the outstanding balance of this Note shall cease bearing
interest at the Default Rate and shall resume bearing interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at the per annum rate of interest equal to BBA LIBOR plus the Applicable Margin. 
 In the event that the Company fails to pay any installment of principal and/or interest on this Note within fifteen (15) days after its due date,
the Company will pay to the Bank without demand a late charge equal to four percent (4.00%) of the amount of such installment; provided that no such late charge shall be due or payable with respect to the Company’s obligation to pay the
unpaid principal balance hereof, whether such balance shall be due on the Revolving Credit Termination Date, by acceleration or otherwise. 
 The Company may, without premium or penalty (subject to any breakage fees or redeployment costs incurred by the Bank as the result of this Note bearing interest at a rate based on BBA LIBOR), prepay amounts outstanding under this Note in
whole or in part at any time and from time to time. 
 The Company agrees that all amounts owing under this Note, including principal,
interest and fees, will be deducted automatically on the due date thereof as set forth in Section 7.2 of the Loan Agreement. 
 The
occurrence of any Event of Default will constitute a default under this Note, and such Events of Default are incorporated herein by this reference. In the event of the occurrence of any or all of such Events of Default, the entire unpaid principal
balance of this Note together with all accrued interest will become or may be declared immediately due and payable in the manner and with the effect as provided in the Loan Agreement, and the Bank will have all other rights and remedies provided for
in the Loan Agreement, the other Loan Documents or otherwise available at law or equity. 
 The Company agrees to reimburse the Bank for any
expenses it incurs in the preparation of this Note and any agreement or instrument related to this Note. Such expenses include, but are not limited to, reasonable attorneys’ fees, including any allocated costs of the Bank’s in-house
counsel to the extent permitted by applicable law. Furthermore, the Company will reimburse the Bank for any reasonable costs and attorneys’ fees incurred by the Bank in connection with the enforcement or preservation of any rights or remedies
under this Note and any other documents executed in connection with this Note, and in connection with any amendment, waiver, “workout” or restructuring under this Note. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys’ fees incurred in connection with the lawsuit or arbitration proceeding, as determined by the court or arbitrator. In the event that any case is commenced by or against the Company
under the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute, the Bank is entitled to recover costs and reasonable attorneys’ fees incurred by the Bank related to the preservation, protection or enforcement of
any rights of the Bank in such a case. 
  

 - 2 - 








 Presentment, demand, protest and notice of dishonor are hereby waived by the Company and each endorser
hereon or other guarantor or obligor hereof. 
 This Note will be governed by and construed in accordance with the laws of the Commonwealth
of Virginia. 
 THIS PARAGRAPH AND THE FOLLOWING SEVEN SUBPARAGRAPHS (THESE “ARBITRATION PROVISIONS”) CONCERN THE RESOLUTION
OF ANY CONTROVERSIES OR CLAIMS BETWEEN THE PARTIES TO THIS NOTE, WHETHER ARISING IN CONTRACT, TORT OR BY STATUTE, INCLUDING BUT NOT LIMITED TO CONTROVERSIES OR CLAIMS THAT ARISE OUT OF OR RELATE TO: (I) THIS NOTE (INCLUDING ANY RENEWALS,
EXTENSIONS OR MODIFICATIONS), OR (II) ANY DOCUMENT RELATED TO THIS NOTE (INDIVIDUALLY AND COLLECTIVELY, A “CLAIM”). FOR THE PURPOSES OF THESE ARBITRATION PROVISIONS ONLY, THE TERM “PARTIES” SHALL INCLUDE ANY PARENT
CORPORATION, SUBSIDIARY OR AFFILIATE OF THE BANK INVOLVED IN THE SERVICING, MANAGEMENT OR ADMINISTRATION OF ANY OBLIGATION DESCRIBED IN OR EVIDENCED BY THIS NOTE. 
 (A) AT THE REQUEST OF ANY PARTY TO THIS NOTE, ANY CLAIM SHALL BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (TITLE 9, U.S. CODE) (THE “ACT”). THE ACT WILL APPLY EVEN
THOUGH THIS NOTE PROVIDES THAT IT IS GOVERNED BY THE LAW OF A SPECIFIED STATE. THE ARBITRATION WILL TAKE PLACE ON AN INDIVIDUAL BASIS WITHOUT RESORT TO ANY FORM OF CLASS ACTION. 
 (B) ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE WITH THE ACT, THE THEN-CURRENT RULES AND PROCEDURES FOR THE ARBITRATION OF FINANCIAL
SERVICES DISPUTES OF THE AMERICAN ARBITRATION ASSOCIATION OR ANY SUCCESSOR THEREOF (“AAA”), AND THE TERMS OF THIS SECTION. IN THE EVENT OF ANY INCONSISTENCY, THE TERMS OF THIS SECTION SHALL CONTROL. IF AAA IS UNWILLING OR UNABLE TO
(I) SERVE AS THE PROVIDER OF ARBITRATION, OR (II) ENFORCE ANY PROVISION OF THIS SECTION, ANY PARTY TO THIS NOTE MAY SUBSTITUTE ANOTHER ARBITRATION ORGANIZATION WITH SIMILAR PROCEDURES TO SERVE AS THE PROVIDER OF ARBITRATION. 
 (C) THE ARBITRATION SHALL BE ADMINISTERED BY AAA AND CONDUCTED, UNLESS OTHERWISE REQUIRED BY LAW, IN ANY U.S. STATE WHERE REAL OR TANGIBLE PERSONAL
PROPERTY COLLATERAL FOR THE OBLIGATIONS HEREUNDER IS LOCATED OR IF THERE IS NO SUCH COLLATERAL, IN THE STATE SPECIFIED IN THE GOVERNING LAW SECTION OF THIS NOTE. ALL CLAIMS SHALL BE DETERMINED BY ONE ARBITRATOR; HOWEVER, IF CLAIMS EXCEED FIVE
MILLION DOLLARS ($5,000,000), UPON THE REQUEST OF ANY PARTY, THE CLAIMS SHALL BE DECIDED BY THREE ARBITRATORS. ALL ARBITRATION HEARINGS SHALL COMMENCE WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION AND CLOSE WITHIN NINETY (90) DAYS
OF 

  

 - 3 - 








 
COMMENCEMENT AND THE AWARD OF THE ARBITRATOR(S) SHALL BE ISSUED WITHIN THIRTY (30) DAYS OF THE CLOSE OF THE HEARING. HOWEVER, THE ARBITRATOR(S), UPON A
SHOWING OF GOOD CAUSE, MAY EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL SIXTY (60) DAYS. THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS FOR THE AWARD. THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT
HAVING JURISDICTION TO BE CONFIRMED, JUDGMENT ENTERED AND ENFORCED. 
 (D) THE ARBITRATOR(S) WILL GIVE EFFECT TO STATUTES OF LIMITATION IN
DETERMINING ANY CLAIM AND MAY DISMISS THE ARBITRATION ON THE BASIS THAT THE CLAIM IS BARRED. FOR PURPOSES OF THE APPLICATION OF THE STATUTE OF LIMITATIONS, THE SERVICE ON AAA UNDER APPLICABLE AAA RULES OF A NOTICE OF CLAIM IS THE EQUIVALENT OF THE
FILING OF A LAWSUIT. ANY DISPUTE CONCERNING THIS SECTION OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR(S). THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS NOTE. 
 (E) THIS SECTION DOES NOT LIMIT THE RIGHT OF ANY PARTY TO: (I) EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED TO, SETOFF; (II) INITIATE
JUDICIAL OR NON-JUDICIAL FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL; (III) EXERCISE ANY JUDICIAL OR POWER OF SALE RIGHTS, OR (IV) ACT IN A COURT OF LAW TO OBTAIN AN INTERIM REMEDY, SUCH AS BUT NOT LIMITED TO, INJUNCTIVE
RELIEF, WRIT OF POSSESSION OR APPOINTMENT OF A RECEIVER, OR ADDITIONAL OR SUPPLEMENTARY REMEDIES. 
 (F) THE FILING OF A COURT ACTION IS NOT
INTENDED TO CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE SUING PARTY, THEREAFTER TO REQUIRE SUBMITTAL OF THE CLAIM TO ARBITRATION. 
 (G) BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM. FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS SECTION, TO THE EXTENT ANY
CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS NOTE. 
 [Signatures appear on following page] 
  

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 IN WITNESS WHEREOF, the Company has caused this Note to be
executed by its duly authorized officer as of the date first above written. 
  

			
	LUMBER LIQUIDATORS, INC.,
	  a Massachusetts corporation
		
	By:	 	 /s/ Jeffrey W. Griffiths

	Name:	 	Jeffrey W. Griffiths
	Title:	 	 President and
 Chief Executive
Officer



  

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