exv10w1






Exhibit 10.1




 

 






CREDIT AGREEMENT




Dated as of October 18, 2010




among




Big 5 Corp.,

as the Lead Borrower




For




The Borrowers Named Herein




Big 5 Sporting Goods Corporation,

as Guarantor




Wells Fargo Bank, National Association

as Administrative Agent and Collateral Agent and Swing Line Lender,




and




The Other Lenders Party Hereto




Bank of America, N.A.,

as Documentation Agent




Wells Fargo Capital Finance, LLC,

as

Sole Lead Arranger and Sole Book Manager




 


 

 




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	    Section	 	Page
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	 
	 	 	 	 
	1.01 Defined Terms
	 	 	1	 
	1.02 Other Interpretive Provisions
	 	 	42	 
	1.03 Accounting Terms
	 	 	43	 
	1.04 Rounding
	 	 	43	 
	1.05 Times of Day
	 	 	43	 
	1.06 Letter of Credit Amounts
	 	 	43	 
	 
	 	 	 	 
	ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS
	 	 	44	 
	 
	 	 	 	 
	2.01 Committed Loans; Reserves
	 	 	44	 
	2.02 Borrowings, Conversions and Continuations of Committed Loans
	 	 	44	 
	2.03 Letters of Credit
	 	 	46	 
	2.04 Swing Line Loans
	 	 	54	 
	2.05 Prepayments
	 	 	56	 
	2.06 Termination or Reduction of Commitments
	 	 	57	 
	2.07 Repayment of Loans
	 	 	58	 
	2.08 Interest
	 	 	58	 
	2.09 Fees
	 	 	59	 
	2.10 Computation of Interest and Fees
	 	 	59	 
	2.11 Evidence of Debt
	 	 	59	 
	2.12 Payments Generally; Administrative Agent’s Clawback
	 	 	60	 
	2.13 Sharing of Payments by Lenders
	 	 	61	 
	2.14 Settlement Amongst Lenders
	 	 	62	 
	2.15 Increase in Commitments
	 	 	62	 
	 
	 	 	 	 
	ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER
	 	 	64	 
	 
	 	 	 	 
	3.01 Taxes
	 	 	64	 
	3.02 Illegality
	 	 	66	 
	3.03 Inability to Determine Rates
	 	 	66	 
	3.04 Increased Costs; Reserves on LIBO Rate Loans
	 	 	67	 
	3.05 Compensation for Losses
	 	 	68	 
	3.06 Mitigation Obligations; Replacement of Lenders
	 	 	68	 
	3.07 Survival
	 	 	69	 
	3.08 Designation of Lead Borrower as Borrowers’ Agent
	 	 	69	 
	 
	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	69	 
	 
	 	 	 	 
	4.01 Conditions of Initial Credit Extension
	 	 	69	 
	4.02 Conditions to all Credit Extensions
	 	 	73	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	74	 
	 
	 	 	 	 
	5.01 Existence, Qualification and Power
	 	 	74	 
	5.02 Authorization; No Contravention
	 	 	74	 
	5.03 Governmental Authorization; Other Consents
	 	 	74	 
	5.04 Binding Effect
	 	 	75	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	75	 






(i)









 






	 	 	 	 	 
	    Section	 	Page
	5.06 Litigation
	 	 	75	 
	5.07 No Default
	 	 	76	 
	5.08 Ownership of Property; Liens
	 	 	76	 
	5.09 Environmental Compliance
	 	 	76	 
	5.10 Insurance
	 	 	77	 
	5.11 Taxes
	 	 	77	 
	5.12 ERISA Compliance
	 	 	78	 
	5.13 Subsidiaries; Equity Interests
	 	 	78	 
	5.14 Margin Regulations; Investment Company Act;
	 	 	78	 
	5.15 Disclosure
	 	 	79	 
	5.16 Compliance with Laws
	 	 	79	 
	5.17 Intellectual Property; Licenses, Etc.
	 	 	79	 
	5.18 Labor Matters
	 	 	79	 
	5.19 Security Documents
	 	 	80	 
	5.20 Solvency
	 	 	81	 
	5.21 Deposit Accounts; Credit Card Arrangements
	 	 	81	 
	5.22 Brokers
	 	 	81	 
	5.23 Intentionally Omitted
	 	 	81	 
	5.24 Material Contracts
	 	 	81	 
	5.25 Casualty
	 	 	81	 
	 
	 	 	 	 
	ARTICLE VI AFFIRMATIVE COVENANTS
	 	 	81	 
	 
	 	 	 	 
	6.01 Financial Statements
	 	 	81	 
	6.02 Certificates; Other Information
	 	 	82	 
	6.03 Notices
	 	 	84	 
	6.04 Payment of Obligations
	 	 	85	 
	6.05 Preservation of Existence, Etc.
	 	 	85	 
	6.06 Maintenance of Properties
	 	 	85	 
	6.07 Maintenance of Insurance
	 	 	85	 
	6.08 Compliance with Laws
	 	 	86	 
	6.09 Books and Records; Accountants
	 	 	87	 
	6.10 Inspection Rights
	 	 	87	 
	6.11 Use of Proceeds
	 	 	87	 
	6.12 Additional Loan Parties
	 	 	87	 
	6.13 Cash Management
	 	 	88	 
	6.14 Information Regarding the Collateral
	 	 	89	 
	6.15 Physical Inventories
	 	 	90	 
	6.16 Environmental Laws
	 	 	90	 
	6.17 Further Assurances
	 	 	90	 
	6.18 Compliance with Terms of Leaseholds
	 	 	91	 
	6.19 Material Contracts
	 	 	91	 
	 
	 	 	 	 
	ARTICLE VII NEGATIVE COVENANTS
	 	 	91	 
	 
	 	 	 	 
	7.01 Liens
	 	 	91	 
	7.02 Investments
	 	 	91	 
	7.03 Indebtedness; Disqualified Stock
	 	 	91	 
	7.04 Fundamental Changes
	 	 	91	 
	7.05 Dispositions
	 	 	92	 
	7.06 Restricted Payments
	 	 	92	 
	7.07 Prepayments of Indebtedness
	 	 	92	 
	7.08 Change in Nature of Business
	 	 	93	 






(ii)








 






	 	 	 	 	 
	    Section	 	Page
	7.09 Transactions with Affiliates
	 	 	93	 
	7.10 Burdensome Agreements
	 	 	93	 
	7.11 Use of Proceeds
	 	 	93	 
	7.12 Amendment of Material Documents
	 	 	93	 
	7.13 Fiscal Year
	 	 	94	 
	7.14 Deposit Accounts; Credit Card Processors
	 	 	94	 
	7.15 Consolidated Fixed Charge Coverage Ratio
	 	 	94	 
	 
	 	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
	 	 	94	 
	 
	 	 	 	 
	8.01 Events of Default
	 	 	94	 
	8.02 Remedies Upon Event of Default
	 	 	96	 
	8.03 Application of Funds
	 	 	97	 
	 
	 	 	 	 
	ARTICLE IX ADMINISTRATIVE AGENT
	 	 	98	 
	 
	 	 	 	 
	9.01 Appointment and Authority
	 	 	98	 
	9.02 Rights as a Lender
	 	 	99	 
	9.03 Exculpatory Provisions
	 	 	99	 
	9.04 Reliance by Agents
	 	 	100	 
	9.05 Delegation of Duties
	 	 	100	 
	9.06 Resignation and Removal of Agents
	 	 	100	 
	9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	101	 
	9.08 No Other Duties, Etc.
	 	 	102	 
	9.09 Administrative Agent May File Proofs of Claim
	 	 	102	 
	9.10 Collateral and Guaranty Matters
	 	 	102	 
	9.11 Notice of Transfer
	 	 	103	 
	9.12 Reports and Financial Statements
	 	 	103	 
	9.13 Agency for Perfection
	 	 	104	 
	9.14 Indemnification of Agents
	 	 	104	 
	9.15 Relation among Lenders
	 	 	104	 
	9.16 Defaulting Lender
	 	 	104	 
	9.17 Syndication Agent; Documentation Agent
	 	 	105	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	105	 
	 
	 	 	 	 
	10.01 Amendments, Etc.
	 	 	105	 
	10.02 Notices; Effectiveness; Electronic Communications
	 	 	107	 
	10.03 No Waiver; Cumulative Remedies
	 	 	109	 
	10.04 Expenses; Indemnity; Damage Waiver
	 	 	109	 
	10.05 Payments Set Aside
	 	 	110	 
	10.06 Successors and Assigns
	 	 	111	 
	10.07 Treatment of Certain Information; Confidentiality
	 	 	114	 
	10.08 Right of Setoff
	 	 	114	 
	10.09 Interest Rate Limitation
	 	 	114	 
	10.10 Counterparts; Integration; Effectiveness
	 	 	115	 
	10.11 Survival
	 	 	115	 
	10.12 Severability
	 	 	115	 
	10.13 Replacement of Lenders
	 	 	115	 
	10.14 Governing Law; Jurisdiction; Etc.
	 	 	116	 
	10.15 Waiver of Jury Trial
	 	 	117	 
	10.16 No Advisory or Fiduciary Responsibility
	 	 	117	 
	10.17 USA PATRIOT Act Notice
	 	 	118	 
	10.18 Foreign Asset Control Regulations
	 	 	118	 






(iii)








 






	 	 	 	 	 
	    Section	 	Page
	10.19 Time of the Essence
	 	 	118	 
	10.20 Press Releases
	 	 	118	 
	10.21 Additional Waivers
	 	 	119	 
	10.22 No Strict Construction
	 	 	120	 
	10.23 Attachments
	 	 	121	 
	 
	 	 	 	 
	    SIGNATURES
	 	 	S-1	 





(iv)








 




SCHEDULES



	 	 	 
	1.01
	 	Borrowers
	2.01
	 	Commitments and Applicable Percentages
	5.01
	 	Loan Parties Organizational Information
	5.05
	 	Supplement to Interim Financial Statements
	5.06
	 	Litigation
	5.08(b)(1)
	 	Owned Real Estate
	5.08(b)(2)
	 	Leased Real Estate
	5.09
	 	Environmental Matters
	5.10
	 	Insurance
	5.13
	 	Subsidiaries; Other Equity Investments
	5.17
	 	Intellectual Property Matters
	5.18
	 	Collective Bargaining Agreements
	5.21(a)
	 	DDAs
	5.21(b)
	 	Credit Card Arrangements
	5.24
	 	Material Contracts
	6.02
	 	Financial and Collateral Reporting
	7.01
	 	Existing Liens
	7.02
	 	Existing Investments
	7.03
	 	Existing Indebtedness
	10.02
	 	Administrative Agent’s Office; Certain Addresses for Notices





EXHIBITS



	 	 	 
	 
	 	Form of
	 
	 	 
	A
	 	Committed Loan Notice
	B
	 	Swing Line Loan Notice
	C
	 	Note
	D
	 	Compliance Certificate
	E
	 	Assignment and Assumption
	F
	 	Borrowing Base Certificate
	G
	 	DDA Notification
	H
	 	Credit Card Notification





(v)








 







CREDIT AGREEMENT




     This CREDIT AGREEMENT (“Agreement”) is entered into as of October 18, 2010, among



     Big 5 Corp., a Delaware corporation (the “Lead Borrower”), as agent for itself and Big 5 Services
Corp., a Virginia corporation (together with the Lead Borrower, individually, a “Borrower”, and
collectively, the “Borrowers”),



     Big 5 Sporting Goods Corporation, a Delaware corporation (the “Parent”),


     each lender from time to time party hereto (collectively, the “Lenders” and individually, a
“Lender”),


     Wells Fargo Bank, NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent, and Swing Line
Lender, and



     Bank of America, N.A., as Documentation Agent.


     The Borrowers
have requested that the Lenders provide a revolving credit facility, and the Lenders
have indicated their willingness to lend and Agent has indicated its willingness to cause the L/C
Issuer to issue Letters of Credit, in each case on the terms and conditions set forth herein.



     In consideration of the mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:



ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS




     1.01 Defined Terms. As used in this Agreement, the following terms shall have the
meanings set forth below:



     “Accelerated Borrowing Base Delivery Event” means either (i) the occurrence and continuance of any
Event of Default, or (ii) the failure of the Borrowers to maintain Availability at least equal to
fifteen percent (15%) of the Loan Cap. For purposes of this Agreement, the occurrence of an
Accelerated Borrowing Base Delivery Event shall be deemed continuing (i) so long as such Event of
Default has not been waived, and/or (ii) if the Accelerated Borrowing Base Delivery Event arises as
a result of the Borrowers’ failure to achieve Availability as required hereunder, until
Availability has equaled or exceeded fifteen percent (15%) of the Loan Cap for thirty (30)
consecutive calendar days, in which case an Accelerated Borrowing Base Delivery Event shall no
longer be deemed to be continuing for purposes of this Agreement.



     “Acceptable Document of Title” means, with respect to any Inventory, a tangible bill of lading or
other Document (as defined in the UCC) that (a) is issued by a common carrier which is not an
Affiliate of the Approved Foreign Vendor or any Loan Party which is in actual possession of such
Inventory, (b) is issued to the order of the Borrower, (c) is the subject of Customs Broker
Agreement on terms reasonably acceptable to the Collateral Agent, (d) is not subject to any Lien
(other than in favor of the Collateral Agent), and (e) is on terms otherwise reasonably acceptable
to the Collateral Agent.



     “ACH” means automated clearing house transfers.



     “Accommodation Payment” as defined in Section 10.21(d).




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     “Account” means “accounts” as defined in the UCC.



     “Acquisition” means, with respect to any Person (a) a purchase of a Controlling interest in the
Equity Interests of any other Person (whether by means of merger, consolidation or otherwise), (b)
a purchase or other acquisition of all or substantially all of the assets or properties of, another
Person or of any business unit of another Person, or (c) any acquisition of Store locations of any
Person in any Fiscal Year in an amount greater than five (5%) percent of the aggregate amount of
the Loan Parties’ Stores at the beginning of such Fiscal Year, in each case in any transaction or
group of transactions which are part of a common plan.



     “Act” shall have the meaning provided in Section 10.17.



     “Additional Commitment Lender” shall have the meaning provided in Section 2.15(b)(iii).



     “Adjusted Availability” means, as of any date of determination thereof, the result, if a positive
number, of:



     (a) The Borrowing Base



     Minus



     (b) The aggregate unpaid balance of Credit Extensions.



     “Adjusted LIBO Rate” means:



     (a) for any Interest Period with respect to any LIBO Borrowing, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of one percent) equal to (i) the LIBO Rate for such
Interest Period multiplied by (ii) the Statutory Reserve Rate; and



     (b) for any interest rate calculation with respect to any Base Rate Loan, an interest rate per
annum (rounded upwards, if necessary, to the next 1/100 of one percent) equal to (i) the LIBO Rate
for an Interest Period commencing on the date of such calculation and ending on the date that is
thirty (30) days thereafter multiplied by (ii) the Statutory Reserve Rate.



     The Adjusted LIBO Rate will be adjusted automatically on and as of the effective date of any change
in the Statutory Reserve Rate.



     “Adjustment Date” means January 3, 2011, and the first day of each Fiscal Quarter occurring
thereafter.



     “Administrative Agent” means Wells Fargo in its capacity as administrative agent under any of the
Loan Documents, or any successor administrative agent.



     “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate,
account as set forth on Schedule 10.02, or such other address or account as the
Administrative Agent may from time to time notify the Lead Borrower and the Lenders.



     “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the
Administrative Agent.



-2-









 





     “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by or is under common Control with the Person
specified.



     “Agent(s)” means, individually, the Administrative Agent or the Collateral Agent, and collectively
means both of them.



     “Agent Parties” shall have the meaning specified in Section 10.02(c).



     “Aggregate Commitments” means the Commitments of all the Lenders. As of the Closing Date, the
Aggregate Commitments are $140,000,000.



     “Agreement” means this Credit Agreement.



     “Allocable Amount” has the meaning specified in Section 10.21(d).



     “Applicable Commitment Fee Percentage” means the applicable percentage set forth in the grid below:




	 	 	 	 	 
	Average Daily Availability for the immediately 

preceding Fiscal Quarter
	 	Applicable Commitment Fee Percentage

	Less than or equal to 50% of the Aggregate
Commitments
	 	0.375%
	Greater than 50% of the Aggregate Commitments
	 	0.50%






     “Applicable Lenders” means the Required Lenders, all affected Lenders, or all Lenders, as the
context may require.



     “Applicable Margin” means:




     (a) From and after the Closing Date until the first Adjustment Date, the
percentages set forth in Level II of the pricing grid below; and




     (b) From and after the first Adjustment Date and on each Adjustment Date thereafter,
the Applicable Margin shall be determined from the following pricing grid based upon the
Average Daily Availability as of the Fiscal Quarter ended immediately preceding such
Adjustment Date; provided, however, that until the Adjustment Date which is January
3, 2011, the Applicable Margin shall not be established at Level I (even if the Average
Daily Availability requirements for Level I have been met; provided further that
notwithstanding anything to the contrary set forth herein, upon the occurrence and during
the continuance of an Event of Default, interest shall accrue at the Default Rate;
provided further if any Borrowing Base Certificates are at any time restated or
otherwise revised because the information set forth therein proves to be false or incorrect
such that the Applicable Margin would have been higher than was otherwise in effect during
the period covered thereby, without constituting a waiver of any Default or Event of Default
arising as a result thereof, interest due under this Agreement shall be immediately
recalculated at such higher rate for any applicable periods and shall be due and payable on
demand.



-3-









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Commercial	 	Standby
	 	 	Average Daily	 	LIBOR	 	Base Rate	 	Letter of Credit	 	Letter of
	Level	 	Availability	 	Margin	 	Margin	 	Fee	 	Credit Fee
	I
	 	Greater than 50% of the Loan Cap	 	 	2.00	%	 	 	1.00	%	 	 	1.50	%	 	 	2.00	%
	II
	 	Less than or equal to 50% of the Loan Cap	 	 	2.25	%	 	 	1.25	%	 	 	1.75	%	 	 	2.25	%






     “Applicable Percentage” means with respect to any Lender at any time, the percentage (carried out
to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at
such time. If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to
make L/C Credit Extensions have been terminated pursuant to Section 2.06 or Section
8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each
Lender shall be determined based on the Applicable Percentage of such Lender most recently in
effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each
Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment
and Assumption pursuant to which such Lender becomes a party hereto, as applicable.



     “Appraised Value” means the appraised orderly liquidation value with respect to the Borrowers’
Eligible Inventory, net of costs and expenses to be incurred in connection with any such
liquidation, which value is expressed as a percentage of Cost of Eligible Inventory as set forth in
the inventory stock ledger of the Lead Borrower, which value shall be determined from time to time
by the most recent appraisal undertaken by an independent appraiser engaged by the Administrative
Agent.



     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender, (c) an entity or an Affiliate of an entity that administers or manages a
Lender or (d) the same investment advisor or an advisor under common control with such Lender,
Affiliate or advisor, as applicable.



     “Approved Foreign Vendor” means a Foreign Vendor which (a) is located in any country acceptable to
the Collateral Agent in its discretion, (b) has received timely payment or performance of all
obligations owed to it by the Loan Parties, and (c) has not asserted and has no right to assert any
reclamation, repossession, diversion, stoppage in transit, Lien or title retention rights in
respect of such Inventory.



     “Arranger” means Wells Fargo Capital Finance, LLC, in its capacity as sole lead arranger and sole
book manager.



     “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or
more Approved Funds managed by the same investment advisor.



     “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an
Eligible Assignee (with the consent of any party whose consent is required by Section
10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit
E or any other form approved by the Administrative Agent.



-4-









 





     “Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease Obligation of
any Person, the capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease or similar payments under the relevant
lease or other applicable agreement or instrument that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease, agreement or instrument were
accounted for as a capital lease.



     “Audited Financial Statements” means the audited consolidated balance sheet of the Parent and its
Subsidiaries for the fiscal year ended January 3, 2010, and the related consolidated statements of
income or operations, Shareholders’ Equity and cash flows for such fiscal year of the Parent and
its Subsidiaries, including the notes thereto.



     “Auto-Extension Letter of Credit” shall have the meaning specified in Section 2.03(b)(iii).


     “Availability” means, as of any date of determination thereof, the result, if a positive number,
of:



     (a) The Loan Cap




     Minus




     (b) The aggregate unpaid balance of Credit Extensions.



     “Availability Period” means the period from and including the Closing Date to the earliest of (a)
the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section
2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the
obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.



     “Availability Reserves” means, without duplication of any other Reserves or items to the extent
such items are otherwise addressed or excluded through eligibility criteria, such reserves as the
Administrative Agent, from time to time and in compliance with Section 2.01(c), determines in its
reasonable discretion as being appropriate (a) to reflect the impediments to the Agents’ ability to
realize upon the Collateral, (b) to reflect claims and liabilities that
the Administrative Agent reasonably determines will need to be satisfied in connection with any
realization upon the Collateral, (c) to reflect criteria, events, conditions, contingencies or
risks which adversely affect any component of the Borrowing Base, or the assets, business,
financial performance or financial condition of any Loan Party, or (d) to reflect that a Default or
an Event of Default then exists. Without limiting the generality of the foregoing, Availability
Reserves may include, in the Administrative Agent’s reasonable discretion, (but are not limited to)
reserves based on: (i) rent; (ii) customs duties, and other costs to release Inventory which is
being imported into the United States; (iii) outstanding Taxes and other governmental charges,
including, without limitation, ad valorem, real estate, personal property, sales, claims of the
PBGC and other Taxes which may have priority over the interests of the Collateral Agent in the
Collateral; (iv) salaries, wages and benefits due to employees of any Borrower, (v) Customer Credit
Liabilities, (vi) Customer Deposits, (vii) reserves for reasonably anticipated changes in the
Appraised Value of Eligible Inventory between appraisals, (viii) warehousemen’s or bailee’s charges
and other Permitted Encumbrances which may have priority over the interests of the Collateral Agent
in the Collateral, (ix) amounts due to vendors on account of consigned goods, (x) Cash Management
Reserves, (xi) Bank Products Reserves and (xii) royalties payable in respect of licensed
merchandise.



     “Average Daily Availability” shall mean the average daily Availability as reflected in the
Administrative Agent’s books and records (absent manifest error) for the immediately preceding
Fiscal Quarter.



-5-









 





     “Bank Products” means any services or facilities provided to any Loan Party by any Lender or any of
its Affiliates (but excluding Cash Management Services) including, without limitation, on account
of (a) Swap Contracts, (b) merchant services constituting a line of credit, and (c) leasing, but
excluding any factoring services or Supply Chain Financing.



     “Bank Product Reserves” means such reserves as the Administrative Agent from time to time
determines as appropriate to reflect the credit exposure of the Loan Parties in respect of Bank
Products, as such exposure has been reasonably determined by the providers of such Bank Products.



     “Base Rate”  means, for any day, a fluctuating rate per annum equal to the highest of
(a) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%),
(b) the Adjusted LIBO Rate plus one percent (1.00%), or (c) the rate of interest in effect for such
day as publicly announced from time to time by Wells Fargo as its “prime rate.” The “prime rate”
is a rate set by Wells Fargo based upon various factors including Wells Fargo’s costs and desired
return, general economic conditions and other factors, and is used as a reference point for pricing
some loans, which may be priced at, above, or below such announced rate. Any change in such rate
announced by Wells Fargo shall take effect at the opening of business on the day specified in the
public announcement of such change.



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



     “Blocked Account” has the meaning provided in Section 6.13(a)(ii).



     “Blocked Account Agreement” means with respect to an account established by a Loan Party, an
agreement, in form and substance reasonably satisfactory to the Collateral Agent, establishing
control (as defined in the UCC) of such account by the Collateral Agent and whereby the bank
maintaining such account agrees, upon the occurrence and during the continuance of a Cash Dominion
Event, to comply only with the instructions originated by the Collateral Agent without the further
consent of any Loan Party.



     “Blocked Account Bank” means each bank with whom deposit accounts are maintained in which any funds
of any of the Loan Parties from one or more DDAs are concentrated and with whom a Blocked Account
Agreement has been, or is required to be, executed in accordance with the terms hereof.



     “Borrower Materials” has the meaning specified in Section 6.02.


     “Borrower(s)” has the meaning specified in the introductory paragraph hereto.


     “Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the context may require.


     “Borrowing Base” means, at any time of calculation, an amount equal to:



     (a) the face amount of Eligible Credit Card Receivables multiplied by 90%;




     plus




     (b) (i) during the period of September 15 through December 15 of each year, the Cost of
Eligible Inventory (other than Eligible In-Transit Inventory), net of Inventory Reserves,
multiplied by 90% of the Appraised Value of Eligible Inventory (other than Eligible
In-Transit Inventory), and (ii) at all other times, the Cost of Eligible Inventory (other
than Eligible In-


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Transit Inventory), net of Inventory Reserves, multiplied by 85% of the
Appraised Value of Eligible Inventory (other than Eligible In-Transit Inventory);




     plus




     (c) the lesser of (i) the Cost of Eligible In-Transit Inventory, net of Inventory Reserves,
multiplied by 85% of the Appraised Value of Eligible In-Transit Inventory, or (ii)
$10,000,000;




     minus




     (g) the then amount of all Availability Reserves.



     “Borrowing Base Certificate” means a certificate substantially in the form of Exhibit F
hereto (with such changes therein as may be required by the Administrative Agent to reflect the
components of and reserves against the Borrowing Base as provided for hereunder from time to time),
executed and certified as accurate and complete by a Responsible Officer of the Lead Borrower which
shall include appropriate exhibits, schedules, supporting documentation, and additional reports as
reasonably requested by the Administrative Agent.



     “Budget” means the annual budget for the year following the most recently completed Fiscal Year
prepared by management of the Lead Borrower, including each month of the year, in a form
reasonably satisfactory to the Administrative Agent, and which budget shall contain an Availability
model, and a consolidated balance sheet and statements of income from operations and cash flows of
the Parent and its Subsidiaries on a monthly basis.



     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks
are authorized to close under the Laws of, or are in fact closed in, the state where the
Administrative Agent’s Office is located and, if such day relates to any LIBO Rate Loan, means any
such day on which dealings in Dollar deposits are conducted by and between banks in the London
interbank market.



     “Capital Expenditures” means, with respect to any Person for any period, (a) the aggregate of
all expenditures made (whether made in the form of cash or other property) during such period that
are capital expenditures as determined in accordance with GAAP, and (b) Capital Lease Obligations
incurred by a Person during such period.



     “Capital Lease Obligations” means, with respect to any Person for any period, the portion of the
obligations of such Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof, required to be
capitalized for financial reporting purposes in accordance with GAAP.



     “Cash Collateralize” has the meaning specified in Section 2.03(g). Derivates of such term
have corresponding meanings.



     “Cash Dominion Event” means either (i) the occurrence and continuance of any Event of Default, or
(ii) the failure of the Borrowers to maintain Availability of at least $10,000,000, or (iii) the
failure of the Borrowers to maintain Adjusted Availability of at least 12.5% of the Borrowing Base.
For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing
at the Administrative Agent’s option (i) so long as such Event of Default has not been waived,
and/or (ii) if the Cash Dominion Event arises as a result of the Borrowers’ failure to achieve
Availability or Adjusted



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Availability as required hereunder, until Availability has exceeded
$10,000,000 and Adjusted Availability has exceeded 12.5% of the Borrowing Base for sixty (60)
consecutive days, in which case a Cash Dominion Event shall no longer be deemed to be continuing
for purposes of this Agreement; provided that a Cash Dominion Event occurring at any time after a
Cash Dominion Event has occurred and been discontinued on two (2) occasions after the Closing Date
shall be deemed continuing (even if an Event of Default is no longer continuing and/or Availability
or Adjusted Availability, as applicable, exceeds the required amount for sixty (60) consecutive
days). The termination of a Cash Dominion Event as provided herein shall in no way limit, waive or
delay the occurrence of a subsequent Cash Dominion Event in the event that the conditions set forth
in this definition again arise.



     “Cash Management Reserves”
means such reserves as the Administrative Agent, from time to time and
in compliance with Section 2.01(c), determines in its reasonable discretion as being appropriate to
reflect the reasonably anticipated liabilities and obligations of the Loan Parties with respect to
Cash Management Services then provided or outstanding.



     “Cash Management Services” means any one cash management services or facilities provided to any
Loan Party by any Lender or any of its Affiliates, including, without limitation: (a) ACH
transactions, (b) controlled disbursement services, treasury, depository, overdraft, and electronic
funds transfer services, (c) foreign exchange facilities, (d) credit or debit cards, (e) credit
card processing services and (f) purchase cards.



     “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
§ 9601 et seq.



     “CERCLIS” means the Comprehensive Environmental Response, Compensation, and Liability Information
System maintained by the United States Environmental Protection Agency.



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


     “Change in Law” means the occurrence, after the date of this Agreement, of any of the following:
(a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any
law, rule, regulation or treaty or in the administration, interpretation or application thereof by
any Governmental Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.



     “Change of Control” means an event or series of events by which:




     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire, whether such right is exercisable immediately or only after
the passage of time (such right, an “option right”)), directly or indirectly, of 30%
or more of the Equity Interests of the Parent entitled to vote for members of the board of
directors or equivalent governing body of the Parent on a fully-diluted basis (and taking
into account all such Equity Interests that such “person” or “group” has the right to
acquire pursuant to any option right); or




     (b) during any period of 12 consecutive months, a majority of the members of the board of
directors or other equivalent governing body of the Parent cease to be composed of



-8-









 







individuals (i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent governing body
was approved by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing body or
(iii) whose election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board or equivalent governing
body; or




     (c) any “change in control” or “sale” or “disposition” or similar event as defined in any
Organizational Document of any Loan Party or in any Material Contract, or any document
governing Material Indebtedness of any Loan Party; or




     (d) the Parent fails at any time to own, directly or indirectly, 100% of the Equity
Interests of each other Loan Party free and clear of all Liens (other than the Liens in
favor of the Collateral Agent and other Permitted Encumbrances), except where such failure
is as a result of a transaction permitted by the Loan Documents.



     “Closing Date” means the first date all the conditions precedent in Section 4.01 are
satisfied or waived in accordance with Section 10.01.



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



     “Collateral” means any and all “Collateral” as defined in any applicable Security Document and all
other property that is or is intended under the terms of the Security Documents to be subject to
Liens in favor of the Collateral Agent.



     “Collateral Access Agreement” means an agreement reasonably satisfactory in form and substance to
the Agents executed by (a) a bailee or other Person in possession of Collateral, and (b) any
landlord of Real Estate leased by any Loan Party where Collateral is located, pursuant to which
such Person (i) acknowledges the Collateral Agent’s Lien on such Collateral, (ii) releases such
Person’s Liens in such Collateral, (iii) provides the Collateral Agent with access to such
Collateral, (iv) as to any landlord, provides the Collateral Agent with a reasonable time to sell
and dispose of such Collateral from such Real Estate, and (v) makes such other agreements with the
Collateral Agent as the Agents may reasonably require.



     “Collateral Agent” means Wells Fargo, acting in such capacity for its own benefit and the ratable
benefit of the other Credit Parties.



     “Commercial Letter of Credit” means any Letter of Credit issued for the purpose of providing the
primary payment mechanism in connection with the purchase of any materials, goods or services by a
Borrower in the ordinary course of business of such Borrower.



     “Committed Increase” has the meaning specified in Section 2.15(a).


     “Commitment” means, as to each Lender, its obligation to (a) make Committed Loans to the Borrowers
pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and (c) purchase
participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as
such amount may be adjusted from time to time in accordance with this Agreement.



-9-









 





     “Commitment Increases” has the meaning specified in Section 2.15(b)(i).



     “Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the same
Type and, in the case of LIBO Rate Loans, having the same Interest Period made by each of the
Lenders pursuant to Section 2.01.



     “Committed Loan” has the meaning specified in Section 2.01(a).



     “Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a Conversion of Committed
Loans from one Type to the other, or (c) a continuation of LIBO Rate Loans, pursuant to 2.02(b),
which, if in writing, shall be substantially in the form of Exhibit A.



     “Compliance Certificate” means a certificate substantially in the form of Exhibit D.



     “Concentration Account” has the meaning provided in Section 6.13(c).



     “Consolidated” means, when used to modify a financial term, test, statement, or report of a Person,
the application or preparation of such term, test, statement or report (as applicable) based upon
the consolidation, in accordance with GAAP, of the financial condition or operating results of such
Person and its Subsidiaries.



     “Consolidated EBITDA” means, at any date of determination, an amount equal to Consolidated Net
Income of the Parent and its Subsidiaries on a Consolidated basis for the most recently completed
Measurement Period, plus (a) the following to the extent deducted in calculating such Consolidated
Net Income: (i) Consolidated Interest Charges, (ii) the provision for Federal, state, local and
foreign income Taxes, (iii) depreciation and amortization expense and (iv) other non-recurring
expenses reducing such Consolidated Net Income which do not represent a cash item in such period or
any future period (in each case of or by the Parent and its Subsidiaries for such Measurement
Period), minus (b) the following to the extent included in calculating such Consolidated Net
Income: (i) Federal, state, local and foreign income tax credits and (ii) all non-cash items
increasing Consolidated Net Income (in each case of or by the Parent and its Subsidiaries for such
Measurement Period), all as determined on a Consolidated basis in accordance with GAAP.



     “Consolidated Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (a)
(i) Consolidated EBITDA for such period minus (ii) Capital Expenditures (other than Capital
Expenditures financed with proceeds of Permitted Indebtedness (other than Borrowings)) made during
such period minus (iii) the aggregate amount of Federal, state, local and foreign income taxes paid
in cash during such period to (b) the sum of (i) Debt Service Charges plus (ii) the aggregate
amount of all Restricted Payments, in each case, of or by the Parent and its Subsidiaries for the
most recently completed Measurement Period, all as determined on a Consolidated basis in accordance
with GAAP.



     “Consolidated Interest Charges” means, for any Measurement Period, the sum of (a) all interest,
premium payments, debt discount, fees, charges and related expenses in connection with borrowed
money (including capitalized interest) or in connection with the deferred purchase price of assets,
in each case to the extent treated as interest in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing and net costs under Swap Contracts, but excluding any
non-cash or deferred interest financing costs, and (b) the portion of rent expense with respect to
such period under Capital Lease Obligations that is treated as interest in accordance with GAAP
minus (d) interest income during such period (excluding any portion of interest income representing
accruals of amounts received in a previous period), in each



-10-









 




case of or by the Parent and its
Subsidiaries for the most recently completed Measurement Period, all as determined on a
Consolidated basis in accordance with GAAP.


     “Consolidated Net Income” means, as of any date of determination, the net income of the Parent and
its Subsidiaries for the most recently completed Measurement Period, all as determined on a
Consolidated basis in accordance with GAAP, provided, however, that there shall be excluded (a)
extraordinary gains and extraordinary losses for such Measurement Period, (b) the income (or loss)
of the Parent and its Subsidiaries during such Measurement Period in which any other Person has a
joint interest, except to the extent of the amount of cash dividends or other distributions
actually paid in cash to the Parent and its Subsidiaries during such period, (c) the income (or
loss) of the Parent and its Subsidiaries during such Measurement Period and accrued prior to the
date it becomes a Subsidiary of the Parent and its Subsidiaries or any of such Person’s
Subsidiaries or is merged into or consolidated with a Person or any of its Subsidiaries or that
Person’s assets are acquired by the Parent or any of its Subsidiaries, and (d) the income of any
direct or indirect Subsidiary of the Parent and its Subsidiaries to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary of that income is not at the
time permitted by operation of the terms of its Organization Documents or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that
Subsidiary, except that the Parent’s equity in any net loss of any such Subsidiary for such
Measurement Period shall be included in determining Consolidated Net Income.



     “Contractual Obligation” means, as to any Person, any provision of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any of its property is bound.



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



     “Convert”, “Conversion” and “Converted” each refers to a conversion of Committed Loans of one Type
into Committed Loans of the other Type.



     “Cost” means the lower of cost or market value of Inventory, on a basis consistent with the
Borrowers’ accounting practices known to the Administrative Agent and in effect on the Closing
Date, which for in-transit Inventory shall be the landed cost thereof. “Cost” shall not include
inventory capitalization costs.



     “Covenant Compliance Event” means that Availability at any time is less than 12.5% of the Loan Cap.
For purposes hereof, the occurrence of a Covenant Compliance Event shall be deemed continuing
until Availability has equaled or exceeded 12.5% of the Loan Cap for sixty (60) consecutive days,
in which case a Covenant Compliance Event shall no longer be deemed to be continuing for purposes
of this Agreement. The termination of a Covenant Compliance Event as provided herein shall in no
way limit, waive or delay the occurrence of a subsequent Covenant Compliance Event in the event
that the conditions set forth in this definition again arise.



     “Credit Card Notification” has the meaning provided in Section 6.13(a)(i).



     “Credit Card Receivables” means each Account together with all income, payments and proceeds
thereof, owed by a major credit or debit card issuer (including, but not limited to, Visa,
MasterCard, American Express and Discover, and such other issuers approved by the Administrative
Agent in the exercise of its reasonable discretion) to a Borrower resulting from charges by a
customer of a Loan Party on credit or debit cards issued by such issuer in connection with the sale
of goods by a Loan Party, or services performed by a Loan Party, in each case in the ordinary
course of its business.



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     “Credit Extensions” mean each of the following: (a) a Borrowing and (b) an L/C Credit Extension
(including any L/C Borrowing).



     “Credit Party” or “Credit Parties” means (a) individually, (i) each Lender and its Affiliates, (ii)
each Agent, (iii) each L/C Issuer, (iv) the Arranger, (v) each beneficiary of each indemnification
obligation undertaken by any Loan Party under any Loan Document, (vi) any other Person to whom
Obligations under this Agreement and other Loan Documents are owing, and (vii) the permitted
successors and assigns of each of the foregoing, and (b) collectively, all of the foregoing.



     “Credit Party Expenses” means, without limitation, (a) all reasonable and documented out-of-pocket
expenses incurred by the Agents in connection with (i) the syndication of the credit facilities
provided for herein, (ii) the preparation, negotiation, administration, management, execution and
delivery of this Agreement and the other Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (iii) the enforcement or protection of their rights in connection with this Agreement
or the Loan Documents or efforts to preserve, protect, collect, or enforce the Collateral, or (iv)
any workout, restructuring or negotiations in respect of any Obligations, and (b) with respect to
the L/C Issuer, all reasonable and documented out-of-pocket expenses incurred in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment
thereunder; and (c) all reasonable out-of-pocket expenses incurred by the Credit Parties who are
not the Agents or the L/C Issuer, after the occurrence and during the continuance of an Event of
Default, provided that such Credit Parties shall be entitled to reimbursement for no more than one
counsel representing all such Credit Parties (absent a conflict of interest in which case the
applicable Credit Party or Credit Parties desiring separate counsel shall inform the Lead Borrower
or such conflict in writing, which writing shall set forth the basis for such claimed conflict and
reasons why the same cannot be waived, after which such Credit Party or Credit Parties may engage
and be reimbursed for additional counsel).



     “Customer Credit Liabilities” means at any time, the aggregate remaining value at such time of (a)
outstanding gift certificates and gift cards of the Borrowers entitling the holder thereof to use
all or a portion of the certificate or gift card to pay all or a portion of the purchase price for
any Inventory, (b) outstanding merchandise credits of the Borrowers and (c) liabilities in
connection with frequent shopping programs of the Borrowers.



     “Customer Deposits” means deposits made by customers with respect to the purchase of goods or the
performance of services, and layaway obligations of the Borrowers.



     “Customs Broker Agreement” means an agreement in form and substance reasonably satisfactory to the
Collateral Agent, among a Loan Party, a customs broker, freight forwarder or other carrier, and
the Collateral Agent, in which the customs broker, freight forwarder or other carrier acknowledges
that it has control over and holds the documents evidencing ownership of the subject Inventory for
the benefit of the Collateral Agent and agrees, upon notice from the Collateral Agent, to hold and
dispose of the subject Inventory solely as directed by the Collateral Agent.



     “DDA” means each checking, savings or other demand deposit account maintained by any of the Loan
Parties. All funds in each DDA shall be conclusively presumed to be Collateral and proceeds of
Collateral and the Agents and the Lenders shall have no duty to inquire as to the source of the
amounts on deposit in any DDA.



     “DDA Notification” has the meaning provided therefor in Section 6.13(b).



-12-









 





     “Debt Service Charges” means for any Measurement Period, the sum of (a) Consolidated Interest
Charges paid or required to be paid for such Measurement Period, plus (b) principal payments made
or required to be made on account of Indebtedness (excluding the Obligations and any Synthetic
Lease Obligations but including, without limitation, Capital Lease Obligations) for such
Measurement Period, in each case determined on a Consolidated basis in accordance with GAAP.



     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or
other applicable jurisdictions from time to time in effect and affecting the rights of creditors
generally.



     “Default” means any event or condition that constitutes an Event of Default or that, with the
giving of notice of same, the passage of time, or both, would be an Event of Default.



     “Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an
interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin then applicable to Base
Rate Loans, plus (iii) 2% per annum; provided, however, that with respect to a LIBO Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin)
otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of
Credit Fees, a rate equal to the Applicable Margin for Standby Letters of Credit or Commercial
Letters of Credit, as applicable, plus 2% per annum.



     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Committed
Loans, participations in L/C Obligations or participations in Swing Line Loans required to be
funded by it hereunder on the date required to be funded by it hereunder, (b) has notified the
Administrative Agent or the Borrowers in writing that it does not intend to comply with its funding
obligations hereunder, or has made a public statement that it does not intend to comply with its
funding obligations generally under agreements in which it commits to extend credit, (c) has
otherwise failed to pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when due, (d) has failed
within three (3) Business Days after receipt of written request therefor, to confirm to the
Administrative Agent or any Borrower in writing that it will comply with its obligations under this
Agreement to fund and otherwise comply with all of its other obligations hereunder, or (e) has, or
has a direct or indirect parent company that (i) has become the subject of a proceeding under any
Debtor Relief Laws, (ii) has a receiver, conservator, trustee, administrator, assignee for the
benefit of creditors or similar person charged with reorganization or liquidation of its business
or a custodian appointed for it, or (iii) has taken any other steps or actions in furtherance of,
or indicating its consent to, approval of, or acquiescence in any such proceeding or appointment.



     “Deteriorating Lender” means any Defaulting Lender or any Lender as to which (a) the L/C Issuer or
the Swing Line Lender has a good faith belief that such Lender has defaulted in fulfilling its
obligations under one or more other syndicated credit facilities, or (b) a Person that Controls
such Lender has been deemed insolvent or become the subject of a bankruptcy, insolvency or similar
proceeding.



     “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including
any sale and leaseback transaction and any sale, transfer, license or other disposition of (whether
in one transaction or in a series of transactions) of any property (including, without limitation,
any Equity Interests) by any Person (or the granting of any option or other right to do any of the
foregoing), including any sale, assignment, transfer or other disposal, with or without recourse,
of any notes or accounts receivable or any rights and claims associated therewith.



-13-









 





     “Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case at the option of the
holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on which the Loans mature;
provided, however, that (i) only the portion of such Equity Interests which so
matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the
option of the holder thereof prior to such date shall be deemed to be Disqualified Stock and (ii)
with respect to any Equity Interests issued to any employee or to any plan for the benefit of
employees of the Lead Borrower or its Subsidiaries or by any such plan to such employees, such
Equity Interest shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Lead Borrower or one of its Subsidiaries in order to satisfy applicable
statutory or regulatory obligations or as a result of such employee’s termination, resignation,
death or disability and if any class of Equity Interest of such Person that by its terms authorizes
such Person to satisfy its obligations thereunder by delivery of an Equity Interest that is not
Disqualified Stock, such Equity Interests shall not be deemed to be Disqualified Stock.
Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified
Stock solely because the holders thereof have the right to require a Loan Party to repurchase such
Equity Interest upon the occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock.
The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this
Agreement will be the maximum amount that the Lead Borrower and its Subsidiaries may become
obligated to pay upon maturity, or pursuant to any mandatory redemption provisions of, such
Disqualified Stock or portion thereof, plus accrued dividends.



     “Documentation Agent” means Bank of America, N.A.



     “Dollars” and “$” mean lawful money of the United States.



     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political
subdivision of the United States.



     “Eligible Assignee” means (a) a Credit Party or any of its Affiliates; (b) a bank, insurance
company, or company engaged in the business of making commercial loans, which Person, together with
its Affiliates, has a combined capital and surplus in excess of $250,000,000; (c) an Approved Fund;
(d) any Person to whom a Credit Party assigns its rights and obligations under this Agreement as
part of an assignment and transfer of such Credit Party’s rights in and to a material portion of
such Credit Party’s portfolio of asset based credit facilities, and (e) any other Person (other
than a natural person) approved by (i) the Administrative Agent, the L/C Issuer and the Swing Line
Lender, and (ii) unless an Event of Default has occurred and is continuing, the Lead Borrower (each
such approval not to be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include a Loan Party or any of the Loan Parties’
Affiliates or Subsidiaries.



     “Eligible Credit Card Receivables” means at the time of any determination thereof, each Credit Card
Receivable that satisfies the following criteria at the time of creation and continues to meet the
same at the time of such determination: such Credit Card Receivable (i) has been earned by
performance and represents the bona fide amounts due to a Borrower from a credit card payment
processor and/or credit card issuer, and in each case originated in the ordinary course of business
of such Borrower, and (ii) is not ineligible for inclusion in the calculation of the Borrowing Base
pursuant to any of clauses (a) through (i) below or any other category of ineligibility determined
by the Administrative Agent in its reasonable discretion; provided that, so long as no
Event of Default has occurred and is continuing, the Administrative Agent shall provide the Lead
Borrower with three (3) days’ prior notice of any new category of ineligibility (during which
period the Administrative Agent shall be available to discuss any such proposed new category of
ineligibility with the Borrowers). Without limiting the foregoing, to



-14-









 







qualify as an Eligible
Credit Card Receivable, an Account shall indicate no Person other than a Borrower as payee or
remittance party. In determining the amount to be so included, the face amount of an Account shall
be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount
of all accrued and actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including any amount that a
Borrower may be obligated to rebate to a customer, a credit card payment processor, or credit card
issuer pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the
aggregate amount of all cash received in respect of such Account but not yet applied by the
Borrowers to reduce the amount of such Credit Card Receivable. Except as otherwise agreed by the
Administrative Agent, any Credit Card Receivable included within any of the following categories
shall not constitute an Eligible Credit Card Receivable:




     (a) Credit Card Receivables which do not constitute an Account;




     (b) Credit Card Receivables that have been outstanding for more than five (5) Business Days
from the date of sale;




     (c) Credit Card Receivables (i) that are not subject to a perfected first-priority security
interest in favor of the Collateral Agent, or (ii) with respect to which a Borrower does not
have good, valid and marketable title thereto, free and clear of any Lien (other than Liens
granted to the Collateral Agent pursuant to the Security Documents, those Liens specified in
clauses (a) and (e) of the definition of Permitted Encumbrances and Permitted Encumbrances
having priority by operation of applicable Laws over the Lien of the Collateral Agent);




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




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




     (f) Credit Card Receivables due from an issuer or payment processor of the applicable credit
card which is the subject of any bankruptcy or insolvency proceedings;




     (g) Credit Card Receivables which are not a valid, legally enforceable obligation of the
applicable issuer with respect thereto;




     (h) Credit Card Receivables which are evidenced by “chattel paper” or an “instrument” of any
kind unless such “chattel paper” or “instrument” is in the possession of the Collateral
Agent, and to the extent necessary or appropriate, endorsed to the Collateral Agent; or




         (i) Credit Card Receivables which the Administrative Agent determines in its discretion to be
uncertain of collection or which do not meet such other reasonable eligibility criteria for Credit
Card Receivables as the Administrative Agent may determine.



     “Eligible In-Transit Inventory” means, as of any date of determination thereof, without duplication
of other Eligible Inventory, either (x) unless an Accelerated Borrowing Base Delivery Event has
occurred and is continuing, Inventory that has been received by a Borrower within seven (7) days of
the end of each Fiscal Month and that would otherwise constitute Eligible Inventory, but which has
not yet been entered into the inventory stock ledger of the Lead Borrower, or (y) In-Transit
Inventory which meets all of the following requirements:



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     (a) Which has been shipped (i) from a foreign location for receipt by a Borrower, but which
has not yet been delivered to such Borrower, which In-Transit Inventory has been in transit
for forty-five (45) days or less from the date of shipment of such Inventory or (ii) from a
domestic location for receipt by a Borrower, but which has not yet been delivered to such
Borrower, which In-Transit Inventory has been in transit for seven (7) days or less from the
date of shipment of such Inventory;




     (b) For which the purchase order is in the name of a Borrower and title and risk of loss has
passed to such Borrower;




     (c) With respect to foreign In-Transit Inventory, for which an Acceptable Document of Title
has been issued, and in each case with respect to foreign In-Transit Inventory and domestic
In-Transit Inventory as to which the Collateral Agent has control (as defined in the UCC)
over the documents of title which evidence ownership of the subject Inventory (such as, if
requested by the Collateral Agent, by the delivery of a Customs Broker Agreement);




     (d) Which is insured to the reasonable satisfaction of the Collateral Agent (including,
without limitation, marine cargo insurance);




     (e) With respect to foreign In-Transit Inventory, the Foreign Vendor with respect to such
foreign In-Transit Inventory is an Approved Foreign Vendor;




     (f) With respect to foreign In-Transit Inventory, for which (i) payment of the purchase
price has been made by the Borrower or the purchase price is supported by a Commercial
Letter of Credit or (ii) if payment of the purchase price is to be made by the Borrower
within applicable trade terms made available to the Borrower by the applicable Foreign
Vendor, such Foreign Vendor has entered into a Foreign Vendor Agreement and the Borrower has
not breached such trade terms made available to the Borrower by the applicable Foreign
Vendor; and




     (g) Which otherwise would constitute Eligible Inventory;



     provided that the Administrative Agent may, in its reasonable discretion, exclude any particular
Inventory from the definition of “Eligible In-Transit Inventory” in the event the Administrative
Agent determines that (i) such Inventory is subject to any Person’s right or claim which is senior
to, or pari passu with, the Lien of the Collateral Agent (such as, without limitation, a right of
stoppage in transit) or may otherwise adversely impact the ability of the Collateral Agent to
realize upon such Inventory, or (ii) such Inventory is not able to be properly tracked by the
Borrowers; provided further that, so long as no Event of Default has occurred and is continuing and
no Material Adverse Effect has occurred or would be reasonably likely to occur prior to the
expiration of such notice period, the Administrative Agent shall provide the Lead Borrower with
three (3) days’ prior notice of any such exclusion (during which period the Administrative Agent
shall be available to discuss any such exclusion with the Borrowers).



     “Eligible Inventory” means, as of the date of determination thereof, without duplication, (i)
Eligible In-Transit Inventory, and (ii) items of Inventory of a Borrower that are finished goods,
merchantable and readily saleable to the public in the ordinary course of a Borrower’s business,
and that is not excluded as ineligible by virtue of one or more of the criteria set forth below or
any other category of ineligibility determined by the Administrative Agent in its reasonable
discretion; provided that, so long as no Event of Default has occurred and is continuing,
the Administrative Agent shall provide the Lead Borrower with three (3) days’ prior notice of any
new category of ineligibility (during which period the Administrative Agent shall be available to
discuss any such proposed new category of ineligibility with 


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the Borrowers). Except as otherwise
agreed by the Administrative Agent, the following items of Inventory shall not be included in
Eligible Inventory:




     (a) Inventory that is not solely owned by a Borrower or a Borrower does not have good and
valid title thereto;




     (b) Inventory that is leased by or is on consignment to a Borrower or which is consigned by
a Borrower to a Person which is not a Loan Party;




     (c) Inventory (other than Eligible In-Transit Inventory) that is not located in the United
States of America (excluding territories or possessions of the United States) at a location
that is owned or leased by a Borrower, except (i) Inventory in transit between such owned or
leased locations, or (ii) to the extent that the Borrowers have furnished the Administrative
Agent with (A) any UCC financing statements or other documents that the Administrative Agent
may determine to be necessary to perfect its security interest in such Inventory at such
location, and (B) a Collateral Access Agreement executed by the Person owning any such
location on terms reasonably acceptable to the Administrative Agent;




     (d) Inventory that is located in a distribution center leased by a Borrower, unless the
applicable lessor has delivered to the Collateral Agent a Collateral Access Agreement;




     (e) Inventory that is comprised of goods which (i) are damaged, defective, “seconds,” or
otherwise unmerchantable, (ii) are to be returned to the vendor, (iii) are obsolete or slow
moving, or custom items, work-in-process, raw materials, or that constitute spare parts,
promotional, marketing, packaging and shipping materials or supplies used or consumed in a
Borrower’s business, (iv) not in compliance with all standards imposed by any Governmental
Authority having regulatory authority over such Inventory, its use or sale, or (v) are bill
and hold goods;




     (f) Inventory that is not subject to a perfected first-priority security interest in favor
of the Collateral Agent;




     (g) Inventory that consists of samples, labels, bags, packaging, and other similar
non-merchandise categories;




     (h) Inventory that is not insured in compliance with the provisions of Section 5.10
hereof;




     (i) Inventory that has been sold but not yet delivered or as to which a Borrower has
accepted a deposit;




     (j) Inventory that is subject to any licensing, patent, royalty, trademark, trade name or
copyright agreement with any third party from which any Borrower or any of its Subsidiaries
has received notice of a dispute in respect of any such agreement, but only to the extent
that such dispute would preclude the Loan Parties or the Collateral Agent or any other
Credit Party from disposing of such Inventory; or




     (k) Inventory acquired in a Permitted Acquisition or which is of the type usually sold in
the ordinary course of a Borrower’s business, unless and until the Collateral Agent has
completed or received (A) an appraisal of such Inventory from appraisers satisfactory to the
Collateral Agent and establishes Inventory Reserves (if applicable) therefor, and otherwise
agrees



-17-









 







that such Inventory shall be deemed Eligible Inventory, and (B) such other due
diligence as the Agents may require, all of the results of the foregoing to be reasonably
satisfactory to the Agents.



     “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including those
related to hazardous substances or wastes, air emissions and discharges to waste or public systems.



     “Environmental Liability” means any liability, obligation, damage, loss, claim, action, suit,
judgment, order, fine, penalty, fee, expense, or cost, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any
Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal or presence of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the foregoing.



     “Equipment” has the meaning set forth in the UCC.


     “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or
other ownership or profit interests in) such Person, all of the warrants, options or other rights
for the purchase or acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such Person or warrants,
rights or options for the purchase or acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting, and whether or not
such shares, warrants, options, rights or other interests are outstanding on any date of
determination.



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



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



     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the
Lead Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by the Lead Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Lead Borrower or any
ERISA Affiliate.



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     “Event of Default” has the meaning specified in Section 8.01. An Event of Default shall be
deemed to be continuing unless and until that Event of Default has been duly waived as provided in
Section 10.01 hereof.



     “Excluded Taxes” means, with respect to the Agents, any Lender, the L/C Issuer or any other
recipient of any payment to be made by or on account of any obligation of the Loan Parties
hereunder, (a) 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 such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable Lending Office is located,
(b) any branch profits taxes imposed by the United States or any similar tax imposed by any other
jurisdiction in which any Loan Party is located and (c) in the case of a Foreign Lender (other than
an assignee pursuant to a request by the Loan Parties under Section 10.13), any withholding
tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign
Lender’s failure or inability (other than as a result of a Change in Law) to comply with
Section 3.01(e), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new Lending Office (or assignment), to receive
additional amounts from the Loan Parties with respect to such withholding tax pursuant to
Section 3.01(a).



     “Executive Order” has the meaning set forth in Section 10.18.


     “Existing Credit Agreement” means that certain Second Amended and Restated Financing Agreement
dated as of December 15, 2004 among the Borrower, The CIT Group/Business Credit, Inc., as agent,
and a syndicate of lenders, as amended, together with all of the documents executed pursuant
thereto or in connection therewith other than documents purposed to effect the termination thereof.



     “Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not
in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of
insurance (other than proceeds of business interruption insurance to the extent such proceeds
constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof),
indemnity payments and any purchase price adjustments.



     “Facility Guaranty” means the Guaranty made by the Guarantor in favor of the Agents and the other
Credit Parties, in form reasonably satisfactory to the Administrative Agent.



     “Factored Receivables” means any Accounts of a Loan Party which have been factored or sold by an
account debtor of a Loan Party to Wells Fargo, or any of its Affiliates pursuant to a factoring
arrangement or otherwise.



     “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such
rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Wells Fargo on such day on such transactions as determined by the Administrative Agent.



     “Fee Letter” means the letter agreement, dated August 13, 2010, by and between the Lead Borrower
and the Administrative Agent.



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     “Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally end on the
Sunday closest to the end of each calendar month in accordance with the fiscal accounting calendar
of the Loan Parties.



     “Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall generally end on
the Sunday closest to the end of each calendar quarter in accordance with the fiscal accounting
calendar of the Loan Parties.



     “Fiscal Year” means the fiscal year of the Parent determined in accordance with the method used for
such determination in the Audited Financial Statements.



     “Forecast Updates” means the quarterly revisions to the Budget to reflect significant or material
changes thereto based on revised assumptions and the actual results obtained during the period or
periods then elapsed during the Fiscal Year covered by the Budget.



     “Foreign Assets Control Regulations” has the meaning set forth in Section 10.18.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other
than that in which the Lead Borrower is resident for tax purposes. For purposes of this
definition, the United States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.



     “Foreign Vendor” means a Person that sells In-Transit Inventory to a Borrower.


     “Foreign Vendor Agreement” means an agreement between a Foreign Vendor and the Collateral Agent in
form and substance reasonably satisfactory to the Collateral Agent and pursuant to which, among
other things, the parties shall agree upon their relative rights with respect to In-Transit
Inventory of a Borrower purchased from such Foreign Vendor.



     “Fronting Fee” has the meaning assigned to such term in Section 2.03(j).


     “FRB” means the Board of Governors of the Federal Reserve System of the United States.


     “Fund” means any Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business.



     “GAAP” means generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the circumstances as of the date
of determination, consistently applied.



     “Governmental Authority” means the government of the United States or any other nation, or of any
political subdivision thereof, whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central Bank).



     “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation
payable



-20-









 




or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation,
(ii) to purchase or lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of the primary obligor
so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such
Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount
equal to the stated or determinable amount of the related primary obligation, or portion thereof,
in respect of which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in
good faith. The term “Guarantee” as a verb has a corresponding meaning.



     “Guarantor” means the Parent, each Subsidiary of the Parent (other than the Borrowers and any CFC)
and each other Subsidiary of the Parent that shall be required to execute and deliver a Facility
Guaranty pursuant to Section 6.12.



     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.



     “Honor Date” has the meaning specified in Section 2.03(c)(i).


     “Increase Effective Date” shall have the meaning provided therefor in Section 2.15(c).


     “Indebtedness” means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance with GAAP:




     (a) all obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar instruments;




     (b) the maximum amount of all reimbursement or other obligations of such Person arising
under letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;




     (c) net obligations of such Person under any Swap Contract;




     (d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business and, in each
case, not past due for more than 60 days);




     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse;



-21-









 






     (f) All Attributable Indebtedness of such Person;




     (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make
any payment in respect of any Disqualified Stock; and




     (h) all Guarantees of such Person in respect of any of the foregoing.



     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Indemnitees” has the meaning specified in Section 10.04(b).



     “Information” has the meaning specified in Section 10.07.



     “Intellectual Property” means all present and future: trade secrets, know-how and other
proprietary information; trademarks, trademark applications, internet domain names, service marks,
trade dress, trade names, business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and other source and/or
business identifiers, and all registrations or applications for registrations which have heretofore
been or may hereafter be issued thereon throughout the world; copyrights and copyright
applications; (including copyrights for computer programs) and all tangible and intangible property
embodying the copyrights, unpatented inventions (whether or not patentable); patents and patent
applications; industrial design applications and registered industrial designs; license agreements
related to any of the foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes, object codes,
executable code, data, databases and other physical manifestations, embodiments or incorporations
of any of the foregoing; all other intellectual property; and all common law and other rights
throughout the world in and to all of the foregoing.



     “Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each
Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any
Interest Period for a LIBO Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan (including a Swing Line Loan), the first day after the end of each
month and the Maturity Date.



     “Interest Period” means, as to each LIBO Rate Loan, the period commencing on the date such LIBO
Rate Loan is disbursed or Converted to or continued as a LIBO Rate Loan and ending on the date one,
two, three or six months thereafter, as selected by the Lead Borrower in its Committed Loan Notice;
provided that:




     (i) any Interest Period that would otherwise end on a day that is not a Business Day shall
be extended to the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next preceding Business
Day;




     (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month at the end of



-22-









 







such Interest Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period;




     (iii) no Interest Period shall extend beyond the Maturity Date; and




     (iv) notwithstanding the provisions of clause (iii), no Interest Period shall have a
duration of less than one (1) month, and if any Interest Period applicable to a LIBO
Borrowing would be for a shorter period, such Interest Period shall not be available
hereunder.


For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is
made and thereafter shall be the effective date of the most recent Conversion or continuation of
such Borrowing.



     “Internal Control Event” means a material weakness in, or fraud that involves management or
other employees who have a significant role in, the Parent’s and/or its Subsidiaries’ internal
controls over financial reporting, in each case as described in the Securities Laws and of which
the Lead Borrower has Knowledge.



     “In-Transit Inventory” means Inventory of a Borrower which is in the possession of a common
carrier and (i) is in transit from a Foreign Vendor of a Borrower from a location outside of the
continental United States or (ii) is in transit from a domestic vendor of a Borrower from a
location within the continental United States, in each case to a location of a Borrower that is
within the continental United States.



     “Inventory” has the meaning given that term in the UCC.



     “Inventory Reserves” means such reserves as may be established from time to time and in compliance
with Section 2.01(c) by the Administrative Agent in its reasonable discretion, with respect to the
determination of the saleability, at retail, of the Eligible Inventory or which reflect such other
factors as affect the market value of the Eligible Inventory. Without limiting the generality of
the foregoing, Inventory Reserves may, in the Administrative Agent’s reasonable discretion, include
(but are not limited to) reserves based on:




     (a) Obsolescence;




     (b) Seasonality;




     (c) Shrink;




     (d) Imbalance;




     (e) Change in Inventory character;




     (f) Change in Inventory composition;




     (g) Change in Inventory mix;




     (h) Mark-downs (both permanent and point of sale);




     (i) Retail mark-ons and mark-ups inconsistent with prior period practice and performance,
industry standards, current business plans or advertising calendar and planned advertising
events; and



-23-









 






     (j) Out-of-date and/or expired Inventory.



     “Investment” means, as to any Person, any direct or indirect acquisition or investment by such
Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another
Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or interest in, another Person, or (c) any
Acquisition, or (d) any other investment of money or capital in order to obtain a profitable
return. For purposes of covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases in the value of such
Investment.



     “IRS” means the United States Internal Revenue Service.


     “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or such later version thereof
as may be in effect at the time of issuance).



     “Issuer Documents” means with respect to any Letter of Credit, the Letter Credit Application, and
any other document, agreement and instrument entered into by the L/C Issuer and any Borrower (or
any Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of Credit.



     “Knowledge” means the actual knowledge of a Responsible Officer of a Loan Party after reasonable
inquiry.



     “Joinder Agreement” means an agreement, in form satisfactory to the Administrative Agent pursuant
to which, among other things, a Person becomes a party to, and bound by the terms of, this
Agreement and/or the other Loan Documents in the same capacity and to the same extent as either a
Borrower or a Guarantor, as the Administrative Agent may determine.



     “Landlord Lien State” means such state(s) in which a landlord’s claim for rent may have
priority over the Lien of the Collateral Agent in any of the Collateral.



     “Laws” means each international, foreign, Federal, state and local statute, treaty, rule,
guideline, regulation, ordinance, code and administrative or judicial precedent or authority,
including the interpretation or administration thereof by any Governmental Authority charged with
the enforcement, interpretation or administration thereof, and each applicable administrative
order, directed duty, request, license, authorization and permit of, and agreement with, any
Governmental Authority, in each case whether or not having the force of law.



     “L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any
L/C Borrowing in accordance with its Applicable Percentage.



     “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit
which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.



     “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or
extension of the expiry date thereof, or the increase of the amount thereof.



     “L/C Issuer” means (a) Wells Fargo in its capacity as issuer of Letters of Credit hereunder, or any
successor issuer of Letters of Credit hereunder (which successor may only be a Lender selected by
the Lead Borrower with the consent of the Administrative Agent), and (b) any other Lender selected
by the Administrative Agent in its discretion. The L/C Issuer may, in its discretion, arrange for
one or more



-24-









 







Letters of Credit to be issued by Affiliates of the L/C Issuer if consented to by the
Lead Borrower, in which case the term “L/C Issuer” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate.



     “L/C Obligations” means, as at any date of determination, the aggregate undrawn amount available to
be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts,
including all L/C Borrowings. For purposes of computing the amounts available to be drawn under
any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with
Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter
of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.



     “Lease” means any agreement, whether written or oral, no matter how styled or structured, pursuant
to which a Loan Party is entitled to the use or occupancy of any space in a structure, land,
improvements or premises for any period of time.



     “Lender” has the meaning specified in the introductory paragraph hereto and, as the context
requires, includes the Swing Line Lender.



     “Lending Office” means, as to any Lender, the office or offices of such Lender described as such in
such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from
time to time notify the Lead Borrower and the Administrative Agent.



     “Letter of Credit” means each Standby Letter of Credit and each Commercial Letter of Credit issued
hereunder.



     “Letter of Credit Application” means an application and agreement for the issuance or amendment of
a Letter of Credit in the form from time to time in use by the L/C Issuer.



     “Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then
in effect (or, if such day is not a Business Day, the next preceding Business Day).



     “Letter of Credit Fee” has the meaning specified in Section 2.03(i).


     “Letter of Credit Sublimit” means an amount equal to $50,000,000. The Letter of Credit Sublimit is
part of, and not in addition to, the Aggregate Commitments. A permanent reduction of the Aggregate
Commitments shall not require a corresponding pro rata reduction in the Letter of Credit Sublimit;
provided, however, that if the Aggregate Commitments are reduced to an amount less than the Letter
of Credit Sublimit, then the Letter of Credit Sublimit shall be reduced to an amount equal to (or,
at Lead Borrower’s option, less than) the Aggregate Commitments.



     “LIBO Borrowing” means a Borrowing comprised of LIBO Rate Loans.



     “LIBO Rate” means for any Interest Period with respect to a LIBO Rate Loan, the rate per annum
equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or
other commercially available source providing quotations of BBA LIBOR as designated by the
Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first
day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not
available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the
rate per annum determined by the



-25-









 







Administrative Agent to be the rate at which deposits in Dollars
for delivery on the first day of such Interest Period in same day funds in the approximate amount
of the LIBO Rate Loan being made, continued or Converted by Wells Fargo and with a term equivalent
to such Interest Period would be offered to Wells Fargo by major banks in the London interbank
eurodollar market in which Wells Fargo participates at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.



     “LIBO Rate Loan” means a Committed Loan that bears interest at a rate based on the Adjusted LIBO
Rate.



     “Lien” means (a) any mortgage, deed of trust, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other
security interest or preferential arrangement in the nature of a security interest of any kind or
nature whatsoever (including any conditional sale, Capital Lease Obligation, Synthetic Lease
Obligation, or other title retention agreement, any easement, right of way or other encumbrance on
title to real property, and any financing lease having substantially the same economic effect as
any of the foregoing) and (b) in the case of securities, any purchase option, call or similar right
of a third party with respect to such securities.



     “Liquidation” means the exercise by the Administrative Agent or Collateral Agent of those rights
and remedies accorded to such Agents under the Loan Documents and applicable Law as a creditor of
the Loan Parties with respect to the realization on the Collateral, including (after the occurrence
and during the continuation of an Event of Default) the conduct by the Loan Parties acting with the
consent of the Administrative Agent, of any public, private or “going out of business”, “store
closing”, or other similarly themed sale or any other disposition of the Collateral for the purpose
of liquidating the Collateral. Derivations of the word “Liquidation” (such as “Liquidate”) are
used with like meaning in this Agreement.



     “Loan” means an extension of credit by a Lender to the Borrower under Article II in the
form of a Committed Loan or a Swing Line Loan.



     “Loan Account” has the meaning assigned to such term in Section 2.11(a).


     “Loan Cap” means, at any time of determination, the lesser of (a) the Aggregate Commitments or (b)
the Borrowing Base.


     “Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee Letter, all
Borrowing Base Certificates, the Blocked Account Agreements, the DDA Notifications, the Credit Card
Notifications, the Security Documents, the Facility Guaranty, and any other instrument or agreement
now or hereafter executed and delivered in connection herewith evidencing or securing the
Obligations, each as amended and in effect from time to time.



     “Loan Parties” means, collectively, the Borrowers and the Guarantors.



     “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect
upon, the operations, business, properties, liabilities (actual or contingent) or condition
(financial or otherwise) of the Loan Parties taken as a whole; (b) a material impairment of the
ability of the Loan Parties to perform their obligations under the Loan Documents, taken as a
whole; (c) a material impairment of the rights and remedies of the Agent or the Lenders under the
Loan Documents, taken as a whole; or (d) a material adverse effect upon the legality, validity,
binding effect or enforceability against the Loan Parties of the Loan Documents, taken as a whole.
In determining whether any individual event would result in a Material Adverse Effect,
notwithstanding that such event in and of itself does not have



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such effect, a Material Adverse
Effect shall be deemed to have occurred if the cumulative effect of such event and all other then
existing events would result in a Material Adverse Effect.



     “Material Contract” means, with respect to any Person, (i) each contract to which such Person is a
party involving aggregate consideration payable to or by such Person of $5,000,000 or more (not
including purchase orders or real property leases) or (ii) each contract or agreement, the loss of
which could reasonably be expected to result in a Material Adverse Effect.



     “Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan Parties in an
aggregate principal amount exceeding $5,000,000. For purposes of determining the amount of
Material Indebtedness at any time, (a) the amount of the obligations in respect of any Swap
Contract at such time shall be calculated at the Swap Termination Value thereof, (b) undrawn
committed or available amounts shall be included, and (c) all amounts owing to all creditors under
any combined or syndicated credit arrangement shall be included.



     “Maturity Date” means October 18, 2014.



     “Maximum Rate” has the meaning provided therefor in Section 10.09.



     “Measurement Period” means, at any date of determination, the most recently completed twelve Fiscal
Months.



     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.


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



     “Non-Consenting Lender” has the meaning provided therefor in Section 10.01.



     “Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).



     “Note” means (a) a promissory note made by the Borrower in favor of a Lender evidencing Loans
made by such Lender, substantially in the form of Exhibit C-1, and (b) the Swing Line Note,
as each may be amended, supplemented or modified from time to time.



     “NPL” means the National Priorities List under CERCLA.



     “Obligations” means (a) all advances to, and debts (including principal, interest, fees, costs, and
expenses), liabilities, obligations, covenants, indemnities, and duties of, any Loan Party arising
under any Loan Document or otherwise with respect to any Loan or Letter of Credit (including
payments in respect of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral therefor), whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising and including
interest, fees, costs, expenses and indemnities that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest, fees, costs, expenses
and indemnities are allowed claims in such proceeding, and (b) any Other Liabilities.



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     “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of
incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to
any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or
articles of formation or organization and operating agreement; (c) with respect to any partnership,
joint venture, trust or other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement, instrument, filing or notice
with respect thereto filed in connection with its formation or organization with the applicable
Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity, and (d) in each case, all
shareholder or other equity holder agreements, voting trusts and similar arrangements to which such
Person is a party or which is applicable to its Equity Interests and all other arrangements
relating to the Control or management of such Person.



     “Other Liabilities” means (a) any obligation on account of (i) any Cash Management Services
furnished to any of the Loan Parties or any of their Subsidiaries and/or (ii) any transaction with
any Lender or any of its Affiliates, which arises out of any Bank Product entered into with any
Loan Party and any such Person, as each may be amended from time to time; and (b) any liability
with respect to Factored Receivables or any Supply Chain Financing.



     “Other Taxes” means all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made hereunder or under any
other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect
to, this Agreement or any other Loan Document.



     “Outstanding Amount” means (i) with respect to Committed Loans and Swing Line Loans on any date,
the aggregate outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be, occurring on
such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements by the Borrower of Unreimbursed Amounts.



     “Overadvance” means a Credit Extension to the extent that, immediately after its having been made,
Availability is less than zero.



     “Parent” has the meaning specified in the introductory paragraph hereto.



     “Participant” has the meaning specified in Section 10.06(d).



     “Payment Conditions” means, at the time of determination with respect to any specified transaction
or payment, that (a) no Default or Event of Default then exists or would arise as a result of
entering into such transaction or the making such payment, (b) after giving effect to such
transaction or payment, the Pro Forma Availability Condition and the Pro Forma Adjusted
Availability Condition have been satisfied, and (c) the Consolidated Fixed Charge Coverage Ratio,
on a pro-forma basis after giving effect to such transaction or payment, will be greater than
1.0:1.0. Prior to undertaking any transaction or payment which is subject to the Payment
Conditions, the Loan Parties shall deliver to the Administrative Agent evidence of satisfaction of
the conditions contained in clause (b) and (c) above on a basis (including, without limitation,
giving due consideration to results for prior periods) reasonably satisfactory to the
Administrative Agent.



     “PBGC” means the Pension Benefit Guaranty Corporation.



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     “PCAOB” means the Public Company Accounting Oversight Board.



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



     “Permitted Acquisition” means an Acquisition in which all of the following conditions are
satisfied:




     (a) No Default then exists or would arise from the consummation of such Acquisition;




     (b) Such Acquisition shall have been approved by the Board of Directors of the Person (or
similar governing body if such Person is not a corporation) which is the subject of such
Acquisition and such Person shall not have announced that it will oppose such Acquisition or
shall not have commenced any action which alleges that such Acquisition shall violate
applicable Law;




     (c) The Lead Borrower shall have furnished the Administrative Agent with thirty (30) days’
prior written notice of such intended Acquisition and shall have furnished the
Administrative Agent with a current draft of the Acquisition Documents (and final copies
thereof as and when executed), a summary of any due diligence undertaken by the Loan Parties
in connection with such Acquisition, appropriate
financial statements of the Person which is the subject of such Acquisition, pro forma
projected financial statements for the twelve (12) month period following such Acquisition
after giving effect to such Acquisition (including balance sheets, cash flows and income
statements by month for the acquired Person, individually, and on a Consolidated basis with
all Loan Parties), and such other information as the Administrative Agent may reasonably
require, all of which shall be reasonably satisfactory to the Administrative Agent;




     (d) If proceeds of Loans will be used to pay all or any portion of the consideration for
such Acquisition, the legal structure of the Acquisition shall be acceptable to the
Administrative Agent in its discretion;




     (e) After giving effect to the Acquisition, if the Acquisition is an Acquisition of Equity
Interests, a Loan Party shall acquire and own, directly or indirectly, a majority of the
Equity Interests in the Person being acquired and shall Control a majority of any voting
interests or shall otherwise Control the governance of the Person being acquired;




     (f) Any assets acquired shall be utilized in, and if the Acquisition involves a merger,
consolidation or stock acquisition, the Person which is the subject of such Acquisition
shall be engaged in, a business otherwise permitted to be engaged in by a Borrower under
this Agreement;




     (g) If the Person which is the subject of such Acquisition will be maintained as a
Subsidiary of a Loan Party, or if the assets acquired in an Acquisition will be transferred
to a Subsidiary which is not then a Loan Party, such Subsidiary shall have been joined as a
“Borrower” hereunder or as a Guarantor, as the Administrative Agent shall determine, and the
Collateral Agent shall upon closing of such Acquisition receive a first priority security in
such



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Subsidiary’s Equity Interests, Inventory, Accounts and other property of the same
nature as constitutes collateral under the Security Documents;




     (h) The total consideration paid for all such Acquisitions (whether in cash, tangible
property, notes or other property) after the Closing Date shall not exceed in the aggregate
the sum of $25,000,000; and




     (i) The Loan Parties shall have satisfied the Payment Conditions.



     “Permitted Disposition” means any of the following:




     (a) Dispositions of Inventory in the ordinary course of business;




     (b) bulk sales or other Dispositions of the Inventory of a Loan Party not in the ordinary
course of business in connection with Store closings, at arm’s length, provided,
that such Store closures and related Inventory dispositions shall not exceed (i) in any
Fiscal Year of the Parent and its Subsidiaries, five percent (5%) of the number of the Loan
Parties’ Stores as of the beginning of such Fiscal Year (net of new Store openings) and (ii)
in the aggregate from and after the Closing Date, ten percent (10%) of the number of the
Loan Parties’ Stores in existence as of the Closing Date (net of new Store openings),
provided, that all sales of Inventory in connection with Store closings shall be in
accordance with liquidation agreements and with professional liquidators reasonably
acceptable to the Agents; provided, further that all net proceeds received in
connection therewith are applied to the Obligations;




     (c) non-exclusive licenses of Intellectual Property of a Loan Party or any of its
Subsidiaries in the ordinary course of business;




     (d) licenses for the conduct of licensed departments within the Loan Parties’ Stores in the
ordinary course of business; provided that, if requested by the Agents, the Agents shall
have entered into an intercreditor agreement with the Person operating such licensed
department on terms and conditions reasonably satisfactory to the Agents;




     (e) Dispositions of Equipment in the ordinary course of business that is substantially worn,
damaged, obsolete or, in the judgment of a Loan Party, no longer useful or necessary in its
business or that of any Subsidiary;




     (f) Sales, transfers and dispositions among the Loan Parties or by any Subsidiary to a Loan
Party;




     (g) Sales, transfers and dispositions by any Subsidiary which is not a Loan Party to another
Subsidiary that is not a Loan Party;




     (h) terminations of contracts, licenses, leases or subleases (other than any Material
Contract unless such Material Contract is replaced or is no longer necessary to the conduct
of the Loan Parties’ business) to the extent that the Loan Parties determine that they are
no longer necessary in the conduct of the Loan Parties’ business;




     (i) Dispositions of Real Estate of any Loan Party; provided that, with respect to
any sale leaseback transaction, if requested by the Collateral Agent, the Loan Parties shall
cause the purchaser of any such Real Estate to enter into a Collateral Access Agreement on
terms reasonably satisfactory to the Collateral Agent;



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     (j) Dispositions of Intellectual Property in the ordinary course of business that is
obsolete or, in the judgment of a Loan Party, no longer used or useful or necessary in, or
material to, its business; and




     (k) Dispositions of assets (other than assets included in the Borrowing Base) of the Loan
Parties to the extent not permitted under any of the foregoing clauses of “Permitted
Dispositions” so long as the value of the assets so Disposed would not exceed $5,000,000
during any Fiscal Year.



     “Permitted Encumbrances” means:




     (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance
with Section 6.04;




     (b) Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by applicable Law, arising in the ordinary course of business and securing
obligations that are not overdue or are being contested in compliance with Section
6.04;




     (c) Pledges and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or regulations, other
than any Lien imposed by ERISA;




     (d) Deposits to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;




     (e) Liens in respect of judgments that would not constitute an Event of Default hereunder;




     (f) Easements, covenants, conditions, restrictions, building code laws, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and do not
materially interfere with the ordinary conduct of business of a Loan Party;




     (g) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals
or extensions thereof, provided that (i) the property covered thereby is not changed
(other than to be decreased), (ii) the amount secured or benefited thereby is not increased,
(iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any
renewal or extension of the obligations secured or benefited thereby is otherwise permitted
hereunder);




     (h) Liens on fixed or capital assets acquired by any Loan Party which are permitted under
clause (c) of the definition of Permitted Indebtedness so long as (i) such Liens and the
Indebtedness secured thereby are incurred prior to or within ninety (90) days after such
acquisition, (ii) the Indebtedness secured thereby does not exceed the cost of acquisition
of such fixed or capital assets and (iii) such Liens shall not extend to any other property
or assets of the Loan Parties;




     (i) Liens in favor of the Collateral Agent;



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     (j) interests of Landlords’ and lessors’ under operating leases and licensors under license
agreements, and Liens in respect of rents or royalties not in default or being contested in
accordance with Section 6.04;




     (k) Possessory Liens in favor of brokers and dealers arising in connection with the
acquisition or disposition of Investments owned as of the date hereof and Permitted
Investments, provided that such liens (a) attach only to such Investments and (b)
secure only obligations incurred in the ordinary course and arising in connection with the
acquisition or disposition of such Investments and not any obligation in connection with
margin financing;




     (l) Liens arising solely by virtue of any statutory or common law provisions relating to
banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar
rights and remedies as to deposit accounts or securities accounts or other funds maintained
with depository institutions or securities intermediaries;




     (m) Liens arising from precautionary UCC filings regarding “true” operating leases or, to
the extent permitted under the Loan Documents, the consignment of goods to a Loan Party;




     (n) voluntary Liens on property (other than property of the type included in the Borrowing
Base) in existence at the time such property is acquired pursuant to a Permitted Acquisition
or on such property of a Subsidiary of a Loan Party in existence at the time such Subsidiary
is acquired pursuant to a Permitted Acquisition; provided, that such Liens are not
incurred in connection with or in anticipation of such Permitted Acquisition and do not
attach to any other assets of any Loan Party or any Subsidiary;




     (o) Liens in favor of customs and revenues authorities imposed by applicable Law arising in
the ordinary course of business in connection with the importation of goods and securing
obligations that are being contested in good faith by appropriate proceedings, provided that
(A) the applicable Loan Party or Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and
(B) such contest effectively suspends collection of the contested obligation and enforcement
of any Lien securing such obligation;




     (p) Liens solely on deposits made by the Loan Parties in connection with any letter of
intent, purchase agreements with respect to a proposed acquisition, or in connection with
any proposed financing; and




     (r) other Liens not securing Indebtedness in an amount not to exceed $1,000,000 in the
aggregate at any time outstanding.



     “Permitted Indebtedness” means each of the following:




     (a) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and any
refinancings, refundings, renewals or extensions thereof; provided that (i) the
amount of such Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such refinancing
and by an amount equal to any existing commitments unutilized thereunder, and the direct or
contingent obligor with respect thereto is not changed as a result of or in connection with
such refinancing, refunding, renewal or extension, (ii) the result of such extension,
renewal or replacement shall not be an earlier maturity date or decreased weighted average
life of such Indebtedness, and (iii) the amortization, maturity, collateral (if any) and
subordination (if any), and other material terms thereof (other than the



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interest rate
applicable thereto) taken as a whole, of any such refinancing, refunding, renewing or
extending Indebtedness, and of any agreement entered into and of any instrument issued in
connection therewith, are not materially less favorable to the Loan Parties or the Lenders
than the terms of any agreement or instrument governing the Indebtedness being refinanced,
refunded, renewed or extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the then applicable market
interest rate;




     (b) Indebtedness of any Loan Party to any other Loan Party;




     (c) Without duplication of Indebtedness described in clause (f) of this definition, purchase
money Indebtedness of any Loan Party to finance the acquisition of any fixed or capital
assets, including Capital Lease Obligations and Synthetic Lease Obligations, and any
Indebtedness assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted average life thereof,
provided that the amortization, maturity, collateral (if any) and subordination (if any),
and other material terms thereof (other than the interest rate applicable thereto) taken as
a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any
agreement entered into and of any instrument issued in connection therewith, are not
materially less favorable to the Loan Parties or the Lenders than the terms of any agreement
or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and
the interest rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate, provided,
however, that the aggregate principal amount of Indebtedness permitted by this
clause (c) shall not exceed $10,000,000 at any time outstanding and further provided
 that, if requested by the Collateral Agent, the Loan Parties shall cause the holders of
any such Indebtedness which is secured by a Lien permitted pursuant to clause (h) of the
definition of Permitted Encumbrances to enter into a Collateral Access Agreement on terms
reasonably satisfactory to the Collateral Agent;




     (d) Obligations (contingent or otherwise) of any Loan Party or any Subsidiary thereof
existing or arising under any Swap Contract, provided that such obligations are (or
were) entered into by such Person in the ordinary course of business for the purpose of
directly mitigating risks associated with fluctuations in interest rates or foreign exchange
rates, and not for purposes of speculation or taking a “market view;”;




     (e) Contingent liabilities (i) under surety bonds or similar instruments incurred in the
ordinary course of business in connection with the construction, improvement or operation of
Stores, (ii) in respect of indemnification obligations, obligations to make customary
purchase price adjustments for working capital, non-compete obligations or similar
obligations of the Loan Parties incurred in connection with a Permitted Acquisition, (iii)
in respect of indemnification obligations under the Existing Credit Agreement or any credit
agreement or securities offerings evidencing any Permitted Indebtedness, or (iv) in respect
of any agreement or instrument relating to a transaction that is permitted hereunder;




     (f) Indebtedness incurred for the construction or acquisition or improvement of, or to
finance or to refinance, any Real Estate owned by any Loan Party (including therein any
Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder),
provided that, the Loan Parties shall
cause the holders of such Indebtedness to enter into a Collateral Access Agreement on terms
reasonably satisfactory to the Collateral Agent;



-33-









 






     (g) Indebtedness with respect to the deferred purchase price for any Permitted Acquisition,
provided that such Indebtedness does not require the payment in cash of principal
(other than in respect of working capital adjustments) prior to the Maturity Date, has a
final maturity which extends beyond the Maturity Date, and is subordinated to the
Obligations on terms reasonably acceptable to the Agents;




     (h) Indebtedness of any Person that becomes a Subsidiary of a Loan Party in a Permitted
Acquisition, which Indebtedness is existing at the time such Person becomes a Subsidiary of
a Loan Party (other than Indebtedness incurred solely in contemplation of such Person’s
becoming a Subsidiary of a Loan Party);




     (i) The Obligations;




     (j) Indebtedness incurred in the ordinary course of business in connection with the
financing of insurance premiums;




     (k) Deferred compensation payable to employees, officers or directors under any deferred
compensation plans; and




     (l) Indebtedness not specifically described herein in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding.



     “Permitted Investments” means each of the following:




     (a) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, readily marketable obligations issued or directly and
fully guaranteed or insured by the United States of America or any agency or instrumentality
thereof having maturities of not more than one (1) year from the date of acquisition
thereof; provided that the full faith and credit of the United States of America is
pledged in support thereof;




     (b) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, commercial paper issued by any Person organized under
the laws of any state of the United States of America and rated at least “Prime-1” (or the
then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P,
in each case with maturities of not more than 270 days from the date of acquisition thereof;




     (c) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, time deposits with, or insured certificates of deposit
or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized
under the laws of the United States of America, any state thereof or the District of
Columbia or is the principal banking subsidiary of a bank holding company organized under
the laws of the United States of America, any state thereof or the District of Columbia, and
is a member of the Federal Reserve System and (ii) has combined capital and surplus of at
least $500,000,000, in each case with maturities of not more than one (1) year from the date
of acquisition thereof;




     (d) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, fully collateralized repurchase agreements with a term
of not more than thirty (30) days for securities described in clause (a) above (without
regard to the limitation on maturity contained in such clause) and entered into with a
financial



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institution satisfying the criteria described in clause (c) above or with any
primary dealer and having a market value at the time that such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of such counterparty entity
with whom such repurchase agreement has been entered into;




     (e) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, Investments, classified in accordance with GAAP as
current assets of the Loan Parties, in any money market fund, mutual fund, or other
investment companies that are registered under the Investment Company Act of 1940, as
amended, which are administered by financial institutions satisfying the criteria described
in clause (c) above, and which invest solely in one or more of the types of securities
described in clauses (a) through (d) above;




     (f) Investments existing on the Closing Date, and set forth on Schedule 7.02, but
not any increase in the amount thereof or any other modification of the terms thereof;




     (g) (i) Investments by any Loan Party and its Subsidiaries in their respective Subsidiaries
outstanding on the date hereof, (ii) additional Investments by any Loan Party and its
Subsidiaries in Loan Parties (other than the Parent), (iii) Investments by any Loan Party in
the Parent consisting of advances or intercompany loans to pay expenses incurred by the
Parent on behalf of the Loan Parties with respect to director and officer compensation,
legal fees, taxes, insurance premiums, accounting audits, other public reporting expenses
and other usual and customary expenses of a holding company incurred in the ordinary course
of business and consistent with the business and activities permitted to be undertaken by the
Parent pursuant to Section 7.08(a) hereof, and (iv) additional Investments by Subsidiaries
of the Loan Parties that are not Loan Parties in other Subsidiaries that are not Loan
Parties;




     (h) Investments consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course of business,
and Investments received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent or limit
loss, or advances in connection with the purchase price of goods or services in the ordinary
course of business;




     (i) Guarantees constituting Permitted Indebtedness;




     (j) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, Investments by any Loan Party in Swap Contracts entered
into in the ordinary course of business and for bona fide business (and not speculative
purposes) to protect against fluctuations in interest rates or foreign exchange rates in a
notional principal amount not to exceed $25,000,000 in the aggregate at any time
outstanding;




     (k) Investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business;




     (l) Advances to officers, directors and employees of the Loan Parties and Subsidiaries in
the ordinary course of business in an amount not to exceed $250,000 to any individual at any
time or in an aggregate amount not to exceed $1,000,000 at any time outstanding, for travel,
entertainment, relocation and analogous ordinary business purposes;



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     (m) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, Investments constituting Permitted Acquisitions;




     (n) Capital contributions made by any Loan Party to another Loan Party;




     (o) Deposits made to secure performance of operating leases in the ordinary course of
business; and




     (p) As long as no Event of Default exists at the time such Investment is made or would arise
from the making of such Investment, Investments not otherwise permitted under any of the
foregoing clauses of this definition of Permitted Investments in an amount (valued at cost)
not to exceed $2,500,000 at any one time outstanding;


provided, however, that notwithstanding the foregoing, after the occurrence and
during the continuance of a Cash Dominion Event, further Investments under clauses (a) through (e)
shall no longer be permitted during such period unless (i) either (A) no Loans are then
outstanding, or (B) the Investment is a temporary Investment pending expiration of an Interest
Period for a LIBO Rate Loan, the proceeds of which Investment will be applied to the Obligations
after the expiration of such Interest Period, and (ii) such Investments are pledged to the
Collateral Agent as additional collateral for the Obligations pursuant to such agreements as may be
reasonably required by the Collateral Agent.



     “Permitted Overadvance” means an Overadvance made by the Administrative Agent, in its discretion,
which:




     (a) Is made to maintain, protect or preserve the Collateral and/or the Credit Parties’
rights under the Loan Documents or which is otherwise for the benefit of the Credit Parties;
or




     (b) Is made to enhance the likelihood of, or to maximize the amount of, repayment of any
Obligation;




     (c) Is made to pay any other amount chargeable to any Loan Party hereunder; and




     (d) Together with all other Permitted Overadvances then outstanding, shall not (i) exceed
ten percent (10%) of the Borrowing Base at any time or (ii) unless a Liquidation is
occurring, remain outstanding for more than forty-five (45) consecutive Business Days,
unless in each case, the Required Lenders otherwise agree;


provided however, that the foregoing shall not (i) modify or abrogate any of the
provisions of Section 2.03 regarding the Lenders’ obligations with respect to Letters of
Credit, or (ii) result in any claim or liability against the Administrative Agent (regardless of
the amount of any Overadvance) for Unintentional Overadvances, and such Unintentional Overadvances
shall not reduce the amount of Permitted Overadvances allowed hereunder, and further provided
that in no event shall the Administrative Agent make an Overadvance, if after giving effect
thereto, the principal amount of the Credit Extensions would exceed the Aggregate Commitments (as
in effect prior to any termination of the Commitments pursuant to Section 2.06 hereof).



     “Person” means any natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, limited partnership, Governmental Authority or other entity.



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     “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA)
established by the Lead Borrower or, with respect to any such plan that is subject to Section 412
of the Code or Title IV of ERISA, any ERISA Affiliate.



     “Platform” has the meaning specified in Section 6.02.



     “Prepayment Event” means:




     (a) Any Disposition of any property or asset of a Loan Party of the type included in the
Borrowing Base (other than sales of Inventory in the ordinary course of business);




     (b) Any casualty or other insured damage to, or any taking under power of eminent domain or
by condemnation or similar proceeding of, any property or asset of a Loan Party constituting
Collateral, unless (i) the proceeds therefrom are required to be paid to the holder of a
Lien on such property or asset having priority over the Lien of the Collateral Agent or (ii)
prior to the occurrence of a Cash Dominion Event, the proceeds therefrom are utilized for
purposes of replacing or repairing the assets in respect of which such proceeds, awards or
payments were received;




     (c) The issuance by a Loan Party of any Equity Interests, other than any such issuance of
Equity Interests (i) by the Parent or to a Loan Party, (ii) as consideration for a Permitted
Acquisition or (iii) as a compensatory issuance to any employee, director, or consultant
(including under any option plan);




     (d) The incurrence by a Loan Party of any Indebtedness for borrowed money other than
Permitted Indebtedness; or




     (e) The receipt by any Loan Party of any Extraordinary Receipts.



     “Pro Forma Adjusted Availability” shall mean, for any date of calculation, after giving pro forma
effect to the transaction then to be consummated or payment to be made, the projected Adjusted
Availability for the immediately following ninety (90) days.



     “Pro Forma Adjusted Availability Condition” shall mean, for any date of calculation with respect to
any transaction or payment, the Pro Forma Adjusted Availability following, and after giving effect
to, such transaction or payment, will be equal to or greater than $30,000,000.



     “Pro Forma Availability” shall mean, for any date of calculation, after giving pro forma effect to
the transaction then to be consummated or payment to be made, the projected Availability for the
immediately following ninety (90) days.



     “Pro Forma Availability Condition” shall mean, for any date of calculation with respect to any
transaction or payment, the Pro Forma Availability following, and after giving effect to, such
transaction or payment, will be equal to or greater than $10,000,000.



     “Public Lender” has the meaning specified in Section 6.02.



     “Real Estate” means all Leases and all land, together with the buildings, structures, parking
areas, and other improvements thereon, now or hereafter owned by any Loan Party, including all
easements, rights-of-way, and similar rights relating thereto and all leases, tenancies, and
occupancies thereof.



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     “Register” has the meaning specified in Section 10.06(c).



     “Registered Public Accounting Firm” has the meaning specified by the Securities Laws and shall be
independent of the Parent and its Subsidiaries as prescribed by the Securities Laws.



     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.



     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events
for which the 30 day notice period has been waived.



     “Reports” has the meaning provided in Section 9.12(b).



     “Request for Credit Extension” means (a) with respect to a Borrowing, Conversion or continuation of
Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of
Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.



     “Required Lenders” means, as of any date of determination, at least two Lenders holding more than
50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to
Section 8.02, at least two Lenders holding in the aggregate more than 50% of the Total
Outstandings (with the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition); provided that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender or Deteriorating Lender shall be
excluded from Aggregate Commitments and Total Outstandings for purposes of making a determination
of Required Lenders.



     “Reserves” means all (if any) Inventory Reserves and Availability Reserves (including, without
limitation, Bank Product Reserves and Cash Management Reserves).



     “Responsible Officer” means the chief executive officer, president, chief financial officer,
treasurer or assistant treasurer of a Loan Party or any of the other individuals designated in
writing to the Administrative Agent by an existing Responsible Officer of a Loan Party as an
authorized signatory of any certificate or other document to be delivered hereunder. Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.



     “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of any Person or any of its
Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement, defeasance,
acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to such Person’s stockholders, partners or members (or the
equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or
other distribution or payment. Without limiting the foregoing, “Restricted Payments” with respect
to any Person shall also include all payments made by such Person with any proceeds of a
dissolution or liquidation of such Person.



     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.
and any successor thereto.



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     “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.



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



     “Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934,
Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and
practices promulgated, approved or incorporated by the SEC or the PCAOB.



     “Security Agreement” means the Security Agreement dated as of the Closing Date among the Loan
Parties and the Collateral Agent.



     “Security Documents” means the Security Agreement, the Blocked Account Agreements, the DDA
Notifications, the Credit Card Notifications, and each other security agreement or other instrument
or document executed and delivered to the Collateral Agent pursuant to this Agreement or any other
Loan Document, and granting a Lien to secure any of the Obligations.



     “Settlement Date” has the meaning provided in Section 2.14(a).



     “Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity of
the Lead Borrower and its Subsidiaries as of that date determined in accordance with GAAP.



     “Shrink” means Inventory which has been lost, misplaced, stolen, or is otherwise unaccounted for.



     “Solvent” and “Solvency” means, with respect to any Person on a particular date, that on such date
(a) at fair valuation, all of the properties and assets of such Person are greater than the sum of
the debts (and for the purposes of this definition including contingent liabilities), of such
Person, (b) the present fair saleable value of the properties and assets of such Person is not less
than the amount that would be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person is able to realize upon its properties and assets
and pay its debts as they mature in the normal course of business, (d) such Person does not intend
to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such
debts mature, and (e) such Person is not engaged in a business or a transaction, and is not about
to engage in a business or transaction, for which such Person’s properties and assets would
constitute unreasonably small capital after giving due consideration to the prevailing practices in
the industry in which such Person is engaged. The amount of all contingent liabilities (including
guarantees) at any time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, can reasonably be expected to become an actual or matured
liability.



     “Standby Letter of Credit” means any Letter of Credit that is not a Commercial Letter of Credit and
that (a) is used in lieu or in support of performance guaranties or performance, surety or similar
bonds (excluding appeal bonds) arising in the ordinary course of business, (b) is used in lieu or
in support of stay or appeal bonds, (c) supports the payment of insurance premiums for reasonably
necessary casualty insurance carried by any of the Loan Parties, or (d) supports payment or
performance for identified purchases or exchanges of products or services in the ordinary course of
business.



     “Stated Amount” means at any time the maximum amount for which a Letter of Credit may be honored.



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     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the FRB to which the Administrative Agent is subject with respect to
the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages
shall include those imposed pursuant to such Regulation D. LIBO Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements without benefit of
or credit for proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any reserve percentage.



     “Store” means any retail store (which may include any real property, fixtures, equipment, inventory
and other property related thereto) operated, or to be operated, by any Loan Party.



     “Subordinated Indebtedness” means Indebtedness which is expressly subordinated in right of payment
to the prior payment in full of the Obligations and which is in form and on terms approved in
writing by the Administrative Agent.



     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company
or other business entity of which a majority of the shares Equity Interests having ordinary voting
power for the election of directors or other governing body are at the time beneficially owned, or
the management of which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party.



     “Supply Chain Financing” means any supply chain finance services including, without limitation,
trade payable services and supplier accounts receivable purchases.



     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.



     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into
account the effect of any legally enforceable netting agreement relating to such Swap Contracts,
(a) for any date on or after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior
to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for
such Swap Contracts, as determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or
any Affiliate of a Lender).



-40-









 





     “Swing Line” means the revolving credit facility made available by the Swing Line Lender pursuant
to Section 2.04.



     “Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.



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



     “Swing Line Loan” has the meaning specified in Section 2.04(a).



     “Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section
2.04(b), which, if in writing, shall be substantially in the form of Exhibit B.



     “Swing Line Note” means the promissory note of the Borrowers substantially in the form of
Exhibit C-2, payable to the order of the Swing Line Lender, evidencing the Swing Line Loans
made by the Swing Line Lender.



     “Swing Line Sublimit” means an amount equal to the lesser of (a) $20,000,000 and (b) the Aggregate
Commitments. The Swing Line Sublimit is part of, and not in addition to, the Aggregate
Commitments.



     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called
synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession
of property (including sale and leaseback transactions), in each case, creating obligations that do
not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief
Laws to such Person, would be characterized as the indebtedness of such Person (without regard to
accounting treatment).



     “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.



     “Termination Date” means the earliest to occur of (i) the Maturity Date, (ii) the date on which
the maturity of the Obligations is accelerated (or deemed accelerated) and the Commitments are
irrevocably terminated (or deemed terminated) in accordance with Article VII, or (iii) the
termination of the Commitments in accordance with the provisions of Section 2.06 hereof.



     “Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.



     “Trading with the Enemy Act” has the meaning set forth in Section 10.18.



     “Type” means, with respect to a Committed Loan, its character as a Base Rate Loan or a LIBO Rate
Loan.



     “UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time
in the State of New York; provided, however, that if a term is defined in Article 9 of the Uniform
Commercial Code differently than in another Article thereof, the term shall have the meaning set
forth in Article 9; provided further that, if by reason of mandatory provisions of law, perfection,
or the effect of perfection or non-perfection, of a security interest in any Collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than



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the State of New York, “Uniform Commercial Code” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection or availability of such
remedy, as the case may be.



     “UFCA” has the meaning specified in Section 10.21(d).



     “UFTA” has the meaning specified in Section 10.21(d).



     “Uncommitted Increase” has the meaning specified in Section 2.15(b).



     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section
4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.



     “Unintentional Overadvance” means an Overadvance which, to the Administrative Agent’s knowledge,
did not constitute an Overadvance when made but which has become an Overadvance resulting from
changed circumstances beyond the control of the Credit Parties, including, without limitation, a
reduction in the Appraised Value of property or assets included in the Borrowing Base or
misrepresentation by the Loan Parties.



     “United States” and “U.S.” mean the United States of America.



     “Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).



     “Wells Fargo” means Wells Fargo Bank, National Association and its successors.



     1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:




     (a) The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation.” The word “will” shall be construed to have the same meaning
and effect as the word “shall.” Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document (including any
Organization Document) shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified (subject to
any restrictions on such amendments, supplements or modifications set forth herein or in any
other Loan Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall be
construed to refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any
law shall include all statutory and regulatory provisions consolidating, amending replacing
or interpreting such law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to
time, and (vi) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer



-42-









 







to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.




     (b) In the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means
“to and including.”




     (c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this Agreement or
any other Loan Document.



     1.03 Accounting Terms




     (a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to this Agreement
shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from
time to time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.




     (b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan Document, and either
the Lead Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Lead Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in GAAP (subject
to the approval of the Required Lenders); provided that, until so amended,
(i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to
such change therein and (ii) the Lead Borrower shall provide to the Administrative Agent and
the Lenders financial schedules and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP.



     1.04 Rounding. Any financial ratios required to be maintained by the Borrowers pursuant to
this Agreement shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a rounding-up if there is no
nearest number).



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



     1.06 Letter of Credit Amounts. Unless otherwise specified, all references herein to the
amount of a Letter of Credit at any time shall be deemed to be the Stated Amount of such Letter of
Credit in effect at such time; provided, however, that with respect to any Letter of Credit that,
by its terms or the terms of any Issuer Documents related thereto, provides for one or more
automatic increases in the Stated Amount thereof, the amount of such Letter of Credit shall be
deemed to be the maximum Stated Amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum Stated Amount is in effect at such time.



-43-









 





ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS




     2.01 Committed Loans; Reserves. (a) Subject to the terms and conditions set forth
herein, each Lender severally agrees to make loans (each such loan, a “Committed Loan”) to
the Borrowers from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the lesser of (x) the amount of such
Lender’s Commitment, or (y) such Lender’s Applicable Percentage of the Borrowing Base; subject in
each case to the following limitations:




          (i) after giving effect to any Committed Borrowing, the Total Outstandings shall
not exceed the Loan Cap,




          (ii) after giving effect to any Committed Borrowing, the aggregate Outstanding Amount
of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of
the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such
Lender’s Commitment, and




          (iii) The Outstanding Amount of all L/C Obligations shall not at any time exceed the
Letter of Credit Sublimit.


Within the limits of each Lender’s Commitment, and subject to the other terms and conditions
hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.05,
and reborrow under this Section 2.01. Committed Loans may be Base Rate Loans or LIBO Rate
Loans, as further provided herein.


          (b) The Inventory Reserves and Availability Reserves as of the Closing Date are set forth
on the form of Borrowing Base Certificate attached hereto as Exhibit F.


          (c) The Administrative Agent shall have the right, at any time and from time to time after the
Closing Date in its reasonable discretion, to establish, modify or eliminate Reserves; provided
that, so long as no Event of Default has occurred and is continuing, the Administrative Agent
shall provide the Lead Borrower with three (3) days’ prior notice of any new Reserve or
modification to increase any existing Reserve (during which period the Administrative Agent shall
be available to discuss any such proposed Reserve with the Borrowers); provided further
that no such prior notice shall be required for (1) changes to any Reserves resulting solely by
virtue of mathematical calculations of the amount of the Reserve in accordance with the methodology
of calculation previously utilized (such as, but not limited to, rent and Customer Credit
Liabilities), or (2) changes to Reserves or establishment of additional Reserves if a Material
Adverse Effect has occurred or it would be reasonably likely that a Material Adverse Effect to the
Lenders would occur were such Reserve not changed or established prior to the expiration of such
three (3) day period.



     2.02 Borrowings, Conversions and Continuations of Committed Loans.


          (a) Committed Loans (other than Swing Line Loans) shall be either Base Rate Loans or LIBO Rate
Loans as the Lead Borrower may request subject to and in accordance with this Section 2.02.
All Swing Line Loans shall be only Base Rate Loans. Subject to the other provisions of this
Section 2.02, Committed Borrowings of more than one Type may be incurred at the same time.


          (b) Each Committed Borrowing, each Conversion of Committed Loans from one Type to the other,
and each continuation of LIBO Rate Loans shall be made upon the Lead Borrower’s irrevocable notice
to the Administrative Agent, which may be given by telephone. Each such notice must be received by
the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested
date of any Borrowing of, Conversion to or continuation of LIBO Rate Loans or of any



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Conversion of
LIBO Rate Loans to Base Rate Loans, and (ii) on the requested date (which shall be a Business Day)
of any Borrowing of Base Rate Loans. Each telephonic notice by the Lead Borrower pursuant to this
Section 2.02(b) must be confirmed promptly by delivery to the Administrative Agent of a
written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the
Lead Borrower. Each Borrowing of, Conversion to or continuation of LIBO Rate Loans shall be in a
principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as
provided in Sections 2.03(c) and 2.04(c), each Borrowing of or Conversion to Base
Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the
Lead Borrower is requesting a Committed Borrowing, a Conversion of Committed Loans from one Type to
the other, or a continuation of LIBO Rate Loans, (ii) the requested date of the Borrowing,
Conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal
amount of Committed Loans to be borrowed, Converted or continued, (iv) the Type of Committed Loans
to be borrowed or to which existing Committed Loans are to be Converted, and (v) if applicable, the
duration of the Interest Period with respect thereto. If the Lead Borrower fails to specify a Type
of Committed Loan in a Committed Loan Notice or if the Lead Borrower fails to give a timely notice
requesting a Conversion or continuation, then the applicable Committed Loans shall be made as, or
Converted to, Base Rate Loans. Any such automatic Conversion to Base Rate Loans shall be effective
as of the last day of the Interest Period then in effect with respect to the applicable LIBO Rate
Loans. If the Lead Borrower requests a Borrowing of, Conversion to, or continuation of LIBO Rate
Loans in any such Committed Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest Period of one
month. Notwithstanding anything to the contrary herein, a Swing Line Loan may not be Converted to
a LIBO Rate Loan.


          (c) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans,
and if no timely notice of a Conversion or continuation is provided by the Lead Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic Conversion to Base
Rate Loans described in Section 2.02(b). In the case of a Committed Borrowing, each Lender
shall make the amount of its Committed Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day
specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions
set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension,
Section 4.01), the Administrative Agent shall use reasonable efforts to make all funds so
received available to the Borrowers in like funds by no later than 4:00 p.m. on the day of receipt
by the Administrative Agent either by (i) crediting the account of the Lead Borrower on the books
of Wells Fargo with the amount of such funds or (ii) wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by
the Lead Borrower; provided, however, that if, on the date the Committed Loan
Notice with respect to such Borrowing is given by the Lead Borrower, there are L/C Borrowings
outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in
full of any such L/C Borrowings, and second, shall be made available to the Borrowers as
provided above.


          (d) The Administrative Agent, without the request of the Lead Borrower, may advance any
interest, fee, service charge, Credit Party Expenses, or other payment to which any Credit Party is
entitled from the Loan Parties pursuant hereto or any other Loan Document and may charge the same
to the Loan Account notwithstanding that an Overadvance may result thereby. The Administrative
Agent shall advise the Lead Borrower of any such advance or charge promptly after the making
thereof. Such action on the part of the Administrative Agent shall not constitute a waiver of the
Administrative Agent’s rights and the Borrowers’ obligations under Section 2.05(c). Any
amount which is added to the principal balance of the Loan Account as provided in this Section
2.02(d) shall bear interest at the interest rate then and thereafter applicable to Base Rate
Loans.



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          (e) Except as otherwise provided herein, a LIBO Rate Loan may be continued or Converted only
on the last day of an Interest Period for such LIBO Rate Loan. During the existence of a Default,
no Loans may be requested as, Converted to or continued as LIBO Rate Loans without the consent of
the Required Lenders.


          (f) The Administrative Agent shall promptly notify the Lead Borrower and the Lenders of the
interest rate applicable to any Interest Period for LIBO Rate Loans upon determination of such
interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall
notify the Lead Borrower and the Lenders of any change in Wells Fargo’s prime rate used in
determining the Base Rate promptly following the public announcement of such change.


          (g) After giving effect to all Committed Borrowings, all Conversions of Committed Loans from
one Type to the other, and all continuations of Committed Loans as the same Type, there shall not
be more than six Interest Periods in effect with respect to LIBO Loans.


          (h) The Administrative Agent, the Lenders, the Swing Line Lender and the L/C Issuer shall have
no obligation to make any Loan or to provide any Letter of Credit if an Overadvance would result.
The Administrative Agent may, in its discretion, make Permitted Overadvances without the consent of
the Borrowers, the Lenders, the Swing Line Lender and the L/C Issuer, and the Borrowers and each
Lender shall be bound thereby. Any Permitted Overadvance may constitute a Swing Line Loan. A
Permitted Overadvance is for the account of the Borrowers and shall constitute a Base Rate Loan and
an Obligation and shall be repaid by the Borrowers in accordance with the provisions of Section
2.05(c). The making of any such Permitted Overadvance on any one occasion shall not obligate
the Administrative Agent or any Lender to make or permit any Permitted Overadvance on any other
occasion or to permit such Permitted Overadvances to remain outstanding. The making by the
Administrative Agent of a Permitted Overadvance shall not modify or abrogate any of the provisions of
Section 2.03 regarding the Lenders’ obligations to purchase participations with respect to
Letter of Credits or of Section 2.04 regarding the Lenders’ obligations to purchase participations
with respect to Swing Line Loans. The Administrative Agent shall have no liability for, and no
Loan Party or Credit Party shall have the right to, or shall, bring any claim of any kind
whatsoever against the Administrative Agent with respect to Unintentional Overadvances regardless
of the amount of any such Overadvance(s).



     2.03 Letters of Credit.


          (a) The Letter of Credit Commitment.



               (i) Subject to the terms and conditions set forth herein, (A) the Administrative Agent,
in reliance upon the agreements of the Lenders set forth in this Section 2.03, shall
endeavor to cause the L/C Issuer from time to time on any Business Day during the period from the
Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account
of the Borrowers, and to amend or extend Letters of Credit previously issued by it, in accordance
with Section 2.03(b) below; and (B) the Lenders severally agree to participate in Letters of Credit
issued for the account of the Borrowers and any drawings thereunder; provided that after
giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total
Outstandings shall not exceed the Loan Cap, (y) the aggregate Outstanding Amount of the Committed
Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all Swing Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of
the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Lead
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation
by the Borrowers that the L/C Credit Extension so requested complies with the conditions set forth
in the proviso to the preceding sentence. Within the foregoing



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limits, and subject to the terms
and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving,
and accordingly the Borrowers may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit that have expired or that have been drawn upon and reimbursed.



               (ii) No Letter of Credit shall be issued if:




               (A) subject to Section 2.03(b)(iii), the expiry date of such
requested Standby Letter of Credit would occur more than twelve months after the date of
issuance or last extension, unless the Required Lenders have approved such expiry date; or




               (B) subject to Section 2.03(b)(iii), the expiry date of such
requested Commercial Letter of Credit would occur more than 120 days after the date of
issuance or last extension, unless the Required Lenders have approved such expiry date; or




               (C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless either such Letter of Credit is Cash Collateralized
on or prior to the date of issuance of such Letter of Credit (or such later date as to which
the Administrative Agent may agree) or all the Lenders have approved such expiry date.



               (iii) No Letter of Credit shall be issued without the prior consent of the
Administrative Agent if:




               (A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of
Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over the L/C
Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters
of credit generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement
(for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the L/C Issuer in good faith deems
material to it;




               (B) the issuance of such Letter of Credit would violate one or more policies
of the L/C Issuer applicable to letters of credit generally;




               (C) such Letter of Credit is to be denominated in a currency other than
Dollars; provided that if the L/C Issuer, in its discretion, issues a Letter of
Credit denominated in a currency other than Dollars, all reimbursements by the Borrowers of
the honoring of any drawing under such Letter of Credit shall be paid in the currency in
which such Letter of Credit was denominated;




               (D) such Letter of Credit contains any provisions for automatic reinstatement
of the Stated Amount after any drawing thereunder; or




               (E) a default of any Lender’s obligations to fund under Section
2.03(c) exists or any Lender is at such time a Defaulting Lender or Deteriorating Lender
hereunder, unless the Administrative Agent or L/C Issuer has entered into satisfactory
arrangements with the Borrowers or such Lender to eliminate the L/C Issuer’s risk with
respect to such Lender.



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               (iv) The Borrowers shall not permit any Letter of Credit to be amended if (A) the
L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form
under the terms hereof or (B) the beneficiary of such Letter of Credit does not accept the proposed
amendment to such Letter of Credit.



               (v) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of
the benefits and immunities (A) provided to the Administrative Agent in Article IX with
respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters
of Credit as fully as if the term “Administrative Agent” as used in Article IX included the
L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with
respect to the L/C Issuer.


          (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
Letters of Credit.



               (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Lead Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent)
in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible
Officer of the Lead Borrower. Such Letter of Credit Application must be received by the L/C Issuer
and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such other
date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in
their sole discretion) prior to the proposed issuance date or date of amendment, as the case may
be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the Administrative Agent and the L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business
Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the Administrative Agent or L/C Issuer may
require. In the case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to the Administrative
Agent and the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment
thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such
other matters as the Administrative Agent or the L/C Issuer may require. Additionally, the Lead
Borrower shall furnish to the L/C Issuer and the Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or amendment, including any
Issuer Documents, as the L/C Issuer or the Administrative Agent may require.



               (ii) Unless the L/C Issuer has received written notice from any Lender, the
Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of
issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions
contained in Article IV shall not then be satisfied, then, subject to the terms and
conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the
account of the applicable Borrower (or the applicable Loan Party) or enter into the applicable
amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary
business practices. Immediately upon the issuance or amendment of each Letter of Credit, each
Lender shall be deemed to (without any further action), and hereby irrevocably and unconditionally
agrees to, purchase from the L/C Issuer, without recourse or warranty, a risk participation in such
Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage
times the amount of such Letter of Credit. Upon any change in the Commitments under this
Agreement, it is hereby agreed that with respect to all L/C Obligations, there shall be an



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automatic adjustment to the participations hereby created to reflect the new Applicable Percentages
of the assigning and assignee Lenders.



               (iii) If the Lead Borrower so requests in any applicable Letter of Credit Application, the
L/C
Issuer shall issue a Standby Letter of Credit that has automatic extension provisions (each, an
“Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of
Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month
period (commencing with the date of issuance of
such Standby Letter of Credit) by giving prior notice to the beneficiary thereof not later
than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed
upon at the time such Standby Letter of Credit is issued. Unless otherwise directed by the
Administrative Agent or the L/C Issuer, the Lead Borrower shall not be required to make a specific
request to the Administrative Agent or the L/C Issuer for any such extension. Once an
Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized
(but may not require) the L/C Issuer to permit the extension of such Standby Letter of Credit at
any time to an expiry date not later than the Letter of Credit Expiration Date; provided,
however, that the Administrative Agent shall instruct the L/C Issuer not to permit any such
extension if (A) the Administrative Agent has determined that it would not be permitted, or would
have no obligation, at such time to endeavor to cause the L/C Issuer to issue such Standby Letter
of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of
clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) the L/C Issuer has received
notice (which may be by telephone or in writing) on or before the day that is five Business Days
before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders
have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the
Lead Borrower that one or more of the applicable conditions specified in Section 4.02 is
not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.



               (iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C
Issuer will also deliver to the Lead Borrower and the Administrative Agent a true and complete copy
of such Letter of Credit or amendment.


          (c) Drawings and Reimbursements; Funding of Participations.



               (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit, the Administrative Agent shall notify the Lead Borrower thereof;
provided, however, that any failure to give or delay in giving such notice shall
not relieve the Borrowers of their obligation to reimburse the L/C Issuer and the Lenders with
respect to any such payment. Not later than 2:00 p.m. on the date of any payment by the L/C Issuer
under a Letter of Credit (each such date, an “Honor Date”), the Borrowers shall reimburse
the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing.
If the Borrowers fail to so reimburse the L/C Issuer by such time, the Administrative Agent shall
promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the
“Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof. In
such event, the Borrowers shall be deemed to have requested a Committed Borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without
regard to the minimum and multiples specified in Section 2.02 for the principal amount of
Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments
and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan
Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this
Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.



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               (ii) Each Lender shall upon any notice from the Administrative Agent pursuant to
Section 2.03(c)(i) make funds available to the Administrative Agent for the account of the
L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable Percentage of
the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by
the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii),
each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the
Borrowers in such amount. The Administrative Agent shall remit the funds so received to the L/C
Issuer.



               (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Committed Borrowing of Base Rate Loans because the conditions set forth in Section 4.02
cannot be satisfied or for any other reason, the Borrowers shall be deemed to have incurred from
the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced,
which L/C Borrowing shall be due and payable on demand (together with interest) and shall, unless
Cash Collateralized in accordance with Section 2.03(g) hereof, bear interest at the Default Rate.
In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer
pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.



               (iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this
Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely
for the account of the L/C Issuer.



               (v) Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse
the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section
2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may
have against the L/C Issuer, any Borrower or any other Person for any reason whatsoever; (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or
not similar to any of the foregoing; provided, however, that each Lender’s
obligation to make Committed Loans pursuant to this Section 2.03(c) is subject to the
conditions set forth in Section 4.02 (other than delivery by the Lead Borrower of a
Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the
obligation of the Borrowers to reimburse the L/C Issuer for the amount of any payment made by the
L/C Issuer under any Letter of Credit, together with interest as provided herein.



               (vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative
Agent), on demand, such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the L/C Issuer at a rate per
annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in
accordance with banking industry rules on interbank compensation plus any administrative,
processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing.
If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance
in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer
submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under
this clause (vi) shall be conclusive absent manifest error.



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          (d) Repayment of Participations.



               (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and
has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance
with Section 2.03(c), if the Administrative Agent receives for the account of the L/C
Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether
directly from the Borrowers or otherwise, including proceeds of cash collateral applied thereto by
the Administrative Agent pursuant to Section 2.03(g)), the Administrative Agent will distribute to
such Lender its Applicable Percentage thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in
the same funds as those received by the Administrative Agent.



               (ii) If any payment received by the Administrative Agent for the account of the L/C
Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the
circumstances described in Section 10.05 (including pursuant to any settlement entered into
by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the
account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent,
plus interest thereon from the date of such demand to the date such amount is returned by such
Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The
obligations of the Lenders under this clause shall survive the payment in full of the Obligations
and the termination of this Agreement.


          (e) Obligations Absolute. The obligation of the Borrowers to reimburse the L/C
Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be
absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances, including the following:



               (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other Loan Document;



               (ii) the existence of any claim, counterclaim, setoff, defense or other right that
the Borrowers or any Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be
acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;



               (iii) any draft, demand, certificate or other document presented under such Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such Letter of Credit;



               (iv) any payment by the L/C Issuer under such Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or
any payment made by
the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or
other representative of or successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any Debtor Relief Law;



               (v) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrowers or any of their Subsidiaries; or



               (vi) the fact that any Event of Default shall have occurred and be continuing.



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     The Lead Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto
that is delivered to it and, in the event of any claim of noncompliance with the Lead Borrower’s
instructions or other irregularity, the Lead Borrower will immediately notify the Administrative
Agent and the L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such claim
against the L/C Issuer and its correspondents unless such notice is given as aforesaid.


          (f) Role of L/C Issuer. Each Lender and the Borrowers agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the L/C Issuer, the
Administrative Agent, any of their respective Related Parties nor any correspondent, participant or
assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; (iii) any error, omission, interruption, loss or delay in transmission or delivery of
any draft, notice or other communication under or relating to any Letter of Credit or any error in
interpretation of technical terms; or (iv) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or Issuer Document.
The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee
with respect to its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the Borrowers’ pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under any other agreement.
None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of
the matters described in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding, the Borrowers may
have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrowers, to the
extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrowers which the Borrowers prove were caused by the L/C Issuer’s willful
misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any notice or information to
the contrary (or the L/C Issuer may refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit), and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective
for any reason.


          (g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing that remains outstanding, or (ii) if, as of the Letter of Credit
Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrowers shall, in
each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations.
Sections 2.05 and 8.02(c) set forth certain additional requirements to deliver Cash
Collateral hereunder. For purposes of this Section 2.03, Section 2.05 and
Section 8.02(c), “Cash Collateralize” means to pledge and deposit
with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the
Lenders, as collateral for the L/C Obligations, cash or deposit account balances in an amount equal
to 105% of the Outstanding Amount of all L/C Obligations, pursuant to documentation in form and
substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby
consented to by the Lenders). The Borrowers hereby grant to the Collateral Agent a security
interest in all such cash, deposit accounts and



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all balances therein and all proceeds of the
foregoing to secure the Obligations. Such cash collateral shall be maintained in blocked,
non-interest bearing deposit accounts at Wells Fargo except that Permitted Investments of the type
listed in clauses (a) through (f) of the definition thereof may be made at the request of the Lead
Borrower at the option and in the sole discretion of the Administrative Agent (and at the
Borrowers’ risk and expense); interest or profits, if any, on such investments shall accumulate in
such account. If at any time the Administrative Agent determines that any funds held as cash
collateral are subject to any right or claim of any Person other than the Administrative Agent or
that the total amount of such funds is less than the aggregate Outstanding Amount of all L/C
Obligations, the Borrowers will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited as cash collateral, an amount equal to
the excess of (x) such aggregate Outstanding Amount over (y) the total amount of funds, if any,
then held as cash collateral that the Administrative Agent determines to be free and clear of any
such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as
cash collateral, such funds shall be applied, to the extent permitted under applicable Laws, to
reimburse the L/C Issuer and, to the extent not so applied, shall thereafter be applied to satisfy
other Obligations.


          (h) Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C Issuer
and the Lead Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to
each Standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for
Documentary Credits, as most recently published by the International Chamber of Commerce at the
time of issuance shall apply to each Commercial Letter of Credit.


          (i) Letter of Credit Fees. The Borrowers shall pay to the Administrative Agent for
the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the
“Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Margin
times the daily Stated Amount under each such Letter of Credit (whether or not such maximum
amount is then in effect under such Letter of Credit). For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of the Letter of Credit shall be
determined in accordance with Section 1.06. Letter of Credit Fees shall be (i) due and
payable on the first day after the end of each month commencing with the first such date to occur
after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter
on demand, and (ii) computed on a monthly basis in arrears. If there is any change in the
Applicable Margin during any quarter, the daily amount available to be drawn under of each Letter
of Credit shall be computed and multiplied by the Applicable Margin separately for each period
during such quarter that such Applicable Margin was in effect. Notwithstanding anything to the
contrary contained herein, while any Event of Default exists, all Letter of Credit Fees shall
accrue at the Default Rate as provided in Section 2.12(b) hereof unless all outstanding
Letters of Credit have been Cash Collateralized as provided in Section 2.03(g) hereof.


          (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The
Borrowers shall pay to the Administrative Agent, for the account of the L/C Issuer, a fronting fee
(the “Fronting Fee”) (i) with respect to each Commercial Letter of Credit, at a rate equal
to 0.125% per annum, computed on the amount of such Letter of Credit, and payable upon the issuance
or amendment thereof, and (ii) with respect to each Standby Letter of Credit, at a rate equal to
0.125% per annum, computed on the daily amount available to be drawn under such Letter of Credit
and on a monthly basis in arrears. Such Fronting Fees shall be due and payable on the first day
after the end of each month, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For
purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount
of the Letter of Credit shall be determined in accordance with Section 1.06. In addition,
the Borrowers shall pay to the Administrative Agent, for the
account of the L/C Issuer, the customary issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of
credit as from time to time in 


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effect. Such customary fees and standard costs and charges are due
and payable on demand and are nonrefundable.


          (k) Conflict with Issuer Documents. In the event of any conflict between the terms
hereof and the terms of any Issuer Document, the terms hereof shall control.



     2.04 Swing Line Loans.


          (a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing
Line Lender may, in reliance upon the agreements of the other Lenders set forth in this Section
2.04, make loans (each such loan, a “Swing Line Loan”) to the Borrowers from time to
time on any Business Day during the Availability Period in an aggregate amount not to exceed at any
time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing
Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Committed
Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such
Lender’s Commitment; provided, however, that after giving effect to any Swing Line
Loan, (i) the Total Outstandings shall not exceed the Loan Cap, and (ii) the aggregate Outstanding
Amount of the Committed Loans of any Lender at such time, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all L/C Obligations at such time, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such time shall
not exceed such Lender’s Commitment, and provided, further, that the Borrowers
shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan, and
provided further that the Swing Line Lender shall not be obligated to make any Swing Line
Loan at any time when any Lender is at such time a Defaulting Lender or Deteriorating Lender
hereunder, unless the Swing Line Lender has entered into satisfactory arrangements with the
Borrower or such Lender to eliminate the Swing Line Lender’s risk with respect to such Lender.
Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrowers
may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under
this Section 2.04. Each Swing Line Loan shall bear interest only at a rate based on the
Base Rate. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable
Percentage multiplied by the amount of such Swing Line Loan. The Swing Line Lender shall have all
of the benefits and immunities (A) provided to the Administrative Agent in Article IX with
respect to any acts taken or omissions suffered by the Swing Line Lender in connection with Swing
Line Loans made by it or proposed to be made by it as if the term “Administrative Agent” as used in
Article IX included the Swing Line Lender with respect to such acts or omissions, and (B)
as additionally provided herein with respect to the Swing Line Lender.


          (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Lead
Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be
given by telephone. Each such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 2:00 p.m. on the requested borrowing date, and shall specify
(i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested
borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed
promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line
Loan Notice, appropriately completed and signed by a Responsible Officer of the Lead Borrower.
Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing
Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line
Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof.
Unless the Swing Line Lender has received notice (by telephone or in writing) from the
Administrative Agent at the request of the Required Lenders prior to 2:00 p.m. on the date of the
proposed Swing Line Borrowing (A) directing the Swing Line Lender not to



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make such Swing Line Loan
as a result of the limitations set forth in the proviso to the first sentence of Section
2.04(a), or (B) that one or more of the applicable conditions specified in Article IV
is not then
satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender may, not
later than 4:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the
amount of its Swing Line Loan available to the Borrowers at its office by crediting the account of
the Lead Borrower on the books of the Swing Line Lender in immediately available funds.


          (c) Refinancing of Swing Line Loans.



               (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on
behalf of the Borrowers (which hereby irrevocably authorize the Swing Line Lender to so request on
their behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s
Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be
made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes
hereof) and in accordance with the requirements of Section 2.02, without regard to the
minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to
the unutilized portion of the Aggregate Commitments and the conditions set forth in Section
4.02. The Swing Line Lender shall furnish the Lead Borrower with a copy of the applicable
Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each
Lender shall make an amount equal to its Applicable Percentage of the amount specified in such
Committed Loan Notice available to the Administrative Agent in immediately available funds for the
account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on
the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii),
each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the
Borrowers in such amount. The Administrative Agent shall remit the funds so received to the Swing
Line Lender.



               (ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed
Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Loans submitted
by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line
Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and
each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant
to Section 2.04(c)(i) shall be deemed payment in respect of such participation.



               (iii) If any Lender fails to make available to the Administrative Agent for the
account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the
foregoing provisions of this Section 2.04(c) by the time specified in Section
2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the period from the
date such payment is required to the date on which such payment is immediately available to the
Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by the Swing Line Lender in accordance with banking industry rules on interbank
compensation plus any administrative, processing or similar fees customarily charged by the Swing
Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and
fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in
the relevant Committed Borrowing or funded participation in the relevant Swing Line Loan, as the
case may be. A certificate of the Swing Line Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive
absent manifest error.



               (iv) Each Lender’s obligation to make Committed Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any setoff,
counterclaim,



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recoupment, defense or other right which such Lender may have against the Swing Line
Lender, the Borrowers or any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided, however, that each Lender’s obligation to make
Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in
Section 4.02. No such funding of risk participations shall relieve or otherwise impair the
obligation of the Borrowers to repay Swing Line Loans, together with interest as provided herein.


          (d) Repayment of Participations.



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



               (ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of
the circumstances
described in Section 10.05 (including pursuant to any settlement entered into by the
Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of
such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds
Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender.
The obligations of the Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.


          (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing the Borrowers for interest on the Swing Line Loans. Until each Lender
funds its Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance
such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable
Percentage shall be solely for the account of the Swing Line Lender.


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



     2.05 Prepayments.


          (a) The Borrowers may, upon irrevocable notice from the Lead Borrower to the Administrative
Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part
without premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of LIBO Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any
prepayment of LIBO Rate Loans shall be in a principal amount of $3,000,000 or a whole multiple of
$1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify the date and
amount of such prepayment and the Type(s) of Loans to be prepaid and, if LIBO Rate Loans, the
Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such
prepayment. If such notice is given by the Lead Borrower, the Borrowers shall make such prepayment
and the payment amount specified in such notice shall be due and payable on



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the date specified
therein. Any prepayment of a LIBO Rate Loan shall be accompanied by all accrued interest on the
amount prepaid, together with any additional amounts required pursuant to Section 3.05.
Each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with
their respective Applicable Percentages.


          (b) The Borrowers may, upon irrevocable notice from the Lead Borrower to the Swing Line Lender
(with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided that (i) such
notice must be received by the Swing Line Lender and the Administrative Agent not later than 2:00
p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal
amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If
such notice is given by the Lead Borrower, the Borrowers shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified therein.


          (c) If for any reason the Total Outstandings at any time exceed the Loan Cap as then in
effect, the Borrowers shall immediately prepay Loans, Swing Line Loans and L/C Borrowings and/or
Cash Collateralize the L/C Obligations (other than L/C Borrowings) in an aggregate amount equal to
such excess; provided, however, that the Borrowers shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the
prepayment in full of the Loans the Total Outstandings exceed the Loan Cap as then in effect.


          (d) The Borrowers shall prepay the Loans and Cash Collateralize the L/C Obligations in
accordance with the provisions of Section 6.13 hereof.


          (e) Unless such net proceeds are deposited by the Loan Parties in a DDA which is subject to a
Blocked Account Agreement, the Borrowers shall prepay the Loans and Cash Collateralize the L/C
Obligations in an amount equal to the net proceeds received by a Loan Party on account of any
Prepayment Event occurring pursuant to clause (a) of the definition thereof, irrespective of
whether a Cash Dominion Event then exists and is continuing.


          (f) Prepayments made pursuant to Section 2.05(c) and (d) above, first, shall
be applied ratably to the L/C Borrowings and the Swing Line Loans, second, shall be applied
ratably to the outstanding Committed Loans, third, shall be used to Cash Collateralize the
remaining L/C Obligations; and, fourth, the amount remaining, if any, after the prepayment
in full of all L/C Borrowings, Swing Line Loans and Committed Loans outstanding at such time and
the Cash Collateralization of the remaining L/C Obligations in full may be retained by the
Borrowers for use in the ordinary course of its business. Upon the drawing of any Letter of Credit
that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any
further action by or notice to or from the Borrowers or any other Loan Party) to reimburse the L/C
Issuer or the Lenders, as applicable.




2.06 Termination or Reduction of Commitments. (a) The Borrowers may, upon
irrevocable notice from the Lead Borrower to the Administrative Agent, terminate the
Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit or from time
to time permanently reduce the Aggregate Commitments, the Letter of Credit Sublimit or the
Swing Line Sublimit; provided that (i) any such notice shall be received by the
Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of
termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of
$10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrowers shall
not terminate or reduce (A) the Aggregate Commitments if, after giving effect thereto and to
any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate
Commitments, (B) the Letter of Credit Sublimit if, after giving effect thereto, the
Outstanding Amount of L/C Obligations not fully Cash



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Collateralized hereunder would exceed
the Letter of Credit Sublimit, and (C) the Swing Line Sublimit if, after giving effect
thereto, and to any concurrent payments hereunder, the Outstanding Amount of Swing Line
Loans hereunder would exceed the Swing Line Sublimit.




     (b) If, after giving effect to any reduction of the Aggregate Commitments, the Letter
of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate
Commitments, such Letter of Credit Sublimit or Swing Line Sublimit shall be automatically
reduced by the amount of such excess.




     (c) The Administrative Agent will promptly notify the Lenders of any termination or
reduction of the Letter of Credit Sublimit, Swing Line Sublimit or the Aggregate Commitments
under this Section 2.06. Upon any reduction of the Aggregate Commitments, the
Commitment of each Lender shall be reduced by such Lender’s Applicable Percentage of such
reduction amount. All fees (including, without limitation, commitment fees and Letter of
Credit Fees) and interest in respect of the Aggregate Commitments accrued until the
effective date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.



     2.07 Repayment of Loans.


          (a) The Borrower shall repay to the Lenders on the Termination Date the aggregate principal
amount of Committed Loans outstanding on such date.


          (b) To the extent not previously paid, the Borrower shall repay the outstanding balance of the
Swing Line Loans on the Termination Date.



     2.08 Interest.


          (a) Subject to the provisions of Section 2.08(b) below, (i) each LIBO Rate Loan shall
bear interest on the outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Adjusted LIBO Rate for such Interest Period plus the Applicable Margin;
(ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Margin; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount
thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Margin.


          (b) (i) If any amount payable under any Loan Document is not paid when due (without regard to
any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such
amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal
to the Default Rate to the fullest extent permitted by applicable Laws.



               (ii) If any other Event of Default exists, then the Administrative Agent may, and upon the
request of the Required Lenders shall, notify the Lead Borrower that the aggregate amount of all
Credit Extensions then outstanding shall thereafter bear interest at a fluctuating interest rate
per annum at all times equal to the Default Rate, and thereafter such Obligations shall bear
interest at the Default Rate to the fullest extent permitted by applicable Laws.



               (iii) Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.


          (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment
Date applicable thereto and at such other times as may be specified herein. Interest hereunder



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shall be due and payable in accordance with the terms hereof before and after judgment, and before
and after the commencement of any proceeding under any Debtor Relief Law.



     2.09 Fees. In addition to certain fees described in subsections (i) and (j) of Section
2.03:


          (a) Commitment Fee. The Borrowers shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the
Applicable Commitment Fee Percentage multiplied by the actual daily amount by which the Aggregate
Commitments exceed the Total Outstandings. The commitment fee shall accrue at all times during the
Availability Period, including at any time during which one or more of the conditions in
Article IV is not met, and shall be due and payable quarterly in arrears on the first day
after the end of each March, June, September and December, commencing with the first such date to
occur after the Closing Date, and on the last day of the Availability Period. The commitment fee
shall be calculated quarterly in arrears.


          (b) Other Fees. The Borrowers shall pay to the Arranger and the Administrative Agent
for their own respective accounts fees in the amounts and at the times specified in the Fee Letter.
Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.



     2.10 Computation of Interest and Fees. All computations of interest for Base Rate Loans when
the Base Rate is determined by Wells Fargo’s “prime rate” shall be made on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed. Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any
portion thereof, for the day on which the Loan or such portion is paid, provided that any
Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a),
bear interest for one day. Each determination by the Administrative Agent of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest error.



     2.11 Evidence of Debt.


          (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by the Administrative Agent (the “Loan Account”) in the ordinary course
of business. In addition, each Lender may record in such Lender’s internal records, an appropriate
notation evidencing the date and amount of each Loan from such Lender, each payment and prepayment
of principal of any such Loan, and each payment of interest, fees and other amounts due in
connection with the Obligations due to such Lender. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the
Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In
the event of any conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrowers shall execute and
deliver to such Lender (through the Administrative Agent) a Note, which
shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may
attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and
maturity of its Loans and payments with respect thereto. Upon receipt of an affidavit of a Lender
as to the loss, theft, destruction or mutilation of such Lender’s Note and upon cancellation of
such Note, the Borrowers will issue, in lieu thereof, a replacement Note in favor of such Lender,
in the same principal amount thereof and otherwise of like tenor.



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          (b) In addition to the accounts and records referred to in Section 2.11(a), each
Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts
or records evidencing the purchases and sales by such Lender of participations in Letters of Credit
and Swing Line Loans. In the event of any conflict between the accounts and records maintained by
the Administrative Agent and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of manifest error.



     2.12 Payments Generally; Administrative Agent’s Clawback.


          (a) General. All payments to be made by the Borrowers shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly
provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office. All payments received by the Administrative
Agent after 2:00 p.m. shall, at the option of the Administrative Agent, be deemed received on the
next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any
payment to be made by the Borrowers shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.


          (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing of LIBO Rate Loans (or in the case of any Borrowing of Base Rate Loans, prior to 12:00
noon on the date of such Borrowing) that such Lender will not make available to the Administrative
Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with Section 2.02 (or in the case
of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance
with and at the time required by Section 2.02) and may, in reliance upon such assumption,
make available to the Borrowers a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Committed Borrowing available to the Administrative Agent, then
the applicable Lender and the Borrowers severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount in immediately available funds with interest thereon,
for each day from and including the date such amount is made available to the Borrowers to but
excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be
made by such Lender, the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank compensation plus any
administrative processing or similar fees customarily charged by the Administrative Agent in
connection with the foregoing, and (B) in the case of a payment to be made by the Borrowers, the
interest rate applicable to Base Rate Loans. If the Borrowers and such Lender shall pay such
interest to the Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for
such period. If such Lender pays its share of the applicable Committed Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan
included in such Committed Borrowing. Any payment by the Borrowers shall be without prejudice to
any claim the Borrowers may have against a Lender that shall have failed to make such payment to
the Administrative Agent.



               (ii) Payments by Borrowers; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Lead Borrower prior to the time at which



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any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer
hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that
the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due.
In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the
L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds
with interest thereon, for each day from and including the date such amount is distributed to it to
but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation.



     A notice of the Administrative Agent to any Lender or the Lead Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest error.


          (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the Borrowers by
the Administrative Agent because the conditions to the applicable Credit Extension set forth in
Article IV are not satisfied or waived in accordance with the terms hereof (subject to the
provisions of the last paragraph of Section 4.02 hereof), the Administrative Agent shall
return such funds (in like funds as received from such Lender) to such Lender, without interest.


          (d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make
Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make
payments hereunder are several and not joint. The failure of any Lender to make any Committed
Loan, to fund any such participation or to make any payment hereunder on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date,
and no Lender shall be responsible for the failure of any other Lender to so make its Committed
Loan, to purchase its participation or to make its payment hereunder.


          (e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain
the funds for any Loan in any particular place or manner or to constitute a representation by any
Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.



     2.13 Sharing of Payments by Lenders. If any Credit Party shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal of, interest on, or
other amounts with respect to, any of the Obligations resulting in such Lender’s receiving payment
of a proportion of the aggregate amount of such Obligations greater than its pro
rata share thereof as provided herein (including as in contravention of the priorities of
payment set forth in Section 8.03), then the Credit Party receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Obligations of the other Credit Parties, or make such other adjustments as
shall be equitable, so that the benefit of all such payments shall be shared by the Credit Parties
ratably and in the priorities set forth in Section 8.03, provided that:




     (i) if any such participations or subparticipations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the extent of such
recovery, without interest; and




     (ii) the provisions of this Section shall not be construed to apply to (x)
any payment made by the Loan Parties pursuant to and in accordance with the express terms of
this Agreement



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or (y) any payment obtained by a Lender as consideration for the assignment
of or sale of a participation in any of its Committed Loans or subparticipations in L/C
Obligations or Swing Line Loans to any assignee or participant, other than to the Borrowers
or any Subsidiary thereof (as to which the provisions of this Section shall apply).



     Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under
applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against such Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of
such participation.



     2.14 Settlement Amongst Lenders.




     (a) The amount of each Lender’s Applicable Percentage of outstanding Loans (including
outstanding Swing Line Loans, shall be computed no less frequently than weekly (or more
frequently in the Administrative Agent’s discretion) and shall be adjusted upward or
downward based on all Loans (including Swing Line Loans) and repayments of Loans (including
Swingline Loans) received by the Administrative Agent as of 3:00 p.m. on the first Business
Day (such date, the “Settlement Date”) following the end of the period specified by
the Administrative Agent.




     (b) The Administrative Agent shall deliver to each of the Lenders promptly after a
Settlement Date a summary statement of the amount of outstanding Committed Loans and Swing
Line Loans for the period and the amount of repayments received for the period. As
reflected on the summary statement, (i) the Administrative Agent shall transfer to each
Lender its Applicable Percentage of repayments, and (ii) each Lender shall transfer to the
Administrative Agent (as provided below) or the Administrative Agent shall transfer to each
Lender, such amounts as are necessary to insure that, after giving effect to all such
transfers, the amount of Committed Loans made by each Lender shall be equal to such Lender’s
Applicable Percentage of all Committed Loans outstanding as of such Settlement Date. If the
summary statement requires transfers to be made to the Administrative Agent by the Lenders
and is received prior to 1:00 p.m. on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 p.m. that day; and, if received after 1:00
p.m., then no later than 3:00 p.m. on the next Business Day. The obligation of each Lender
to transfer such funds is irrevocable, unconditional and without recourse to or warranty by
the Administrative Agent. If and to the extent any Lender shall not have so made its
transfer to the Administrative Agent, such Lender agrees to pay to the Administrative Agent,
forthwith on demand such amount, together with interest thereon, for each day from such date
until the date such amount is paid to the Administrative Agent, equal to the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation plus any administrative, processing, or
similar fees customarily charged by the Administrative Agent in connection with the
foregoing.



     2.15 Increase in Commitments.


          (a) Committed Increase. Provided no Default or Event of Default then exists or would
arise therefrom, upon notice to the Administrative Agent, the Lead Borrower may from time to time
request an increase in the Aggregate Commitments by an amount (for all such requests) not exceeding
$25,000,000 (the “Committed Increase”); provided that (i) any such Committed
Increase shall be in a minimum amount of $5,000,000, (ii) the amount of the Aggregate Commitments,
as the same may be increased pursuant to any Committed Increase and/or Uncommitted Increase, shall
not exceed $200,000,000 at any time, and (iii) the Lead Borrower may make a maximum of five such
requests. Any 



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such Committed Increase shall be effectuated as soon as reasonably practicable after
the request of the Lead Borrower therefor. Any such Committed Increase shall be provided solely by
Wells Fargo (or any permitted assignee or Participant of Wells Fargo) and shall otherwise be on the
same terms as the existing facility under this Agreement; provided that the upfront fees
payable in connection with any such Committed Increase shall be in an amount equal to the upfront
fees payable to Wells Fargo under the Fee Letter.


          (b) Uncommitted Increase.


               (i) Request for Increase. Provided no Default or Event of Default then
exists
or would arise therefrom, upon notice to the Administrative Agent (which shall promptly
notify the Lenders), the Lead Borrower may, from time to time, request an increase in the
Aggregate Commitments by an amount equal to $60,000,000 less the aggregate amount of all
Committed Increases made pursuant to Section 2.15(a) hereof (the “Uncommitted
Increase”, and, together with all Committed Increases, collectively, the “Commitment
Increases”); provided that (i) any such request for an increase shall be in a
minimum amount of $10,000,000, (ii) the Lead Borrower may make a maximum of six (6)
requests, and (iii) the amount of the Aggregate
Commitments, as the same may be increased pursuant to any Committed Increase and/or
this Section 2.15(b), shall not exceed $200,000,000 at any time. At the time of
sending such notice, the Lead Borrower (in consultation with the Administrative Agent) shall
specify the time period within which each Lender is requested to respond (which shall in no
event be less than ten Business Days from the date of delivery of such notice to the
Lenders).


               (ii) Lender Elections to Increase. Each Lender shall notify the
Administrative
Agent within such time period whether or not it agrees to increase its Commitment and, if
so, whether by an amount equal to, greater than, or less than its Applicable Percentage of
such requested increase. Any Lender not responding within such time period shall be deemed
to have declined to increase its Commitment.


               (iii) Notification by Administrative Agent; Additional Lenders. The
Administrative Agent shall notify the Lead Borrower and each Lender of the Lenders’
responses to any request made hereunder. To achieve the full amount of a requested increase
and subject to the approval of the Administrative Agent, the L/C Issuer and the Swing Line
Lender (which approvals shall not be unreasonably withheld), to the extent that the existing
Lenders decline to increase their Commitments, or decline to increase their Commitments to
the amount requested by the Lead Borrower, the Administrative Agent, in consultation with
the Lead Borrower, will use its reasonable efforts to arrange for other Eligible Assignees
to become a Lender hereunder and to issue commitments in an amount equal to the amount of
the increase in the Aggregate Commitments requested by the Lead Borrower and not accepted by
the existing Lenders (and the Lead Borrower may also invite additional Eligible Assignees to
become Lenders) (each such Eligible Assignee, an “Additional Commitment Lender”),
provided, however, that without the consent of the Administrative Agent, at no time shall
the Commitment of any Additional Commitment Lender be less than $10,000,000.


          (c) Effective Date and Allocations. If the Aggregate Commitments are increased in
accordance with this Section, the Administrative Agent, in consultation with the Lead Borrower,
shall determine the effective date (the “Increase Effective Date”) and, with respect to any
increase made pursuant to Section 2.15(b) hereof, the final allocation of such increase.
The Administrative Agent shall promptly notify the Lead Borrower and the Lenders of the final
allocation of such increase made pursuant to Section 2.15(b) hereof and the Increase
Effective Date and on the Increase Effective Date (i) the Aggregate Commitments under, and for all
purposes of, this Agreement shall be increased by the



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aggregate amount of such Commitment
Increases, and (ii) Schedule 2.01 shall be deemed modified, without further action, to
reflect the revised Commitments and Applicable Percentages of the Lenders.


          (d) Conditions to Effectiveness of Commitment Increase. As a condition precedent to
any such Commitment Increase, (i) the Lead Borrower shall deliver to the Administrative Agent a
certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for
each Lender) signed by a Responsible Officer of such Loan Party (A) certifying and attaching the
resolutions adopted by such Loan Party approving or consenting to such Commitment Increase, and (B)
in the case of the Borrowers, certifying that, before and after giving effect to such Commitment
Increase, (1) the representations and warranties contained in Article V and the other Loan
Documents are true and correct on and as of the Increase Effective Date, except to the extent that
such representations and warranties specifically refer to an earlier date, in which case they are
true and correct as of such earlier date, and except that for purposes of this Section
2.15, the representations and warranties contained in subsections (a) and (b) of Section
5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section 6.01, (ii) the Borrowers, the Administrative Agent, and
any Additional Commitment Lender shall have executed and delivered a joinder to the Loan Documents
in such form as the Administrative Agent shall reasonably require; (iii) the Borrowers shall have
paid such fees and other compensation to, in the case of any Committed Increase, Wells Fargo, and
in the case of the Uncommitted Increase, the Additional Commitment Lenders, as the Lead Borrower
and Wells Fargo or such Additional Commitment Lenders, as applicable, shall agree; (iv) the
Borrowers shall have paid such arrangement fees to the Administrative Agent as the Lead Borrower
and the Administrative Agent
may agree; (v) the Borrowers and the Additional Commitment Lender shall have delivered such
other instruments, documents and agreements as the Administrative Agent may reasonably have
requested; and (vi) no Default exists. The Borrowers shall prepay any Committed Loans outstanding
on the Increase Effective Date (and pay any additional amounts required pursuant to Section
3.05) to the extent necessary to keep the outstanding Committed Loans ratable with any revised
Applicable Percentages arising from any nonratable increase in the Commitments under this Section.


          (e) Conflicting Provisions. This Section shall supersede any provisions in
Sections 2.13 or 10.01 to the contrary.



ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY;

APPOINTMENT OF LEAD BORROWER




     3.01 Taxes.


          (a) Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrowers hereunder or under any other Loan Document shall be made free and clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if
the Borrowers shall be required by applicable Law to deduct any Indemnified Taxes (including any
Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums payable
under this Section) the Agents, Lenders or L/C Issuer, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the Borrowers shall make
such deductions and (iii) the Borrowers shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable Law.


          (b) Payment of Other Taxes by the Borrowers. Without limiting the provisions of
subsection (a) above, the Borrowers shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable Law.



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          (c) Indemnification by the Loan Parties. The Loan Parties shall indemnify the Agents,
each Lender and the L/C Issuer, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) paid by such Agent, such Lender or the L/C
Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Lead Borrower by a Lender or the L/C Issuer (with a
copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of
the Collateral Agent, a Lender or the L/C Issuer, shall be conclusive absent manifest error.


          (d) Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrowers to a Governmental Authority, the Lead Borrower shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative Agent.


          (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which any Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Lead Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by
the Lead Borrower or the Administrative Agent, such properly completed and executed documentation
prescribed by applicable Law as will permit such payments to be made without withholding or at a
reduced rate of withholding. Such delivery shall be provided on the Closing Date and on or before
such documentation expires or becomes obsolete or after the occurrence of an event requiring a
change in the documentation most recently delivered. In addition, any Lender, if requested by the
Lead Borrower or the Administrative Agent, shall deliver such other documentation prescribed by
applicable Law or reasonably requested by
the Lead Borrower or the Administrative Agent as will enable the Lead Borrower or the
Administrative Agent to determine whether or not such Lender is subject to backup withholding or
information reporting requirements.



     Without limiting the generality of the foregoing, in the event that any Borrower is resident
for tax purposes in the United States, any Foreign Lender shall deliver to the Lead Borrower and
the Administrative Agent (in such number of copies as shall be requested by the recipient) on or
prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time
to time thereafter upon the request of the Lead Borrower or the Administrative Agent, but only if
such Foreign Lender is legally entitled to do so), whichever of the following is applicable:




               (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a party,




               (ii) duly completed copies of Internal Revenue Service Form W-8ECI,




               (iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that
such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the
Code, (B) a “10 percent shareholder” of the Borrowers within the meaning of section
881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form
W-8BEN, or



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               (iv) any other form prescribed by applicable Law as a basis for claiming
exemption from
or a reduction in United States Federal withholding tax duly completed together with such
supplementary documentation as may be prescribed by applicable Law to permit the Lead
Borrower to determine the withholding or deduction required to be made.


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



     3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund LIBO Rate Loans, or to determine or charge interest rates based
upon the LIBO Rate, or any Governmental Authority has imposed material restrictions on the
authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to the Lead Borrower through the
Administrative Agent, any obligation of such Lender to make or continue LIBO Rate Loans or to
Convert Base Rate Loans to LIBO Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Lead Borrower that the circumstances giving rise to such determination
no longer exist. Upon receipt of such notice, the Borrowers shall, upon demand from such Lender
(with a copy to the Administrative Agent), prepay or, if applicable, Convert all LIBO Rate Loans of
such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or immediately, if such
Lender may not lawfully continue to maintain such LIBO Rate Loans. Upon any such prepayment or
Conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or Converted.



     3.03 Inability to Determine Rates. If the Required Lenders determine that for any reason in connection with any request for a
LIBO Rate Loan or a Conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank market for the applicable amount and Interest Period of
such LIBO Rate Loan, (b) adequate and reasonable means do not exist for determining the LIBO Rate
for any requested Interest Period with respect to a proposed LIBO Rate Loan, or (c) the LIBO Rate
for any requested Interest Period with respect to a proposed LIBO Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will
promptly so notify the Lead Borrower and each Lender. Thereafter, the obligation of the Lenders to
make or maintain LIBO Rate Loans shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Lead
Borrower may revoke any pending request for a Borrowing of, Conversion to or continuation of LIBO
Rate Loans or, failing that, will be deemed to have Converted such request into a request for a
Committed Borrowing of Base Rate Loans in the amount specified therein.



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     3.04 Increased Costs; Reserves on LIBO Rate Loans.


          (a) Increased Costs Generally. 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, any Lender (except any reserve requirement
reflected in the LIBO Rate) or the L/C Issuer;




               (ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or
any LIBO Rate Loan made by it, or change the basis of taxation of payments to such Lender or
the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by
Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender or the L/C Issuer); or




               (iii) impose on any Lender or the L/C Issuer or the London interbank market any
other
condition, cost or expense affecting this Agreement or LIBO Loans made by such Lender or any
Letter of Credit or participation therein;


and the result of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any LIBO Rate Loan (or of maintaining its obligation to make any such Loan), or to
increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any
Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer
hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or
the L/C Issuer, the Loan Parties will pay to such Lender or the L/C Issuer, as the case may be,
such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may
be, for such additional costs incurred or reduction suffered.


          (b) Capital Requirements. If any Lender or the L/C Issuer determines that any
Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such
Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on
the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below
that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C
Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with
respect to capital adequacy), then from time to time the Loan Parties will pay to such Lender or
the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such
Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such
reduction suffered.


          (c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its
holding company, as the case may be, as specified in subsection (a) or (b) of this Section and
delivered to the Lead Borrower shall be conclusive absent manifest error. The Loan Parties shall
pay such Lender or the
L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.



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          (d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer
to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a
waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided
that the Loan Parties shall not be required to compensate a Lender or the L/C Issuer pursuant to
the foregoing provisions of this Section for any increased costs incurred or reductions suffered
more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be,
notifies the Lead Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of retroactive effect
thereof).


          (e) Reserves on LIBO Rate Loans. The Borrowers shall pay to each Lender, as long as
such Lender shall be required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional interest on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs
of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith,
which determination shall be conclusive), which shall be due and payable on each date on which
interest is payable on such Loan, provided the Lead Borrower shall have received at least
10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from
such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date,
such additional interest shall be due and payable 10 days from receipt of such notice.



     3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative
Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:




     (a) any continuation, Conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);




     (b) any failure by the Borrowers (for a reason other than the failure of such Lender to
make a Loan) to prepay, borrow, continue or Convert any Loan other than a Base Rate Loan on
the date or in the amount notified by the Lead Borrower; or




     (c) any assignment of a LIBO Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Lead Borrower pursuant to Section
10.13;


including any actual loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such
funds were obtained. The Borrowers shall also pay any customary administrative fees charged by
such Lender in connection with the foregoing.



     For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section
3.05, each Lender shall be deemed to have funded each LIBO Rate Loan made by it at the LIBO
Rate for such Loan by a matching deposit or other borrowing in the London interbank market for a
comparable amount and for a comparable period, whether or not such LIBO Rate Loan was in fact so
funded.



     3.06 Mitigation Obligations; Replacement of Lenders.


          (a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 3.04, or the Borrowers are required to pay any additional amount to any
Lender or any

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Governmental Authority for the account of any Lender pursuant to Section
3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender shall
use reasonable efforts to designate a different Lending Office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in
the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable,
and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any such designation
or assignment.


          (b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01, the
Borrowers may replace such Lender in accordance with Section 10.13.



     3.07 Survival. All of the Borrowers’ obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other Obligations hereunder.



     3.08 Designation of Lead Borrower as Borrowers’ Agent.


          (a) Each Borrower hereby irrevocably designates and appoints the Lead Borrower as such
Borrower’s agent to obtain Credit Extensions, the proceeds of which shall be available to each
Borrower for such uses as are permitted under this Agreement. As the disclosed principal for its
agent, each Borrower shall be obligated to each Credit Party on account of Credit Extensions so
made as if made directly by the applicable Credit Party to such Borrower, notwithstanding the
manner by which such Credit Extensions are recorded on the books and records of the Lead Borrower
and of any other Borrower. In addition, each Loan Party other than the Borrowers hereby
irrevocably designates and appoints the Lead Borrower as such Loan Party’s agent to represent such
Loan Party in all respects under this Agreement and the other Loan Documents.


          (b) Each Borrower recognizes that credit available to it hereunder is in excess of and on
better terms than it otherwise could obtain on and for its own account and that one of the reasons
therefor is its joining in the credit facility contemplated herein with all other Borrowers.
Consequently, each Borrower hereby assumes and agrees to discharge all Obligations of each of the
other Borrowers.


          (c) The Lead Borrower shall act as a conduit for each Borrower (including itself, as a
“Borrower”) on whose behalf the Lead Borrower has requested a Credit Extension. Neither the
Administrative Agent nor any other Credit Party shall have any obligation to see to the application
of such proceeds therefrom.



ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS




     4.01 Conditions of Initial Credit Extension. The obligation of each Lender to make its
initial Credit Extension hereunder and of the Administrative Agent to endeavor to cause the L/C
Issuer to make its initial Credit Extension hereunder is subject to satisfaction of the following
conditions precedent:




     (a) The Administrative Agent’s receipt of the following, each of which shall be
originals, telecopies or other electronic image scan transmission (e.g., “pdf” or “tif” via
e-mail) (followed promptly by originals) unless otherwise specified, each properly executed
by a 


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Responsible Officer of the signing Loan Party or the Lenders, as applicable, each dated
the Closing Date (or, in the case of certificates of governmental officials, a recent date
before the Closing Date) and each in form and substance satisfactory to the Administrative
Agent:




     (i) executed counterparts of this Agreement sufficient in number for
distribution to the Administrative Agent, each Lender and the Lead Borrower;




     (ii) a Note executed by the Borrowers in favor of each Lender
requesting a Note;




     (iii) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan Party as
the Administrative Agent may require evidencing (A) the authority of each Loan Party
to enter into this Agreement and the other Loan Documents to which such Loan Party
is a party or is to become a party and (B) the identity, authority and capacity of
each Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which such Loan Party
is a party or is to become a party;




     (iv) copies of each Loan Party’s Organization Documents and such
other documents and certifications as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or formed, and that each
Loan Party is validly existing, in good standing
and qualified to engage in business in each jurisdiction where its ownership,
lease or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to so qualify in such jurisdiction
could not reasonably be expected to have a Material Adverse Effect;




     (v) a favorable opinion of Irell and Manella LLP, counsel to the Loan
Parties, addressed to the Administrative Agent and each Lender, as to such matters
concerning the Loan Parties and the Loan Documents as the Administrative Agent may
reasonably request;




     (vi) a certificate signed by a Responsible Officer of the Lead
Borrower certifying (A) that the conditions specified in Sections 4.02(a)
and (b) have been satisfied, (B) that there has been no event or
circumstance since the date of the Audited Financial Statements that has had or
could be reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect, (C) to the Solvency of the Loan Parties as of the Closing
Date after giving effect to the transactions contemplated hereby, and (D) that no
consents, licenses or approvals are required in connection with the execution and
delivery by such Loan Party and the validity against such Loan Party of the Loan
Documents to which it is a party, except for (a) the perfection or maintenance of
the Liens created under the Security Documents (including the first priority nature
thereof) or (b) such as have been obtained or made and are in full force and effect;




     (vii) evidence that all insurance required to be maintained pursuant to the Loan
Documents and all endorsements in favor of the Agents required under the Loan
Documents have been obtained and are in effect;




     (viii) a payoff letter from the agent for the lenders under the Existing Credit
Agreement satisfactory in form and substance to the Administrative Agent evidencing
that the Existing Credit Agreement and all commitments to lend thereunder have been
or concurrently with the Closing Date are being terminated, all obligations (other
than



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contingent indemnification obligations for which no claim has been asserted)
thereunder are being paid in full, and all Liens securing obligations under the
Existing Credit Agreement have been or concurrently with the Closing Date are being
released;




     (ix) the Security Documents and certificates evidencing any stock
being pledged thereunder, together with undated stock powers executed in blank, each
duly executed by the applicable Loan Parties;




     (x) all other Loan Documents, each duly executed by the applicable
Loan Parties;




     (xi) (A) appraisals (based on net liquidation value) by a third party
appraiser acceptable to the Collateral Agent of all Inventory of the Borrowers, the
results of which are satisfactory to the Collateral Agent and (B) a written report
regarding the results of a commercial finance examination of the Loan Parties, which
shall be satisfactory to the Collateral Agent;



     (xii) results of searches or other evidence reasonably satisfactory to
the Collateral Agent (in each case dated as of a date reasonably satisfactory to the
Collateral Agent) indicating the absence of Liens on the assets of the Loan Parties,
except for Permitted Encumbrances and Liens for which termination statements and
releases or subordination agreements satisfactory to the Collateral Agent are being
tendered concurrently with such extension of credit or other arrangements
satisfactory to the Collateral Agent for the delivery of such termination statements
and releases or subordination agreements have been made;


     (xiii) (A) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by the Collateral
Agent to be filed, registered or recorded to create or perfect the first priority
Liens intended to be created under the Loan Documents and all such documents and
instruments shall have been so filed, registered or recorded to the satisfaction of
the Collateral Agent, (B) the Credit Card Notifications and Blocked Account
Agreements required pursuant to Section 6.13 hereof, (C) control agreements
with respect to the Loan Parties’ securities and investment accounts, and (D)
Collateral Access Agreements for the Loan Parties’ distribution centers and
warehouses as required by the Collateral Agent; and




     (xiv) such other assurances, certificates, documents, consents or opinions as the
Agents reasonably may require.




     (b) After giving effect to (i) the first funding under the Loans, (ii) any charges
to the Loan Account made in connection with the establishment of the credit facility
contemplated
hereby and (iii) all Letters of Credit to be issued at, or immediately subsequent to,
such establishment, Availability shall be not less than $50,000,000.




     (c) The Administrative Agent shall have received a Borrowing Base Certificate dated the
Closing Date, relating to the month ended on October 3, 2010, and executed by a Responsible
Officer of the Lead Borrower.




     (d) The Administrative Agent shall be reasonably satisfied that any financial
statements delivered to it fairly present the business and financial condition of the Loan
Parties



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and that there has been no Material Adverse Effect since the date of the most recent
financial information delivered to the Administrative Agent.


     (e) The Administrative Agent shall have received and be satisfied with (i) detailed
financial projections and business assumptions for the Borrowers and their Subsidiaries on
(x) a monthly basis for the twelve month period following the Closing Date and (y) on a
quarterly basis, for each fiscal year thereafter through the Maturity Date, including, in
each case, a consolidated income statement, balance sheet, statement of cash flow and
Availability analysis, each prepared in conformity with GAAP and consistent with the Loan
Parties’ then current practices and (b) such other information (financial or otherwise)
reasonably requested by the Administrative Agent.




     (f) There shall not have occurred since January 3, 2010 (i) any event or condition that
has had or could reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect or (ii) any action, suit, investigation or proceeding pending or, to
the Knowledge of the Borrowers, threatened in any court or before any arbitrator or
governmental authority that if determined adversely to the Loan Parties could reasonably be
expected to have a Material Adverse Effect.




     (g) Each Material Contract of any Loan Party shall be in full force and effect and no
default or event of default shall have occurred and be continuing thereunder.




     (h) The consummation of the transactions contemplated hereby shall not violate any
applicable Laws or any Organization Document.




     (i) All fees required to be paid to the Agents or the Arranger on or before the Closing
Date shall have been paid in full, and all fees required to be paid to the Lenders on or
before the Closing Date shall have been paid in full.




     (j) The Borrowers shall have paid all fees, charges and disbursements of examiners and
appraisers to the Administrative Agent to the extent invoiced prior to or on the Closing
Date, plus such additional amounts of such fees, charges and disbursements as shall
constitute its reasonable estimate of such fees, charges and disbursements incurred or to be
incurred by it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrowers and the
Administrative Agent).




     (k) The Administrative Agent shall have received all documentation and other
information required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation the USA PATRIOT
Act.




     (l) The Arranger shall have successfully arranged the syndication of the Loans as
contemplated in its engagement letter with the Loan Parties.


     (m) All governmental consents and approvals, and all third party consents required for
the Loan Parties to consummate the financing shall have been obtained.


     (n) The Administrative Agent shall be reasonably satisfied with the capital structure of the
Loan Parties. Without limiting the foregoing, the Loan Parties shall not have any
Indebtedness outstanding as of the Closing Date other than Permitted Indebtedness and prior
to the Credit Extensions hereunder and application of part or all of the proceeds thereof to
satisfy the 


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obligations outstanding under the Existing Credit Agreement, Indebtedness under
the Existing Credit Agreement.


Without limiting the generality of the provisions of Section 9.04, for purposes of
determining compliance with the conditions specified in this Section 4.01, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative
Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.



     4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any
Request for Credit Extension (other than a Committed Loan Notice requesting only a Conversion of
Committed Loans to the other Type, or a continuation of LIBO Rate Loans) and of the Administrative
Agent to endeavor to cause the L/C Issuer to issue each Letter of Credit is subject to the
following conditions precedent:




     (a) The representations and warranties of each other Loan Party contained in
Article V or any other Loan Document shall be true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations or warranties that already are qualified or modified by materiality in the
text thereof) on and as of the date of such Credit Extension, except (i) to the extent that
such representations and warranties specifically refer to an earlier date, in which case
they shall be true and correct as of such earlier date, and (ii) for purposes of this
Section 4.02, the representations and warranties contained in subsections (a) and
(b) of Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01.




     (b) No Default shall exist, or would result from such proposed Credit Extension or from
the application of the proceeds thereof.




     (c) The Administrative Agent and, if applicable, the Swing Line Lender shall have
received a Request for Credit Extension in accordance with the requirements hereof.




     (d) No Overadvance shall result from such Credit Extension.



     provided, however, if any criminal indictment of any Loan Party or any Subsidiary thereof has
occurred under any federal, state, municipal, or other criminal statute, rule, regulation, order,
or other requirement having the force of law for a felony for fraud or other felony which would (in
each case based on, among other considerations, the likelihood of a conviction thereunder) have a
negative impact on the ability of the Collateral Agent to exercise on, or the value of, the
Collateral, which indictment has remained unquashed or undismissed for a period of thirty (30) days
or more, the Required Lenders (which shall for these purposes include at least two Lenders) may
direct the Administrative Agent to cease honoring any Request for Credit Extension (other than a
Committed Loan Notice requesting only a Conversion of Committed Loans to the other Type, or a
continuation of LIBO Rate Loans); provided that, upon the quashing or dismissal of any such
indictment, the Administrative
Agent and the Lenders shall thereafter honor any Request for Credit Extension so long as the
conditions precedent set forth in this Article IV have been met.


Each Request for Credit Extension (other than a Committed Loan Notice requesting only a Conversion
of Committed Loans to the other Type or a continuation of LIBO Rate Loans) submitted by the
Borrower shall be deemed to be a representation and warranty by the Borrowers that the conditions
specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of
the applicable Credit Extension. The 

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conditions set forth in this Section 4.02 are for the
sole benefit of the Credit Parties but until the Required Lenders otherwise direct the
Administrative Agent to cease making Committed Loans, the Lenders will fund their Applicable
Percentage of all Loans and L/C Advances and participate in all Swing Line Loans and Letters of
Credit whenever made or issued, which are requested by the Lead Borrower and which, notwithstanding
the failure of the Loan Parties to comply with the provisions of this Article IV, agreed
to by the Administrative Agent, provided, however, the making of any such Loans or the issuance of
any Letters of Credit shall not be deemed a modification or waiver by any Credit Party of the
provisions of this Article IV on any future occasion or a waiver of any rights or the Credit
Parties as a result of any such failure to comply.



ARTICLE V

REPRESENTATIONS AND WARRANTIES




     To induce the Credit Parties to enter into this Agreement and to make Loans and to issue Letters of
Credit hereunder, each Loan Party represents and warrants to the Administrative Agent and the other
Credit Parties that:



     5.01 Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (a)
is a corporation, limited liability company, partnership or limited partnership, duly incorporated,
organized or formed, validly existing and, where applicable, in good standing under the Laws of the
jurisdiction of its incorporation, organization, or formation (b) has all requisite power and
authority and all requisite governmental licenses, permits, authorizations, consents and approvals
to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its
obligations under the Loan Documents to which it
is a party, and (c) is duly qualified and is licensed and, where applicable, in good standing under
the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct
of its business requires such qualification or license; except in each case referred to in clause
(b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect. Schedule 5.01 annexed hereto sets forth, as of the Closing Date,
each Loan Party’s name as it appears in official filings in its state of incorporation or
organization, its state of incorporation or organization, organization type, organization number,
if any, issued by its state of incorporation or organization, and its federal employer
identification number.



     5.02 Authorization; No Contravention. The execution, delivery and performance by each
Loan Party of each Loan Document to which such Person is or is to be a party, has been duly
authorized by all necessary corporate or other organizational action, and does not and will not (a)
contravene the terms of any of such Person’s Organization Documents; (b) other than with respect to
the Existing Credit Agreement, conflict with or result in any breach, termination, or contravention
of, or constitute a default under, or require any mandatory prepayment to be made under (i) any
Material Contract or any Material Indebtedness to which such Person is a party or affecting such
Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction,
writ or decree of any Governmental Authority or any arbitral award to which such Person or its
property is subject; (c) result in or require the creation of any Lien upon any asset of any Loan
Party (other than Liens in favor of the Collateral Agent under the Security Documents); or (d)
violate any Law.



     5.03 Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by,
or enforcement against, any Loan Party of this Agreement or any other Loan Document, except for (a)
the perfection or maintenance of the Liens created under the Security Documents (including the
first priority nature thereof) or (b) such as have been obtained or made and are in full force and
effect or (c) those that the failure to obtain could not, individually or in the aggregate, have a
Material Adverse Effect.



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     5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, the
legally valid and binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at law.



     5.05 Financial Statements; No Material Adverse Effect.


          (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii)
fairly present the financial condition of the Parent and its Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; and
(iii) show all Material Indebtedness and other liabilities, direct or contingent, of the Parent and
its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and
Indebtedness.


          (b) The unaudited Consolidated balance sheet of the Parent and its Subsidiaries dated July 4,
2010, and the related Consolidated statements of income or operations, Shareholders’ Equity and
cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present the financial condition of the Parent and its Subsidiaries as of
the date thereof and their results of operations for the period covered thereby, subject, in the
case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.
Schedule 5.05 sets forth all Material Indebtedness and other liabilities, direct or
contingent, of the Loan Parties and their Consolidated Subsidiaries as of the date of such
financial statements, including liabilities for taxes, material commitments and Material
Indebtedness.


          (c) Since the date of the Audited Financial Statements, there has been no event or
circumstance, either individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.


          (d) To the best Knowledge of the Lead Borrower, no Internal Control Event exists or has
occurred since the date of the Audited Financial Statements that has resulted in or could
reasonably be expected to result in a misstatement in any material respect, in any financial
information delivered or to be delivered to the Administrative Agent or the Lenders, of (i)
covenant compliance calculations provided hereunder or (ii) the assets, liabilities, financial
condition or results of operations of the Parent and its Subsidiaries on a Consolidated basis.


          (e) The Consolidated forecasted balance sheet and statements of income and cash flows of
the Parent and its Subsidiaries delivered pursuant to Section 6.01(d) were prepared in good
faith on the basis of the assumptions stated therein, which assumptions were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented, at the time of
delivery, the Loan Parties’ best estimate of its future financial performance.



     5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending
or, to the Knowledge of the Loan Parties, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against any Loan Party or any of its
Subsidiaries or against any of its properties or revenues that (a) purport to affect or pertain to
this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b)
except as specifically disclosed in Schedule 5.06 or



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as disclosed to the Administrative
Agent pursuant to Section 6.03 hereof, either individually or in the aggregate, if determined
adversely, could reasonably be expected to have a Material Adverse Effect.



     5.07 No Default. No Loan Party or any Subsidiary is in default with respect to any
material term or provision of any Material Contract (other than any Material Contract which has
been replaced or is no longer necessary to the conduct of the Loan Parties’ business). No Default
has occurred and is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.



     5.08 Ownership of Property; Liens. (a) Each of the Loan Parties and each Subsidiary
thereof has good record and marketable title in fee simple to or valid leasehold interests in, all
real property necessary or used in the ordinary conduct of its business, except as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each
of the Loan Parties and each Subsidiary has good and marketable title to, valid leasehold interests
in, or valid licenses to use all personal property and assets material to the ordinary conduct of
its business, except as could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.


          (b) Schedule 5.08(b)(1) sets forth, as of the Closing Date, the address (including
street address, county and state) of all Real Estate that is owned by the Loan Parties and each of
their Subsidiaries, together with a list of the holders of any mortgage or other Lien thereon.
Schedule 5.08(b)(2) sets forth, as of the Closing Date, the address (including street
address, county and state) of all Leases of the Loan Parties, together with a list of the lessor
and its contact information with respect to each such Lease. Each of such Leases is in full force
and effect and the Loan Parties are not in default of the terms thereof.


          (c) Schedule 7.01 sets forth, as of the Closing Date, a complete and accurate list of
all Liens of record on the personal property or assets of each Loan Party and each of its
Subsidiaries, showing the lienholder thereof, the principal amount of the obligations secured
thereby (if any) and the personal property or assets of such Loan Party or such Subsidiary subject
thereto. The property of each Loan Party and each of its Subsidiaries is subject to no Liens,
other than Permitted Encumbrances.


          (d) Schedule 7.02 sets forth, as of the Closing Date, a complete and accurate list of
all Investments consisting of (i) a loan, advance or capital contribution described in clause (b)
of the definition thereof made to any Person other than a Loan Party, and (ii) any other Investment
of money described in clause (d) of the definition thereof, in each case held by any Loan Party or
any Subsidiary of a Loan Party, showing the amount, obligor or issuer and maturity, if any,
thereof.


          (e) Schedule 7.03 sets forth, as of the Closing Date, a complete and accurate list of
all Indebtedness for borrowed money of each Loan Party or any Subsidiary of a Loan Party, showing
the amount, obligor or issuer and maturity thereof.




5.09 Environmental Compliance. (a) Except as specifically disclosed in
Schedule 5.09, to the Loan Parties’ Knowledge, as of the Closing Date, no Loan Party
or any Subsidiary thereof (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has
received notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability, except, in each case, as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.



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     (b) Except as otherwise set forth in Schedule 5.09, to the Loan Parties’
Knowledge, as of the Closing Date, (i) none of the properties currently or formerly owned or
operated by any Loan Party or any Subsidiary thereof is listed or proposed for listing on
the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to
any such property, (ii) there are no and never have been any underground or above-ground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or have been treated, stored or disposed on any property
currently owned or operated by any Loan Party or any Subsidiary thereof, (iii) there is no
asbestos or asbestos-containing material on any property currently owned or operated by any
Loan Party or Subsidiary thereof, and (iv) Hazardous Materials have not been released,
discharged or disposed of on any property currently or formerly owned or operated by any
Loan Party or any Subsidiary thereof other than in compliance with Laws applicable thereto,
except, in each case, as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.




     (c) Except as otherwise set forth on Schedule 5.09, as of the Closing Date,
except as could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, no Loan Party or any Subsidiary thereof is undertaking, and no Loan
Party or any Subsidiary thereof has completed, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or response
action relating to any actual or threatened release, discharge or disposal of Hazardous
Materials at any site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law. To the Loan
Parties’ Knowledge, all Hazardous Materials generated, used, treated, handled or stored at,
or transported to or from, any property currently owned or operated by any Loan Party or any
Subsidiary thereof have been disposed of in a manner not reasonably expected to result in
any Environmental Liability, except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.



     5.10 Insurance. The properties of the Loan Parties and their Subsidiaries are insured with
financially sound and reputable insurance companies which are not Affiliates of the Loan Parties,
in such amounts (after giving effect to any self-insurance), with such deductibles and covering
such risks (including, without limitation, workmen’s compensation, public liability, business
interruption and property damage insurance) as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the Loan Parties or the
applicable Subsidiary operates. Schedule 5.10 sets forth a description of all insurance
maintained by or on behalf of the Loan Parties and their Subsidiaries as of the Closing Date. Each
insurance policy listed on Schedule 5.10 is in full force and effect as of the Closing Date
and all premiums in respect thereof that are due and payable have been paid.



     5.11 Taxes. The Loan Parties and their Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all Federal, state and
other material taxes, assessments, fees and other governmental charges levied or imposed upon them
or their properties, income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings being diligently conducted, for which adequate
reserves have been provided in accordance with GAAP, which contest effectively suspends the
collection of the contested obligation and the enforcement of any Lien securing such obligation,
and the failure to make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect. No tax assessment has been levied against any Loan Party or any
Subsidiary that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. No Loan Party or any Subsidiary
thereof is a party to any tax sharing agreement.



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     5.12 ERISA Compliance.


          (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with respect thereto and, to
the best Knowledge of the Lead Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification. The Loan Parties and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan. No Lien imposed under the Code or ERISA exists or is likely to arise on
account of any Plan.


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


          (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan
has any Unfunded Pension Liability; (iii) neither any Loan Party nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that
could be subject to Sections 4069 or 4212(c) of ERISA.



     5.13 Subsidiaries; Equity Interests. As of the Closing Date, the Loan Parties have no
Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, which
Schedule sets forth the legal name, jurisdiction of incorporation or formation and authorized
Equity Interests of each such Subsidiary. All of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan
Party (or a Subsidiary of a Loan Party) in the amounts specified on Part (a) of Schedule
5.13 free and clear of all Liens except for those created or permitted under the Security
Documents. Except as set forth in Schedule 5.13, there are no outstanding rights to purchase any
Equity Interests in any Subsidiary. The Loan Parties have no equity investments in any other
corporation or entity other than those specifically disclosed in Part(b) of Schedule 5.13.
All of the outstanding Equity Interests in the Subsidiaries of the Loan Parties have been validly
issued, and are fully paid and non-assessable and are owned in the amounts specified on Part (c) of
Schedule 5.13 free and clear of all Liens except for those created or permitted under the
Security Documents. The copies of the Organization Documents of each Loan Party and each amendment
thereto provided pursuant to Section 4.01 are true and correct copies of each such
document, each of which is valid and in full force and effect.



     5.14 Margin Regulations; Investment Company Act;


          (a) No Loan Party is engaged or will be engaged, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock. None of the proceeds of the Credit Extensions shall be used directly or indirectly
for the purpose of purchasing or carrying any margin stock, for the purpose of reducing or retiring
any Indebtedness that was originally incurred to purchase or carry any margin stock or for any
other purpose that might cause any of the Credit Extensions to be considered a “purpose credit”
within the meaning of Regulations T, U, or X issued by the FRB.



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          (b) None of the Loan Parties, any Person Controlling any Loan Party, or any Subsidiary is or
is required to be registered as an “investment company” under the Investment Company Act of 1940.



     5.15 Disclosure. Each Loan Party has disclosed to the Administrative Agent and the Lenders
all agreements, instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters which, to the Knowledge of the Loan Parties,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. To the Knowledge of the Loan Parties, no report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each
case, as modified or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, the Loan Parties represent only that such
information was prepared in good faith based upon assumptions believed to be reasonable at the
time.



     5.16 Compliance with Laws. Each of the Loan Parties and each Subsidiary is in compliance
in all material respects with the requirements of all Laws and all orders, writs, injunctions and
decrees applicable to it or to its properties, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.



     5.17 Intellectual Property; Licenses, Etc. The Loan Parties and their Subsidiaries own,
or possess the right to use, all of the Intellectual Property, licenses, permits and other
authorizations that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person, other than conflicts that could not,
individually, or in the aggregate, reasonably be expected to have a Material Adverse Effect. To
the Knowledge of the Lead Borrower, no Person has made any claim that any slogan or other
advertising device, product, process, method, substance, part or other material now employed, or
now contemplated to be employed, by any Loan Party or any Subsidiary infringes upon any rights held
by any other Person which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect. Except as specifically disclosed in Schedule 5.17, as of
the Closing Date, no claim or litigation regarding any of the foregoing is pending or, to the
Knowledge of the Lead Borrower, threatened, which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.



     5.18 Labor Matters.



     There are no strikes, lockouts, slowdowns or other material labor disputes against any Loan
Party or any Subsidiary thereof pending or, to the Knowledge of any Loan Party, threatened that,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
The hours worked by and payments made to employees of the Loan Parties comply with the Fair Labor
Standards Act and any other applicable federal, state, local or foreign Law dealing with such
matters, except for such instances of noncompliance which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. No Loan Party or any of its
Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining
Act or similar state Law, except for such liabilities and obligations as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. All payments due from
any Loan Party and its Subsidiaries, or for which any claim may be made against any Loan Party or
any of its Subsidiaries, on account of wages and employee health and welfare insurance and other
benefits, have been paid or properly accrued in accordance with


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GAAP as a liability on the books of
such Loan Party, except as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 5.18, as of the Closing
Date, no Loan Party or any Subsidiary is a party to or bound by any collective bargaining
agreement, management agreement, employment agreement, bonus, restricted stock, stock option, or
stock appreciation plan or agreement or any similar plan, agreement or arrangement. There are no
representation proceedings pending or, to any Loan Party’s Knowledge, threatened to be filed with
the National Labor Relations Board, and no labor organization or group of employees of any Loan
Party or any Subsidiary has made a pending demand for recognition, in each case that could,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. There
are no complaints, unfair labor practice charges, grievances, arbitrations, unfair employment
practices charges or any other claims or complaints against any Loan Party or any Subsidiary
pending or, to the Knowledge of any Loan Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment of any employee of any Loan Party or any of its
Subsidiaries, in each case that could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The
consummation of the transactions contemplated by the Loan Documents will not give rise to any right
of termination or right of renegotiation on the part of any union under any material collective
bargaining agreement to which any Loan Party or any of its Subsidiaries is bound.



     5.19 Security Documents.




     (a) The Security Agreement creates in favor of the Collateral Agent, for the benefit of
the Secured Parties referred to therein, a legal, valid, continuing and enforceable security
interest in the Collateral (as defined in the Security Agreement), the enforceability of
which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law. The financing
statements, releases and other filings are in appropriate form and have been or will be
filed in the offices specified in Schedule II of the Security Agreement. Upon such filings
and/or the obtaining of “control,” (as defined in the UCC) the Collateral Agent will have a
perfected Lien on, and security interest in, to and under all right, title and interest of
the grantors thereunder in all Collateral that may be perfected by filing, recording or
registering a financing statement or analogous document (including without limitation the
proceeds of such Collateral subject to the limitations relating to such proceeds in the UCC)
or by obtaining control, under the UCC (in effect on the date this representation is made)
in each case prior and superior in right to any other Person. The Pledged Securities (as
defined in the Security Agreement) have been delivered to the Collateral Agent (together
with stock powers or other appropriate instruments of transfer executed in blank form), and
the Collateral Agent has a fully perfected first priority Lien on, and security interest in,
to and under all right, title and interest of each pledgor thereunder in such Collateral,
and such security interest is in each case prior and superior in right and interest to any
other Person.




     (b) When the Security Agreement (or a short form thereof) is filed in the United States
Patent and Trademark Office and the United States Copyright Office and when financing
statements, releases and other filings in appropriate form are filed in the offices
specified on Schedule II of the Security Agreement, the Collateral Agent shall have a fully
perfected Lien on, and security interest in, all right, title and interest of the applicable
Loan Parties in the IP Collateral (as defined in the Security Agreement) in which a security
interest may be perfected by filing, recording or registering a security agreement,
financing statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and superior in
right to any other Person (it being understood that subsequent recordings in the United
States
Patent and Trademark Office and the United States



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Copyright Office may be necessary
to perfect a Lien on registered trademarks, trademark applications and copyrights acquired
by the Loan Parties after the date hereof).



     5.20 Solvency



     After giving effect to the transactions contemplated by this Agreement, and before and after
giving effect to each Credit Extension, the Loan Parties, on a Consolidated basis, are Solvent. No
transfer of property has been or will be made by any Loan Party and no obligation has been or will
be incurred by any Loan Party in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either present or future
creditors of any Loan Party.



     5.21 Deposit Accounts; Credit Card Arrangements.



          (a) Annexed hereto as Schedule 5.21(a) is a list of all DDAs maintained by the Loan
Parties as of the Closing Date, which Schedule includes, with respect to each DDA (i) the name and
address of the depository; (ii) the account number(s) maintained with such depository; (iii) a
contact person at such depository, and (iv) the identification of each Blocked Account Bank.



          (b) Annexed hereto as Schedule 5.21(b) is a list describing all arrangements as of the
Closing Date to which any Loan Party is a party with respect to the processing and/or payment to
such Loan Party of the proceeds of any credit card charges and debit card charges for sales made by
such Loan Party.



     5.22 Brokers. No broker or finder brought about the obtaining, making or closing of the Loans or
transactions contemplated by the Loan Documents, and no Loan Party or Affiliate thereof has any
obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.



     5.23 Intentionally Omitted.



     5.24 Material Contracts. Schedule 5.24 sets forth all Material Contracts to
which any Loan Party is a party or is bound as of the Closing Date. The Loan Parties have
delivered true, correct and complete copies of such Material Contracts to the Administrative Agent
on or before the date hereof.



     5.25 Casualty. Neither the businesses nor the properties of any Loan Party or any of its
Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.



ARTICLE VI

AFFIRMATIVE COVENANTS




     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Loan
Parties shall, and shall (except in the case of the covenants set forth in Sections 6.01,
6.02, and 6.03) cause each Subsidiary to:



     6.01 Financial Statements. Deliver to the Administrative Agent, in form and detail
satisfactory to the Administrative Agent:



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     (a) as soon as available, but in any event within 90 days after the end of each
Fiscal Year of the Parent, a Consolidated balance sheet of the Parent and its Subsidiaries
as at the end of such Fiscal Year, and the related consolidated statements of income or
operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting forth in each
case in comparative form the figures for the previous Fiscal Year, all in reasonable detail
and prepared in accordance with GAAP, audited and accompanied by (i) a report and
unqualified opinion of a Registered Public Accounting Firm of nationally recognized standing
reasonably acceptable to the Administrative Agent, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not be subject
to any “going concern” or like qualification or exception or any qualification or exception
as to the scope of such audit and (ii) an opinion of such Registered Public Accounting Firm
independently assessing Loan Parties’ internal controls over financial reporting in
accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2, and Section
404 of Sarbanes-Oxley expressing a conclusion that contains no statement that there is a
material weakness in such internal controls, except for such material weaknesses as to which
the Required Lenders do not object;




     (b) as soon as available, but in any event within 45 days after the end of each of the
Fiscal Quarters of each Fiscal Year of the Parent, a Consolidated balance sheet of the
Parent and its Subsidiaries as at the end of such Fiscal Quarter, and the related
consolidated statements of income from operations, Shareholders’ Equity and cash flows for
such Fiscal Quarter and for the portion of the Parent’s Fiscal Year then ended, setting
forth in each case in comparative form the figures for (A) such period set forth in the
projections delivered pursuant to Section 6.01(d) hereof, (B) the corresponding
Fiscal Quarter of the previous Fiscal Year and (C) the corresponding portion of the previous
Fiscal Year, all in reasonable detail, certified by a Responsible Officer of the Lead
Borrower as fairly presenting the financial condition, results of operations, Shareholders’
Equity and cash flows of the Parent and its Subsidiaries as of the end of such Fiscal
Quarter in accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes;




     (c) as soon as available, but in any event within 30 days after the end of each of the
Fiscal Months of each fiscal year of the Parent, a consolidated balance sheet of the Parent
and its Subsidiaries as at the end of such Fiscal Month, and the related consolidated
statements of income from operations, Shareholders’ Equity and cash flows for such Fiscal
Month, and for the portion
of the Parent’s Fiscal Year then ended, setting forth in each case in comparative form
the figures for (A) such period set forth in the projections delivered pursuant to
Section 6.01(d) hereof, (B) the corresponding Fiscal Month of the previous Fiscal
Year and (C) the corresponding portion of the previous fiscal year, all in reasonable
detail, certified by a Responsible Officer of the Lead Borrower as fairly presenting the
financial condition, results of operations, Shareholders’ Equity and cash flows of the
Parent and its Subsidiaries as of the end of such Fiscal Month in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes




     (d) as soon as available, but in any event (i) within 45 days after the end of each
Fiscal Year of the Parent, a draft Budget for the immediately following Fiscal Year as
prepared by management of the Lead Borrower, (ii) within 60 days after the end of each
Fiscal Year of the Parent, a final Budget, and (iii) within 45 days after the end of each
Fiscal Quarter, a Forecast Update for the remainder of such Fiscal Year.



     6.02 Certificates; Other Information. Deliver to the Administrative Agent, in form and
detail satisfactory to the Administrative Agent:



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     (a) concurrently with the delivery of the financial statements referred to in Sections
6.01(a), (b) and (c), (i) a duly completed Compliance Certificate signed by a
Responsible Officer of the Lead Borrower, (ii) in the event of any change in generally
accepted accounting principles used in the preparation of such financial statements, the
Lead Borrower shall also provide a statement of reconciliation conforming such financial
statements to GAAP, and (iii) a copy of management’s discussion and analysis with respect to
such financial statements;




     (b) on the tenth (10th) Business Day of each Fiscal Month, a Borrowing
Base Certificate showing the Borrowing Base as of the close of business as of the last day
of the immediately preceding Fiscal Month, each Borrowing Base Certificate to be certified
as complete and correct by a Responsible Officer of the Lead Borrower; provided that
at any time that an Accelerated Borrowing Base Delivery Event has occurred and is
continuing, at the election of the Administrative Agent, such Borrowing Base Certificate
shall be delivered on Wednesday of each week (or, if Wednesday is not a Business Day, on the
next succeeding Business Day), as of the close of business on the immediately preceding
Saturday;




     (c) promptly upon receipt, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of the board of
directors) of any Loan Party by its Registered Public Accounting Firm in connection with the
accounts or books of the Loan Parties or any Subsidiary, or any audit of any of them,
including, without limitation, specifying any Internal Control Event;




     (d) promptly after the same are available, copies of each annual report, proxy or
financial statement or other report or communication sent to the stockholders of the Loan
Parties, and copies of all annual, regular, periodic and special reports and registration
statements which any Loan Party may file or be required to file with the SEC under Section
13 or 15(d) of the Securities Exchange Act of 1934 or with any national securities exchange;




     (e) The financial and collateral reports described on Schedule 6.02 hereto, at
the times set forth in such Schedule;




     (f) promptly after the furnishing thereof, copies of any statement or report furnished
to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the
terms of any indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Lenders pursuant to Section 6.01 or any other clause of this
Section 6.02;




     (g) as soon as available, but in any event within 30 days after the end of each
Fiscal Year of the Loan Parties, a report summarizing the insurance coverage (specifying
type, amount and carrier) in effect for each Loan Party and its Subsidiaries and containing
such additional information as the Administrative Agent, or any Lender through the
Administrative Agent, may reasonably specify;




     (h) promptly after the Administrative Agent’s request therefor, copies of all Material
Contracts and documents evidencing Material Indebtedness; and




     (i) promptly, such additional information regarding the business affairs, financial
condition or operations of any Loan Party or any Subsidiary, or compliance with the terms of
the
Loan Documents, as the Administrative Agent or any Lender may from time to time
reasonably request.



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Documents required to be delivered pursuant to Section 6.01(a), (b), or (c) or
Section 6.02(a)(ii), (a)(iii) or 6.02(c) (to the extent any such documents
are included in materials otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the Lead Borrower posts
such documents, or provides a link thereto on the Lead Borrower’s website on the Internet at the
website address listed on Schedule 10.02; or (ii) on which such documents are posted on the
Lead Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: (i) the Lead Borrower shall deliver paper copies
of such documents to the Administrative Agent or any Lender that requests the Lead Borrower to
deliver such paper copies until a written request to cease delivering paper copies is given by the
Administrative Agent or such Lender and (ii) the Lead Borrower shall notify the Administrative
Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and
provide to the Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. The Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by the Loan Parties with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of
such documents.


The Loan Parties hereby acknowledge that (a) the Administrative Agent and/or the Arranger will make
available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf
of the Loan Parties hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on SyndTrak or another similar electronic system (the “Platform”).



     6.03 Notices. Promptly notify the Administrative Agent:




     (a) of the occurrence of any Default;




     (b) of any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including, if the same will have such result: (i) breach or
non-performance of, or any default under, a Material Contract or with respect to Material
Indebtedness of any Loan Party or any Subsidiary thereof; (ii) any dispute, litigation,
investigation, proceeding or suspension between any Loan Party or any Subsidiary thereof and
any Governmental Authority; (iii) the commencement of, or any material development in, any
litigation or proceeding affecting any Loan Party or any Subsidiary thereof, including
pursuant to any applicable Environmental Laws; (iv) any proceeding with, or investigation or
possible investigation or other inquiry by any Governmental Authority regarding financial or
other operational results of any Loan Party or any Subsidiary thereof; or (v) the failure to
pay rent at any of such Loan Party’s locations for more than ten (10) days following the day
on which such rent first came due;




     (c) of the occurrence of any ERISA Event;




     (d) of any material change in accounting policies or financial reporting practices by
any Loan Party or any Subsidiary thereof;




     (e) of any change in the Responsible Officers of any Loan Party;




     (f) of the discharge by any Loan Party of its present Registered Public Accounting Firm
or any withdrawal or resignation by such Registered Public Accounting Firm; or



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     (g) of any collective bargaining agreement or other labor contract to which a Loan
Party becomes a party.


Each notice pursuant to this Section shall be accompanied by a statement of a Responsible
Officer of the Lead Borrower setting forth details of the occurrence referred to therein and
stating what action the Lead Borrower has taken and proposes to take with respect thereto. Each
notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions
of this Agreement and any other Loan Document that have been breached.



     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable,
all its obligations and liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, (b) all lawful claims
(including, without limitation, claims of landlords, warehousemen, customs brokers, and carriers)
which, if unpaid, would by Law become a Lien upon its property having priority over the Lien of the
Collateral Agent; and (c) all
Material Indebtedness, as and when due and payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such Material Indebtedness, except, in each
case, where (a) the validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) such Loan Party has established adequate reserves with respect thereto in
accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation
and enforcement of any Lien securing such obligation, and (d) the failure to make payment pending
such contest could not reasonably be expected to result in a Material Adverse Effect. Nothing
contained in this Section 6.04 shall be deemed to limit the rights of the Agents with respect to
determining Reserves pursuant to this Agreement.



     6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and
effect its legal existence and good standing under the Laws of the jurisdiction of its organization
or formation except in a transaction permitted by Section 7.04 or 7.05; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business, except to the extent that failure to
do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew
all of its Intellectual Property, except to the extent such Intellectual Property is no longer used
or useful in the conduct of the business of the Loan Parties or to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.



     6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its material
properties and equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted, and (b) make all necessary repairs thereto and renewals
and replacements thereof, except in each case where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.



     6.07 Maintenance of Insurance. Maintain with financially sound and reputable insurance
companies that are not Affiliates of any Loan Party and having an A.M. Best Rating of at least A-
and otherwise reasonably acceptable to the Administrative Agent, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business and operating in the same or similar locations or as is
required by applicable Law, of such types and in such amounts (after giving effect to any
self-insurance compatible with the following standards) as are customarily carried under similar
circumstances by such other Persons and as are reasonably acceptable to the Administrative Agent.



          (a) Fire and extended coverage policies maintained with respect to any Collateral shall
be endorsed or otherwise amended to include (i) a lenders’ loss payable clause (regarding personal
property), in form and substance satisfactory to the Collateral Agent, which endorsements or
amendments shall provide that the insurer shall pay all proceeds otherwise payable to the Loan
Parties under the



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policies directly to the Collateral Agent, (ii) a provision to the effect that
none of the Loan Parties, Credit Parties or any other Person shall be a co-insurer and (iii) such
other provisions as the Collateral Agent may reasonably require from time to time to protect the
interests of the Credit Parties with respect to the Collateral. Commercial general liability
policies shall be endorsed to name the Collateral Agent as an additional insured. Business
interruption policies shall name the Collateral Agent as a loss payee and shall be endorsed or
amended to include (i) a provision that, from and after the Closing Date, the insurer shall pay all
proceeds otherwise payable to the Loan Parties under the policies directly to the Collateral Agent,
(ii) a provision to the effect that none of the Loan Parties, the Administrative Agent, the
Collateral Agent or any other party shall be a co-insurer and (iii) such other provisions as the
Collateral Agent may reasonably require from time to time to protect the interests of the Credit
Parties. Each such policy referred to in this Section 6.07(d) shall also provide that it
shall not be canceled, modified or not renewed (i) by reason of nonpayment of premium except upon
not less than thirty (30) days’ prior written notice thereof by the insurer to the Collateral Agent
(giving the Collateral Agent the right to cure defaults in the payment of premiums) or (ii) for any
other reason except upon not less than thirty (30) days’ prior written notice thereof by the
insurer to the Collateral Agent. The Lead Borrower shall deliver to the Collateral Agent, prior to
the cancellation, modification or non-renewal of any such policy of insurance, evidence of a
renewal or replacement policy (including an insurance binder) together with evidence satisfactory
to the Collateral Agent of payment of the premium therefor (unless such payment will be made in
accordance with the trade terms available therefor or has been financed pursuant to any insurance
premium financing permitted under clause (j) of the definition of Permitted Indebtedness).



          (b) Maintain for themselves and their Subsidiaries, a Directors and Officers insurance policy,
and a “Blanket Crime” policy including employee dishonesty, forgery or alteration, theft,
disappearance and destruction, robbery and safe burglary, property, and computer fraud coverage
with responsible companies in such amounts as are customarily carried by business entities engaged
in similar businesses similarly situated, and will upon request by the Administrative Agent furnish
the Administrative Agent certificates evidencing renewal of each such policy.



          (c) Permit any representatives that are designated by the Collateral Agent to inspect the
insurance policies maintained by or on behalf of the Loan Parties and to inspect books and records
related thereto and any properties covered thereby.



          (d) None of the Credit Parties, or their agents or employees shall be liable for any loss or
damage insured by the insurance policies required to be maintained under this Section 6.07.
Each Loan Party shall look solely to its insurance companies or any other parties other than the
Credit Parties for the recovery of such loss or damage and such insurance companies shall have no
rights of subrogation against any Credit Party or its agents or employees. If, however, the
insurance policies do not provide waiver of subrogation rights against such parties, as required
above, then the Loan Parties hereby agree, to the extent permitted by law, to waive their right of
recovery, if any, against the Credit Parties and their agents and employees. The designation of
any form, type or amount of insurance coverage by the any Credit Party under this Section
6.07 shall in no event be deemed a representation, warranty or advice by such Credit Party that
such insurance is adequate for the purposes of the business of the Loan Parties or the protection
of their properties.



     6.08 Compliance with Laws. Comply in all material respects with the requirements of all Laws
and all orders, writs, injunctions and decrees applicable to it or to its business or property,
except in such instances in which (a) such requirement of Law or order, writ, injunction or decree
is being contested in good faith by appropriate proceedings diligently conducted and with respect
to which adequate reserves have been set aside and maintained by the Loan Parties in accordance
with GAAP; (b) such contest effectively suspends enforcement of the contested Laws, and (c) the
failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.



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6.09 Books and Records; Accountants. (a) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the assets and
business of the Loan Parties or such Subsidiary, as the case may be; and (ii) maintain such
books of record and account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over the Loan Parties or such
Subsidiary, as the case may be.




     (b) at all times retain a Registered Public Accounting Firm which is reasonably
satisfactory to the Administrative Agent and shall instruct such Registered Public
Accounting Firm to cooperate with, and be available to, the Administrative Agent or its
representatives to discuss the Loan Parties’ financial performance, financial condition,
operating results, controls, and such other matters, within the scope of the retention of
such Registered Public Accounting Firm, as may be raised by the Administrative Agent.




6.10 Inspection Rights. (a) Permit representatives and independent contractors of
the Administrative Agent to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with its directors, officers, and
Registered Public Accounting Firm, all at the expense of the Loan Parties and at such
reasonable times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Lead Borrower; provided, however, that
when an Event of Default exists the Administrative Agent (or any of its representatives or
independent contractors) may do any of the foregoing at the expense of the Loan Parties at
any time during normal business hours and without advance notice.




     (b) Upon the request of the Administrative Agent after reasonable prior notice, permit
the Administrative Agent or professionals (including investment bankers, consultants,
accountants, lawyers and appraisers) retained by the Administrative Agent to conduct
appraisals, commercial finance examinations and other evaluations, including, without
limitation, of (i) the Lead Borrower’s practices in the computation of the Borrowing Base
and (ii) the assets included in the Borrowing Base and related financial information such
as, but not limited to, sales, gross margins, payables, accruals and reserves. The Loan
Parties shall pay the fees and expenses of the Administrative Agent and such professionals
with respect to one (1) appraisal of the Loan Parties’ Inventory and one (1) commercial
finance examination during each Fiscal Year; provided that, if Availability is at
any time less than twenty (20%) of the Loan Cap, the Loan Parties shall pay the fees and
expenses of the Administrative Agent and such professionals with respect to two (2)
appraisals of the Loan Parties’ Inventory and two (2) commercial finance examinations during
such Fiscal Year. Notwithstanding the foregoing, the Administrative Agent may undertake
additional appraisals and commercial finance examinations (i) as it in its discretion deems
necessary or appropriate, at its own expense or, (ii) if an Event of Default shall have
occurred and be continuing, at the expense of the Loan Parties.



     6.11 Use of Proceeds. Use the proceeds of the Credit Extensions (a) to repay Indebtedness
under the Existing Credit Agreement and to pay related transaction expenses on the Closing Date,
(b) to finance the acquisition of working capital assets of the Borrowers, including the purchase
of inventory and equipment, in each case in the ordinary course of business, (c) to finance Capital
Expenditures of the Borrowers, and (d) for general corporate purposes of the Loan Parties, in each
case to the extent expressly permitted under applicable Law and the Loan Documents.



     6.12 Additional Loan Parties. Notify the Administrative Agent at the time that any
Person becomes a Subsidiary, and promptly thereafter (and in any event within fifteen (15) days),
cause any such Person (a) which is not a CFC, to (i) become a Loan Party by executing and
delivering to the



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Administrative Agent a Joinder to this Agreement or a counterpart of the Facility
Guaranty or such other document as the Administrative Agent shall deem appropriate for such
purpose, (ii) grant a Lien to the Collateral Agent on such Person’s assets to secure the
Obligations, and (iii) deliver to the Administrative Agent documents of the types referred to in
clauses (iii) and (iv) of Section 4.01(a) and favorable opinions of counsel to such Person
(which shall cover, among other things, the legality, validity, binding effect and enforceability
of the documentation referred to in clause (a)), and (b) if any Equity Interests or Indebtedness of
such Person are owned by or on behalf of any Loan Party, to pledge such Equity Interests and
promissory notes evidencing such Indebtedness (except that, if such Subsidiary is a CFC, the Equity
Interests of such Subsidiary to be pledged may be limited to 65% of the outstanding voting Equity
Interests of such Subsidiary and 100% of the non-voting Equity Interests of such Subsidiary and
such time period may be extended based on local law or practice), in each case in form, content and
scope reasonably satisfactory to the Administrative Agent. In no event shall compliance with this
Section 6.12 waive or be deemed a waiver or consent to any transaction giving rise to the
need to comply with this Section 6.12 if such transaction was not otherwise expressly
permitted by this Agreement or constitute or be deemed to constitute, with respect to any
Subsidiary, an approval of such Person as a Borrower or permit the inclusion of any acquired assets
in the computation of the Borrowing Base.



     6.13 Cash Management.



          (a) On or prior to the Closing Date:




          (i) deliver to the Administrative Agent copies of notifications (each, a “Credit
Card Notification”) substantially in the form attached hereto as Exhibit H which
have been executed on behalf of such Loan Party and delivered to such Loan Party’s credit
card clearinghouses and processors listed on Schedule 5.21(b); and




          (ii) enter into a Blocked Account Agreement satisfactory in form and substance to the
Agents with each Blocked Account Bank (collectively, the “Blocked Accounts”).



          (b) At the request of the Administrative Agent, the Loan Parties shall deliver to the
Administrative Agent copies of notifications (each, a “DDA Notification”) substantially in
the form attached hereto as Exhibit G which have been executed on behalf of such Loan Party
and delivered to each depository institution listed on Schedule 5.21(a).



          (c) The Loan Parties shall ACH or wire transfer or make an intra bank transfer no less
frequently than daily (and whether or not there are then any outstanding Obligations) to a Blocked
Account all amounts on deposit in each such DDA and all payments due from credit card processors.



          (d) On or before February 15, 2011, the Loan Parties shall establish with Wells Fargo or, if
the Administrative Agent consents, Bank of America, N.A. or any other bank or financial institution
reasonably acceptable to the Administrative Agent, a cash management system reasonably acceptable
to the Administrative Agent which shall include, without limitation, the establishment of a
concentration account maintained by the Collateral Agent (the “Concentration Account”) and
a separate operating account from which disbursements shall be funded.



          (e) Each Blocked Account Agreement shall require after the occurrence and during the
continuance of a Cash Dominion Event, the ACH or wire transfer or intra bank transfer no less
frequently than daily (and whether or not there are then any outstanding Obligations) to (i) prior
to the establishment of the Loan Parties’ cash management system as required pursuant to Section
6.13(d) above, the concentration account (account number 1459701000) maintained by the Lead
Borrower at Bank of America, N.A., which concentration account shall be a Blocked Account, and (ii)
upon the



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establishment of the Loan Parties’ cash management system as required pursuant to Section
6.13(d) above, the Concentration Account, of all cash receipts and collections, including, without
limitation, the following:




          (i) all available cash receipts from the sale of Inventory and other assets (whether or
not constituting Collateral);




          (ii) all proceeds of collections of Accounts;




          (iii) all other cash payments received by a Loan Party from any Person or from any
source or on account of any sale or other transaction or event, including, without
limitation, all net proceeds on account of any Prepayment Event;




          (iv) the then contents of each DDA (net of any minimum balance, not to exceed
$2,500.00, as may be required to be kept in the subject DDA by the depository institution at
which such DDA is maintained);




          (v) the then entire ledger balance of each Blocked Account (net of any minimum balance,
not to exceed $2,500.00, as may be required to be kept in the subject Blocked Account by the
Blocked Account Bank); and




          (vi) the proceeds of all credit card charges.



          (f) The Concentration Account shall at all times be under the sole dominion and control of the
Collateral Agent. The Loan Parties hereby acknowledge and agree that (i) the Loan Parties have no
right of withdrawal from the Concentration Account, (ii) the funds on deposit in the Concentration
Account shall at all times be collateral security for all of the Obligations and (iii) the funds on
deposit in the Concentration Account shall be applied as provided in this Agreement. In the event
that, notwithstanding the provisions of this Section 6.13, any Loan Party receives or
otherwise has dominion and control of any such proceeds or collections, such proceeds and
collections shall be held in trust by such Loan Party for the Collateral Agent, shall not be
commingled with any of such Loan Party’s other funds or deposited in any account of such Loan Party
and shall, not later than the Business Day after receipt thereof, be deposited into the
Concentration Account or dealt with in such other fashion as such Loan Party may be instructed by
the Collateral Agent.



          (g) Upon the request of the Administrative Agent, the Loan Parties shall cause bank statements
and/or other reports to be delivered to the Administrative Agent not less often than monthly,
accurately setting forth all amounts deposited in each Blocked Account to ensure the proper
transfer of funds as set forth above.



     6.14 Information Regarding the Collateral.



     Furnish to the Administrative Agent at least thirty (30) days prior written notice of any
change in: (i) any Loan Party’s name or in any trade name used to identify it in the conduct of its
business or in the ownership of its properties; (ii) the location of any Loan Party’s chief
executive office, its principal place of business, any office in which it maintains books or
records relating to Collateral owned by it (other than any Store location) or any
distribution center (including the establishment of any new distribution center); (iii) any Loan
Party’s organizational structure or jurisdiction of incorporation or formation; or (iv) any Loan
Party’s Federal Taxpayer Identification Number or organizational identification number assigned to
it by its state of organization. The Loan Parties shall not effect or permit any change referred to
in the preceding sentence unless (if the same shall be necessary to continue perfection) all
filings have



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been made under the UCC or otherwise that are required in order for the Collateral
Agent to continue at all times following such change to have a valid, legal and perfected first
priority security interest in all of the Collateral for its own benefit and the benefit of the
other Credit Parties.



     6.15 Physical Inventories.



          (a) Cause not less than one physical inventory to be undertaken, at the expense of the Loan
Parties, in each twelve (12) month period and periodic cycle counts, in each case consistent with
past practices, conducted by such inventory takers as are satisfactory to the Collateral Agent and
following such methodology as is consistent with the methodology used in the immediately preceding
inventory count or as otherwise may be satisfactory to the Collateral Agent. The Collateral Agent,
at the expense of the Loan Parties, may participate in and/or observe each scheduled physical count
of Inventory which is undertaken on behalf of any Loan Party. The Lead Borrower, within 30 days
following the end of each Fiscal Month, shall provide the Collateral Agent with a reconciliation of
the results of the physical count of the Loan Parties’ Inventory, and shall post such results to
the Loan Parties’ stock ledgers and general ledgers, as applicable.



          (b) Permit the Collateral Agent, in its discretion, if any Event of Default exists, to cause
additional such inventories to be taken as the Collateral Agent determines (each, at the expense of
the Loan Parties).



     6.16 Environmental Laws.



          (a) Conduct its operations and keep and maintain its Real Estate in material compliance with
all Environmental Laws; (b) obtain and renew all environmental permits necessary for its operations
and properties; and (c) implement any and all investigation, remediation, removal and response
actions that are appropriate or necessary to maintain the value and marketability of the Real
Estate or to otherwise comply with Environmental Laws pertaining to the presence, generation,
treatment, storage, use, disposal, transportation or release of any Hazardous Materials on, at, in,
under, above, to, from or about any of its Real Estate, provided, however, that
neither a Loan Party nor any of its Subsidiaries shall be required to undertake any such cleanup,
removal, remedial or other action to the extent that its obligation to do so is being contested in
good faith and by proper proceedings and adequate reserves have been set aside and are being
maintained by the Loan Parties with respect to such circumstances in accordance with GAAP.



     6.17 Further Assurances.



          (a) Execute any and all further documents, financing statements, agreements and instruments,
and take all such further actions (including the filing and recording of financing statements and
other documents), that may be required under any applicable Law, or which any Agent may request, to
effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or
perfect the Liens created or intended to be created by the Security Documents or the validity or
priority of any such Lien, all at the expense of the Loan Parties. The Loan Parties also agree to
provide to the Agents, from time to time upon request, evidence satisfactory to the Agents as to
the perfection and priority of the Liens created or intended to be created by the Security
Documents.



          (b) Upon the reasonable request of the Collateral Agent, use commercially reasonable efforts
to cause each of its customs brokers, freight forwarders, consolidators and/or carriers to deliver
an agreement (including, without limitation, a Customs Broker Agreement) to the Collateral Agent
covering such matters and in such form as the Collateral Agent may reasonably require.



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          (c) Upon the reasonable request of the Collateral Agent, use commercially reasonable efforts
cause any landlords of any distribution center to deliver a Collateral Access Agreement to the
Collateral Agent.



     6.18 Compliance with Terms of Leaseholds. Except as could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect, perform all of its obligations under Leases of real property to which
any Loan Party or any of its Subsidiaries is a party, and cause each of its Subsidiaries to do so.



     6.19 Material Contracts. Perform and observe all the material terms and provisions of
each Material Contract to be performed or observed by it, maintain each such Material Contract in
full force and effect, and enforce each such Material Contract in accordance with its terms, in
each case other than any Material Contract that has been replaced or that is no longer necessary to
the conduct of the Loan Parties’ business.



ARTICLE VII

NEGATIVE COVENANTS




     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, no Loan Party
shall, nor shall it permit any Subsidiary to, directly or indirectly:



     7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired or sign or file or suffer to exist
under the UCC or any similar Law or statute of any jurisdiction a financing statement that names
any Loan Party or any Subsidiary thereof as debtor; sign or suffer to exist any security agreement
authorizing any Person thereunder to file such financing statement; sell any of its property or
assets subject to an understanding or agreement (contingent or otherwise) to repurchase such
property or assets with recourse to it or any of its Subsidiaries; or assign or otherwise transfer
any accounts or other rights to receive income, other than, as to all of the above, Permitted
Encumbrances.



     7.02 Investments. Make any Investments, except Permitted Investments.



     7.03 Indebtedness; Disqualified Stock.



          (a) Create, incur, assume, guarantee, suffer to exist or otherwise become or remain liable
with respect to, any Indebtedness, except Permitted Indebtedness or (b) issue Disqualified Stock.



     7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another
Person, (or agree to do any of the foregoing), except that, so long as no Default or Event of
Default shall have occurred and be continuing prior to or immediately after giving effect to any
action described below or would result therefrom:




     (a) any Subsidiary which is not a Loan Party may merge with (i) a Loan Party,
provided that the Loan Party shall be the continuing or surviving Person, or (ii)
any one or more other Subsidiaries which are not Loan Parties, provided that when
any wholly-owned Subsidiary is merging with another Subsidiary, a wholly-owned Subsidiary
shall be the continuing or surviving Person;



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     (b) any Subsidiary which is a Loan Party may merge into any Subsidiary which is a Loan
Party or into a Borrower, provided that in any merger involving a Borrower, such
Borrower shall be the continuing or surviving Person;




     (c) in connection with a Permitted Acquisition, any Subsidiary of a Loan Party may
merge with or into or consolidate with any other Person or permit any other Person to merge
with or into or consolidate with it; provided that (i) the Person surviving such
merger shall be a wholly-owned Subsidiary of a Loan Party and (ii) in the case of any such
merger to which any Loan Party is a party, such Loan Party is the surviving Person; and




     (d) any CFC that is not a Loan Party may merge into any CFC that is not a Loan Party.



     7.05 Dispositions. Make any Disposition or enter into any agreement to make any Disposition,
except Permitted Dispositions.



     7.06 Restricted Payments. Declare or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity
Interests or accept any capital contribution, except that:




     (a) each Subsidiary of a Loan Party may make Restricted Payments to any Loan Party
whether or not a Default or Event of Default then exists;




     (b) the Loan Parties and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other common Equity Interests of
such Person;




     (c) if the Payment Conditions are satisfied, the Loan Parties and each Subsidiary may
purchase, redeem or otherwise acquire Equity Interests issued by it;




     (d) if the Payments Conditions are satisfied, the Parent may declare or pay cash
dividends to its stockholders; and




     (e) (i) the Parent may issue and sell Equity Interests other than Disqualified Stock, and
(ii) the other Loan Parties and any Subsidiary thereof may issue additional Equity Interests
to a Loan Party.



     7.07
Prepayments of Indebtedness. Prepay, redeem, purchase, defease or otherwise
satisfy prior to the scheduled maturity thereof in any manner any Indebtedness, or make any payment
in violation of any subordination terms of any Subordinated Indebtedness, except (a) as long as no
Event of Default then exists, regularly scheduled or mandatory repayments, repurchases, redemptions
or defeasances of Permitted Indebtedness (other than Subordinated Indebtedness), (b) as long as no
Event of Default then exists, repayments and prepayments of Subordinated Indebtedness in accordance
with the subordination terms thereof, (c) voluntary prepayments, repurchases, redemptions or
defeasances of Permitted Indebtedness (but excluding on account of any Subordinated Indebtedness)
as long as the Payment Conditions are satisfied, and (d) refinancings and refundings of such
Indebtedness in compliance with Section 7.02(e).




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     7.08 Change in Nature of Business.




     (a) In the case of the Parent, engage in any business or activity other than (i) the
direct or indirect ownership of all outstanding Equity Interests in the other Loan Parties,
(ii) maintaining its corporate existence, (iii) participating in tax, accounting and other
administrative activities as the parent of the consolidated group of companies, including
the Loan Parties, (iv) the execution and delivery of the Loan Documents to which it is a
party and the performance of its obligations thereunder, and (v) activities incidental to
the businesses or activities described in clauses (i) through (iv) of this Section
7.08(a).




     (b) In the case of each of the Loan Parties, engage in any line of business
substantially different from the business conducted by the Loan Parties and their
Subsidiaries on the date hereof or any business substantially related or incidental thereto.



     7.09 Transactions with Affiliates. Enter into, renew, extend or be a party to any transaction
of any kind with any Affiliate of any Loan Party, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to the Loan Parties or
such Subsidiary as would be obtainable by the Loan Parties or such Subsidiary at the time in a
comparable arm’s length transaction with a Person other than an Affiliate, provided that
the foregoing restriction shall not apply to a transaction between or among the Loan Parties, and
any employment agreements and other transactions as between an employee, officer or director of any
of the Loan Parties and a Loan Party or the Loan Parties, including, without limitation, stock
options or other grants to acquire capital stock, deferred compensation plans and any indemnity
provided by the Loan parties or any of them to such Persons.



     7.10 Burdensome Agreements. Enter into or permit to exist any Contractual Obligation
(other than this Agreement or any other Loan Document) that (a) limits the ability (i) of any
Subsidiary to make Restricted Payments or other distributions to any Loan Party or to otherwise
transfer property to or invest in a Loan Party, (ii) of any Subsidiary to Guarantee the
Obligations, (iii) of any Subsidiary to make or repay loans to a Loan Party, or (iv) of the Loan
Parties or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such
Person in favor of the Collateral Agent; provided, however, that this clause (iv)
shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under clauses (c) or (f) of the definition of Permitted Indebtedness solely to the extent
any such negative pledge relates to the property financed by or the subject of such Indebtedness;
or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person.



     7.11 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose
of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such
purpose; or (b) for purposes other than those permitted under this Agreement.



     7.12 Amendment of Material Documents.



     Amend, modify or waive any of a Loan Party’s rights under (a) its Organization Documents in a
manner materially adverse to the Credit Parties, or (b) any Material Contract or Material
Indebtedness (other than on account of any refinancing thereof otherwise permitted hereunder), in
each case to the extent that such amendment, modification or waiver would result in a Default or
Event of Default under any of the Loan Documents, would be materially adverse to the Credit Parties
or otherwise would be reasonably likely to have a Material Adverse Effect.




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     7.13 Fiscal Year.



     Change the Fiscal Year of any Loan Party, or the accounting policies or reporting practices of
the Loan Parties, except as required by GAAP, the SEC or any other Governmental Authority.



     7.14 Deposit Accounts; Credit Card Processors.



     Open new DDAs or Blocked Accounts unless the Loan Parties shall have delivered to the
Collateral Agent appropriate DDA Notifications or Blocked Account Agreements consistent with the
provisions of Section 6.13 and otherwise satisfactory to the Collateral Agent. No Loan
Party shall maintain any bank accounts or enter into any agreements with credit card processors
other than the ones expressly contemplated herein or in Section 6.13 hereof.



     7.15 Consolidated Fixed Charge Coverage Ratio.



     During the continuance of a Covenant Compliance Event, permit the Consolidated Fixed Charge
Coverage Ratio, calculated as of the last day of each month on a trailing twelve month basis, to be
less than 1.0:1.0.



ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES




     8.01 Events of Default. Any of the following shall constitute an Event of Default:




     (a) Non-Payment. The Borrowers or any other Loan Party fails to pay when
and as required to be paid herein, (i) any amount of principal of any Loan or any L/C
Obligation, or deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii)
any interest on any Loan or on any L/C Obligation, or any fee within five (5) days of the
date when due hereunder, or (iii) any other amount payable hereunder or under any other Loan
Document is not paid within five (5) days of Lead Borrower’s receipt of an invoice therefor
with supporting documentation; or




     (b) Specific Covenants. (i) Any Loan Party fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02 (other
than 6.02(d)), 6.03, 6.05, 6.07, 6.10, 6.11,
6.12, 6.13, 6.14 (other than 6.14 (ii)) or Article VII; or




     (c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for 30 days; or




     (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of any Borrower or
any other Loan Party herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith (including, without limitation, any Borrowing Base
Certificate) shall be incorrect or misleading in any material respect when made or deemed
made; or




     (e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise and giving effect to any applicable grace and/or cure periods) in
respect of any Material Indebtedness (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement), or (B) fails to observe or perform any other agreement or condition relating
to any such Material Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to



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permit the holder or holders of such Material Indebtedness or
the beneficiary or beneficiaries of any Guarantee thereof (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or
such Guarantee to become payable or cash collateral in respect thereof to be
demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by the Loan Party or such
Subsidiary as a result thereof is greater than $5,000,000; or




     (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or for all or any material part of its property; or a proceeding
shall be commenced or a petition filed, without the application or consent of such Person,
seeking or requesting the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed and the appointment continues
undischarged, undismissed or unstayed for 30 calendar days or an order or decree approving
or ordering any of the foregoing shall be entered; or any proceeding under any Debtor Relief
Law relating to any such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for 30 calendar
days, or an order for relief is entered in any such proceeding; or




     (g) Judgments. There is entered against any Loan Party or any Subsidiary
thereof (i) one or more judgments or orders for the payment of money in an aggregate amount
(as to all such judgments and orders) exceeding $5,000,000 (to the extent not covered by
independent third-party insurance as to which the insurer has been notified of the potential
claim and does not dispute coverage), or (ii) any one or more non-monetary judgments that
have, or could reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any
creditor upon such judgment or order, or (B) there is a period of 30 consecutive days at any
time after the entry of any such judgment, order, or award during which (i) the same is not
discharged or satisfied, or (ii) a stay of enforcement thereof is not in effect; or




     (h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result in liability
of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the
PBGC in an aggregate amount in excess of $2,500,000 or which would reasonably likely result
in a Material Adverse Effect, or (ii) a Loan Party or any ERISA Affiliate fails to pay when
due, after the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan
in an aggregate amount in excess of $2,500,000 or which would reasonably likely result in a
Material Adverse Effect; or




     (i) Invalidity of Loan Documents. (i) Any Loan Party contests in any manner
the validity or enforceability of any material provision of any Loan Document, or denies
that it has any or further liability or obligation under any material provision of any Loan
Document, or



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purports to revoke, terminate or rescind any material provision of any Loan
Document or seeks to avoid, limit or otherwise adversely affect any Lien purported to be
created under any Security Document; or (ii) the Liens purported to be created under any
Security Document shall cease to be (other than pursuant to any act or omission by the
Agents) valid and perfected Liens on the Collateral with the priority required by the
applicable Security Document; or




     (j) Change of Control. There occurs any Change of Control; or




     (k) Cessation of Business. Except as otherwise expressly permitted hereunder,
any Loan Party shall adopt a plan of liquidation or the board of directors of any Loan party
shall resolve to suspend the operation of its business in the ordinary course, liquidate all
or a material portion of its assets or Store locations, or employ an agent or other third
party to conduct a
program of closings, liquidations or “Going-Out-Of-Business” sales of any material
portion of its business; or




     (l) Subordination. (i) The subordination provisions of the documents
evidencing or governing any Subordinated Indebtedness (the “Subordinated
Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable against any holder of the applicable Subordinated
Indebtedness; or (ii) any Borrower or any other Loan Party shall, directly or indirectly,
disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of
the Subordination Provisions, (B) that the Subordination Provisions exist for the benefit of
the Credit Parties, or (C) that all payments of principal of or premium and interest on the
applicable Subordinated Indebtedness, or realized from the liquidation of any property of
any Loan Party, shall be subject to any of the Subordination Provisions.



     8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the
Administrative Agent may, or, at the request of the Required Lenders shall, take any or all of the
following actions:




     (a) declare the Commitments of each Lender to make Loans and any obligation of the
L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such Commitments and
obligation shall be terminated;




     (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued
and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Loan Parties;




     (c) require that the Loan Parties Cash Collateralize the L/C Obligations; and




     (d) whether or not the maturity of the Obligations shall have been accelerated pursuant
hereto, proceed to protect, enforce and exercise all rights and remedies of the Credit
Parties under this Agreement, any of the other Loan Documents or applicable Law, including,
but not limited to, by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in this
Agreement and the other Loan Documents or any instrument pursuant to which the Obligations
are evidenced, and, if such amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or equitable right of the Credit
Parties;


provided, however, that upon the entry of an order for relief with respect to
any Loan Party or any Subsidiary thereof under any Debtor Relief Laws, the obligation of each
Lender to make Loans and any

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 obligation of the L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and
other amounts as aforesaid shall automatically become due and payable, and the obligation of the
Loan Parties to Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any Lender.



     No remedy herein is intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of Law.



     8.03 Application of Funds. After the exercise of remedies provided for in Section
8.02 (or after the Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set forth in the proviso
to Section 8.02), any amounts received on account of the Obligations shall be applied by
the Administrative Agent in the following order:




     First, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting fees, indemnities, Credit Party Expenses and other amounts
(including fees, charges and disbursements of counsel to the Administrative Agent and the
Collateral Agent and amounts payable under Article III) payable to the
Administrative Agent and the Collateral Agent, each in its capacity as such;




     Second, to payment of that portion of the Obligations (excluding the Other
Liabilities) constituting indemnities, Credit Party Expenses, and other amounts (other than
principal, interest and fees) payable to the Lenders and the L/C Issuer (including fees,
charges and disbursements of counsel to the respective Lenders and the L/C Issuer and
amounts payable under Article III), ratably among them in proportion to the amounts
described in this clause Second payable to them;




     Third, to the extent not previously reimbursed by the Lenders, to payment to the
Agents of that portion of the Obligations constituting principal and accrued and unpaid
interest on any Permitted Overadvances;




     Fourth, to the extent that Swing Line Loans have not been refinanced by a Committed
Loan, payment to the Swing Line Lender of that portion of the Obligations constituting
accrued and unpaid principal and interest on the Swing Line Loans;




     Fifth, to payment of that portion of the Obligations constituting accrued and unpaid
interest on the Loans L/C Borrowings and other Obligations, and fees (including Letter of
Credit Fees), ratably among the Lenders and the L/C Issuer in proportion to the respective
amounts described in this clause Fifth payable to them;




     Sixth, to payment of that portion of the Obligations constituting unpaid principal
of the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in proportion
to the respective amounts described in this clause Sixth held by them;




     Seventh, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of
Letters of Credit;



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     Eighth, to payment of all other Obligations (including without limitation the cash
collateralization of unliquidated indemnification obligations as provided in Section
10.04(g), but excluding any Other Liabilities), ratably among the Credit Parties in
proportion to the respective amounts described in this clause Eighth held by them




     Ninth, to payment of that portion of the Obligations arising from Cash Management
Services, ratably among the Credit Parties in proportion to the respective amounts described
in this clause Ninth held by them;




     Tenth, to payment of all other Obligations arising from Bank Products, ratably among
the Credit Parties in proportion to the respective amounts described in this clause
Tenth held by them;




     Eleventh, to payment of all other Obligations arising from Factored Receivables and
Supply Chain Financing, ratably among the Credit Parties in proportion to the respective
amounts described in this clause Eleventh held by them; and




     Last, the balance, if any, after all of the Obligations have been indefeasibly paid
in full, to the Loan Parties or as otherwise required by Law.


Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount
of Letters of Credit pursuant to clause Seventh above shall be applied to satisfy drawings
under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral
after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligations, if any, in the order set forth above.



ARTICLE IX

ADMINISTRATIVE AGENT




     9.01 Appointment and Authority.




     (a) Each of the Lenders and the Swing Line Lender hereby irrevocably appoints Wells
Fargo to act on its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative Agent, the
Lenders and the L/C Issuer, and no Loan Party or any Subsidiary thereof shall have rights as
a third party beneficiary of any of such provisions.




     (b) Each of the Lenders (in its capacities as a Lender) and the Swing Line Lender
hereby irrevocably appoints Wells Fargo as Collateral Agent and authorizes the Collateral
Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing
any and all Liens on Collateral granted by any of the Loan Parties to secure any of the
Obligations, together with such powers and discretion as are reasonably incidental thereto.
In this connection, the Collateral Agent, as “collateral agent” and any co-agents,
sub-agents and attorneys-in-fact appointed by the Collateral Agent pursuant to Section
9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents, or for exercising any rights and remedies
thereunder at the direction of the Collateral Agent), shall be entitled to the benefits of
all provisions of this Article IX and Article X (including Section



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10.04(c)), as though such co-agents, sub-agents and attorneys-in-fact were the
“collateral agent” under the Loan Documents, as if set forth in full herein with respect
thereto.



     9.02 Rights as a Lender. The Persons serving as the Agents hereunder shall have the same
rights and powers in their capacity as a Lender as any other Lender and may exercise the same as
though they were not the Administrative Agent or the Collateral Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the Administrative Agent or the Collateral Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act
as the financial advisor or in any other advisory capacity for and generally engage in any kind of
business with the Loan Parties or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent or the Collateral Agent hereunder and without any duty to account
therefor to the Lenders.



     9.03 Exculpatory Provisions. The Agents shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents. Without limiting the generality
of the foregoing, the Agents:




     (a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;




     (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Loan Documents that the Administrative Agent or the Collateral Agent, as
applicable, is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for herein or in
the other Loan Documents), provided that no Agent shall be required to take any
action that, in its respective opinion or the opinion of its counsel, may expose such Agent
to liability or that is contrary to any Loan Document or applicable Law; and




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


No Agent shall be liable for any action taken or not taken by it (i) with the consent or at
the request of the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances
as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross
negligence or willful misconduct as determined by a final and non-appealable judgment of a court of
competent jurisdiction.



     The Agents shall not be deemed to have knowledge of any Default unless and until notice describing
such Default is given to such Agent by the Loan Parties, a Lender or the L/C Issuer. Upon the
occurrence of an Event of Default, the Agents shall take such action with respect to such Default
or Event of Default as shall be reasonably directed by the Applicable Lenders. Unless and until
the Agents shall have received such direction, the Agents may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to any such Default or Event of
Default as it shall deem advisable in the best interest of the Credit Parties. In no event shall
the Agents be required to comply with any such directions to the extent that any Agent believes
that its compliance with such directions would be unlawful.



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     The Agents shall not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder
or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or document or the creation,
perfection or priority of any Lien purported to be created by the Security Documents, (v) the value
or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in
Article IV or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Agents.



     9.04 Reliance by Agents.



     Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or other writing
(including, but not limited to, any electronic
message, Internet or intranet website posting or other distribution) believed by it to be genuine
and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may
rely upon any statement made to it orally or by telephone and believed by it to have been made by
the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C
Issuer unless the Administrative Agent shall have received written notice to the contrary from such
Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit.
Each Agent may consult with legal counsel (who may be counsel for any Loan Party), independent
accountants and other experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or experts.



     9.05 Delegation of Duties. Each Agent may perform any and all of its duties and exercise
its rights and powers hereunder or under any other Loan Document by or through any one or more
sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all of
its duties and exercise its rights and powers by or through their respective Related Parties. The
exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties
of the Agents and any such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as activities as such
Agent.



     9.06 Resignation and Removal of Agents. Either Agent may at any time give written notice
of its resignation to the Lenders and the Lead Borrower. Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with the Lead Borrower, to
appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of
any such bank with an office in the United States. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the
Lenders and the L/C Issuer, appoint a successor Administrative Agent or Collateral Agent, as
applicable, meeting the qualifications set forth above; provided that if the Administrative
Agent or the Collateral Agent shall notify the Lead Borrower and the Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the case of any Collateral
held by the Collateral Agent on behalf of the Lenders or the L/C Issuer under any of the Loan
Documents, the retiring Collateral Agent shall continue to hold such collateral security until such
time as a successor Collateral Agent is appointed) and (2) all payments, communications and
determinations




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provided to be made by, to or through the Administrative Agent shall instead be made
by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this Section. Upon the acceptance of a
successor’s appointment as Administrative Agent or Collateral Agent, as applicable, hereunder, such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this Section). The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Lead Borrower and such successor. After the retiring Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article and Section 10.04 shall
continue in effect for the benefit of such retiring Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while the
retiring Agent was acting as Administrative Agent or Collateral Agent hereunder.



     In addition, if any Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable Law, all of the remaining Lenders who are not the applicable Agent
may agree in writing to remove and replace such Agent with a successor Agent from among the
Lenders, and so long as no Event of Default has occurred and is continuing the consent of Lead
Borrower shall be required for any such change (such consent not to be unreasonably withheld,
delayed, or conditioned). Upon the replacement of the Agent, the successor Agent shall succeed to
and become vested with all of the rights, powers, privileges and duties of the removed Agent, and
the removed Agent shall be discharged from all of its duties and obligations as agent (but not as a
Lender) hereunder and under the other Loan Documents (if not already discharged therefrom as
provided above in this Section). The fees payable by the Borrowers to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Lead Borrower and such successor. After any such agent removal hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04 shall continue in effect for
the benefit of such removed agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while acting as Agent hereunder.



     Any resignation by Wells Fargo as Administrative Agent pursuant to this Section shall also
constitute its resignation as Swing Line Lender and the resignation of Wells Fargo as L/C Issuer.
Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring L/C Issuer and Swing Line Lender, (b) the retiring L/C Issuer and Swing Line Lender
shall be discharged from all of their respective duties and obligations hereunder or under the
other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of
the retiring L/C Issuer with respect to such Letters of Credit.



     9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the L/C
Issuer acknowledges that it has, independently and without reliance upon the Agents or any other
Lender or any of their Related Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender
and the L/C Issuer also acknowledges that it will, independently and without reliance upon the
Agents or any other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan Document or any
related agreement or any document furnished hereunder or thereunder. Except as provided in
Section 9.12, the Agents shall not have any duty or responsibility to provide any Credit
Party with any other credit or other information concerning



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the affairs, financial condition or
business of any Loan Party that may come into the possession of the Agents.



     9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the
Bookrunners, Arrangers, Syndication Agent or Documentation Agent listed on the cover page hereof
shall have any powers, duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent, Collateral Agent, a
Lender or the L/C Issuer hereunder.



     9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party,
the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Loan Parties) shall be entitled
and empowered, by intervention in such proceeding or otherwise




     (a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or advisable in order
to have the claims of the Lenders, the L/C Issuer, the Administrative Agent and the other
Credit Parties (including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders, the L/C Issuer, the Administrative Agent, such Credit Parties
and their respective agents and counsel and all other amounts due the Lenders, the L/C
Issuer the Administrative Agent and such Credit Parties under Sections 2.03(i),
2.03(j) and 2.03(k) as applicable, 2.09 and 10.04) allowed in
such judicial proceeding; and




     (b) to collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to
make such payments to the Administrative Agent and, if the Administrative Agent shall consent to
the making of such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.



     Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the
L/C Issuer or to authorize the Administrative Agent to vote in respect of the claim of any Lender
or the L/C Issuer in any such proceeding.



     9.10 Collateral and Guaranty Matters. The Credit Parties irrevocably authorize the
Agents, at their option and in their discretion,




     (a) to release any Lien on any property granted to or held by the Collateral Agent
under any Loan Document (i) upon termination of the Aggregate Commitments and payment in
full of all Obligations (other than contingent indemnification obligations for which no
claim has been asserted) and the expiration or termination of all Letters of Credit, (ii)
that is sold or to be sold as part of or in connection with any sale permitted hereunder or
under any other Loan



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Document, or (iii) if approved, authorized or ratified in writing by
the Applicable Lenders in accordance with Section 10.01;




     (b) to subordinate any Lien on any property granted to or held by the Collateral Agent
under any Loan Document to the holder of any Lien on such property that is permitted by
clause (h) of the definition of Permitted Encumbrances; and




     (c) to release any Guarantor from its obligations under the Facility Guaranty if such
Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.



Upon request by any Agent at any time, the Applicable Lenders will confirm in writing such
Agent’s authority to release or subordinate its interest in particular types or items of property,
or to release any Guarantor from its obligations under the Facility Guaranty pursuant to this
Section 9.10. In each case as specified in this Section 9.10, the Agents will, at
the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such
Loan Party may reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted under the Security Documents or to subordinate its
interest in such item, or to release such Guarantor from its obligations under the Facility
Guaranty, in each case in accordance with the terms of the Loan Documents and this Section
9.10.



     9.11 Notice of Transfer.



     The Agents may deem and treat a Lender party to this Agreement as the owner of such Lender’s
portion of the Obligations for all purposes, unless and until, and except to the extent, an
Assignment and Acceptance shall have become effective as set forth in Section 10.06.



     9.12 Reports and Financial Statements.



     By signing this Agreement, each Lender:




     (a) agrees to furnish the Administrative Agent after the occurrence and during the
continuance of a Cash Dominion Event (and thereafter at such frequency as the Administrative
Agent may reasonably request) with a summary of all Other Liabilities due or to become due
to such Lender. In connection with any distributions to be made hereunder, the
Administrative Agent shall be entitled to assume that no amounts are due to any Lender on
account of Other Liabilities unless the Administrative Agent has received written notice
thereof from such Lender;




     (b) is deemed to have requested that the Administrative Agent furnish such Lender,
promptly after they become available, copies of all financial statements required to be
delivered by the Lead Borrower hereunder and all commercial finance examinations and
appraisals of the Collateral received by the Agents (collectively, the “Reports”);




     (c) expressly agrees and acknowledges that the Administrative Agent makes no
representation or warranty as to the accuracy of the Reports, and shall not be liable for
any information contained in any Report;




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



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     (e) agrees to keep all Reports confidential in accordance with the provisions of
Section 10.07 hereof; and




     (f) without limiting the generality of any other indemnification provision contained in
this Agreement, agrees: (i) to hold the Agents and any such other Lender preparing a Report
harmless from any action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any Credit Extensions that the
indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (ii) to pay
and protect, and indemnify, defend, and hold the Agents and any such other Lender preparing
a
Report harmless from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including attorney costs) incurred by the Agents and any such
other Lender preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.



     9.13 Agency for Perfection.



     Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Liens for
the benefit of the Agents and the Lenders, in assets which, in accordance with Article 9 of the UCC
or any other applicable Law of the United States can be perfected only by possession or control.
Should any Lender (other than the Agents) obtain possession or control of any such Collateral, such
Lender shall notify the Agents thereof, and, promptly upon the Collateral Agent’s request therefor
shall deliver such Collateral to the Collateral Agent or otherwise deal with such Collateral in
accordance with the Collateral Agent’s instructions.



     9.14 Indemnification of Agents. The Lenders hereby agree to indemnify the Agents, the
L/C Issuer and any Related Party, as the case may be (to the extent not reimbursed by the Loan
Parties and without limiting the obligations of Loan Parties hereunder), ratably according to their
Applicable Percentages, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against any Agent in any way relating
to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be
taken by any Agent in connection therewith; provided, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful
misconduct as determined by a final and nonappealable judgment of a court of competent
jurisdiction.



     9.15 Relation among Lenders. The Lenders are not partners or co-venturers, and no Lender
shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of
the Agents) authorized to act for, any other Lender.



     9.16 Defaulting Lender.




     (a) If for any reason any Lender shall fail or refuse to abide by its obligations under
this Agreement, including without limitation its obligation to make available to
Administrative Agent its Applicable Percentage of any Loans, expenses or setoff or purchase
its Applicable Percentage of a participation interest in the Swingline Loans or L/C
Borrowings and such failure is not cured within one (1) Business Day after receipt from the
Administrative Agent of written notice thereof, then, in addition to the rights and remedies
that may be available to the other Credit Parties, the Loan Parties or any other party at
law or in equity, and not at limitation thereof, (i) such Defaulting Lender’s right to
participate in the administration of, or decision-



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making rights related to, the Obligations,
this Agreement or the other Loan Documents shall be suspended during the pendency of such
failure or refusal, and (ii) a Defaulting Lender shall be deemed to have assigned any and
all payments due to it from the Loan Parties, whether on account of outstanding Loans,
interest, fees or otherwise, to the remaining non-Defaulting Lenders for application to, and
reduction of, their proportionate shares of all outstanding Obligations until, as a result
of application of such assigned payments the Lenders’ respective Applicable Percentages of
all outstanding Obligations shall have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such delinquency, and (iii)
at the option of the Administrative Agent, any amount payable to such Defaulting Lender
hereunder (whether on account of principal, interest, fees or otherwise) shall, in lieu of
being distributed to such Defaulting Lender, be retained by the Administrative Agent as cash
collateral for future funding obligations of the Defaulting Lender in respect of any Loan or
existing or future participating interest in any Swing Line Loan or Letter of Credit. The
Defaulting Lender’s decision-making and participation rights and rights to payments as set
forth in clauses (i) and (ii) hereinabove shall be restored only upon the payment by the
Defaulting Lender of its Applicable Percentage of any Obligations, any participation
obligation, or expenses as to which it is delinquent, together with interest thereon at the
rate set forth in Section 2.13(c) hereof from the date when originally due until the
date upon which any such amounts are actually paid.




     (b) The non-Defaulting Lenders shall also have the right, but not the obligation, in
their respective, sole and absolute discretion, to cause the termination and assignment,
without any further action by the Defaulting Lender for no cash consideration (pro
rata, based on the respective Commitments of those Lenders electing to exercise such
right), of the Defaulting Lender’s Commitment to fund future Loans. Upon any such purchase
of the Applicable Percentage of any Defaulting Lender, the Defaulting Lender’s share in
future Credit Extensions and its rights under the Loan Documents with respect thereto shall
terminate on the date of purchase, and the Defaulting Lender shall promptly execute all
documents reasonably requested to surrender and transfer such interest, including, if so
requested, an Assignment and Acceptance.




     (c) Each Defaulting Lender shall indemnify the Administrative Agent and each
non-Defaulting Lender from and against any and all loss, damage or expenses, including but
not limited to reasonable attorneys’ fees and funds advanced by the Administrative Agent or
by any non-Defaulting Lender, on account of a Defaulting Lender’s failure to timely fund its
Applicable Percentage of a Loan or to otherwise perform its obligations under the Loan
Documents.



    9.17 Syndication Agent; Documentation Agent.


    Notwithstanding the provisions of this Agreement or any of the other Loan Documents, no
Person who is or becomes a Syndication Agent or a Documentation Agent shall have any powers,
rights, duties, responsibilities or liabilities with respect to this Agreement and the other Loan
Documents.



ARTICLE X

MISCELLANEOUS


    10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be
effective unless in writing signed by the Administrative Agent, with the consent of the Required
Lenders, and the Lead Borrower or the applicable Loan Party, as the case may be, and acknowledged
by the Administrative Agent, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, however,
that no such amendment, waiver or consent shall:



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     (a) extend or, increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender;




     (b) as to any Lender, postpone any date fixed by this Agreement or any other Loan
Document for (i) any scheduled payment (including the Maturity Date) or mandatory prepayment
of principal, interest, fees or other amounts due hereunder or under any of the other Loan
Documents without the written consent of such Lender, or (ii) any scheduled or mandatory
reduction of the Aggregate Commitments hereunder or under any other Loan Document without
the written consent of such Lender;




     (c) as to any Lender, reduce the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this
Section 10.01) any fees or other amounts payable hereunder or under any other Loan
Document, without the written consent of such Lender; provided, however,
that only the consent of the Required Lenders shall be necessary to amend the definition of
“Default Rate” or to waive any obligation of the Borrowers to pay interest or Letter of
Credit Fees at the Default Rate;




     (d) as to any Lender, change Section 2.13 or Section 8.03 in a manner
that would alter the pro rata sharing of payments required thereby without the written
consent of such Lender;




     (e) change any provision of this Section or the definition
of “Required Lenders”, or
any other provision hereof specifying the number or percentage of Lenders required to amend,
waive or otherwise modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Lender;




     (f) except as expressly permitted hereunder or under any other Loan Document, release,
or limit the liability of, any Loan Party without the written consent of each Lender;




     (g) except for Permitted Dispositions, release all or substantially all of the
Collateral from the Liens of the Security Documents without the written consent of each
Lender;




     (h) change the definition of the term
“Borrowing Base” or any component definition
thereof if as a result thereof the amounts available to be borrowed by the Borrowers would
be increased without the written consent of each Lender, provided that the foregoing shall
not limit the discretion of the Administrative Agent to change, establish or eliminate any
Reserves in accordance with Section 2.01(c);




     (i) modify the definition of Permitted Overadvance so as to increase the amount thereof
or, except as provided in such definition, the time period for a Permitted Overadvance
without the written consent of each Lender; and




     (j) except as expressly permitted herein or in any other Loan Document, subordinate the
Obligations hereunder or the Liens granted hereunder or under the other Loan Documents, to
any other Indebtedness or Lien, as the case may be without the written consent of each
Lender;


and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the
rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any
Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless
in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect
the rights or duties of the Swing Line Lender under this Agreement; 

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(iii) no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under this Agreement or any
other Loan Document; (iv) no amendment, waiver or consent shall, unless in writing and signed by
the Collateral Agent in addition to the Lenders required above, affect the rights or duties of the
Collateral Agent under this Agreement or any other Loan Document, and (v) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only by the parties
thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any
right to approve or disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent of such Lender.



     If any Lender does not consent (a
“Non-Consenting Lender”) to a proposed amendment,
waiver, consent or release with respect to any Loan Document that requires the consent of each
Lender and that has been approved by the Required Lenders, the Lead Borrower may replace such
Non-Consenting Lender in accordance with Section 10.13; provided that such
amendment, waiver, consent or release can be effected as a result of the assignment contemplated by
such Section (together with all other such assignments required by the Lead Borrower to be made
pursuant to this paragraph).



     10.02 Notices; Effectiveness; Electronic Communications.




     (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (b)
below), all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered
mail or sent by telecopier as follows, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable telephone
number, as follows:




          (i) if to the Loan Parties, the Agents, the L/C Issuer or the Swing Line Lender, to the
address, telecopier number, electronic mail address or telephone number specified for such
Person on Schedule 10.02; and




          (ii) if to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.



     Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the extent provided in
subsection (b) below, shall be effective as provided in such subsection (b).




     (b) Electronic Communications. Notices and other communications to the
Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender or the
L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as
applicable, has notified the Administrative Agent that it is incapable of receiving notices
under such Article by electronic communication. The Administrative Agent or the Lead
Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices or
communications.



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     Unless the Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.




     (c) The Platform. THE PLATFORM IS PROVIDED
“AS IS” AND “AS AVAILABLE.”
THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE
PLATFORM. In no event shall the Agents or any of their Related Parties (collectively, the
“Agent Parties”) have any liability to any Loan Party, any Lender, the L/C Issuer or
any other Person for losses, claims, damages, liabilities or expenses of any kind (whether
in tort, contract or otherwise) arising out of the Loan Parties’ or the Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the extent that
such losses, claims, damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Agent Party; provided, however,
that in no event shall any Agent Party have any liability to any Loan Party, any Lender, the
L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).




     (d) Change of Address, Etc. Each of the Loan Parties, the Agents, the L/C
Issuer and the Swing Line Lender may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties hereto. Each
other Lender may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the Lead Borrower, the Agents, the L/C Issuer and the
Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an effective address,
contact name, telephone number, telecopier number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire instructions for such
Lender.




     (e) Reliance by Agents, L/C Issuer and Lenders. The Agents, the L/C Issuer and
the Lenders shall be entitled to rely and act upon any notices (including telephonic
Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the
Loan Parties even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Loan Parties shall indemnify the Agents, the L/C Issuer, each Lender and the
Related Parties of each of them from all losses, costs, expenses and liabilities resulting
from the reliance by such Person on each notice
purportedly given by or on behalf of the Loan Parties. All telephonic notices to and
other



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telephonic communications with the Agents may be recorded by the Agents, and each of
the parties hereto hereby consents to such recording.



     10.03 No Waiver; Cumulative Remedies. No failure by any Credit Party to exercise, and no
delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder or under any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided herein and in the other Loan Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether any Credit Party may have had notice or
knowledge of such Default at the time.



     10.04 Expenses; Indemnity; Damage Waiver.




     (a) Costs and Expenses. The Borrowers shall pay all Credit Party Expenses.




     (b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the
Agents (and any sub-agent thereof), each other Credit Party, and each Related Party of any
of the foregoing Persons (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless (on an after tax basis) from, any and all losses, claims,
causes of action, damages, liabilities, settlement payments, costs, and related expenses
(including the fees, charges and disbursements of any counsel for any Indemnitee), incurred
by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower
or any other Loan Party arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, or, in the case of the Agents (and any sub-agents thereof)
and their Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by any Loan Party
or any of its Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any Credit Party
to, a Blocked Account Bank or other Person which has entered into a control agreement with
any Credit Party hereunder, or (v) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on contract,
tort or any other theory, whether brought by a third party or by any Borrower or any other
Loan Party or any of the Loan Parties’ directors, shareholders or creditors, and regardless
of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or
arising, in whole or in part, out of the comparative, contributory or sole negligence of the
Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or related expenses
(x) are determined by a court of competent jurisdiction by final and nonappealable judgment
to have resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by a Borrower or any other Loan Party against an Indemnitee
for intentional breach of such Indemnitee’s obligations hereunder or under any other Loan
Document, if the Borrowers or such Loan Party has obtained a final and nonappealable
judgment in its favor on such claim as determined by a court of competent jurisdiction.



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     (c) Reimbursement by Lenders. Without limiting their obligations under
Section 9.14 hereof, to the extent that the Loan Parties for any reason fail to
indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid
by it, each Lender severally agrees to pay to the Agents (or any such sub-agent), the L/C
Issuer or such Related Party, as the case
may be, such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage, liability
or related expense, as the case may be, was incurred by or asserted against the Agents (or
any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party
of any of the foregoing acting for the Agents (or any such sub-agent) or L/C Issuer in
connection with such capacity. The obligations of the Lenders under this subsection (c) are
subject to the provisions of Section 2.12(d).




     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, the Loan Parties shall not assert, and hereby waive, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages
arising from the use by unintended recipients of any information or other materials
distributed to such unintended recipients by such Indemnitee through telecommunications,
electronic or other information transmission systems in connection with this Agreement or
the other Loan Documents or the transactions contemplated hereby or thereby other than for
direct or actual damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of competent
jurisdiction.




     (e) Payments. All amounts due under this Section shall be payable on demand
therefor.




     (f) Survival. The agreements in this Section shall survive the resignation of
any Agent and the L/C Issuer, the assignment of any Commitment or Loan by any Lender, the
replacement of any Lender, the termination of the Aggregate Commitments and the repayment,
satisfaction or discharge of all the other Obligations.



    10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Loan Parties
is made to any Credit Party, or any Credit Party exercises its right of setoff, and such payment or
the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by such Credit Party in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not been made or such
setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the
Agents upon demand its Applicable Percentage (without duplication) of any amount so recovered from
or repaid by the Agents, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.
The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall
survive the payment in full of the Obligations and the termination of this Agreement.


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     10.06 Successors and Assigns.


               (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder or under any other Loan Document without the prior written consent
of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of
its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 10.06(b), (ii) by way of participation in accordance with the
provisions of subsection Section 10.06(d), or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of Section 10.06(f) (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in
subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related
Parties of
each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason
of this Agreement.



               (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment(s) and the Loans (including for purposes of this Section
10.06(b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it);
provided that any such assignment shall be subject to the following conditions:




                    (i) Minimum Amounts




                         (A) in the case of
an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to
a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, no
minimum amount need be assigned; and




                         (B) in any case not
described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans outstanding
thereunder) or, if the Commitment is not then in effect, the principal outstanding balance
of the Loans of the assigning Lender subject to each such assignment, determined as of the
date the Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as
of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent
and, so long as no Default has occurred and is continuing, the Lead Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed); provided,
however, that concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or to an
Eligible Assignee and members of its Assignee Group) will be treated as a single assignment
for purposes of determining whether such minimum amount has been met;




                    (ii) Proportionate Amounts. Each partial
assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned, except that this
clause (ii) shall not apply to the Swing Line Lender’s rights and obligations in respect of
Swing Line Loans;




                    (iii) Required Consents. No consent shall
be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section and, in addition:



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                         (A) the consent of
the Lead Borrower (such consent not to be unreasonably withheld
or delayed) shall be required unless (1) a Default has occurred and is continuing at the
time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or
an Approved Fund; and




                         (B) the consent of
the Administrative Agent, the L/C Issuer and the Swing
Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for
assignments in respect of any Commitment if such assignment is to a Person that is not a
Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.




                    (iv) Assignment and Assumption. The parties
to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500, provided, however, that the
Administrative Agent may, in its sole discretion, elect to waive such processing and
recordation fee in the case of any assignment. The assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection
(c) of this Section, from and after the effective date specified in each Assignment and Assumption,
the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and
10.04 with respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrowers (at their expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this
Agreement that
does not comply with this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with Section
10.06(d).



               (c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C
Obligations owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, absent manifest error, and
the Loan Parties, the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by the Lead Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.



               (d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Loan Parties or the Administrative Agent, sell participations to any Person (other than a
natural person or the Loan Parties or any of the Loan Parties’ Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of such obligations and
(iii) the Loan Parties, the Agents, the Lenders and the L/C Issuer shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and obligations under



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this
Agreement. Any Participant shall agree in writing to comply with all confidentiality obligations
set forth in Section 10.07 as if such Participant was a Lender hereunder.



     Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to Section
10.01 that affects such Participant. Subject to subsection (e) of this Section, the Loan
Parties agree that each Participant shall be entitled to the benefits of Sections 3.01,
3.04 and 3.05 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 10.06(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a
Lender.



               (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Lead Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Lead Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the Loan
Parties, to comply with Section 3.01(e) as though it were a Lender.



               (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement (including under its Note, if any) to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.



               (g) Electronic Execution of Assignments. The words
“execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any
applicable law, including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.



               (h) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time Wells Fargo assigns all of its Commitment
and Loans pursuant to subsection (b) above, Wells Fargo may, (i) upon 30 days’ notice to the Lead
Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Lead
Borrower, Wells Fargo may resign as Swing Line Lender. In the event of any such resignation as L/C
Issuer or Swing Line Lender, the Lead Borrower shall be entitled to appoint from among the Lenders
a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no
failure by the Lead Borrower to appoint any such successor shall affect the resignation of Wells
Fargo as L/C Issuer or Swing Line Lender, as the case may be. If Wells Fargo resigns as L/C
Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder
with respect to all Letters of Credit outstanding as of the effective date of its resignation as
L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders
to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section
2.03(c)). If Wells Fargo resigns as Swing Line Lender, it shall retain all the rights of the
Swing Line Lender provided for hereunder with respect to Swing Line



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Loans made by it and
outstanding as of the effective date of such resignation, including the right to require the
Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans
pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swing
Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b)
the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements satisfactory to Wells
Fargo to effectively assume the obligations of Wells Fargo with respect to such Letters of Credit.



     10.07 Treatment of Certain Information; Confidentiality. Each Lender agrees that material
non-public information regarding the Loan Parties and their Subsidiaries, their operations, assets
and existing business plans, including the Borrower Materials, shall be treated by each Lender in a
confidential manner, and shall not be disclosed by it to persons who are not parties hereto,
except: (i) to attorneys for and other advisors, accountants, auditors, and consultants to such
Lender on a “need to know” basis, (ii) to Subsidiaries, Affiliates and Approved Funds of such
Lender, provided that any such Subsidiary, Affiliate or Approved Fund shall have agreed to receive
such information subject to the terms of these confidentiality requirements, (iii) as may be
required by regulatory authorities so long as such authorities are informed of the confidential
nature of such information, (iv) as may be required by statute, judicial or administrative order,
rule or regulation, provided that prior to any such disclosure under this clause (iv), the
disclosing party agrees to provide the Lead Borrower with prior notice thereof, (v) as may be
agreed to in advance by the Lead Borrower, (vi) as requested or required by any governmental
authority pursuant to subpoena or other legal process, provided that prior to any disclosure
pursuant to this clause (vi) the disclosing party agrees to provide the Lead Borrower with prior
notice thereof, (vii) as to any information that is or becomes generally available to the public
(other than as a result of a prohibited disclosure by a Lender), (viii) in connection with any
proposed assignment of, or grant of a participation in, such Lender’s interest under this
Agreement, provided that any such proposed assignee or participant shall have agreed in writing to
receive such information subject to these confidentiality provisions.



     10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing or
if any Lender shall have been served with a trustee process or similar attachment relating to
property of a Loan Party, each Lender, the L/C Issuer and each of their respective Affiliates is
hereby authorized at any time and from time to time, after obtaining the prior written consent of
the Administrative Agent or the Required Lenders, to the fullest extent permitted by applicable
law, to set off and apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in whatever currency) at any
time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account
of the Borrowers or any other Loan Party against any and all of the Obligations now or hereafter
existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer,
regardless of the adequacy of the Collateral, and irrespective of whether or not such Lender or the
L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although
such obligations of the Borrowers or such Loan Party may be contingent or unmatured or are owed to
a branch or office of such Lender or the L/C Issuer different from the branch or office holding
such deposit or obligated on such indebtedness. The rights of each Lender, the L/C Issuer and
their respective Affiliates under this Section are in addition to other rights
and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their
respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Lead Borrower
and the Administrative Agent promptly after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff and application.



     10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in
any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed
the



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



     10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy, pdf or other electronic
transmission shall be as effective as delivery of a manually executed counterpart of this
Agreement.



     10.11 Survival. All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such representations and
warranties have been or will be relied upon by the Credit Parties, regardless of any investigation
made by any Credit Party or on their behalf and notwithstanding that any Credit Party may have had
notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or any Letter of Credit shall remain outstanding. Further, the provisions of
Sections 3.01, 3.04, 3.05 and 10.04 and Article IX
shall survive and remain in full force and effect regardless of the repayment of the Obligations,
the expiration or termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof. In connection with the termination of this Agreement and
the release and termination of the security interests in the Collateral, the Agents may require
such indemnities and collateral security as they shall reasonably deem necessary or appropriate to
protect the Credit Parties against (x) loss on account of credits previously applied to the
Obligations that may subsequently be reversed or revoked, (y) any obligations that may thereafter
arise with respect to the Other Liabilities and (z) any Obligations that may thereafter arise under
Section 10.04.



     10.12 Severability. If any provision of this Agreement or the other Loan Documents is
held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.



     10.13 Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any
Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrowers may, at their sole
expense and effort, upon notice to such Lender



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and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 10.06), all of its interests, rights and obligations
under this Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such assignment),
provided that:




     (a) the Borrowers shall have paid to the Administrative Agent the assignment fee
specified in Section 10.06(b);




     (b) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder and under the other Loan Documents (including any
amounts under Section 3.05) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrowers (in the case of all other
amounts);




     (c) in the case of any such assignment resulting from a claim for compensation under
Section 3.04 or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments thereafter; and




     (d) such assignment does not conflict with applicable Laws.



A Lender shall not be required to make any such assignment or delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to
require such assignment and delegation cease to apply.


     10.14 Governing Law; Jurisdiction; Etc.


          (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.



          (b) SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE LOAN PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF
THE LOAN PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY
RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.



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          (c) WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE LOAN
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.



          (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.



          (e) ACTIONS COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AGREES THAT ANY ACTION
COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE ADMINISTRATIVE AGENT
MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH
RESPECT TO ANY SUCH ACTION.



     10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each
transaction contemplated hereby, the Loan Parties each acknowledge and agree that: (i) the credit
facility provided for hereunder and any related arranging or other services in connection therewith
(including in connection with any amendment, waiver or other modification hereof or of any other
Loan Document) are an arm’s-length commercial transaction between the Loan Parties, on the one
hand, and the Credit Parties, on the other hand, and each of the Loan Parties is capable of
evaluating and understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver
or other modification hereof or thereof); (ii) in connection with the process leading to such
transaction, the each Credit Party is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary, for the Loan Parties or any of their respective Affiliates,
stockholders, creditors or employees or any other Person; (iii) none of the Credit Parties has
assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Loan Parties
with respect to any of the transactions contemplated hereby or the process leading thereto,
including with respect to any amendment, waiver or other modification hereof or of any other Loan



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Document (irrespective of whether any of the Credit Parties has advised or is currently advising
any Loan Party or any of its Affiliates on other matters) and none of the Credit Parties has any
obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated
hereby except those obligations expressly set forth herein and in the other Loan Documents; (iv)
the Credit Parties and their respective Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of the Loan Parties and their respective Affiliates,
and none of the Credit Parties has any obligation to disclose any of such interests by virtue of
any advisory, agency or fiduciary relationship; and (v) the Credit Parties have not provided and
will not provide any legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby (including any amendment, waiver or other modification hereof or
of any other Loan Document) and each of the Loan Parties has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate. Each of the Loan Parties
hereby waives and releases, to the fullest extent permitted by law, any claims that it may have
against each of the Credit Parties with respect to any breach or alleged breach of agency or
fiduciary duty.



     10.17 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as hereinafter
defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies
the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify
and record information that identifies each Loan Party, which information includes the name and
address of each Loan Party and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify each Loan Party in accordance with the Act. Each Loan Party is in
compliance, in all material respects, with the Patriot Act. No part of the proceeds of the Loans
will be used by the Loan Parties, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate for political
office,
or anyone else acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.



     10.18 Foreign Asset Control Regulations. Neither of the advance of the Loans nor the use
of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq.,
as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
(the “Foreign Assets Control Regulations”) or any enabling legislation or executive order
relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a)
Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
“Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore,
none of the Borrowers or their Affiliates (a) is or will become a “blocked person” as described in
the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or
(b) engages or will engage in any dealings or transactions, or be otherwise associated, with any
such “blocked person” or in any manner violative of any such order.



     10.19 Time of the Essence. Time is of the essence of the Loan Documents.



     10.20 Press Releases.




     (a) Each Credit Party executing this Agreement agrees that neither it nor its
Affiliates will in the future issue any press releases or other public disclosure (i) using
the name of Administrative Agent or its Affiliates, (ii) referring to this Agreement or the
other Loan Documents, or (iii) using the name of any of the Loan Parties, in each case
without at least two (2) Business Days’ prior notice to Administrative Agent, and to the
Lead Borrower with respect



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to disclosures involving the use of, or reference to, the name of
any of the Loan Parties (hereafter, the “Loan Parties’ Disclosure”), and without the prior
written consent of Administrative Agent, and of the Lead Borrower with respect to Loan
Parties’ Disclosures, unless (and only to the extent that) such Credit Party or Affiliate is
required to do so under applicable Law and then, in any event, such Credit Party or
Affiliate will consult with Administrative Agent, and with the Lead Borrower with respect to
the Loan Parties’ Disclosures before issuing such press release or other public disclosure.




     (b) Each Loan Party consents to the publication by Administrative Agent or any Lender
of advertising material relating to the financing transactions contemplated by this
Agreement using any Loan Party’s name, product photographs, logo or trademark.
Administrative Agent or such Lender shall provide a draft reasonably in advance of any
advertising material to the Lead Borrower for review and comment prior to the publication
thereof. Administrative Agent reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.



    10.21 Additional Waivers.



          (a) The Obligations are the joint and several obligation of each Loan Party. To the fullest
extent permitted by Applicable Law, the obligations of each Loan Party shall not be affected by
(i) the failure of any Credit Party to assert any claim or demand or to enforce or exercise any
right or remedy against any other Loan Party under the provisions of this Agreement, any other Loan
Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release
from any of the terms or provisions of, this Agreement or any other Loan Document, or (iii) the
failure to perfect any security interest in, or the release of, any of the Collateral or other
security held by or on behalf of the Collateral Agent or any other Credit Party.



          (b) The obligations of each Loan Party shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in full in cash of
the Obligations after the termination of the Commitments), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any of the Obligations or otherwise. Without limiting the
generality of the foregoing,
the obligations of each Loan Party hereunder shall not be discharged or impaired or otherwise
affected by the failure of any Agent or any other Credit Party to assert any claim or demand or to
enforce any remedy under this Agreement, any other Loan Document or any other agreement, by any
waiver or modification of any provision of any thereof, any default, failure or delay, willful or
otherwise, in the performance of any of the Obligations, or by any other act or omission that may
or might in any manner or to any extent vary the risk of any Loan Party or that would otherwise
operate as a discharge of any Loan Party as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations after the termination of the Commitments).



          (c) To the fullest extent permitted by applicable Law, each Loan Party waives any defense
based on or arising out of any defense of any other Loan Party or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause of the liability of
any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations
and the termination of the Commitments. The Collateral Agent and the other Credit Parties may, at
their election, foreclose on any security held by one or more of them by one or more judicial or
non-judicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or
adjust any part of the Obligations, make any other accommodation with any other Loan Party, or
exercise any other right or remedy available to them against any other Loan Party, without
affecting or impairing in any way the



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liability of any Loan Party hereunder except to the extent
that all the Obligations have been indefeasibly paid in full in cash and the Commitments have been
terminated. Each Loan Party waives any defense arising out of any such election even though such
election operates, pursuant to applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Loan Party against any other Loan
Party, as the case may be, or any security.



          (d) Each Borrower is obligated to repay the Obligations as joint and several obligors under
this Agreement. Upon payment by any Loan Party of any Obligations, all rights of such Loan Party
against any other Loan Party arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior
in right of payment to the prior indefeasible payment in full in cash of all the Obligations and
the termination of the Commitments. In addition, any indebtedness of any Loan Party now or
hereafter held by any other Loan Party is hereby subordinated in right of payment to the prior
indefeasible payment in full of the Obligations and no Loan Party will demand, sue for or otherwise
attempt to collect any such indebtedness. If any amount shall erroneously be paid to any Loan
Party on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right
or (ii) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit
of the Credit Parties and shall forthwith be paid to the Administrative Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in accordance with the terms
of this Agreement and the other Loan Documents. Subject to the foregoing, to the extent that any
Borrower shall, under this Agreement as a joint and several obligor, repay any of the Obligations
constituting Revolving Loans made to another Borrower hereunder or other Obligations incurred
directly and primarily by any other Borrower (an “Accommodation Payment”), then the
Borrower making such Accommodation Payment shall be entitled to contribution and indemnification
from, and be reimbursed by, each of the other Borrowers in an amount, for each of such other
Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is
such other Borrower’s Allocable Amount and the denominator of which is the sum of the Allocable
Amounts of all of the Borrowers. As of any date of determination, the “Allocable Amount”
of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which
could be asserted against such Borrower hereunder without (a) rendering such Borrower “insolvent”
within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent
Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act
(“UFCA”), (b) leaving such Borrower with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or
(c) leaving such Borrower unable to pay its debts as they become due within the meaning of Section
548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.



          (e) Without limiting the generality of the foregoing, or of any other waiver or other
provision set forth in this Agreement, each Loan Party hereby absolutely, knowingly,
unconditionally, and expressly waives any and all claim, defense or benefit arising directly or
indirectly under any one or more of Sections 2787 to 2855 inclusive of the California Civil Code or
any similar law of California.



     10.22 No Strict Construction.



     The parties hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.




-120-








 




     10.23 Attachments.


     The exhibits, schedules and annexes attached to this Agreement are incorporated herein and
shall be considered a part of this Agreement for the purposes stated herein, except that in the
event of any conflict between any of the provisions of such exhibits and the provisions of this
Agreement, the provisions of this Agreement shall prevail.




-121-











 





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



	 	 	 	 	 
	 	BIG 5 CORP., as Lead Borrower

 	 
	 	By:  	/s/ Barry D. Emerson
 	 
	 	Name: 	Barry D. Emerson 	 
	 	Title: 	Senior V.P. and CFO 	 
	 
	 	BIG 5 SERVICES CORP., as a Borrower

 	 
	 	By:  	/s/ Barry D. Emerson
 	 
	 	Name: 	Barry D. Emerson 	 
	 	Title: 	Senior V.P. and CFO 	 
	 
	 	BIG 5 SPORTING GOODS 

CORPORATION, as Guarantor

 	 
	 	By:  	/s/ Barry D. Emerson
 	 
	 	Name: 	Barry D. Emerson 	 
	 	Title: 	Senior V.P. and CFO 	 
	 



Signature Page to Credit Agreement




 









 








	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Administrative Agent, as Collateral Agent, as
L/C Issuer, as Swing Line Lender and as a
Lender

 	 
	 	By:  	/s/ David C. Lipkin
 	 
	 	Name: 	David C. Lipkin 	 
	 	Title: 	Senior Vice President 	 
	 



Signature Page to Credit Agreement




 









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender

 	 
	 	By:  	/s/ Stephen King
 	 
	 	Name: 	Stephen King 	 
	 	Title: 	SVP 	 
	 



Signature Page to Credit Agreement




 









 








	 	 	 	 	 
	 	PNC BANK NATIONAL ASSOCIATION,

as a Lender

 	 
	 	By:  	/s/ Thomas Hayes
 	 
	 	Name: 	Thomas Hayes 	 
	 	Title: 	V.P. 	 
	 



Signature Page to Credit Agreement




 









 








	 	 	 	 	 
	 	UNION BANK, N.A., as a Lender

 	 
	 	By:  	/s/ Peter Ettinger 	 
	 	Name: 	Peter Ettinger 	 
	 	Title: 	Vice President 	 
	 



Signature Page to Credit Agreement





 











 




SCHEDULE 2.01




Commitments and Applicable Percentages



	 	 	 	 	 
	Lender	 	Commitment	 	Applicable Percentage
	Wells Fargo Bank, National Association
	 	$  70,000,000	 	50.000000000%
	Bank of America, N.A.
	 	$  30,000,000	 	21.428571428%
	PNC Bank National Association
	 	$  20,000,000	 	14.285714286%
	Union Bank, N.A.
	 	$  20,000,000	 	14.285714286%
	TOTAL
	 	$140,000,000	 	100.00000000%






 








 





SCHEDULE 6.02




Collateral Reporting



In addition to the other materials and information required to be provided pursuant to the terms
of the Credit Agreement, the Loan Parties shall provide Administrative Agent, on the applicable
day specified below, the following documents (each in such form and detail as the Administrative
Agent from time to time may specify):



Monthly Reports. Monthly, the Loan Parties shall provide to Administrative Agent original
counterparts of:





	 	a.	 	On the tenth (10th) Business Day of each Fiscal Month, provided,
however, upon
the occurrence and during the continuation of an Accelerated Borrowing Base
Delivery Event on Wednesday of each week:






	 	i.	 	On such day, supporting source documents for the Borrowing Base
Certificate delivered in accordance with the Credit Agreement.






	 	b.	 	Within fifteen (15) days of the end of each Fiscal Month for the
immediately
preceding Fiscal Month:






	 	i.	 	Purchases and accounts payable analysis report, (together with account
payable aging) for each Loan Party, in Administrative Agent’s format; and
	 
	 	ii.	 	Inventory summary by Store location;
	 
	 	iii.	 	Inventory summary by department; and
	 
	 	iv.	 	Inventory certificate in Loan Parties’ format but
including a certification in Administrative Agent’s format;






	 	c.	 	Within 30 days of the end of each Fiscal Month for the immediately preceding
Fiscal Month:






	 	i.	 	Reconciliation of the stock ledger to the general ledger and
the calculation of Availability; and
	 
	 	ii.	 	Reconciliation of stock ledger gross margin to
general ledger gross margin;
	 
	 	iii.	 	Statement of Store Activity in Administrative Agent’s format; and
	 
	 	iv.	 	Such other information as the Administrative
Agent may from time to time reasonably request.




For purposes of Sections (a), (b), and (c) above, the first “preceding Fiscal Month” in respect of
which the items required by such Section shall be provided shall be September 2010.





- 2 -











 





EXHIBIT A




FORM OF COMMITTED LOAN NOTICE




Date: ___________, _____




To: Wells Fargo Bank, National Association, as Administrative Agent



Ladies and Gentlemen:



     Reference is made to the Credit Agreement dated as of October 18, 2010 (as amended, modified,
supplemented or restated hereafter, the “ Credit Agreement”) by and among (i) Big 5 Corp., a
Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower”) for
the other Borrowers party thereto from time to time (individually, a “Borrower” and, collectively,
the “Borrowers”), (ii) the Borrowers party thereto from time to time, (iii) Big 5 Sporting Goods
Corporation, a Delaware corporation, as Guarantor (the “Parent”), (iv) Wells Fargo Bank, National
Association, as administrative agent (in such capacity, the “Administrative Agent”) for its own
benefit and the benefit of the other Credit Parties referred to therein, (v) Wells Fargo Bank,
National Association, as collateral agent (in such capacity, the “Collateral Agent”) for its own
benefit and the benefit of the other Credit Parties, (vi) Wells Fargo Bank, National Association,
as L/C Issuer, and (vii) the lenders from time to time party thereto (individually, a “Lender” and,
collectively, the “Lenders”). All capitalized terms used herein and not otherwise defined shall
have the same meaning herein as in the Credit Agreement.




	1.	 	The Lead Borrower hereby requests [a Borrowing][a conversion of Committed Loans from
one Type to the other][a continuation of LIBO Rate Loans]1:







	 	(a)	 	On                      (a Business Day)2

	 
	 	(b)	 	In the amount of $                    3

	 
	 	(c)	 	Comprised of [Base Rate][LIBO Rate]Loans (Type of Committed Loan)4

	 
	 	(d)	 	For LIBO Rate Loans: with an Interest Period of ___ months5







 



			
	1	 	A Borrowing must be a borrowing consisting
of simultaneous Loans of the same Type and, in the case of LIBO Rate Loans,
must have the same Interest Period.

	 
	2	 	Each notice of a Borrowing must be received
by the Administrative Agent not later than 11:00 a.m. (i) three (3) Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of LIBO Rate Loans, and (ii) on the requested date of any
Borrowing of or conversion to Base Rate Loans.

	 
	3	 	Each Borrowing, conversion to, or
continuation of LIBO Rate Loans must be in a principal amount of $3,000,000 or
a whole multiple of $1,000,000 in excess thereof. Each Borrowing of, or
conversion to, Base Rate Loans must be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof.

	 
	4	 	Committed Loans may be either Base Rate
Loans or LIBO Rate Loans. If the Type of Committed Loan is not specified, then
the applicable Committed Loans will be made as Base Rate Loans.




 








 




     The Lead Borrower hereby represents and warrants (for itself and on behalf of the other
Borrowers) that the conditions specified in Sections 4.02(a), (b) and (d) of the Credit Agreement
have been satisfied and, if the Borrowing requested herein is the initial Credit Extension, the
conditions specified in Section 4.01 of the Credit Agreement will be satisfied, in each case on and
as of the date specified in Item 1(a) above.


[signature page follows]



 



			
	5	 	The Lead Borrower may request a Borrowing of
LIBO Rate Loans with an Interest Period of one, two, three or six months. If
no election of Interest Period is specified, then the Lead Borrower will be
deemed to have specified an Interest Period of one month.




2








 









Dated as of the date above first written.



	 	 	 	 	 
	 	BIG 5 CORP., as Lead Borrower

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 	 
	 



Signature Page to Committed Loan Notice





 









 








EXHIBIT B




FORM OF SWING LINE LOAN NOTICE




Date: ___________, _____





			
	To:	 	 Wells Fargo Bank, National Association, as Swing Line Lender

Wells Fargo Bank, National Association, as Administrative Agent






Ladies and Gentlemen:





     Reference is made to the Credit Agreement dated as of October 18, 2010 (as amended, modified,
supplemented or restated hereafter, the “ Credit Agreement”) by and among (i) Big 5 Corp., a
Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower”) for
the other Borrowers party thereto from time to time (individually, a “Borrower” and, collectively,
the “Borrowers”), (ii) the Borrowers party thereto from time to time, (iii) Big 5 Sporting Goods
Corporation, a Delaware corporation, as Guarantor (the “Parent”), (iv) Wells Fargo Bank, National
Association, as administrative agent (in such capacity, the “Administrative Agent”) for its own
benefit and the benefit of the other Credit Parties referred to therein, (v) Wells Fargo Bank,
National Association, as collateral agent (in such capacity, the “Collateral Agent”) for its own
benefit and the benefit of the other Credit Parties, (vi) Wells Fargo Bank, National Association,
as L/C Issuer, and (vii) the lenders from time to time party thereto (individually, a “Lender” and,
collectively, the “Lenders”). All capitalized terms used herein and not otherwise defined shall
have the same meaning herein as in the Credit Agreement.



     The Borrower hereby requests a Swing Line Borrowing:




	 	1.	 	On                                                             (a Business Day)1

	 
	 	2.	 	In the amount of $                                        2






     The Swing Line Borrowing requested herein complies with the provisions of Section 2.04 of the
Credit Agreement.



	 	 	 	 	 
	 	BIG 5 CORP., as Lead Borrower

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 





 




			
	1	 	Each notice of a Swing Line Borrowing must be
received by the Swing Line Lender and the Administrative Agent not later than
2:00 p.m. on the requested date of any Swing Line Borrowing.

	 
	2	 	Each Swing Line Borrowing must be in a
minimum amount of $100,000.







 









 





EXHIBIT C-1




FORM OF NOTE




NOTE




			
	 	 	 
	$       
               
                  
	 	          
               
               , 2010






     FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and, collectively, the
“Borrowers”), jointly and severally promise to pay to the order of                                         
(hereinafter, with any subsequent holders, the “Lender”), c/o Wells Fargo Bank, National
Association, One Boston Place, 18th Floor, Boston, Massachusetts 02108, the principal sum of
                      
                   ($    
                      
              ), or, if less, the aggregate unpaid principal balance of
Committed Loans made by the Lender to or for the account of any Borrower pursuant to the Credit
Agreement dated as of October 18, 2010 (as amended, modified, supplemented or restated and in
effect from time to time, the “Credit Agreement”) by and among (i) the Borrowers, (ii) Big 5
Sporting Goods Corporation, as Parent, (iii) Wells Fargo Bank, National Association, as
administrative agent (in such capacity, the “Administrative Agent”) for its own benefit and the
benefit of the other Credit Parties referred to therein, (iv) Wells Fargo Bank, National
Association, as collateral agent for its own benefit and the benefit of the other Credit Parties,
(v) Wells Fargo Bank, National Association, as L/C Issuer, and (vi) the Lender and the other
lenders from time to time party thereto, with interest at the rate and payable in the manner stated
therein.



     This is a “Note” to which reference is made in the Credit Agreement and is subject to all
terms and provisions thereof. The principal of, and interest on, this Note shall be payable at the
times, in the manner, and in the amounts as provided in the Credit Agreement and shall be subject
to prepayment and acceleration as provided therein. Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.



     The Administrative Agent’s books and records concerning the Committed Loans, the accrual of
interest thereon, and the repayment of such Committed Loans, shall be prima facie evidence of the
indebtedness to the Lender hereunder.



     No delay or omission by any Agent or the Lender in exercising or enforcing any of such Agent’s
or the Lender’s powers, rights, privileges, remedies, or discretions hereunder shall operate as a
waiver thereof on that occasion nor on any other occasion. No waiver of any Event of Default shall
operate as a waiver of any other Event of Default, nor as a continuing waiver of any such Event of
Default.



1









 





     Each Borrower, and each endorser and guarantor of this Note, waives presentment, demand,
notice, and protest, and also waives any delay on the part of the holder hereof. Each
Borrower assents to any extension or other indulgence (including, without limitation, the
release or substitution of Collateral) permitted by any Agent and/or the Lender with respect to
this Note and/or any Collateral or any extension or other indulgence with respect to any other
liability or any collateral given to secure any other liability of any Borrower or any other Person
obligated on account of this Note.



     This Note shall be binding upon each Borrower, and each endorser and guarantor hereof, and
upon their respective successors, assigns, and representatives, and shall inure to the benefit of
the Lender and its permitted successors, endorsees, and assigns.



     The liabilities of each Borrower, and of any endorser or guarantor of this Note, are joint and
several, provided, however, the release by any Agent or the Lender of any one or more such Persons
shall not release any other Person obligated on account of this Note. Each reference in this Note
to any Borrower, any endorser, and any guarantor, is to such Person individually and also to all
such Persons jointly. No Person obligated on account of this Note may seek contribution from any
other Person also obligated unless and until all of the Obligations have been paid in full in cash.



     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.



     EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND
ANY FEDERAL COURT SITTING THEREIN, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.
EACH OF THE BORROWERS AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS NOTE OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT THE ADMINISTRATIVE AGENT OR THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.



2









 





     EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO ABOVE. EACH OF THE BORROWERS HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.



     Each Borrower makes the following waiver knowingly, voluntarily, and intentionally, and
understands that the Agents and the Lender, in the establishment and maintenance of their
respective relationship with the Borrowers contemplated by this Note, are each relying thereon.
EACH BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE LENDER, BY ITS ACCEPTANCE HEREOF,
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE AGENTS AND THE LENDER HAVE BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT
AND THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.



[SIGNATURE PAGES FOLLOW]




3









 





     IN WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed as of the date set
forth above.



	 	 	 	 	 
	 	BORROWERS:



BIG 5 CORP.

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	 	BIG 5 SERVICES CORP.

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 



Signature Page to Note




 











 





EXHIBIT C-2




FORM OF SWING LINE NOTE




SWING LINE NOTE




			
	 	 	 
	$20,000,000
	 	                                        , 2010






     FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and, collectively, the
“Borrowers”), jointly and severally promise to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION (hereinafter, with any subsequent holders, the “Swing Line Lender”), One Boston Place,
18th Floor, Boston, Massachusetts 02108, the principal sum of TWENTY MILLION DOLLARS ($20,000,000),
or, if less, the aggregate unpaid principal balance of Swing Line Loans made by the Swing Line
Lender to or for the account of any Borrower pursuant to the Credit Agreement dated as of October
18, 2010 (as amended, modified, supplemented or restated and in effect from time to time, the
“Credit Agreement”) by and among (i) the Borrowers, (ii) Big 5 Sporting Goods Corporation, as
Parent, (iii) Wells Fargo Bank, National Association, as administrative agent (in such capacity,
the “Administrative Agent”) for its own benefit and the benefit of the other Credit Parties
referred to therein, (iv) Wells Fargo Bank, National Association, as collateral agent for its own
benefit and the benefit of the other Credit Parties, (v) Wells Fargo Bank, National Association, as
L/C Issuer, and (vi) the Swing Line Lender and the other lenders from time to time party thereto,
with interest at the rate and payable in the manner stated therein.



     This is a “Swing Line Note” to which reference is made in the Credit Agreement and is subject
to all terms and provisions thereof. The principal of, and interest on, this Swing Line Note shall
be payable at the times, in the manner, and in the amounts as provided in the Credit Agreement and
shall be subject to prepayment and acceleration as provided therein. Capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.



     The Administrative Agent’s books and records concerning the Swing Line Loans, the accrual of
interest thereon, and the repayment of such Swing Line Loans, shall be prima facie evidence of the
indebtedness to the Lender hereunder.



     No delay or omission by any Agent or the Swing Line Lender in exercising or enforcing any of
such Agent’s or the Swing Line Lender’s powers, rights, privileges, remedies, or discretions
hereunder shall operate as a waiver thereof on that occasion nor on any other occasion. No waiver
of any Event of Default shall operate as a waiver of any other Event of Default, nor as a
continuing waiver of any such Event of Default.



1









 





     Each Borrower, and each endorser and guarantor of this Swing Line Note, waives presentment,
demand, notice, and protest, and also waives any delay on the part of the holder hereof. Each
Borrower assents to any extension or other indulgence (including, without limitation, the release
or substitution of Collateral) permitted by any Agent and/or the Lender with respect to this Swing
Line Note and/or any Collateral or any extension or other indulgence with respect to any other
liability or any collateral given to secure any other liability of any Borrower or any other Person
obligated on account of this Swing Line Note.



     This Swing Line Note shall be binding upon each Borrower, and each endorser and guarantor
hereof, and upon their respective successors, assigns, and representatives, and shall inure to the
benefit of the Lender and its permitted successors, endorsees, and assigns.



     The liabilities of each Borrower, and of any endorser or guarantor of this Swing Line Note,
are joint and several, provided, however, the release by any Agent or the Lender of any one or more
such Persons shall not release any other Person obligated on account of this Swing Line Note. Each
reference in this Swing Line Note to any Borrower, any endorser, and any guarantor, is to such
Person individually and also to all such Persons jointly. No Person obligated on account of this
Swing Line Note may seek contribution from any other Person also obligated unless and until all of
the Obligations have been paid in full in cash.



     THIS SWING LINE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.



     EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND
ANY FEDERAL COURT SITTING THEREIN, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWERS IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN
SUCH FEDERAL COURT. EACH OF THE BORROWERS AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SWING LINE NOTE OR IN ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR THE SWING LINE LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN
DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.



2









 





     EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT
IN ANY COURT REFERRED TO ABOVE. EACH OF THE BORROWERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.



     Each Borrower makes the following waiver knowingly, voluntarily, and intentionally, and
understands that the Agents and the Lender, in the establishment and maintenance of their
respective relationship with the Borrowers contemplated by this Swing Line Note, are each relying
thereon. EACH BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE SWING LINE LENDER, BY ITS
ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE AGENTS AND THE SWING LINE LENDER
HAVE BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS NOTE BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.



[SIGNATURE PAGES FOLLOW]




3









 





     IN WITNESS WHEREOF, the Borrowers have caused this Swing Line Note to be duly executed as of
the date set forth above.



	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 	 	BIG 5 CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	BIG 5 SERVICES CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Signature Page to Note





 











 




EXHIBIT D


FORM OF COMPLIANCE CERTIFICATE



	 	 	 	 	 	 	 
	To:
	 	Wells Fargo Bank, National Association	 	Date:	 	                                        
	 
	 	One Boston Place, 18th Floor	 	 	 	 
	 
	 	Boston, Massachusetts 02108	 	 	 	 
	 
	 	Attention: Brent E. Shay, Vice President	 	 	 	 






     Re: Credit Agreement dated as of October 18, 2010 (as amended, modified, supplemented or
restated hereafter, the “ Credit Agreement”) by and among (i) Big 5 Corp., a Delaware corporation,
for itself and as Lead Borrower (in such capacity, the “Lead Borrower”) for the other Borrowers
party thereto from time to time (individually, a “Borrower” and, collectively, the “Borrowers”),
(ii) the Borrowers, (iii) Big 5 Sporting Goods Corporation, a Delaware corporation, as Guarantor
(“Parent”), (iv) Wells Fargo Bank, National Association, as administrative agent (in such capacity,
the “Administrative Agent”) for its own benefit and the benefit of the other Credit Parties
referred to therein, (v) Wells Fargo Bank, National Association, as collateral agent (in such
capacity, the “Collateral Agent”) for its own benefit and the benefit of the other Credit Parties,
(vi) Wells Fargo Bank, National Association, as L/C Issuer, and (vii) the lenders from time to time
party thereto (individually, a “Lender” and, collectively, the “Lenders”). All capitalized terms
used herein and not otherwise defined shall have the same meaning herein as in the Credit
Agreement.



     The undersigned, a duly authorized and acting Responsible Officer of the Lead Borrower, hereby
certifies to you as of the date hereof as follows:




	1.	 	No Default.







	 	a.	 	To the Knowledge of the undersigned Responsible Officer, except as set forth in
Appendix I, no Default or Event of Default exists and is continuing.

	 
	 	b.	 	If a Default or Event of Default exists and is continuing, the Borrowers have
taken or propose to take the action(s) as set forth on Appendix I with respect
to such Default or Event of Default.







	2.	 	Financial Calculations. Attached hereto as Appendix II are reasonably
detailed calculations necessary to determine the Consolidated Fixed Charge Coverage Ratio as
of the last day of the Fiscal Month ended                      on a trailing twelve month basis
(whether or not compliance therewith is then required under Section 7.15 of the Credit
Agreement).

	 
	3.	 	No Material Accounting Changes, Etc. The financial statements furnished to the
Administrative Agent for the month/quarter/year ended [          ] were prepared in accordance with
GAAP and present fairly in all material respects the financial condition of the Parent and its
Subsidiaries on a consolidated basis at the close of, and the results of the Loan Parties’
operations and cash flows for, the period(s) covered, subject to, with





 









 






	 	 	respect to the monthly/quarterly financial statements, normal year end audit adjustments and
the absence of footnotes. Except as provided in any statement of reconciliation delivered
or deemed delivered pursuant to Section 6.02(a) of the Credit Agreement, there has been no
material change in GAAP or the application thereof, as either pertain to the Loan Parties’
financial statements, since the date of the audited financial statements furnished to the
Administrative Agent for the year ended [          ].

	 
	4.	 	Except as set forth on Appendix IV hereto, to the Knowledge of the Loan Parties, no
Lien for unpaid Taxes which has (or would have with the passage of time) priority over the
Lien of the Collateral Agent has been filed against any Loan Party during the
month/quarter/year ended [          ].

	 
	5.	 	Except as set forth on Appendix V hereto, no material damage or destruction has
occurred with respect to any distribution center of the Loan Parties or a material number of
Store locations of the Loan Parties during the month/quarter/year ended [          ].

	 
	6.	 	Set forth on Appendix VI hereto is a list of any transaction undertaken by the Loan
Parties during the month/quarter/year ended [          ] involving (i) the entry by a Loan Party
into a Material Contract, (ii) the incurrence by a Loan Party of Material Indebtedness, or
(iii) the making of any Acquisition by a Loan Party.

	 
	7.	 	Except as set forth on Appendix VII hereto, no Loan Party is a beneficiary under a
Letter of Credit issued in favor of such Loan Party (which, for the avoidance of doubt, shall
not include any Letter of Credit issued pursuant to the Credit Agreement).

	 
	8.	 	Except as set forth on Appendix VIII hereto, no Loan Party holds any Commercial Tort
Claims.





 









 











     IN WITNESS WHEREOF, I have executed this certificate as of the date first written above.



	 	 	 	 
	 

	 	By:


	 

	 	      Responsible Officer of Lead Borrower
	 
	 

	 	Name:


	 

	 	Title:













 









 











Appendix I




     Except as set forth below, no Default or Event of Default presently exists. [If a Default or
Event of Default exists, the following describes the nature of the Default in reasonable detail and
the steps being taken or contemplated by the Loan Parties to be taken on account thereof.]



 









 





Appendix II



A. Calculation of Consolidated Fixed Charge Ratio: Calculated monthly on a trailing twelve
months basis.



	 	 	 	 	 	 	 	 	 
	1.	 	

Consolidated EBITDA for such period (all calculated on a Consolidated basis in accordance
with GAAP):
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Consolidated Net Income of the Parent and its
Subsidiaries on a Consolidated basis for the
most recently completed Measurement Period:
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Plus the following, to the 

extent deducted in determining Consolidated Net Income for such period:
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(b)
	 	Consolidated Interest Charges for such period:
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(c)
	 	the provision for Federal, state, local and
foreign income Taxes:
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(d)
	 	depreciation and amortization expense:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(e)
	 	other non-recurring expenses reducing such
Consolidated Net Income which do not represent
a cash item in such period or any future period
(in each case of or by the Parent and its Subsidiaries
for such Measurement Period):
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Minus the following, to the 

extent included in Consolidated Net Income for such period:
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(f)
	 	Federal, state, local and foreign income tax credits:
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(g)
	 	all non-cash items increasing Consolidated Net Income
(in each case of or by the Parent and its Subsidiaries
for such Measurement Period):
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(h)
	 	Consolidated EBITDA [Line 1(a), plus the
sum of Lines 1(b) through 1(e), minus the sum of
Lines 1(f) through 1(g)]:
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	2.	 	Minus the following:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Capital Expenditures made during such period
(other than Capital Expenditures financed with proceeds
of Permitted Indebtedness (other than Borrowings):
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(b)
	 	the aggregate amount of Federal, state, local
and foreign income taxes paid in cash during such
period:
	 	 	 	 
	 

	 	 	 	 	 	 

	 	 






 









 





	 	 	 	 	 	 	 	 	 
	3.	 	Line 1(h), minus Lines 2(a) and 2(b):	 	 	 	 
	 
	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	4.	 	Debt Service Charges for the Parent and its Subsidiaries during
such Measurement Period (as determined on a
Consolidated basis in accordance with GAAP):
	 	 	 	 
	 
	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(a)
	 	Consolidated Interest Charges paid or required
to be paid for such Measurement Period:
	 	 	 	 
	 
	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	Plus	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(b)
	 	principal payments made or required to be made
on account of Indebtedness (excluding the Obligations
and any Synthetic Lease Obligations but including,
without limitation, Capital Lease Obligations) for
such Measurement Period:
	 	 	 	 
	 
	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(c)	 	Debt Service Charges [The sum of Lines 4(a) and 4(b)]:
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Plus	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	5.	 	The aggregate amount of all Restricted Payments made during
such Measurement Period:
	 	 	 	 
	 
	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	6.	 	The sum of Line 4(c) and Line 5:	 	 	 	 
	 
	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	7.	 	CONSOLIDATED FIXED CHARGE COVERAGE RATIO AS OF
THE END OF THE MONTH ENDED                     , CALCULATED
ON A TRAILING TWELVE MONTHS BASIS
[Line 3 divided by Line 6]:
	 	 	 	 
	 
	 	 	 	 	 	 

	 	 





B. Consolidated Fixed Charge Coverage Ratio Covenant: During the continuance of a
Covenant Compliance Event, the Borrowers will not permit the Consolidated Fixed Charge Coverage
Ratio, calculated as of the last day of each month on a trailing twelve month basis, to be less
than 1.0:1.0.



	 	 	 	 	 	 	 
	1.
	 	Is covenant required to be tested?
	 	Yes                     	    	No                     
	 
	2.
	 	If covenant is required to be tested, in compliance?
	 	Yes                     
	 	No                     







 











 





EXHIBIT E




FORM OF ASSIGNMENT AND ASSUMPTION




     Reference is made to the Credit Agreement dated as of October 18, 2010 (as amended, modified,
supplemented or restated hereafter, the “ Credit Agreement”) by and among (i) Big 5 Corp., a
Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower”) for
the other Borrowers party thereto from time to time (individually, a “Borrower” and, collectively,
the “Borrowers”), (ii) the Borrowers party thereto from time to time, (iii) Big 5 Sporting Goods
Corporation, a Delaware corporation, as Guarantor (the “Parent”), (iv) Wells Fargo Bank, National
Association, as administrative agent (in such capacity, the “Administrative Agent”) for its own
benefit and the benefit of the other Credit Parties referred to therein, (iv) Wells Fargo Bank,
National Association, as collateral agent (in such capacity, the “Collateral Agent”) for its own
benefit and the benefit of the other Credit Parties, (v) Wells Fargo Bank, National Association, as
L/C Issuer, and (vi) the lenders from time to time party thereto (individually, a “Lender” and,
collectively, the “Lenders”). All capitalized terms used herein and not otherwise defined shall
have the same meaning herein as in the Credit Agreement.



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




	1.	 	The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and
obligations as a Lender under the Credit Agreement as of the date hereof (including, without
limitation, such interest in each of the Assignor’s outstanding Commitments, if any, and the
Loans (and related Obligations) owing to it) specified in Section 1 of Schedule
I hereto. After giving effect to such sale and assignment, the Assignor’s and the
Assignee’s Commitments and the amount of the Loans owing to the Assignor and the Assignee and
the amount of Letters of Credit participated in by the Assignor and the Assignee will be as
set forth in Section 2 of Schedule I hereto.







	2.	 	The Assignor: (a) represents and warrants that it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and clear of any
Liens and that it is legally authorized to enter into this Assignment and Assumption; (b)
makes no representation or warranty and assumes no responsibility with respect to (i) any
statements, warranties or representations made in, or in connection with, the Credit Agreement
or any other Loan Document or any other instrument or document furnished pursuant thereto, or
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of
the Credit Agreement or any other Loan Document or any other instrument or document furnished
pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Loan Party or the performance or observance by any
Loan Party of any of their respective obligations under the Credit Agreement or any other Loan
Document or any other instrument or document furnished pursuant thereto; and (d) confirms, in
the case of an Assignee who is not a Lender, an Affiliate of a Lender, or an Approved Fund,
the





1









 












	 	 	aggregate amount of the Commitment (which for this purpose includes Loans outstanding
thereunder) or, if the Commitment is not then in effect, the principal outstanding balance
of the Loans of the Assignor subject to this Assignment and Assumption, is not less than
$5,000,000, or, if less, the entire remaining amount of the Assignor’s Commitment and the
Loans at any time owing to it, unless each of the Administrative Agent, the L/C Issuer
and the Swing Line Lender and, so long as no Default or Event of Default has occurred
and is continuing, the Lead Borrower otherwise consent (each such consent not to be
unreasonably withheld or delayed).

	 
	3.	 	The Assignee: (a) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in Section 6.01 thereof
and such other documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption; (b) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under the Credit
Agreement; (c) appoints and authorizes the Agents to take such action as agent on its behalf
and to exercise such powers under the Credit Agreement as are delegated to the Agents by the
terms thereof, together with such powers as are reasonably incidental thereto; (d) agrees that
it will perform in accordance with their terms all of the obligations which, by the terms of
the Credit Agreement, are required to be performed by it as a Lender; (e) specifies as its
lending office (and address for notices) the office set forth beneath its name on the
signature pages hereof; (f) agrees that, if the Assignee is a Foreign Lender entitled to an
exemption from, or reduction of, withholding tax under the law of the jurisdiction in which
the applicable Loan Party is resident for tax purposes, it shall deliver to the Loan Parties
and the Administrative Agent (in such number of copies as shall be requested by the recipient)
whichever of the following is applicable: (i) duly completed copies of Internal Revenue
Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the
United States is a party, (ii) duly completed copies of Internal Revenue Service Form W-8ECI,
(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under section 881(c) of the Code, (A) a certificate to the effect that such Foreign
Lender is not (1) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (2) a “10
percent shareholder” of the Loan Parties within the meaning of section 881(c)(3)(B) of the
Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (B) duly completed copies of Internal Revenue Service Form W-8BEN, or (iv) any other form
prescribed by applicable law as a basis for claiming exemption from, or a reduction in, United
States Federal withholding tax, duly completed, together with such supplementary documentation
as may be prescribed by applicable law to permit the Borrowers to determine the withholding or
deduction required to be made; and (g) represents and warrants that it is an Eligible
Assignee.

	 
	4.	 	Following the execution of this Assignment and Assumption by the Assignor and the
Assignee, it will be delivered, together with a processing and recordation fee in the amount
required as set forth in Section 10.06 to the Credit Agreement, to the Administrative
Agent for acceptance and recording by the Administrative Agent. The





2









 












	 	 	effective date of this
Assignment and Assumption shall be the date of acceptance thereof
by the Administrative Agent, unless otherwise specified on Schedule I hereto (the
“Effective Date”).

	 
	5.	 	Upon such acceptance and recording by the Administrative Agent and, to the extent
required by Section 10.06(b)(iii) of the Credit Agreement, consent by the
Administrative Agent, the L/C Issuer, the Swing Line Lender and the Lead Borrower,
as applicable (such consent not to be unreasonably withheld or delayed), from and after the
Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the extent
of the interest assigned by this Assignment and Assumption, shall have the rights and
obligations of a Lender under the Credit Agreement, and (b) the Assignor shall, to the extent
of the interest assigned by this Assignment and Assumption, be released from its obligations
under the Credit Agreement.

	 
	6.	 	Upon such acceptance and recording by the Administrative Agent, from and after the
Effective Date, the Administrative Agent shall make all payments under the Credit Agreement in
respect of the interest assigned hereby (including, without limitation, all payments of
principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement for periods
prior to the Effective Date directly between themselves.

	 
	7.	 	This Assignment and Assumption shall be governed by, and be construed in accordance
with, the laws of the State of New York, without regard to conflicts of laws principles
thereof.






[SIGNATURE PAGE FOLLOWS]






3









 








     IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption to be
executed by their respective officers thereunto duly authorized, as of the date first above
written.



	 	 	 	 	 	 	 
	 	 	[ASSIGNOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	[ASSIGNEE]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Lending Office (and address for notices):	 	 
	 
	 	 	 	 	 	 
	 	 	[Address]	 	 






	 	 	 	 	 
	Accepted this       day
of                     ,      :	 	 
	 
	 	 	 	 
	WELL FARGO BANK, NATIONAL ASSOCIATION	 	 
	as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






Schedule I to Assignment and Assumption




 









 




Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement,
consented to, this       day of                     ,
          :



	 	 	 	 	 
	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 
	WELL FARGO BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






2









 




Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement,
consented to, this       day of                     ,           :



	 	 	 	 	 
	L/C ISSUER:	 	 
	 
	 	 	 	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






3









 




Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement,
consented to, this       day of                     ,           :



	 	 	 	 	 
	SWING LINE LENDER:	 	 
	 
	 	 	 	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






4









 




Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement,
consented to, this       day of                     ,           :



	 	 	 	 	 
	LEAD BORROWER:	 	 
	 
	 	 	 	 
	BIG 5 CORP.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






5









 





Schedule I



Section 1. Percentage/Amount of Commitments/Loans/Letters of Credit Assigned by
Assignor to Assignee.



	 	 	 
	Applicable Percentage assigned by Assignor:

	 	          %
	 
	 	 
	Commitment assigned by Assignor:

	 	$                    
	 
	 	 
	Commitment assigned by Assignor:

	 	$                    
	 
	 	 
	Aggregate Outstanding Principal Amount of
Loans assigned by Assignor:

	 	$                    
	 
	 	 
	Aggregate Participations assigned by Assignor in L/C Obligations:

	 	$                    







Section 2. 
Percentage/Amount of Commitments/Loans/Letters of Credit Held by Assignor and
Assignee after giving effect to Assignment and Assumption.




	 	 	 
	Assignor’s Applicable Percentage

	 	          %
	 
	 	 
	Assignee’s Applicable Percentage:

	 	          %
	 
	 	 
	Assignor’s Commitment:

	 	$                    
	 
	 	 
	Assignee’s Commitment:

	 	$                    
	 
	 	 
	Aggregate Outstanding Principal Amount of
Loans Owing to Assignor:

	 	$                    
	 
	 	 
	Aggregate Outstanding Principal Amount of
Loans Owing to Assignee:

	 	$                    
	 
	 	 
	Aggregate Participations by Assignor in L/C Obligations:

	 	$                    
	 
	 	 
	Aggregate Participations by Assignee in L/C Obligations:

	 	$                    





Section 3.
Effective Date



	 	 	 
	Effective Date:
	 	                    ,          







6











 




EXHIBIT
F




FORM
OF BORROWING BASE CERTIFICATE





Big 5 Corp.,




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	As of Date:	 	 	 	 	 	 	10/3/2010	 
	Borrowing Base Certificate	 	 	 	 	 	 	 	 	 	Certificate #	 	 	 	 	 	 	1	 
	 
	Credit Card Receivables
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Credit Card Receivables as of:
	 	 	 	 	 	 	 	 	 	 	10/3/2010	 	 	 	 	 	 	$	—	 
	Less: Outstanding Credit Card Fees
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Eligible Credit Card Receivables
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	Advance Rate
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	90.0	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Credit Card Receivables Availability
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RETAIL INVENTORY
	 	 	 	 	 	 	 	 	 	 	 	 	 	At Retail	 	At Cost
	 
	Beginning Inventory
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 	 	$	—	 
	Add: Purchases
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 
	Net Markups
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 
	Freight
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 
	Inventory Adjustments
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Available for Sale
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 
	Less: Sales/Cost of Good Sold
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 
	Net Markdowns
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	   
	Ending Inventory as of:
	 	 	 	 	 	 	 	 	 	 	10/2/2010	 	 	$	—	 	 	$	—	 
	Less: Sales/Cost of Good Sold (10/3/10)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ending Inventory as of:
	 	 	 	 	 	 	 	 	 	 	10/3/2010	 	 	 	 	 	 	$	—	 
	Less Ineligibles:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shrink Reserve (Per G/L + $25,000 DC
Shrink Reserve)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Recalls Merchandise (Locations #812)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Defective Inventory (Location #814)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Store Claims (Location #815)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Employee Purchase Inventory (Location #816)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Work in Process (Location #817)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Show Merchandise (Location #818)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Sample Inventory (Locations #819 & #820)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Store RTV (Location #821)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Donation / Supplies (Location #851)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Unprocessed Damages / RTV’s (Delinquent
Store Returns)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Other
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Ineligibles
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Eligible Retail Inventory
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	NOLV	 	 	 	 	 	 	 	 
	Advance Rate (90% of NOLV)
	 	 	 	 	 	 	90.0%	 	 	 	76.6%	 	 	 	 	 	 	 	68.9	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Retail Inventory Availability
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	In-Transit Inventory
	 	 	 	 	 	 	 	 	 	 	 	 	 	At Retail	 	At Cost
	 
	In-Transit Inventory as of:
	 	 	 	 	 	 	 	 	 	 	10/3/2010	 	 	$	—	 	 	$	—	 
	Less Ineligibles:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shrink
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Shortship Reserve (TBD)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Ineligibles
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Eligible In-Transit Inventory
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	NOLV	 	 	 	 	 	 	 	 
	Advance Rate (90% of NOLV)
	 	 	 	 	 	 	90.0%	 	 	 	66.1%	 	 	 	 	 	 	 	59.5	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total In-Transit Inventory Availability
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Inventory Availability
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gross Borrowing Base Availability
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Less: Availability Reserves
	 	 	 	 	 	as of:	 	 	10/3/2010	 	 	 	 	 	 	 	 	 
	Gift Certificates/Cards (50%)
	 	as of:	 	 	10/3/2010	 	 	$	—	 	 	 	 	 	 	$	—	 
	Customer Deposits/Layaway (100%)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Firearms Deposit
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Rent Reserve (1 Mo PA, WA, and VA)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Texas Personal Property Tax (Full
amount paid in prior year)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Past Due Licenses A/P
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Past Due DROS Fees A/P
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Foreign Freight & Duty Landed Cost
Reserve (15% of Eligible In-Transit Inventory)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Domestic Freight & Duty Landed Cost Reserve
(5% of Eligible In-Transit Inventory)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	Other
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Availability Reserves
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Borrowing Base
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Capped Borrowing Base (Capped at $140,000,000)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	AVAILABILITY CALCULATION
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Beginning Principal Balance
	 	 	 	 	 	as of:	 	 	10/18/2010	 	 	 	 	 	 	 	—	 
	ADD:
	 	 	 	 	 	 	 	 	 	Prior days advance	 	 	 	 	 	 	—	 
	ADD:
	 	 	 	 	 	 	 	 	 	Fees charged today	 	 	 	 	 	 	—	 
	ADD:
	 	 	 	 	 	 	 	 	 	Legal Fees	 	 	 	 	 	 	—	 
	ADD:
	 	 	 	 	 	 	 	 	 	Prior day’s requested lending	 	 	 	 	 	 	—	 
	LESS:
	 	 	 	 	 	 	 	 	 	Prior day’s pay down	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ending principal balance prior to advance request
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ADVANCE REQUEST
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ending Principal Balance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ADD:
	 	 	 	 	 	 	 	 	 	Standby Letters of Credit	 	 	 	 	 	 	—	 
	ADD:
	 	 	 	 	 	 	 	 	 	Commercial Letters of Credit	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total exposure
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Availability After Today’s Request / Pay Down
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjusted Availability (Net Borrowing Base less total exposure)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 




The undersigned, a Responsible Officer (as defined in the Credit Agreement referred to below)
of Big 5 Corp. (the “Lead Borrower”), represents and warrants that (A) the information set forth
above and the supporting documentation and information delivered herewith (i) is true and correct
in all respects, (ii) has been prepared in accordance with the requirements of that certain Credit
Agreement dated ___, 2010 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), by, among others, (1) the Lead Borrower, as agent for itself and the
other Borrowers party thereto, (2) the Lenders party thereto, and (3) Wells Fargo Bank N.A., as
Administrative Agent and Collateral Agent (in such capacities, the “Agent”), and (iii) is based on
supporting documentation that is satisfactory to the Agent, and (B) all accounts payable and Taxes
are being paid on a timely basis and (C) no Default or Event of Default (as such terms are defined
in the Credit Agreement) has occurred and is continuing.


Responsible Officer











 





EXHIBIT G




FORM OF DDA NOTIFICATION





PREPARE ON BORROWER LETTERHEAD — ONE FOR EACH DEPOSITORY




[DATE]




To: [Name and Address of Bank]





			
	     Re:	 	BIG 5 CORP.

The Account Numbers referenced on Exhibit A annexed hereto






Dear Sir/Madam:




     This letter relates to the Account Numbers referenced on Exhibit A annexed hereto and any
other depository account(s) (collectively the “Account”) which BIG 5 CORP., a Delaware corporation
with an address at 2525 El Segundo Boulevard, El Segundo, California 90245 (the “Borrower”), now or
hereafter maintains with you. The term “Account” shall also mean any certificates of deposit,
investments, or other evidence of indebtedness heretofore or hereafter issued by you to or for the
account of the Borrower.



     Under various agreements between, among others, the Borrower and Wells Fargo Bank, National
Association, with an office at One Boston Place, 18th Floor, Boston, Massachusetts 02108, as
collateral agent (in such capacity, herein the “Collateral Agent”) for its own benefit and the
benefit of a syndicate of revolving lenders and certain other credit parties (the “Credit
Parties”), the Borrower has granted to the Collateral Agent (for its own benefit and the benefit of
the Credit Parties) security interests in and to, among other things, the Borrower’s accounts,
accounts receivable, inventory, and proceeds therefrom, including, without limitation, the proceeds
now or hereafter deposited in the Account or evidenced thereby. Consequently, the present and all
future contents of the Account constitute the Collateral Agent’s collateral.



     Until you receive written notification from the Collateral Agent that the interest of the
Collateral Agent and the other Credit Parties in the Accounts has been terminated, all funds from
time to time on deposit in each of the Accounts, net of such minimum balance, not to exceed
$2,500.00, as may be required by you to be maintained in each of the Accounts, shall be transferred
on each business day only as follows:



1









 





     (a) By ACH, Depository Transfer Check, or Electronic Depository Transfer to:


                            
            

ABA #                     

Account No.                                         

Re: Big 5 Corp.



     or



     (b) As you
may be otherwise instructed from time to time in writing by an officer of the
Collateral Agent.



     Upon request of the Collateral Agent, a copy of each statement issued with respect to the
Account should be provided to the Collateral Agent at the following addresses (which address may be
changed upon seven (7) days’ written notice given to you by the Collateral Agent):



Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention: Brent E. Shay, Vice President

Re: Big 5 Corp.



     You shall be fully protected in acting on any order or direction by the Collateral Agent
respecting the Accounts without making any inquiry whatsoever as to the Collateral Agent’s right or
authority to give such order or direction or as to the application of any payment made pursuant
thereto. Nothing contained herein is intended to, nor shall it be deemed to, modify the rights and
obligations of the Borrower and the Collateral Agent under the terms of the loan arrangement and
the loan documents executed in connection therewith between, among others, the Borrower and the
Collateral Agent.



     This letter may be amended only by notice in writing signed by the Borrower and an officer of
the Collateral Agent and may be terminated solely by written notice signed by an officer of the
Collateral Agent.



[signature page follows]




2









 








	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	BIG 5 CORP., as Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






cc: Wells Fargo Bank, National Association




Signature Page to DDA Notification




 









 





Exhibit A




Accounts




[see attached]




Signature Page to DDA Notification





 











 





EXHIBIT H




FORM OF CREDIT CARD NOTIFICATION




PREPARE ON BORROWER LETTERHEAD — ONE FOR EACH PROCESSOR




__________, 2010





			
	To:	 	[Name and Address of Credit Card Processor] (The “Processor”)







				
	 	Re:	 	Big 5 Corp. (the “Company”)

Merchant Account Number:                     






Dear Sir/Madam:



        Under various agreements between and among the Company, certain affiliates of the Company,
Wells Fargo Bank, National Association, with offices at One Boston Place, 18th Floor, Boston,
Massachusetts 02108, as administrative agent (the “Administrative Agent”) and collateral agent (the
“Collateral Agent” and, together with the Administrative Agent, the “Agents”) for a syndicate of
lenders and other credit parties (the “Credit Parties”) party to a Credit Agreement dated as of
October 18, 2010 (as amended, modified or supplemented from time to time, the “Credit Agreement”),
the Company has granted to the Collateral Agent, for its own benefit and the benefit of the other
Credit Parties, security interests in and to, among other things, the Company’s accounts, accounts
receivable, inventory and all proceeds therefrom, including, without limitation all payments with
respect to credit card charges (the “Charges”) submitted by the Company to the Processor for
processing and the amounts which the Processor owes to the Company on account thereof (the “Credit
Card Proceeds”).




	1.	 	Until the Processor receives written notification from an officer of the Collateral
Agent to the contrary, all amounts as may become due from time to time from the Processor to
the Company shall continue to be transferred only as follows:







	 	(a)	 	By ACH, Depository Transfer Check, or Electronic Depository Transfer to:

	 
	 	 	 	Bank of America, N.A.

ABA #                     





 









 






	 	 	 	Account No.                     

Re: Big 5 Corp.







	 	or	 	

	 
	 	(b)	 	As the Processor may be instructed from time to time in writing by an officer
of the Collateral Agent.







	2.	 	Upon request of the Collateral Agent, a copy of each periodic statement provided by
the Processor to the Company should be provided to the Collateral Agent at the following
address (which address may be changed upon seven (7) days’ written notice given to the
Processor by the Collateral Agent):





Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention: Brent E. Shay, Vice President

Re:     Big 5 Corp.




	3.	 	The Processor shall be fully protected in acting on any order or direction by the
Agents respecting the Charges and the Credit Card Proceeds without making any inquiry
whatsoever as to the Collateral Agent’s right or authority to give such order or direction or
as to the application of any payment made pursuant thereto.

	 
	4.	 	Nothing contained herein is intended to, nor shall it be deemed to, modify the rights
and obligations of the Company and the Collateral Agent under the terms of the loan
arrangement and the loan documents executed in connection therewith between, among others, the
Borrower and the Collateral Agent.





        This letter may be amended only by the written agreement of the Processor, the Company, and an
officer of the Collateral Agent and may be terminated solely by written notice signed by an officer
of the Collateral Agent.



Signature Page to Credit Card Notification




 









 








	 	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 	 
	 	 	BIG 5 CORP., as the Company
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 






			
	cc:	 	Wells Fargo Bank, National Association






Signature Page to Credit Card Notification