exv10w1



 





Exhibit 10.1




FIFTH AMENDED AND RESTATED




CREDIT AGREEMENT




Dated as of December 29, 2006




among




WILSONS LEATHER HOLDINGS INC.




as Borrower,




THE LENDERS SIGNATORY HERETO

FROM TIME TO TIME,




as Lenders




GENERAL ELECTRIC CAPITAL CORPORATION,




as Agent, Lender, Term Lender and Swing Line Lender




GE CAPITAL MARKETS, INC.




as Lead Arranger




and




WELLS FARGO RETAIL FINANCE, LLC




as Lender and Syndication Agent




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.	 	AMOUNT AND TERMS OF CREDIT
	 	 	2	 
	 	 	 
	 	 	 	 
	1.1	 	Credit Facilities
	 	 	2	 
	1.2	 	Letters of Credit
	 	 	6	 
	1.3	 	Prepayment
	 	 	6	 
	1.4	 	Use of Proceeds
	 	 	7	 
	1.5	 	Interest
	 	 	7	 
	1.6	 	Applicable Margins
	 	 	9	 
	1.7	 	[Intentionally Deleted]
	 	 	10	 
	1.8	 	Cash Management Systems
	 	 	10	 
	1.9	 	Fees
	 	 	10	 
	1.10	 	Receipt of Payments
	 	 	11	 
	1.11	 	Application and Allocation of Payments
	 	 	11	 
	1.12	 	Loan Account and Accounting
	 	 	12	 
	1.13	 	Indemnity
	 	 	12	 
	1.14	 	Access
	 	 	14	 
	1.15	 	Taxes
	 	 	14	 
	1.16	 	Capital Adequacy: Increased Costs: Illegality
	 	 	15	 
	1.17	 	Single Loan
	 	 	17	 
	1.18	 	Effect On Prior Loans; Prior Credit Agreement
	 	 	17	 
	1.19	 	Eligible Inventory-Apparel
	 	 	17	 
	1.20	 	Eligible Inventory-Wholesale
	 	 	19	 
	1.21	 	Eligible In-Transit Inventory
	 	 	20	 
	1.22	 	Eligible Accounts
	 	 	21	 
	1.23	 	Eligible Trade L/Cs
	 	 	23	 
	 	 	 
	 	 	 	 
	2.	 	CONDITIONS PRECEDENT
	 	 	23	 
	 	 	 
	 	 	 	 
	2.1	 	Conditions to Term Loan B, Initial Eligible Trade L/C Obligations or Letter of Credit Obligations
	 	 	23	 
	2.2	 	Further Conditions to Initial Revolving Credit Advances
	 	 	24	 
	2.3	 	Further Conditions to Each Loan
	 	 	24	 
	 	 	 
	 	 	 	 
	3.	 	REPRESENTATIONS AND WARRANTIES
	 	 	25	 
	 	 	 
	 	 	 	 
	3.1	 	Corporate Existence; Compliance with Law
	 	 	25	 
	3.2	 	Executive Offices; FEIN
	 	 	25	 
	3.3	 	Corporate Power, Authorization, Enforceable Obligations
	 	 	26	 
	3.4	 	Financial Statements and Projections
	 	 	26	 
	3.5	 	Material Adverse Effect
	 	 	26	 
	3.6	 	Ownership of Property; Liens
	 	 	27	 
	3.7	 	Labor Matters
	 	 	27	 
	3.8	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness
	 	 	27	 
	3.9	 	Government Regulation
	 	 	27	 
	3.10	 	Margin Regulations
	 	 	28	 
	3.11	 	Taxes
	 	 	28	 
	3.12	 	ERISA
	 	 	28	 
	3.13	 	No Litigation
	 	 	29	 
	3.14	 	Brokers
	 	 	29	 
	3.15	 	Intellectual Property
	 	 	29	 
	3.16	 	Full Disclosure
	 	 	29	 
	3.17	 	Hazardous Materials
	 	 	30	 
	3.18	 	Insurance
	 	 	30	 
	3.19	 	Deposit and Disbursement Accounts
	 	 	30	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	3.20	 	Government Contracts
	 	 	30	 
	3.21	 	Landlords and Trade Relations
	 	 	30	 
	3.22	 	Agreements and Other Documents
	 	 	30	 
	3.23	 	Solvency
	 	 	31	 
	 	 	 
	 	 	 	 
	4.	 	FINANCIAL STATEMENTS AND INFORMATION
	 	 	31	 
	 	 	 
	 	 	 	 
	4.1	 	Reports and Notices
	 	 	31	 
	4.2	 	Communication with Accountants
	 	 	31	 
	 	 	 
	 	 	 	 
	5.	 	AFFIRMATIVE COVENANTS
	 	 	31	 
	 	 	 
	 	 	 	 
	5.1	 	Maintenance of Existence and Conduct of Business
	 	 	31	 
	5.2	 	Payment of Obligations
	 	 	32	 
	5.3	 	Books and Records
	 	 	32	 
	5.4	 	Insurance: Damage to or Destruction of Collateral
	 	 	32	 
	5.5	 	Compliance With Laws
	 	 	34	 
	5.6	 	Employee Plans
	 	 	34	 
	5.7	 	Environmental Matters
	 	 	34	 
	5.8	 	Landlords’ Agreements and Bailee Letters
	 	 	34	 
	5.9	 	Ownership of Inventory
	 	 	35	 
	5.10	 	Additional Pledges
	 	 	35	 
	 	 	 
	 	 	 	 
	6.	 	NEGATIVE COVENANTS
	 	 	35	 
	 	 	 
	 	 	 	 
	6.1	 	Mergers, Subsidiaries, Etc.
	 	 	35	 
	6.2	 	Investments; Loans and Advances
	 	 	36	 
	6.3	 	Indebtedness
	 	 	36	 
	6.4	 	Employee Loans and Affiliate Transactions
	 	 	37	 
	6.5	 	Capital Structure and Business
	 	 	37	 
	6.6	 	Guaranteed Indebtedness
	 	 	38	 
	6.7	 	Liens
	 	 	38	 
	6.8	 	Sale of Stock and Assets
	 	 	38	 
	6.9	 	ERISA
	 	 	38	 
	6.10	 	[Intentionally Omitted.]
	 	 	39	 
	6.11	 	Hazardous Materials
	 	 	39	 
	6.12	 	Sale-Leasebacks
	 	 	39	 
	6.13	 	Cancellation of Indebtedness
	 	 	39	 
	6.14	 	Restricted Payments
	 	 	39	 
	6.15	 	Change of Corporate Name or Location; Change of Fiscal Year
	 	 	39	 
	6.16	 	No Impairment of Upstreaming
	 	 	40	 
	6.17	 	[Intentionally Deleted].
	 	 	40	 
	6.18	 	Eligible Trade L/Cs
	 	 	40	 
	6.19	 	Non-Core Businesses
	 	 	40	 
	 	 	 
	 	 	 	 
	7.	 	TERM
	 	 	40	 
	 	 	 
	 	 	 	 
	7.1	 	Termination
	 	 	40	 
	7.2	 	Survival of Obligations Upon Termination of Financing Arrangements
	 	 	41	 
	 	 	 
	 	 	 	 
	8.	 	EVENTS OF DEFAULT: RIGHTS AND REMEDIES
	 	 	41	 
	 	 	 
	 	 	 	 
	8.1	 	Events of Default
	 	 	41	 
	8.2	 	Remedies
	 	 	43	 
	8.3	 	Waivers by Credit Parties
	 	 	44	 
	 	 	 
	 	 	 	 
	9.	 	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
	 	 	44	 
	 	 	 
	 	 	 	 
	9.1	 	Assignment and Participations
	 	 	44	 
	9.2	 	Appointment of Agent
	 	 	46	 
	9.3	 	Agent’s Reliance, Etc.
	 	 	47	 
	9.4	 	GE Capital and Affiliates
	 	 	47	 






ii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	9.5	 	Lender Credit Decision
	 	 	48	 
	9.6	 	Indemnification
	 	 	48	 
	9.7	 	Successor Agent
	 	 	48	 
	9.8	 	Setoff and Sharing of Payments
	 	 	49	 
	9.9	 	Advances; Payments; Information; Non-Funding Lender
	 	 	49	 
	 	 	 
	 	 	 	 
	10.	 	SUCCESSORS AND ASSIGNS
	 	 	52	 
	 	 	 
	 	 	 	 
	10.1	 	Successors and Assigns
	 	 	52	 
	 	 	 
	 	 	 	 
	11.	 	MISCELLANEOUS
	 	 	53	 
	 	 	 
	 	 	 	 
	11.1	 	Complete Agreement; Modification of Agreement
	 	 	53	 
	11.2	 	Amendments and Waivers
	 	 	53	 
	11.3	 	Fees and Expenses
	 	 	55	 
	11.4	 	No Waiver
	 	 	56	 
	11.5	 	Remedies
	 	 	56	 
	11.6	 	Severability
	 	 	56	 
	11.7	 	Conflict of Terms
	 	 	56	 
	11.8	 	Authorized Signature
	 	 	56	 
	11.9	 	GOVERNING LAW
	 	 	56	 
	11.10	 	Notices
	 	 	57	 
	11.11	 	Section Titles
	 	 	58	 
	11.12	 	Counterparts
	 	 	58	 
	11.13	 	WAIVER OF JURY TRIAL
	 	 	58	 
	11.14	 	Press Releases
	 	 	58	 
	11.15	 	Reinstatement
	 	 	58	 
	11.16	 	Advice of Counsel
	 	 	59	 
	11.17	 	No Strict Construction
	 	 	59	 
	11.18	 	Confidentiality
	 	 	59	 






iii









 





INDEX OF EXHIBITS AND SCHEDULES




	 	 	 	 	 
	Schedule A (Recitals)

	 	-
	 	Definitions
	Schedule B (Section 1.2)

	 	-
	 	Letters of Credit
	Schedule C

	 	-
	 	Intentionally Omitted
	Schedule D

	 	-
	 	Intentionally Omitted
	Schedule E (Section 1.9)

	 	-
	 	Cash Management System
	Schedule F (Section 2.1(b))

	 	-
	 	Schedule of Additional Closing Documents
	Schedule G (Section 4.1(a))

	 	-
	 	Financial Statements and
Projections - Reporting
	Schedule H (Section 4.1(b))

	 	-
	 	Collateral Reports
	Schedule I (Section 6.10)

	 	-
	 	Intentionally Omitted
	Schedule J (Section 11.10)

	 	-
	 	Notice Addresses
	 
	 	 	 	 
	Schedule 1.1

	 	-
	 	Responsible Individual
	Schedule 2.1(e)

	 	-
	 	Distribution Center Leases
	Schedule 3.2

	 	-
	 	Executive Offices/Inventory-Wholesale Locations
	Schedule 3.5

	 	-
	 	Material Adverse Effect
	Schedule 3.6

	 	-
	 	Real Estate and Leases
	Schedule 3.7

	 	-
	 	Labor Matters
	Schedule 3.8

	 	-
	 	Ventures, Subsidiaries and Affiliates;
Outstanding Stock
	Schedule 3.11

	 	-
	 	Tax Matters
	Schedule 3.12

	 	-
	 	ERISA Plans
	Schedule 3.13

	 	-
	 	Litigation
	Schedule 3.15

	 	-
	 	Intellectual Property
	Schedule 3.17

	 	-
	 	Hazardous Materials
	Schedule 3.18

	 	-
	 	Insurance
	Schedule 3.19

	 	-
	 	Deposit and Disbursement Accounts
	Schedule 3.20

	 	-
	 	Government Contracts
	Schedule 3.22

	 	-
	 	Material Agreements
	Schedule 5.1

	 	-
	 	Trade Names
	Schedule 6.3

	 	-
	 	Indebtedness
	Schedule 6.4(a)

	 	-
	 	Transactions with Affiliates
	Schedule 6.7

	 	-
	 	Existing Liens
	Schedule 6.18

	 	-
	 	Form of Transportation Certificate
	Schedule 11.8

	 	-
	 	Authorized Signatures
	 
	 	 	 	 
	Exhibit 1.1(a)(i)

	 	-
	 	Form of Notice of Revolving Credit Advance
	Exhibit 1.1(a)(ii)

	 	-
	 	Form of Revolving Note
	Exhibit 1.1(b)(i)

	 	-
	 	Form of Term B Note
	Exhibit 1.1(c)(i)

	 	-
	 	Form of Notice of Swing Line Advance
	Exhibit 1.1(c)(ii)

	 	-
	 	Form of Swing Line Note
	Exhibit 1.5(e)

	 	-
	 	Form of Notice of Conversion/Continuation
	Exhibit 4.1(b)

	 	-
	 	Form of Borrowing Base Certificate
	Exhibit 9.1(a)

	 	-
	 	Form of Assignment Agreement






iv









 





     This FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (the “Agreement”), dated as of December 29,
2006 among WILSONS LEATHER HOLDINGS INC., a Minnesota corporation (“Borrower”), GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, “GE Capital”), for itself,
as Lender, as Term Lender, as Swing Line Lender and as Agent for Lenders, WELLS FARGO RETAIL
FINANCE, LLC, as syndication agent and as Lender and the other Lenders signatory hereto from time
to time.



RECITALS




     WHEREAS, Borrower and Agent, certain of the Lenders signatory hereto, and the Credit Parties,
are parties to a Credit Agreement dated as of May 25, 1996 (the “Initial Credit Agreement”), which
was amended and restated by that certain Amended and Restated Credit Agreement dated as of May 24,
1999, by that certain Second Amended and Restated Credit Agreement dated as of October 31, 2000, by
that certain Third Amended and Restated Credit Agreement dated as of June 19, 2001 and subsequently
by that certain Fourth Amended and Restated Credit Agreement dated as of April 23, 2002 (as amended
or otherwise modified prior to the date hereof, the “Prior Credit Agreement”), pursuant to which
the Agent and the other Lenders party thereto provided to Borrower a Revolving Loan Commitment in
the amount of $125,000,000 and;



     WHEREAS, pursuant to the Prior Credit Agreement Borrower has outstanding certain Loans,
Letters of Credit and Eligible Trade L/Cs (the “Prior Loans”);



     WHEREAS, Borrower desires that the terms governing the outstanding Prior Loans be amended and
restated in accordance herewith;



     WHEREAS, Borrower and Lenders agree to continue to provide Borrower with Revolving Loan
Commitments in the amount of $115,000,000 upon the terms and conditions set forth herein;



     WHEREAS, Borrower desires that Lenders extend the Commitment Termination Date until June 30,
2010, and Lenders are willing to extend the Commitment Termination Date upon the terms and
conditions set forth herein;



     WHEREAS, Borrower desires that Term Lender continue to provide the prior term loan facility,
the original principal amount of which equaled Twenty Five Million Dollars ($25,000,000) and the
principal amount of which equals Twenty Million Dollars ($20,000,000) on the Closing Date (the
“Term Loan B”) and Term Lender is willing to continue to provide Borrower with Term Loan B upon the
terms and conditions set forth herein;



 









 





     WHEREAS, to secure the Obligations, Borrower granted to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon all of its existing and after-acquired personal
property other than Equipment and Fixtures as set forth in the Amended and Restated Security
Agreement. In addition, Borrower further secured the Obligations (including, without limitation,
the repayment of the Term Loan B and the Revolving Loan) by granting to Agent, for the benefit of
Agent and Lenders, a first priority perfected lien upon all of the Equipment of each
Credit Party (and the Proceeds thereof), as set forth in the Amended and Restated Security
Agreement; and



     WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in
Schedule A. All Schedules, Disclosure Schedules, Exhibits and other attachments
(collectively, “Appendices”) hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together, shall constitute but a single agreement.
These Recitals shall be construed as part of this Agreement.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the parties hereto agree as follows:



     1. AMOUNT AND TERMS OF CREDIT



     1.1 Credit Facilities.



     (a) Revolving Credit Facility.



          (i) Subject to the terms and conditions hereof, each Lender agrees to make available from time
to time until the Commitment Termination Date its Pro Rata Share of advances (each, a
“Revolving Credit Advance”). The obligations of each Lender hereunder shall be several and
not joint. The aggregate amount of Revolving Credit Advances outstanding shall not exceed at any
time the lesser of (A) the Maximum Amount less the sum of 100% of the Letter of Credit
Obligations, 100% of the Eligible Trade L/C Obligations and 100% of the Swing Line Loan outstanding
and (B) the Borrowing Base, less the sum of 100% of the Letter of Credit Obligations, 100%
of the Eligible Trade L/C Obligations and 100% of the Swing Line Loan outstanding at such time
(such amount, “Borrowing Availability”). Furthermore, the Pro Rata Share of the Revolving
Loan of any Lender shall not at any time exceed its separate Revolving Loan Commitment. Until the
Commitment Termination Date, Borrower may from time to time borrow, repay and reborrow under this
Section 1.1(a). Each Revolving Credit Advance shall be made on notice by Borrower to the
representative of the Agent identified on Schedule 1.1 at the address specified thereon.
Those notices must be given no later than (1) Noon (Chicago time) on the Business Day of the
proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 10:00 a.m. (Chicago
time) on the date which is two (2) Business Days prior to the proposed Revolving Credit Advance, in
the case of a LIBOR Loan. Each such notice (a “Notice of Revolving Credit Advance”) must
be substantially in the form of Exhibit 1.1(a)(i), and must specify the requested date, the
amount and type of the requested Revolving Credit Advance, and such other information as may be
required by Agent and must be given in writing (by telecopy or overnight courier) or by telephone
confirmed immediately in writing. Revolving Credit Advances in the form of Index Rate Loans must
be in a minimum amount of $100,000 and multiples of $10,000 in excess of such amount; minimum
advances and integral multiples for LIBOR Loans are set forth in Section 1.5(e). In the
case of a Revolving Credit Advance that is not to be funded by a Swing Line Advance, Agent shall
promptly notify each Lender of the Notice of Revolving Credit Advance. Notwithstanding the
foregoing, any Revolving Credit Advance to Borrower which is to be used solely to repay the Swing
Line Loan to Borrower may be in the aggregate principal amount of the Swing Line Loan even if less
than the foregoing
minimums. If Borrower desires to have the Revolving Loan bear interest by reference to a
LIBOR Rate, it must comply with Section 1.5(e).




2









 





          (ii) Borrower shall execute and deliver to each Lender a promissory note to evidence the
Revolving Loan and all Revolving Loan Notes outstanding under the Prior Credit Agreement shall
thereupon cease to be of any force or effect. Each note shall be in the principal amount of the
Revolving Loan Commitment of the applicable Lender, dated the Closing Date and substantially in the
form of Exhibit 1.1(a)(ii) (each a “Revolving Note” and, collectively, the
“Revolving Notes”). The Revolving Notes shall represent the obligation of Borrower to pay
the amount of the Revolving Loan Commitment or, if less, the applicable Lender’s Pro Rata Share of
the aggregate unpaid principal amount of all Revolving Credit Advances made by the applicable
Lender to Borrower together with interest thereon as prescribed in Section 1.5. The entire
unpaid balance of the Revolving Loan and all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds in Dollars on the Commitment Termination
Date.




          (iii) In its discretion the Agent may (but shall have absolutely no obligation to) make
Revolving Credit Advances to Borrower on behalf of the Lenders in amounts which cause the
outstanding principal balance of the aggregate Revolving Credit Advances to exceed Borrowing
Availability (any such excess Revolving Credit Advances are herein referred to collectively as
“Overadvances”), and no such event or occurrence shall cause or constitute a waiver by
Agent or Lenders of any Default or Event of Default that may result therefrom or of their right to
refuse to make any further Overadvances, Revolving Credit Advances or Swing Line Advances or incur
any Letter of Credit Obligations or Eligible Trade L/C Obligations at any time that an Overadvance
exists or would result therefrom. In addition, Overadvances may be made even if the conditions to
lending set forth in Section 2 have not been met. The authority of the Agent to make
Overadvances is limited to an aggregate amount not to exceed an amount equal to three (3%) percent
of the Revolving Loan Commitment of all Lenders at the time such Overadvance is to be made, shall
not cause the sum of the Revolving Loan plus the Swing Line Loan to exceed the Maximum
Amount, and may be revoked prospectively by a written notice to Agent signed by Lenders holding
fifty-one percent (51%) or more of the Revolving Loan Commitments. The aggregate principal balance
of all Overadvances shall bear interest at the Default Rate then applicable to Index Rate Loans.
Each Overadvance shall be payable by Borrower as and when specified by Agent at the time that such
Overadvance is made or, if not so specified by Agent, shall be payable on demand.




     (b) Term Loan B.



          (i) Subject to the terms and conditions hereof, the Term Lender agrees to continue to provide
a term loan (the “Term Loan B”) which was previously made under the Prior Credit Agreement
to Borrower in the original principal amount of the Term Loan B Commitment. The Term Loan B shall
be evidenced by a promissory note substantially in the form of Exhibit 1.1(b)(i) (the
“Term B Note”) and Borrower shall execute and deliver the Term B Note to the Term Lender on
the Closing Date, and thereupon all Term B Notes outstanding under the Prior Credit Agreement shall
deemed to be replaced by such new notes. The Term B Note shall represent the obligation of
Borrower to pay the amount of the Term Loan B, together with interest thereon as prescribed in
Section 1.5.




3









 








          (ii) The aggregate outstanding principal balance of the Term Loan B shall be due and payable
in full in immediately available funds on the Commitment Termination Date, if not sooner paid in
full. No payment with respect to the Term Loan B may be reborrowed.




          (iii) Each payment of principal and each payment of interest with respect to the Term Loan B
shall be paid to Agent for the benefit of the Term Lender.




     (c) Swing Line Facility.



          (i) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make available
from time to time until the Commitment Termination Date advances (each, a “Swing Line
Advance”); provided that, except as set forth in Section 2.3, no Swing Line
Advance may be made after the occurrence and during the continuance of an Event of Default unless
such Swing Line Advance is approved by Requisite Lenders. The aggregate amount of Swing Line
Advances outstanding shall not exceed the lesser of (A) the Swing Line Commitment and (B) the
Borrowing Base less the sum of the outstanding balance of the Revolving Credit Advances, 100% of
outstanding Letter of Credit Obligations and 100% of outstanding Eligible Trade L/C Obligations
(“Swing Line Availability”). Until the Commitment Termination Date, Borrower may from time
to time borrow, repay and reborrow under this Section 1.1(c). In order to minimize
fluctuations in the Revolving Loan balance, it is intended that the Swing Line Loan shall be the
first Loan borrowed and the first Loan repaid. Each Swing Line Advance shall be made on notice by
Borrower to the representative of the Agent identified on Schedule 1.1 at the address
specified thereon. Those notices must be given no later than Noon (Chicago time) on the Business
Day of the proposed Swing Line Advance. Each such notice (a “Notice of Swing Line
Advance”) must be substantially in the form of Exhibit 1.1(c)(i), and must specify the
requested date, the amount of the requested Swing Line Advance, and such other information as may
be required by Agent or the Swing Line Lender and must be given in writing (by telecopy or
overnight courier) or by telephone confirmed immediately in writing.




          (ii) Borrower shall execute and deliver to the Swing Line Lender a promissory note to evidence
the Swing Line Loan, and thereupon the Swing Line Note outstanding under the Prior Credit Agreement
shall deemed to be replaced by such new note. Such note shall be in the principal amount of the
Swing Line Commitment of the Swing Line Lender, dated the Closing Date and substantially in the
form of Exhibit 1.1(c)(ii) (the “Swing Line Note”). The Swing Line Note shall
represent the obligation of Borrower to pay the amount of the Swing Line Commitment or, if less,
the aggregate unpaid principal amount of all Swing Line Advances made to Borrower together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the Swing Line
Loan and all other non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date if not sooner paid in full.




4









 








          (iii) Refunding of Swing Line Loans. The Swing Line Lender, at any time and from time
to time in its sole and absolute discretion, but not less frequently than once weekly, shall on
behalf of Borrower (and Borrower hereby irrevocably authorizes the Swing Line Lender to so act on
its behalf) request by telephone or telecopy each Lender (including the Swing Line Lender) to make
a Revolving Credit Advance to Borrower (which initially shall be
an Index Rate Loan, but may be converted to a LIBOR Loan) in an amount equal to such Lender’s
Pro Rata Share of the principal amount of the Swing Line Loan (the “Refunded Swing Line
Loan”) outstanding on the date such notice is given. Unless any of the events described in
Sections 8.1(h) or 8.l(i) shall have occurred (in which event the procedures of
Section 1.1(c)(iv) shall apply) and regardless of whether the conditions precedent set
forth in this Agreement to the making of a Revolving Credit Advance are then satisfied, each
Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance
on behalf of the Swing Line Lender, prior to 1:00 p.m. (Chicago time), in immediately available
funds on the Business Day that such notice is given. The proceeds of such Revolving Credit
Advances shall be immediately applied to repay the Refunded Swing Line Loan.




          (iv) Participation in Swing Line Loans. If, prior to refunding a Swing Line Loan with
a Revolving Credit Advance pursuant to Section 1.1(c)(iii), one of the events described in
Sections 8.1 (h) or 8.1(i) shall have occurred with respect to Borrower, then,
subject to the provisions of Section 1.1(c)(v) below, each Lender will, on the date such
Revolving Credit Advance was to have been made to Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan in an amount equal to its Pro Rata Share of
such Swing Line Loan. Upon request, each Lender will promptly transfer to the Swing Line Lender,
in immediately available funds, the amount of its participation and upon receipt thereof the Swing
Line Lender will deliver to such Lender a Swing Line Loan participation certificate, in form and
substance reasonably satisfactory to Agent, dated the date of receipt of such funds and in such
amount.




          (v) Lenders’ Obligations Unconditional. Each Revolving Lender’s obligation to make
Revolving Credit Advances in accordance with Section 1.1(c)(iii) and to purchase
participating interests in accordance with Section 1.1(c)(iv) shall be absolute and
unconditional and shall not be affected by any of the following circumstances: (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line
Lender, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance
of any Default or Event of Default; (C) any inability of Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement on the date upon which such participating
interest is to be purchased or (D) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing. If any Revolving Lender does not make available to the
Swing Line Lender the amount required pursuant to Section 1.1(c)(iii) or
1.1(c)(iv), as the case may be, the Swing Line Lender shall be entitled to recover such
amount on demand from such Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the federal funds rate for the first two Business
Days and at the Index Rate thereafter.




     (d) Reliance on Notices. Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation, Notice of Swing Line Advance or similar notice believed by Agent to be
genuine. Agent may assume that each Person executing and delivering such a notice was duly
authorized, unless the responsible individual acting thereon for Agent has actual knowledge to the
contrary.



5









 





     1.2 Letters of Credit. Subject to and in accordance with the terms and conditions contained herein and in
Schedule B, Borrower shall have the right to request, and the Lenders agree to incur,
Eligible Trade L/C Obligations and Letter of Credit Obligations in respect of Borrower. The
aggregate Letter of Credit Obligations and Eligible Trade L/C Obligations outstanding at any time
shall not exceed as of any date of determination, the lesser of (A) $75,000,000 and (B)
$115,000,000 less the then outstanding Revolving Credit Advances and Swing Line Loan. In addition,
the sum of 100% of the Letter of Credit Obligations and 100% of outstanding Eligible Trade L/C
Obligations shall not exceed the Borrowing Base, less the then outstanding Revolving Credit
Advances and Swing Line Loan. The determination of availability described in the preceding two
sentences is herein referred to as “L/C Availability.



     1.3 Prepayment.



     (a) Subject to Section 1.1(a)(iii), if at any time Borrowing Availability or L/C
Availability is less than zero, Borrower shall immediately repay the aggregate outstanding
Revolving Credit Advances and Swing Line Advances (in such order as shall minimize the aggregate of
LIBOR breakage costs and the interest costs on the Revolving Loan and/or Swing Line Loan that
remains outstanding) to the extent required to eliminate such deficit. If any deficit remains
after repayment in full of the aggregate outstanding Revolving Credit Advances and Swing Line
Advances, Borrower shall provide cash collateral for the Letter of Credit Obligations and Eligible
Trade L/C Obligations in the manner set forth in Schedule B to the extent required to
eliminate such deficit.



     (b) If Ultimate Parent issues Stock, no later than the Business Day following the date of
receipt of the proceeds thereof, Borrower shall prepay the Loans (other than Term Loan B) in an
amount equal to such proceeds, net of underwriting discounts and commissions and other reasonable
costs paid to non-Affiliates in connection therewith. Any such prepayment of Loans (other than
Term Loan B) shall be applied in accordance with clause (e) below.



     (c) Borrower may at any time on at least five (5) days’ (fifteen (15) days’ in the case of
prepayment in full of the Loans) prior written notice to Agent voluntarily prepay all or part of
the Revolving Loan and/or the Swing Line Loan and permanently reduce or terminate the Revolving
Loan Commitment or the Swing Line Commitment, as applicable; provided that (a) any such
prepayments or reductions shall be in a minimum amount of $5,000,000 and integral multiples of
$250,000 in excess of such amount, (b) such voluntary prepayments or reductions may be made or
effected no more frequently than once per year following the Closing Date, (c) any partial
reduction of the Revolving Loan Commitment shall result in a ratable reduction in the Swing Line
Commitment, and (d) any partial reduction of the Revolving Loan Commitment to $100,000,000 or less
shall result in a ratable reduction in the L/C Sublimit. Any such voluntary prepayment and any
such reduction or termination of the Revolving Loan Commitment must be accompanied by the payment
of any LIBOR funding breakage costs in accordance with Section 1.13(b). Upon any such
prepayment in full and termination in full of the Revolving Loan Commitment and the Swing Line
Commitment, Borrower’s right to request Revolving Credit Advances, request that Letter of Credit
Obligations or Eligible Trade L/C Obligations be incurred on its behalf, or request Swing Line
Advances shall simultaneously be permanently terminated.



6









 





     (d) In the event of the receipt by any Credit Party of proceeds of any sale or other
disposition of all or any portion of the Term Collateral (or the receipt of insurance or
condemnation proceeds relating to such Term Collateral which have not been applied to replacement
or reconstruction as provided in Section 5.4(c)) then, at the option of the Term Lender,
the amount equal to the net proceeds of such sale or disposition (i) shall be applied to prepayment
of Term Loan B or the other Loans, in such order of application as the Term Lender shall determine,
or (ii) shall be released to Borrower. The Term Lender shall exercise its option to direct
application of such proceeds by notice to Borrower no later than the later of (x) the date that the
applicable proceeds are received by a Credit Party or (y) thirty (30) days after the Term Lender
receives written notice of the event giving rise to such option, and Borrower shall make any
prepayment required hereby within two Business Days after receipt of such notice.



     (e) Any prepayments made by Borrower pursuant to clause (b) above or pursuant to
Section 5.4(c) (unless otherwise set forth in this Section 1.3) shall be applied in
the following order of priority, in each instance until all Obligations having a higher priority
have been paid in full: first, to accrued Fees and expenses reimbursable hereunder;
second, to accrued interest on the Swing Line Loan; third, to the principal balance
of the Swing Line Loan; fourth, to the accrued interest on the Index Rate Loans;
fifth, to the principal balance of the Index Rate Loans; sixth to accrued interest
on the LIBOR Rate Loans; seventh to the principal balance of the LIBOR Rate Loans; and
eighth, if L/C Availability is less than zero, to any Letter of Credit Obligations and
Eligible Trade L/C Obligations of Borrower to provide cash collateral therefor in the manner set
forth in Schedule B, until all such Letter of Credit Obligations and Eligible Trade L/C
Obligations have been cash collateralized to the extent so required. If an Event of Default shall
have occurred and be continuing, the remainder of any such prepayments shall be applied to
outstanding Obligations in such order as Agent may deem appropriate, including the cash
collateralization of Letter of Credit Obligations and Eligible Trade L/C Obligations. Otherwise
the remainder of such prepayments shall be returned to Borrower. Neither the Revolving Loan
Commitment nor the Swing Line Commitment shall be permanently reduced by the amount of any
prepayments applied to the Revolving Loan or the Swing Line Loan pursuant to the foregoing.



     1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Revolving Credit
Advances, the Term Loan B and the Swing Line Advances solely for the financing of Borrower’s
ordinary working capital needs, including Capital Expenditures (but excluding in any event (a) the
making of any Restricted Payment not specifically permitted by Section 6.14 and (b) with
respect to proceeds of Revolving Loans, the making of any payments of the principal of Term Loan
B).



     1.5 Interest.



     (a) Borrower shall pay interest to Agent, for the ratable benefit of Lenders, in arrears on
each applicable Interest Payment Date, at the following rates: (i) with respect to the Revolving
Credit Advances bearing interest at the Index Rate, at a per annum rate equal to the Index Rate
plus the Applicable Index Margin, or at the election of Borrower, at a per annum rate equal to the
applicable LIBOR Rate plus the Applicable LIBOR Margin, based on the aggregate Revolving Credit
Advances outstanding from time to time; (ii) with respect to the Term Loan B,
the LIBOR Rate plus four percent (4%) per annum; and (iii) with respect to the Swing Line Loan
at a per annum rate equal to the LIBOR Rate plus the Applicable Swing Line Margin.



7









 





     (b) If any payment on any Loan becomes due and payable on a day other than a Business Day, the
maturity thereof will be extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.



     (c) All computations of interest with respect to LIBOR Loans and the Swing Line Loan shall be
made by Agent on the basis of a three hundred sixty (360) day year, for the actual number of days
occurring in the period for which such interest is payable. All computations of interest with
respect to Index Rate Loans, shall be made by Agent on the basis of a three hundred sixty-five
(365) day year for the actual number of days elapsed. The Index Rate shall be determined each day
based upon the Index Rate as in effect each day. Each determination by Agent of an interest rate
hereunder shall be conclusive, absent manifest error.



     (d) So long as any Event of Default shall have occurred and be continuing, and at the election
of Agent (or upon the written request of Requisite Lenders) after written notice from Agent to
Borrower, the interest rates applicable to the Revolving Loan, the Term Loan B, the Swing Line Loan
and the Letter of Credit Fees shall be increased by two percentage points (2%) per annum above the
rate of interest or the rate of such Fees otherwise applicable hereunder (“Default Rate”),
and all outstanding Obligations shall bear interest at the Default Rate applicable to such
Obligations. If such notice is issued, interest and Letter of Credit Fees at the Default Rate
shall accrue from the initial date of such Event of Default for so long as that Event of Default
shall continue and shall be payable upon demand.



     (e) So long as no Default or Event of Default shall have occurred and be continuing, Borrower
shall have the option to (i) request that any Revolving Credit Advance (other than an Overadvance)
be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Revolving Credit
Advances (including a Refunded Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with
Section 1.13(b) if such conversion is made prior to the expiration of the LIBOR Period
applicable thereto, or (iv) continue all or any portion of any LIBOR Loan as a LIBOR Loan upon the
expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the last day of the LIBOR Period of the Loan to be continued. Any Loan to be
made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of such amount. Any such election must be made by 10:00
a.m. (Chicago time) on the second (2nd) Business Day prior to (1) the date of any proposed Advance
which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any
LIBOR Loans to be continued as such, or (3) the date on which Borrower wishes to convert any Index
Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in such election. If no
election is received with respect to a LIBOR Loan by 10:00 a.m. (Chicago time) on the second (2nd)
Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event
of Default shall have occurred and be continuing), that LIBOR Loan shall be converted to an Index
Rate Loan at the end of its LIBOR Period. Borrower must make such election by notice to Agent in
writing, by telecopy or
overnight courier. In the case of any conversion or continuation, such election must be made
pursuant to a written notice (a “Notice of Conversion/Continuation”) in the form of
Exhibit 1.5(e). Borrower shall not be entitled to request or continue any Revolving Loan
as, or convert any Revolving Loan into, a LIBOR Loan unless at the time of such request, conversion
or continuation, the aggregate outstanding principal balance of the Revolving Credit Advances plus
the amount of the Swing Line Advances equals or exceeds $5,000,000. Not more than ten (10) LIBOR
Loans shall be outstanding at any time.



8









 





     (f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a court
of competent jurisdiction determines in a final order that the rate of interest payable hereunder
exceeds the highest rate of interest permissible under law (the “Maximum Lawful Rate”),
then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if at
any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the
total interest received by Agent, on behalf of Lenders, is equal to the total interest which would
have been received had the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, the interest rate payable hereunder shall be the rate(s) of interest
provided in Sections 1.5(a) through (e) above, unless and until the rate of
interest again exceeds the Maximum Lawful Rate, and at that time this paragraph shall again apply.
In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the
amount which such Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is
calculated pursuant to this paragraph, such interest shall be calculated at a daily rate equal to
the Maximum Lawful Rate divided by the number of days in the year in which such calculation is
made. If, notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest hereunder in excess of the
Maximum Lawful Rate, Agent shall, to the extent permitted by applicable law, promptly apply such
excess in the order specified in Section 1.11 and thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.



     1.6 Applicable Margins. The Applicable Swing Line Margin, Applicable Index Margin,
Applicable LIBOR Margin, Applicable Documentary L/C Margin and Applicable Standby L/C Margin will
be 1.75%, 0.50%, 1.75%, 0.875% and 1.75% per annum, respectively.



     The Applicable Margins shall be adjusted (up or down) prospectively on a quarterly basis as
determined based upon the percentage of the Borrowing Availability Utilizer during the immediately
preceding Fiscal Quarter, commencing with the Fiscal Quarter ending on or about the last day of
July, 2007. All adjustments in the Applicable Margins thereafter shall be implemented quarterly on
a prospective basis at any time there is a need for an adjustment (the determination as to whether
an adjustment is necessary to be made by Agent in good faith). Adjustments in Applicable Margins
will be determined by reference to the following grids:



9









 





	 	 	 
	If the percentage of the Borrowing Availability
Utilizer during the immediately preceding Fiscal
Quarter is:

	 	Level of
Applicable Margins:
	> 50%

	 	Level I
	£ 50%, but > 25%

	 	Level II
	£ 25

	 	Level III






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	Level
I	 	 	Level
II	 	 	Level
III	 	 
	 	 	 	 
	 	Applicable Swing Line Margin
	 	 	 	1.25	%	 	 	 	1.50	%	 	 	 	1.75	%	 	 
	 	 	 	 
	 	Applicable Index Margin
	 	 	 	0.00	%	 	 	 	0.25	%	 	 	 	0.50	%	 	 
	 	 	 	 
	 	Applicable LIBOR Margin
	 	 	 	1.25	%	 	 	 	1.50	%	 	 	 	1.75	%	 	 
	 	 	 	 
	 	Applicable Documentary L/C
Margin
	 	 	 	0.625	%	 	 	 	0.75	%	 	 	 	0.875	%	 	 
	 	 	 	 
	 	Applicable Standby L/C Margin
	 	 	 	1.25	%	 	 	 	1.50	%	 	 	 	1.75	%	 	 
	 	 	 	 






     If any Default or an Event of Default has occurred and is continuing at the time any
reduction in the Applicable Margins is to be implemented, that reduction shall be deferred until
the first day of the first calendar month following the date on which all Defaults or Events of
Default are waived or cured.



     1.7 [Intentionally Deleted].



     1.8 Cash Management Systems. Borrower will maintain its existing cash management systems
as described on Schedule E (the “Cash Management Systems”).



     1.9 Fees.



     (a) Borrower shall pay to GE Capital, individually, the Fees specified in the GE Capital Fee
Letter at the times specified for payment therein and on the Closing Date Borrower shall pay to
Agent, for the ratable benefit of the Lenders, a closing fee in an amount equal to $135,000 (which
closing fee shall be deemed fully earned on the Closing Date and shall be non-refundable when
paid).



     (b) As additional compensation for the Lenders having Revolving Loan Commitments, Borrower
agrees to pay to Agent, for the ratable benefit of such Lenders, in arrears, on the first Business
Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date,
a fee for Borrower’s non-use of funds (the “Non-Use Fee”) in an amount equal to 0.25% per
annum (calculated on the basis of a 360 day year for actual days elapsed) of the difference between
(x) the Maximum Amount (as it may be reduced
from time to time) and (y) the average for the period of the daily closing balances of the
Revolving Loan and the Swing Line Loan outstanding during the period for which the Non-Use Fee is
due.



10









 





     (c) If Borrower pays after acceleration or reduces or terminates the Revolving Loan
Commitment, whether voluntarily or involuntarily and whether before or after acceleration of the
Obligations, or if any of the Commitments are otherwise terminated, Borrower shall pay as
liquidated damages and compensation for the costs of being prepared to make funds available
hereunder to the Agent, for the ratable benefit of the Lenders based upon their Revolving Loan
Commitments, an amount equal to 1% multiplied by the amount of the reduction of the Revolving Loan
Commitment. Notwithstanding the foregoing, no prepayment fee shall be payable by Borrower upon a
mandatory prepayment made pursuant to Sections 1.3(a), 1.3(b), 1.3(d) or 1.16(c);
provided that in the case of prepayments made pursuant to Sections 1.3(b) and
1.3(d), the transaction giving rise to the applicable prepayment is expressly permitted under
Section 6.



     1.10 Receipt of Payments. Payments in the form of immediately available funds received in
Agent’s Collection Account before 2:00 p.m. (Chicago time) on any Business Day will be applied
against the Obligations on that day. Payments received after 2:00 p.m. (Chicago time) on any
Business Day shall be deemed to have been received on the next Business Day.



     1.11 Application and Allocation of Payments.



     (a) Borrower hereby irrevocably waives as to all payments from and after the Commitment
Termination Date, the right to direct the application of such payments received from or on behalf
of Borrower, and Borrower hereby irrevocably agrees that Agent shall have the continuing exclusive
right to apply any and all such payments against the Obligations as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or any other books and records.
Subject to Section 8.2, in the absence of a specific determination by Agent with respect
thereto after the Commitment Termination Date and in all other instances (except as otherwise
expressly provided herein), payments shall be applied in the following order of priority, in each
instance until all Obligations having a higher priority have been paid in full: (1) to Fees and
Agent’s expenses reimbursable hereunder; (2) to accrued interest on the Swing Line Loan; (3) to the
outstanding principal balance of the Swing Line Loan; (4) to accrued interest on the Revolving
Loans that are Index Rate Loans; (5) to the principal balance of the Revolving Loans that are Index
Rate Loans; (6) to accrued interest on the Revolving Loans that are LIBOR Rate Loans; (7) to the
principal balance of the Revolving Loans that are LIBOR Rate Loans; (8) if the Commitment
Termination Date has occurred or if L/C Availability is less than zero, to cash collateralize
Letter of Credit Obligations and Eligible Trade L/C Obligations in the manner described in
Schedule B, (9) to interest on the Term Loan B, (10) to the principal of the Term Loan B
and (11) to all other Obligations then due and payable including expenses of Lenders reimbursable
under Section 11.3.



11









 





     (b) Agent is authorized to, and at its sole election may, charge to the Swing Line Loan to the
extent such charge would not cause the Swing Line Loan balance to exceed the
Swing Line Commitment and then to the Revolving Loan balance on behalf of Borrower and cause
to be paid all Fees, expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest owing by Borrower under this Agreement or any of the other
Loan Documents if and to the extent Borrower fails to promptly pay any such amounts within three
(3) Business Days after the date on which such payment is due, even if such charges would cause the
Revolving Loan to exceed Borrowing Availability. At Agent’s option and to the extent permitted by
law, any charges so made shall constitute part of the Swing Line Loan or Revolving Loan hereunder.



     (c) If a Default or an Event of Default has occurred and is continuing, in addition to any
other right or remedy, and without implying any obligation to continue to make Loans and Advances,
Agent may in its sole and absolute discretion, impose a Reserve against Borrowing Availability for
interest, Fees and expenses due and payable or which will become due and payable hereunder on the
next respective payment dates therefor.



     (d) Subject to Section 1.11(a) above, if Borrower pays less than all of the interest
due hereunder on any Interest Payment Date, Agent shall apply such partial payment ratably to all
interest then due hereunder.



     1.12 Loan Account and Accounting. Agent shall maintain a loan account (the “Loan
Account”) on its books to record: (a) all Advances and the Term Loan B (b) all payments made by
Borrower, and (c) all other debits and credits as provided in this Agreement with respect to the
Loans or any other Obligations. All entries in the Loan Account shall be made in accordance with
Agent’s customary accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent’s most recent printout or other written statement, shall be
presumptive evidence of the amounts due and owing to Agent and Lenders by Borrower;
provided that any failure to so record or any error in so recording shall not limit or
otherwise affect Borrower’s duty to pay the Obligations. Agent shall render to Borrower a monthly
accounting of transactions with respect to the Loans setting forth the balance of the Loan Account.
Unless Borrower notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the date thereof, each and
every such accounting shall (absent manifest error) be deemed final, binding and conclusive upon
Borrower in all respects as to all matters reflected therein. Only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower.



     1.13 Indemnity.



     (a) Borrower shall indemnify and hold harmless each of Agent, Lenders and their respective
Affiliates, and each such Person’s respective officers, directors, employees, attorneys, agents and
representatives (each, an “Indemnified Person”), from and against any and all suits,
actions, proceedings, claims, damages, losses, liabilities and expenses (including attorneys’ fees
and disbursements and other costs of investigation or defense, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this Agreement and the
other Loan Documents, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures to act in
connection therewith, including any and all Environmental Liabilities and Costs and legal costs and
expenses arising out of or incurred in connection with disputes between or among any parties to any
of the Loan Documents; provided, that Borrower shall not be liable for any



12









 







indemnification
to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results solely from that Indemnified Person’s gross negligence or willful
misconduct, as finally determined by a court of competent jurisdiction. NO INDEMNIFIED PERSON
SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH
SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.



     (b) To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i)
any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period
(whether that repayment is made pursuant to any provision of this Agreement or any other Loan
Document or is the result of acceleration, by operation of law or otherwise); (ii) Borrower shall
default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii)
Borrower shall default in making any borrowing of, conversion into or continuation of LIBOR Loans
after Borrower has given notice requesting the same in accordance herewith; or (iv) Borrower shall
fail to make any prepayment of a LIBOR Loan after Borrower has given a notice thereof in accordance
herewith, Borrower shall indemnify and hold harmless each Lender from and against all losses, costs
and expenses resulting from or arising from any of the foregoing. Such indemnification shall
include, without limitation, any loss (including, without limitation, loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained. For the purpose of calculating amounts payable to a Lender
under this subsection, each Lender shall be deemed to have actually funded its relevant LIBOR Loan
through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the
amount of that LIBOR Loan and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any manner
it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts
payable under this subsection. This covenant shall survive the termination of this Agreement and
the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under
the circumstances, each Lender shall provide Borrower and Agent with its written calculation of all
amounts payable pursuant to this Section 1.13(b), and such calculation shall be binding on
the parties hereto unless Borrower shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail. All amounts payable pursuant to this
Section 1.13(b) shall be made payable to Agent for the benefit of the requesting Lender and
shall then be funded by Agent to such Lender.



13









 





     1.14 Access.



     (a) Borrower shall, and in accordance with the Guaranties, shall cause each other Credit Party
who is a signatory thereto to, during normal business hours, from time to time upon one (1)
Business Day’s prior notice as frequently as Agent reasonably determines to be appropriate: (a)
provide Agent and any of its officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) of each Credit Party and to the Collateral, (b) permit
Agent, and any of its officers, employees and agents, to inspect, audit and make extracts from any
Credit Party’s books and records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review and evaluate the Accounts, Inventory and other Collateral of any Credit Party;
provided, that Borrower shall only be obligated to reimburse Agent pursuant to clause
(b) below for (x) Collateral audits performed not more than two times in each year so long as
the percentage of the Borrowing Availability Utilizer during the immediately preceding Fiscal
Quarter is equal to, or greater than, 20% or (y) Collateral audits performed not more than four
times in each year so long as the percentage of the Borrowing Availability Utilizer during the
immediately preceding Fiscal Quarter is less than 20%, in each case in the absence of an Event of
Default (and, unless an Event of Default has occurred and is continuing, Agent shall use good faith
efforts to provide at least five (5) Business Days’ notice of such audit, which notice shall
include a summary of the procedures to be followed in such audit). If a Default or Event of
Default shall have occurred and be continuing, Borrower, Ultimate Parent, First Intermediate
Parent, Second Intermediate Parent and Third Intermediate Parent shall provide such access at all
times and without advance notice. Borrower, Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent and Third Intermediate Parent shall make available to Agent and its counsel, as
quickly as is possible under the circumstances, originals or copies of all books and records which
Agent may request. Borrower, Ultimate Parent, First Intermediate Parent, Second Intermediate
Parent and Third Intermediate Parent shall deliver any document or instrument necessary for Agent,
as it may from time to time request, to obtain records from any service bureau or other Person
which maintains records for the Credit Parties. Borrower, Ultimate Parent, First Intermediate
Parent, Second Intermediate Parent and Third Intermediate Parent shall maintain duplicate records
or supporting documentation on media, including computer tapes and discs owned by Borrower,
Ultimate Parent, First Intermediate Parent, Second Intermediate Parent and Third Intermediate
Parent.



     (b) Borrower shall pay Agent a Fee of $900 per day per individual (plus all out-of-pocket
costs and expenses) in connection with Agent’s field examinations permitted under Section
1.14(a) above and Section 4(c) of the Amended and Restated Security Agreement,
including the cost of verifying Eligible In-Transit Inventory in the possession of Approved
Shippers (and no additional costs for such field examinations shall be payable pursuant to
Section 11.3).



     1.15 Taxes.



     (a) Any and all payments by Borrower hereunder or under the Notes shall be made, in accordance
with this Section 1.15, free and clear of and without deduction for any and all present or
future Taxes. Except as provided in Section 1.16(d), if Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under the Notes, (i) the sum
payable shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable under this
Section 1.15) Agent or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) Borrower shall make such deductions, and
(iii) Borrower shall pay the full amount deducted to the relevant taxing or other authority in
accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes,
Borrower shall furnish to Agent the original or a certified copy of a receipt evidencing payment
thereof.



14









 





     (b) Borrower shall indemnify and, within ten (10) days of demand therefor, pay, Agent and each
Lender for the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts
payable under this Section 1.15) paid by Agent or such Lender, as appropriate, and any
liability (including penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.



     1.16 Capital Adequacy: Increased Costs: Illegality.



     (a) If any Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any Lender with any request
or directive regarding capital adequacy, reserve requirements or similar requirements (whether or
not having the force of law) from any central bank or other Governmental Authority increases or
would have the effect of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such Lender’s capital as a
consequence of its obligations hereunder, then Borrower shall from time to time upon demand by such
Lender (with a copy of such demand to Agent) pay to Agent, for the account of such Lender,
additional amounts sufficient to compensate such Lender for such reduction. A certificate as to
the amount of that reduction and showing the basis of the computation thereof submitted by such
Lender to Borrower and to Agent shall, absent manifest error, be final, conclusive and binding for
all purposes.



     (b) If, due to either (i) the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of law), there shall
be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any
Loan, then Borrower shall from time to time, upon demand by such Lender (with a copy of such demand
to Agent), pay to Agent for the account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower and to Agent by such Lender, shall be conclusive and binding on Borrower for
all purposes, absent manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender’s internal policies of
general application, use reasonable commercial efforts to minimize costs and expenses incurred by
it and payable to it by Borrower pursuant to this Section 1.16(b).



     (c) Notwithstanding anything to the contrary contained herein, if the introduction of or any
change in any law or regulation (or any change in the interpretation
thereof) shall make it unlawful, or any central bank or other Governmental Authority shall
assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or
maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to
maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender’s
opinion, adversely affecting it or its Loans or the income obtained therefrom, on notice thereof
and demand therefor by such Lender to Borrower through Agent, (i) the obligation of such Lender to
agree to make or to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii)
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by Borrower to such
Lender, together with interest accrued thereon (but without LIBOR breakage costs), unless Borrower,
within five (5) Business Days after the delivery of such notice and demand, converts all such Loans
into a Loan bearing interest based on the Index Rate (which conversion shall be without LIBOR
breakage costs).



15









 





     (d) Foreign Lenders. Each Lender organized under the laws of a jurisdiction outside
the United States (a “Foreign Lender”) as to which payments to be made under this Agreement
or under the Notes are exempt from United States withholding tax under an applicable statute or tax
treaty shall provide to Borrower and Agent a properly completed and executed IRS Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender’s entitlement to such exemption (a “Certificate of
Exemption”). Prior to becoming a Lender under this Agreement and within fifteen (15) days
after a reasonable written request of Agent or Borrower from time to time thereafter, each Foreign
Lender that becomes a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent. No Person may become a Lender hereunder if such Person is unable to deliver a
Certificate of Exemption. If a Foreign Lender does not provide a Certificate of Exemption to Agent
and Borrower within the time periods set forth above, Borrower shall withhold taxes from payments
to such Foreign Lender at the applicable statutory rate and Borrower shall not be required to pay
any additional amounts as a result of such withholding; provided, that all such withholding shall
cease upon delivery by such Foreign Lender of a Certificate of Exemption to Agent and Borrower.



     (e) Replacement of Lender in Respect of Increased Costs. Within fifteen (15) days
after receipt by Borrower of written notice and demand from any Lender or a participant that has
purchased a participation from such Lender (an “Affected Lender”) for payment of taxes,
additional amounts or increased costs as provided in Section 1.15 or Section
1.16(a) or (b), Borrower may, at its option, notify Agent and such Affected Lender of
its intention to replace the Affected Lender as follows: So long as no Default or Event of Default
shall have occurred and be continuing, Borrower, with the consent of Agent, may obtain, at
Borrower’s expense, a replacement Lender (“Replacement Lender”) for the Affected Lender,
which Replacement Lender must be reasonably satisfactory to Agent. If Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to do so, the Affected
Lender must sell and assign its Loans and Revolving Loan Commitments to such Replacement Lender
provided that Borrower reimbursed such Affected Lender for the additional amounts or increased
costs that it is entitled to receive under this Agreement through the date of such sale and
assignment.



     Notwithstanding the foregoing, Borrower shall not have the right to obtain a Replacement
Lender, if the Affected Lender rescinds its demand for increased costs or additional amounts within
fifteen (15) days following its receipt of Borrower’s notice of intention to replace
such Affected Lender. Furthermore, if Borrower gives a notice of intention to replace and
does not so replace such Affected Lender within ninety (90) days thereafter, Borrower’s rights
under this Section 1.16(e) shall terminate and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to Sections 1.15,
1.16(a) and (b).



16









 





     1.17 Single Loan. All Loans to Borrower and all of the other Obligations of Borrower
arising under this Agreement and the other Loan Documents shall constitute one general obligation
of Borrower and Guarantors secured, until the Termination Date, by all of the Collateral.



     1.18 Effect On Prior Loans; Prior Credit Agreement. The Borrower ratifies and confirms
that the obligations of the Borrower under the Prior Credit Agreement immediately prior to the
effectiveness of this Agreement shall constitute obligations under this Agreement and the Borrower
agrees and acknowledges that it does not have any defense or set off against any or all of such
obligations. The Prior Loans and Liens securing payment thereof shall in all respects be
continuing, and this Agreement shall not be deemed to evidence or result in a novation or repayment
and reborrowing of the Prior Loans. This Agreement shall supersede the Prior Credit Agreement.
From and after the Closing Date, this Agreement shall govern the terms of the Prior Loans. To the
extent not replaced by Loan Documents dated as of the Closing Date, Loan Documents executed in
connection with the Prior Credit Agreement or the Initial Credit Agreement (other than any such
Loan Document that is specifically terminated by the parties thereto) shall continue to be
effective, and all references in those prior Loan Documents to the “Credit Agreement” shall be
deemed to refer to this Agreement without further amendment thereof.



     1.19 Eligible Inventory-Apparel. “Eligible Inventory-Apparel” shall mean all of
the Inventory- Apparel owned by the Borrower (including, without duplication, Eligible In-Transit
Inventory that shall, merely upon delivery to Borrower, otherwise satisfy all applicable criteria
(other than as set forth in clauses (b) and (c) of this Section 1.19) required for an item
to constitute Eligible Inventory-Apparel) and reflected in the most recent Borrowing Base
Certificate delivered by Borrower to Agent, except any Inventory-Apparel to which any of the
exclusionary criteria set forth below applies. Agent shall have the right to establish, modify, or
eliminate Reserves against Eligible Inventory-Apparel from time to time in its reasonable credit
judgment. In addition, Agent reserves the right, at any time and from time to time after the
Closing Date, to adjust any of the criteria set forth below, to establish new criteria and to
adjust advance rates with respect to Eligible Inventory-Apparel in its reasonable credit judgment,
subject to the approval of Requisite Lenders in the case of adjustments or new criteria or changes
in advance rates or the elimination of Reserves which have the effect of making more credit
available. Eligible Inventory-Apparel shall not include any Inventory-Apparel of Borrower that:



     (a) is not owned by Borrower free and clear of all Liens and rights of any other Person
(including the rights of a purchaser that has made progress payments and the rights
of a surety that has issued a bond to assure Borrower’s performance with respect to that
Inventory), except the Liens in favor of Agent, on behalf of itself and Lenders;



     (b) (i) is not located on domestic premises owned, leased or rented by Borrower or a Store
Guarantor set forth in Disclosure Schedule (3.2) or (ii) is stored at a leased location
other than a Store located in the United States, unless Agent has given its prior consent thereto
and unless (x) a reasonably satisfactory landlord waiver has been delivered to Agent, or (y)
Reserves satisfactory to Agent have been established with respect thereto, (iii) is stored with a
bailee or warehouseman unless a reasonably satisfactory, acknowledged bailee letter has been
received by Agent or Reserves reasonably satisfactory to Agent have been established with respect
thereto, (iv) is located at an owned location subject to a mortgage in favor of a lender other than
Agent, unless a reasonably satisfactory mortgagee waiver has been delivered to Agent, or(v) is
located at any site (other than a Seasonal Store) if the aggregate book value of Inventory-Apparel
at any such location is less than $50,000 (in each case unless it is Eligible In-Transit
Inventory-Retail);



17









 





     (c) is placed on consignment with any Person that is not a Store Guarantor or is in transit,
except for Inventory-Apparel in transit between domestic locations of Credit Parties as to which
Agent’s Liens have been perfected at origin and destination;



     (d) is covered by a negotiable document of title, unless such document has been delivered to
Agent with all necessary endorsements, free and clear of all Liens except those in favor of Agent
and Lenders;



     (e) is excess, obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;



     (f) consists of display items or packing or shipping materials, manufacturing supplies,
work-in-process Inventory-Apparel or replacement parts;



     (g) is not of a type held for sale in the ordinary course of Borrower’s business (including
repair, promotional, sample, discontinued, closeout, special order and layaway items);



     (h) is not subject to a first priority lien in favor of Agent on behalf of itself and Lenders
subject to Permitted Encumbrances;



     (i) breaches any of the representations or warranties pertaining to Inventory-Apparel set
forth in the Loan Documents;



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



     (k) is not covered by casualty insurance reasonably acceptable to Agent;



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



     (m) is otherwise unacceptable to Agent in its reasonable credit judgment.


It being understood and agreed that Eligible Inventory-Apparel shall not include Eligible
Inventory-Wholesale.




18









 








     1.20 Eligible Inventory-Wholesale. “Eligible Inventory-Wholesale” shall mean all
of the Inventory-Wholesale owned by the Borrower or the Wholesale Subsidiary (including, without
duplication, Eligible In-Transit Inventory that shall, merely upon delivery to Borrower or
Wholesale Subsidiary, otherwise satisfy all applicable criteria (other than as set forth in clauses
(b) and (c) of this Section 1.20) required for an item to constitute Eligible
Inventory-Wholesale) and reflected in the most recent Borrowing Base Certificate delivered by
Borrower to Agent, except any Inventory-Wholesale to which any of the exclusionary criteria set
forth below applies. Agent shall have the right to establish, modify, or eliminate Reserves
against Eligible Inventory-Wholesale from time to time in its reasonable credit judgment. In
addition, Agent reserves the right, at any time and from time to time after the Closing Date, to
adjust any of the criteria set forth below, to establish new criteria and to adjust advance rates
with respect to Eligible Inventory-Wholesale in its reasonable credit judgment, subject to the
approval of Requisite Lenders in the case of adjustments or new criteria or changes in advance
rates or the elimination of Reserves which have the effect of making more credit available.
Eligible Inventory-Wholesale shall not include any Inventory-Wholesale of Borrower or Wholesale
Subsidiary that:



     (a) is not owned by Borrower or Wholesale Subsidiary free and clear of all Liens and rights of
any other Person (including the rights of a purchaser that has made progress payments and the
rights of a surety that has issued a bond to assure Borrower or Wholesale Subsidiary’s performance
with respect to that Inventory-Wholesale), except the Liens in favor of Agent, on behalf of itself
and Lenders;



     (b) (i) is not located on domestic premises owned, leased or rented by Wholesale Subsidiary or
Borrower set forth in Disclosure Schedule (3.2) or is not located on other domestic premises set
forth in Disclosure Schedule (3.2) – Inventory-Wholesale or (ii) is stored at a leased
location, unless Agent has given its prior consent thereto and unless (x) a reasonably satisfactory
landlord waiver has been delivered to Agent, or (y) Reserves satisfactory to Agent have been
established with respect thereto, (iii) is stored with a bailee or warehouseman unless a reasonably
satisfactory, acknowledged bailee letter has been received by Agent or Reserves reasonably
satisfactory to Agent have been established with respect thereto, (iv) is located at an owned
location subject to a mortgage in favor of a lender other than Agent, unless a reasonably
satisfactory mortgagee waiver has been delivered to Agent or (v) is located at any site if the
aggregate book value of Inventory-Wholesale at any such location is less than $50,000 (in each case
unless it is Eligible In-Transit Inventory-Wholesale).



     (c) is placed on consignment with any Person or is in transit, except for Inventory-Wholesale
in transit between domestic locations of Credit Parties to which Agent’s Liens have been perfected
at origin and destination;



     (d) is covered by a negotiable document of title, unless such document has been delivered to
Agent with all necessary endorsements, free and clear of all Liens except those in favor of Agent
and Lenders;



     (e) is excess, obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;



     (f) consists of display items or packing or shipping materials, manufacturing supplies,
work-in-process Inventory-Wholesale or replacement parts;



     (g) is not of a type held for sale in the ordinary course of Borrower’s or Wholesale
Subsidiary’s business (including repair, promotional, sample, discontinued, closeout, special order
and layaway items);



19









 





     (h) is not subject to a first priority lien in favor of Agent on behalf of itself and Lenders
subject to Permitted Encumbrances;



     (i) breaches any of the representations or warranties pertaining to Inventory-Wholesale set
forth in the Loan Documents;



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



     (k) is not covered by casualty insurance reasonably acceptable to Agent;



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



     (m) is otherwise unacceptable to Agent in its reasonable credit judgment.



     1.21 Eligible In-Transit Inventory. “Eligible In-Transit Inventory-Retail” shall
mean all of the In-Transit Inventory owned by the Borrower and reflected on Borrower’s monthly
general ledger as In-Transit Inventory-Retail and reflected in the most recent Borrowing Base
Certificate as part of Eligible Inventory-Apparel and delivered by Borrower to Agent, except any
In-Transit Inventory-Retail to which any of the exclusionary criteria set forth below applies.
“Eligible In-Transit Inventory-Wholesale” shall mean all of the In-Transit Inventory owned
by the Borrower or the Wholesale Subsidiary and reflected on Borrower’s or Wholesale Subsidiary’s
monthly general ledger as In-Transit Inventory-Wholesale and reflected in the most recent Borrowing
Base Certificate as part of Eligible Inventory-Wholesale and delivered by Borrower to Agent, except
any In-Transit
Inventory-Wholesale to which any of the exclusionary criteria set forth below applies.
Eligible In-Transit Inventory-Retail and Eligible In-Transit Inventory-Wholesale shall not include
any finished goods:



     (a) that are not in the possession of an Approved Shipper under contract with Borrower or
Wholesale Subsidiary and in which Borrower or Wholesale Subsidiary has good title;



     (b) as to which Agent for the benefit of Lenders does not have a first priority security
interest through constructive possession by means of a bailee agreement with an Approved Shipper;



     (c) which have not been accepted by Borrower or Wholesale Subsidiary (F.O.B. shipping point)
as conforming goods or as to which the L/C Issuer has not received an inspection certificate signed
by Borrower’s or Wholesale Subsidiary’s agent or employee;



     (d) which are not fully insured against loss under insurance naming Agent as loss payee for
the benefit of Lenders;



20









 





     (e) as to which the purchase price has not been paid by a draw under a corresponding Eligible
Trade L/C or otherwise; and



     (f) as to which Borrower or Wholesale Subsidiary has not been named as consignee on bills of
lading or other Documents.



     1.22 Eligible Accounts. For the purposes of this Agreement “Eligible
Accounts-Retail” shall mean and include all Accounts reflected in the most recent Borrowing
Base Certificate delivered by Borrower to Agent as Eligible Accounts-Retail consisting of credit
card receivables owing by American Express or credit card issuers with respect to VISA, Discover,
Master Card and other nationally recognized credit cards, subject to Reserves for set-offs imposed
by Agent in its reasonable credit judgment. For the purposes of this Agreement “Eligible
Accounts-Wholesale” shall mean and include all Accounts owned by Borrower or Wholesale
Subsidiary and reflected in the most recent Borrowing Base Certificate delivered by Borrower to
Agent as Eligible Accounts-Wholesale, except any Account to which any of the exclusionary criteria
set forth below applies. Agent shall have the right to establish, modify, or eliminate Reserves
against Eligible Accounts-Wholesale from time to time in its reasonable credit judgment. In
addition, Agent reserves the right, at any time and from time to time after the Closing Date, to
adjust any of the criteria set forth below, to establish new criteria and to adjust advance rates
with respect to Eligible Accounts-Wholesale in its reasonable credit judgment, subject to the
approval of Requisite Lenders in the case of adjustments or new criteria or changes in advance
rates or the elimination of Reserves which have the effect of making more credit available.
Eligible Accounts-Wholesale shall not include any Account of Borrower or Wholesale Subsidiary:



     (a) that does not arise from the sale of goods or the performance of services by Borrower or
Wholesale Subsidiary in the ordinary course of its business;



     (b) (i) upon which Borrower’s or Wholesale Subsidiary’s right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or (ii) as to which
Borrower or Wholesale Subsidiary is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process, or (iii) if the Account represents a progress
billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract
under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s or
Wholesale Subsidiary ‘s completion of further performance under such contract or is subject to the
equitable lien of a surety bond issuer;



     (c) to the extent that any defense, counterclaim, setoff or dispute is asserted as to such
Account;



     (d) that is not a true and correct statement of bona fide indebtedness incurred in the amount
of the Account for merchandise sold to or services rendered and accepted by the applicable Account
Debtor;



     (e) with respect to which an invoice, reasonably acceptable to Agent in form and substance,
has not been sent to the applicable Account Debtor;



21









 





     (f) that (i) is not owned by Borrower or Wholesale Subsidiary, (ii) is not subject to a first
priority perfected Lien in favor of Agent on behalf of itself and Lenders, or (iii) is subject to
any other Lien (other than Permitted Encumbrances set forth in clause (a) of definition of
“Permitted Encumbrances”);



     (g) that arises from a sale to any director, officer, other employee or Affiliate of any
Credit Party, or to any entity that has any common officer with any Credit Party;



     (h) that is the obligation of an Account Debtor that is the United States government or a
political subdivision thereof, or any state, county or municipality or department, agency or
instrumentality thereof unless Agent, in its sole discretion, has agreed to the contrary in writing
and Wholesale Subsidiary, if necessary or desirable, has complied with respect to such obligation
with the Federal Assignment of Claims Act of 1940, or any applicable state, county or municipal law
restricting the assignment thereof with respect to such obligation.



     (i) that is the obligation of an Account Debtor located in a foreign country other than Canada
unless payment thereof is assured by a letter of credit assigned and delivered to Agent,
satisfactory to Agent in its reasonable credit judgment as to form, amount and issuer;



     (j) to the extent Borrower, Wholesale Subsidiary or any Subsidiary thereof is liable for goods
sold or services rendered by the applicable Account Debtor to Borrower, Wholesale Subsidiary or any
Subsidiary thereof but only to the extent of the potential offset;



     (k) that arises with respect to goods that are delivered on a bill-and-hold, cash-on-delivery
basis or placed on consignment, guaranteed sale or other terms by reason of which the payment by
the Account Debtor is or may be conditional;



     (l) that is not paid within the earlier of: sixty (60) days following its due date or ninety
(90) days following its original invoice date;



     (m) the Account Debtor obligated upon which Account suspends business, makes a general
assignment for the benefit of creditors or fails to pay its debts generally as they come due;



     (n) a petition is filed by or against any Account Debtor obligated upon which Account under
any bankruptcy law or any other federal, state or foreign (including any provincial) receivership,
insolvency relief or other law or laws for the relief of debtors;



     (o) that is the obligation of an Account Debtor if fifty percent (50%) or more of the Dollar
amount of all Accounts owing by that Account Debtor are ineligible under the other criteria set
forth in clauses (l), (m) or (n) of this Section 1.22;



     (p) as to which any of the representations or warranties in the Loan Documents are untrue;



     (q) to the extent such Account is evidenced by a judgment, Instrument or Chattel Paper;



22









 





     (r) to the extent such Account exceeds any credit limit established by Agent, in its
reasonable credit judgment, following prior notice of such limit by Agent to Borrower; or



     (s) that is payable in any currency other than Dollars.



     1.23 Eligible Trade L/Cs. For the purposes of this Agreement “Eligible Trade
L/Cs-Retail” shall mean and include all documentary letters of credit issued by an L/C Issuer
for the account of Borrower for payment of the purchase price of finished goods inventory which
will be Eligible In-Transit Inventory-Retail upon presentation of a draft under that documentary
letter of credit, subject to the further conditions contained in Section 6.18 of this
Agreement and subject to Reserves for set-offs imposed by Agent in its reasonable credit judgment.
For the purposes of this Agreement “Eligible Trade L/Cs-Wholesale” shall mean and include
all documentary letters of credit issued by an L/C Issuer for the account of Borrower or Wholesale
Subsidiary for payment of the purchase price of finished goods inventory which will be Eligible
In-Transit Inventory-Wholesale upon presentation of a draft under that documentary letter of
credit, subject to the further conditions contained in Section 6.18 of this Agreement and
subject to Reserves for set-offs imposed by Agent in its reasonable credit judgment.



     2. CONDITIONS PRECEDENT



     2.1 Conditions to Term Loan B, Initial Eligible Trade L/C Obligations or Letter of Credit
Obligations. No Lender shall be obligated to maintain or incur Term Loan B, any Eligible Trade
L/C Obligations or Letter of Credit Obligations on the Closing Date, or to take, fulfill, or
perform any other action hereunder, until the following conditions have been satisfied, in Agent’s
sole discretion, or waived in writing by Agent and those Lenders present at the closing on the
Closing Date:



     (a) Credit Agreement: Loan Documents. This Agreement or counterparts hereof shall
have been duly executed by, and delivered to, Borrower, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent shall request in
connection with the transactions contemplated by this Agreement and the other Loan Documents,
including all those listed in the Schedule of Documents attached hereto as Schedule F, each
in form and substance satisfactory to Agent.



     (b) Governmental Approvals. Agent shall have received (i) satisfactory evidence that
the Credit Parties have obtained all required consents and approvals of all Persons including, but
not limited to, all requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Loan Documents or (ii) an officer’s certificate in form and
substance satisfactory to Agent affirming that no such consents or approvals are required.



     (c) Payment of Fees. Borrower shall have paid or reimbursed Agent for all fees, costs
and expenses of closing to the extent statements therefor are presented at closing (including fees
of consultants and special loan counsel to Agent presented as of the Closing Date).



23









 





     (d) Compliance with Laws. Each Credit Party shall be in compliance in all material
respects with all applicable foreign, federal, state and local laws and regulations, including
those specifically referenced in Section 5.5.



     (e) Leases. Evidence supporting the fact that the Distribution Center lease is in
full force and effect and has a remaining term of not less than six (6) months past the Termination
Date, except as set forth on Disclosure Schedule 2.1(e).



     (f) Consignment Agreement. As of the Closing Date, the Consignment Agreement shall be
in full force and effect and shall have been executed by all Store Guarantors.



     (g) Financial Statements. Agent shall have received Ultimate Parent’s unaudited
financial statements for the Fiscal Month ending in October of 2006.



     2.2 Further Conditions to Initial Revolving Credit Advances. No Lender shall be obligated
to make any Initial Revolving Credit Advance until the following conditions have been satisfied, in
Agent’s sole discretion, or waived in writing by Agent and Revolving Lenders:



     (a) Other Conditions. The conditions set forth in Section 2.1 shall have been
satisfied.



     (b) Appraisals. Agent shall have received appraisals, which were prepared by an
appraiser retained by Borrower and acceptable to Agent, and completed a Collateral audit, each in
form and substance satisfactory to Agent and Requisite Lenders, reflecting asset values of
Borrower’s assets at levels acceptable to Agent and Requisite Lenders.



     2.3 Further Conditions to Each Loan . It shall be a further condition to the initial and each subsequent Advance and to the
incurrence of the initial and any subsequent Letter of Credit Obligations or Eligible Trade L/C
Obligations that the following statements shall be true on the date of each such Advance or
incurrence, as the case may be:



     (a) All of each Credit Party’s representations and warranties contained herein or in any of
the other Loan Documents shall be true and correct in all material respects as though made on and
as of such date, except to the extent that any such representation or warranty expressly relates to
an earlier date and except for changes therein expressly permitted or expressly contemplated by
this Agreement.



     (b) No Event of Default shall have occurred and be continuing or would result from the making
of any Advance (or the incurrence of any Letter of Credit Obligations or Eligible Trade L/C
Obligations) or, if an Event of Default shall have occurred and be continuing or would result from
the making of any Advance (or the incurrence of any Letter of Credit Obligations or Eligible Trade
L/C Obligations), Lenders having 60% or more of the Commitments shall not have determined by
affirmative vote to cease making further Advances or incurring additional Letter of Credit
Obligations or Eligible Trade L/C Obligations as a result of such Event of Default.



24









 





     (c) After giving effect to any Revolving Credit Advance or Swing Line Advance, Borrowing
Availability shall be greater than zero. After giving effect to the incurrence of any Letter of
Credit Obligations or Eligible Trade L/C Obligations, L/C Availability shall be greater than zero.



     (d) No event or circumstance having a Material Adverse Effect shall have occurred since the
date hereof as reasonably determined by the Requisite Lenders and Agent or, if such a Material
Adverse Effect shall have occurred, Requisite Lenders shall not have determined by affirmative vote
to cease making Advances, or incurring additional Letter of Credit Obligations and Eligible Trade
L/C Obligations as a result of the fact that such event or circumstance has occurred.


The request and acceptance by Borrower of the proceeds of any Loan or the incurrence of any Letter
of Credit Obligations or Eligible Trade L/C Obligations shall be deemed to constitute, as of the
date of such request or acceptance, (i) a representation and warranty by Borrower that the
conditions in this Section 2.3 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents. With respect to clauses (b) and (d) above, if an Event of Default or event
or circumstance having a Material Adverse Effect has occurred, Agent shall call for a vote of
Lenders with respect thereto within two (2) Business Days following the date on which Agent learns
of the occurrence thereof.




     3. REPRESENTATIONS AND WARRANTIES



     To induce Lenders to make the Loans and to incur Letter of Credit Obligations and Eligible
Trade L/C Obligations, the Loan Parties, jointly and severally, make the following
representations and warranties to Agent and each Lender, each and all of which shall survive
the execution and delivery of this Agreement.



     3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a corporation duly
organized, validly existing and in good standing under the laws of its jurisdiction of
incorporation; (b) is duly qualified to conduct business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of its business requires such
qualification except where the failure to so qualify would not have a Material Adverse Effect; (c)
has the requisite corporate power and authority and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates under lease and to
conduct its business as now, heretofore and proposed to be conducted; (d) has all material
licenses, permits, consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (e) is in compliance with its charter and by-laws; and (f) is in
compliance with all applicable provisions of law to the extent required by Section 5.5.



     3.2 Executive Offices; FEIN. As of the Closing Date, the current location of each Credit
Party’s chief executive office and principal place of business is set forth in Disclosure
Schedule 3.2. In addition, the Disclosure Schedule 3.2 lists the federal employer
identification number of each Credit Party.



25









 





     3.3 Corporate Power, Authorization, Enforceable Obligations. The execution, delivery and
performance by each Credit Party of the Loan Documents to which it is a party and the creation of
Liens provided for therein: (a) are within such Person’s corporate power; (b) have been duly
authorized by all necessary or proper corporate and shareholder action; (c) do not contravene any
provision of such Person’s charter or bylaws; (d) do not violate any law or regulation, or any
order or decree of any court or Governmental Authority; (e) do not conflict with or result in the
breach or termination of, constitute a default under or accelerate any performance required by, any
indenture, mortgage, or deed of trust, or any material lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is bound; (f) do not
result in the creation or imposition of any Lien upon any of the property of such Person other than
those in favor of Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and (g)
do not require the consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(b), all of which will have been duly obtained, made or
complied with prior to the Closing Date. On or prior to the Closing Date, each of the Loan
Documents shall have been duly executed and delivered by each Credit Party thereto and each such
Loan Document shall then constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms.



     3.4 Financial Statements and Projections . Except for the Projections, all Financial Statements concerning Ultimate Parent and its
Subsidiaries which have been delivered to Agent have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence of footnotes and normal year-end audit
adjustments) and present fairly in all material respects the financial condition of the Persons
covered thereby as at the dates thereof and the results of their operations for the periods then
ended. The Projections delivered to Agent and Lenders on or prior to the date hereof have been
prepared by Ultimate Parent in light of the past operations of its Subsidiaries’ businesses, but
including future payments of known contingent liabilities, and reflect projections for the Fiscal
Year ending in January 2007. The Projections are based upon estimates and assumptions stated
therein, all of which, as of the Closing Date, Ultimate Parent believes to be reasonable and fair
in light of current conditions and current facts known to Ultimate Parent and, as of the Closing
Date, reflect Ultimate Parent’s good faith and reasonable estimates of the future financial
performance of Ultimate Parent and its Subsidiaries and of the other information projected therein
for the period set forth therein.



     3.5 Material Adverse Effect. Between the last day of the Fiscal Year ending in January,
2006 and the date hereof (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual forward or
long-term commitments which, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, (b) no contract, lease or other agreement or instrument has been entered
into by any Credit Party or has become binding upon any Credit Party’s assets and no law or
regulation applicable to any Credit Party has been adopted which has had or could reasonably be
expected to have a Material Adverse Effect, (c) no Credit Party is in default and to the best of
the Credit Parties’ knowledge no third party is in default under any material contract, lease or
other agreement or instrument, which alone or in the aggregate could reasonably be expected to have
a Material Adverse Effect and (d) other than as set forth in Schedule 3.5 hereto, there
have been no changes in the Credit Party’s business or financial condition, the industry in which
the Credit Parties operate or the Collateral, which alone or in the aggregate could reasonably be
expected to have a Material Adverse Effect.



26









 





     3.6 Ownership of Property; Liens. Disclosure Schedule 3.6 sets forth all real
estate (the “Real Estate”) owned or leased by any Credit Party as of the Closing Date.
Each Credit Party has good and marketable title to, or valid leasehold interests in, all of its
personal properties and assets. As of the Closing Date, none of the properties and assets of any
Credit Party are subject to any Liens, except Permitted Encumbrances. As of the Closing Date, no
portion of any of the Real Estate has suffered any material damage by fire or other casualty loss
that has not heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, except as set forth in Disclosure
Schedule 3.6, all material permits required to have been issued or appropriate to enable the
Real Estate to be lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect.



     3.7 Labor Matters. As of the Closing Date: (a) no strikes or other material labor
disputes against any Credit Party are pending or, to any Credit Party’s knowledge, threatened; (b)
hours worked by and payment made to employees of each Credit Party in all material respects comply
with the Fair Labor Standards Act and each other federal, state, local or foreign law applicable to
such matter; (c) all material payments due from any Credit Party for employee health and welfare
insurance have been paid or accrued as a liability on the books of such Credit Party; (d) except as
set forth in Disclosure Schedule 3.7, no Credit Party is a party to or bound by any
collective bargaining agreement; (e) except as set forth in Disclosure Schedule 3.7, there
is no organizing activity involving any Credit Party pending or, to any Credit Party’s knowledge,
threatened by any labor union or group of employees; (f) there are no representation proceedings
pending or, to any Credit Party’s knowledge, threatened with the National Labor Relations Board,
and no labor organization or group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule 3.7, there are no
complaints or charges against any Credit Party pending or threatened to be filed with any
Governmental Authority or arbitrator relating to the employment or termination of employment by any
Credit Party of any employee, other than routine, non-material claims by individual employees or
former employees.



     3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness. Except as
set forth in Disclosure Schedule 3.8, as of the Closing Date no Credit Party has any
Subsidiaries, is engaged in any joint venture or partnership with any other Person, or is an
Affiliate of any other Person. Disclosure Schedule 3.8 sets forth the corporate
organizational chart as of the Closing Date for Ultimate Parent and its Subsidiaries. Except as
set forth on Disclosure Schedule 3.8, as of the Closing Date Ultimate Parent owns, directly
or indirectly, all of the outstanding capital stock of each of its Subsidiaries.



     3.9 Government Regulation. No Credit Party is an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms
are defined in the Investment Company Act of 1940 as amended. No Credit Party is subject to
regulation under the Federal Power Act or any other federal or state statute that restricts or
limits its ability to incur Indebtedness or to perform its obligations hereunder. The making of
the Loans by Lenders to Borrower, the incurrence of the Letter of Credit Obligations and the
Eligible Trade L/C Obligations on behalf of Borrower, the application of the proceeds thereof and
repayment thereof will not violate any provision of any such statute or any rule, regulation or
order issued by the Securities and Exchange Commission.



27









 





     3.10 Margin Regulations. No Credit Party is engaged, nor will it engage, principally or as
one of its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin security” as such terms are defined in Regulation U of the
Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) as now and
from time
to time hereafter in effect (such securities being referred to herein as “Margin
Stock”). No Credit Party owns any Margin Stock, and none of the proceeds of the Loans or other
extensions of credit under this Agreement will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement to be considered a
“purpose credit” within the meaning of Regulation T, U or X of the Federal Reserve Board. No
Credit Party will take or permit to be taken any action which might cause any Loan Document to
violate any regulation of the Federal Reserve Board.



     3.11 Taxes. All material tax returns, reports and statements, including, but not limited
to, information returns, required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority and all material Charges have been paid
prior to the date on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid),
excluding Charges or other amounts being contested in accordance with Section 5.2(b).
Proper and accurate amounts have been withheld by each Credit Party from its respective employees
for all periods in full and complete compliance with all applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective Governmental Authorities.
Disclosure Schedule 3.11 sets forth, as of the Closing Date, those taxable years for which
any Credit Party’s tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in connection with such audits
or otherwise currently outstanding. Except as described on Disclosure Schedule 3.11, as of
the Closing Date, no Credit Party has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of extending, the period
for assessment or collection of any Charges. None of the Credit Parties and their respective
predecessors are liable for any Charges: (a) under any agreement (including, without limitation,
any tax sharing agreements) or (b) to the best of each Credit Party’s knowledge, as a transferee.
As of the Closing Date, no Credit Party has agreed or been requested to make any adjustment under
IRC Section 481(a), by reason of a change in accounting method or otherwise, which would have a
Material Adverse Effect.



     3.12 ERISA.



     (a) Disclosure Schedule 3.12 lists and separately identifies all Title IV Plans,
Multiemployer Plans, ESOPs and Retiree Welfare Plans in effect as of the Closing Date. Each Plan
is in compliance in all material respects with the applicable provisions of ERISA and the IRC,
including the filing of reports required under the IRC or ERISA. No Credit Party or ERISA
Affiliate has failed to make any material contribution or pay any material amount due as required
by either Section 412 of the IRC or Section 302 of ERISA or the terms of any Plan subject to such
sections. No Credit Party or ERISA Affiliate has engaged in a prohibited transaction, as defined
in Section 4975 of the IRC, in connection with any Plan, which would subject any Credit Party to a
material tax on prohibited transactions imposed by Section 4975 of the IRC.



28









 





     (b) Except as set forth in Disclosure Schedule 3.12, as of the Closing Date: (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no material ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably
expected to occur; (iii) there are no pending, or to the knowledge of any Credit Party, threatened
claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits,
asserted or instituted against any plan or any person as fiduciary or sponsor of any Plan; and (iv)
no Credit party or ERISA Affiliate has incurred or reasonably expects to incur any material
liability as a result of a complete or partial withdrawal from a Multiemployer Plan.



     3.13 No Litigation. No action, claim or proceeding is now pending or, to the knowledge of
any Credit Party, threatened against any Credit Party, before any court, board, commission, agency
or instrumentality of any federal, state, local or foreign government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators (collectively,
“Litigation”), (a) which challenges any Credit Party’s right or power to enter into or
perform any of its obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which is reasonably
likely to be determined adversely to any Credit Party and which, if so determined, would have a
Material Adverse Effect. Except as set forth on Disclosure Schedule 3.13, as of the
Closing Date there is no Litigation pending or threatened which seeks damages in excess of $500,000
or injunctive relief.



     3.14 Brokers. No broker or finder acting on behalf of any Credit Party brought about the
obtaining, making or closing of the Loans. No Credit Party has any obligation to any Person in
respect of any finder’s or brokerage fees in connection therewith.



     3.15 Intellectual Property. Except as set forth on Disclosure Schedule 3.13, as of
the Closing Date, each Credit Party owns or has rights to use all Intellectual Property necessary
to continue to conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each material Patent, Trademark, Copyright and License for which, as of the
Closing Date, a U.S. registration has been obtained or for which an application to register in the
U.S. has been filed is listed, together with application or registration numbers, as applicable, in
Disclosure Schedule 3.15 hereto. Except as set forth on Disclosure Schedule 3.13,
each Credit Party conducts and will continue to conduct its business and affairs without
infringement of or interference with, in any material respect, any Intellectual Property of any
other Person.



     3.16 Full Disclosure. No information contained in this Agreement, any of the other Loan
Documents, any Projections, Financial Statements or Collateral Reports or other reports from time
to time delivered hereunder or any written statement furnished by any Material Credit Party with
respect to any Credit Party to Agent or any Lender pursuant to the terms of this Agreement contains
any untrue statement of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading in light of the circumstances under
which they were made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant
to the Collateral Documents will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject only to Permitted Encumbrances with respect to the
Collateral.



29









 





     3.17 Hazardous Materials.



     (a) Except as set forth in Disclosure Schedule 3.17, as of the Closing Date, the Real
Estate is free of contamination from any Hazardous Material in such form and quantity so as to
create any material unpaid liability for any of the Loan Parties. In addition, Disclosure
Schedule 3.17 discloses material environmental liabilities of any Credit Party existing as of
the Closing Date (i) that could result in Environmental Liabilities and Costs, or (ii) associated
with the Real Estate. No Credit Party has caused or suffered to occur any Release with respect to
any Hazardous Material at, under, above or upon any of its Real Estate. No Credit Party is
involved in operations that are likely to result in the imposition of any Lien on its assets or any
material liability under any Environmental Law, and no Credit Party has permitted any tenant or
occupant of such premises to engage in any such operations.



     (b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not
ever been, in control of any of the Real Estate or any Credit Party’s affairs, and (ii) does not
have the capacity through the provisions of the Loan Documents or otherwise to influence any Credit
Party’s conduct with respect to the ownership, operation or management of any of its Real Estate.



     3.18 Insurance. Disclosure Schedule 3.18 lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each Credit Party, as well as
a summary of the terms of each such policy.



     3.19 Deposit and Disbursement Accounts. Disclosure Schedule 3.19 lists all banks
and other financial institutions at which any Credit Party maintains deposits and/or other accounts
as of the Closing Date, including any Disbursement Accounts, and such Schedule correctly identifies
the name, address and telephone number of each depository, the name in which the account is held, a
description of the purpose of the account, and the complete account number.



     3.20 Government Contracts. Except as set forth in Disclosure Schedule 3.20, as of
the Closing Date, no Credit Party is a party to any contract or agreement with the federal
government and no Credit Party’s Accounts are subject to the Federal Assignment of Claims Act (31
U.S.C. Section 3727).



     3.21 Landlords and Trade Relations . As of the Closing Date, there exists no actual or threatened termination or cancellation
of, or any material adverse modification or change in the business relationship of any Credit Party
with any supplier material to its operations.



     3.22 Agreements and Other Documents. Each Credit Party has provided to Agent or its
counsel, on behalf of Lenders, accurate and complete copies (or summaries) of all of the following
agreements or documents to which it is subject as of the Closing Date and each of which are listed
on Disclosure Schedule 3.22: (a) instruments or documents evidencing Indebtedness of such
Credit Party and any security interest granted by such Credit Party with respect thereto; and (b)
instruments and agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of each Credit Party (other than Ultimate Parent).



30









 





     3.23 Solvency. Both before and after giving effect to (a) the Revolving Loan, Eligible
Trade L/C Obligations and Letter of Credit Obligations, including the Prior Loans outstanding, (b)
the disbursement of the proceeds of such Loan pursuant to the instructions of Borrower, (c) the
payment and accrual of all transaction costs in connection with the foregoing, each Material Credit
Party is Solvent.



     4. FINANCIAL STATEMENTS AND INFORMATION



     4.1 Reports and Notices.



     (a) Borrower hereby agrees that from and after the Closing Date and until the Termination
Date, it shall deliver or cause to be delivered to Agent and/or Lenders, as required, Financial
Statements, notices, Projections and other information at the times, to the Persons and in the
manner set forth in Schedule G.



     (b) Borrower hereby agrees that from and after the Closing Date and until the Termination
Date, it shall deliver or cause to be delivered to Agent and/or Lenders, as required, the various
Collateral Reports (including, without limitation, Borrowing Base Certificates in the form of
Exhibit 4.1(b) at the times, to the Persons and in the manner set forth in Schedule
H.



     4.2 Communication with Accountants. Ultimate Parent authorizes Agent, so long as an Event
of Default has occurred and is continuing, to communicate directly with its independent certified
public accountants and authorizes and shall instruct those accountants and advisors to disclose and
make available to Agent any and all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including, without limitation, copies of
any issued management letters) with respect to the business, financial condition and other affairs
of any Credit Party.



     5. AFFIRMATIVE COVENANTS



     Each Loan Party jointly and severally agrees that it shall and shall cause all Credit Parties
from and after the date hereof and until the Termination Date to do the following:



     5.1 Maintenance of Existence and Conduct of Business. Each Credit Party shall: (a) do or
cause to be done all things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises (except for mergers, sales, dispositions and other
transactions permitted in Section 6 hereof and liquidations of Store Guarantors that are
not Material Credit Parties following such dispositions and transactions); (b) continue to conduct
its business substantially as now conducted or as otherwise permitted hereunder; (c) except as
permitted in Section 6.8 hereof, at all times maintain, preserve and protect all of its
assets and properties used or useful in the conduct of its business, and keep the same in good
repair, working order and condition (taking into consideration ordinary wear and tear) and from
time to time make, or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices; and (d) transact business only in such
corporate and trade names as are set forth in Disclosure Schedule 5.1 and as otherwise
disclosed to Agent in accordance with the Loan Documents.



31









 





     5.2 Payment of Obligations.



     (a) Subject to Section 5.2(b), each Credit Party shall pay and discharge or cause to
be paid and discharged promptly all Charges payable by it, including (A) Charges imposed upon it,
its income and profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its employees, and (B)
lawful claims for storage and shipping charges payable to Approved Shippers.



     (b) Each Credit Party may in good faith contest, by appropriate proceedings, the validity or
amount of any Charges or claims described in Section 5.2(a); provided, that (i) the
imposition of such Charge does not otherwise constitute an Event of Default under Section
8.1 hereof, (ii) adequate reserves with respect to such contest are maintained on the books of
such Credit Party, in accordance with GAAP, (iii) such contest is maintained and prosecuted
continuously and with diligence, (iv) none of the Collateral becomes subject to forfeiture or loss
as a result of such contest, (v) no Lien shall be filed or imposed to secure payment of such
Charges or claims which would, with the passage of time or otherwise, have priority over Agent’s
Liens with respect to the Collateral, (vi) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties and expenses, if any,
and shall deliver to Agent evidence acceptable to Agent of such compliance, payment or discharge,
if such contest is terminated or discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met, and (vii) Agent has not advised Borrower in
writing that Agent reasonably believes that nonpayment or nondischarge thereof could have or result
in a Material Adverse Effect.



     5.3 Books and Records . Each Credit Party shall keep adequate books and records with respect to its business
activities in which proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements delivered to Agent.



     5.4 Insurance: Damage to or Destruction of Collateral.



     (a) The Credit Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule 3.18 or substantially equivalent coverage with
reputable insurers. If Borrower at any time or times hereafter shall fail to obtain or maintain
any of the policies of insurance required above or to pay all premiums relating thereto, Agent may
at any time or times thereafter obtain and maintain such policies of insurance and pay such premium
and take any other action with respect thereto which Agent deems reasonably advisable. Agent shall
have no obligation to obtain insurance for any Credit Party or pay any premiums therefor. By doing
so, Agent shall not be deemed to have waived any Default or Event of Default arising from any
Credit Party’s failure to maintain such insurance or pay any premiums therefor. All sums so
disbursed, including attorneys’ fees, court costs and other charges related thereto, shall be
payable on demand by Borrower to Agent and shall be additional Obligations hereunder secured by the
Collateral. Borrower must provide Agent fifteen (15) days prior written notice of any non-renewal,
cancellation or amendment of the insurance policies required above.



32









 





     (b) Intentionally Omitted.



     (c) Borrower shall deliver or cause to be delivered to Agent, in form and substance
satisfactory to Agent, endorsements to (i) all “All Risk” and business interruption insurance
naming Agent, on behalf of itself and Lenders, as loss payee, and (ii) all general liability and
other liability policies naming Agent, on behalf of itself and Lenders, as additional insured.
Each Loan Party irrevocably makes, constitutes and appoints Agent (and all officers, employees or
agents designated by Agent) as its true and lawful agent and attorney-in-fact for the purpose of
making, settling and adjusting claim under such “All Risk” policies of insurance, endorsing the
name of each such Credit Party on any check or other item of payment for the proceeds of such “All
Risk” policies of insurance and for making all determinations and decisions with respect to such
“All Risk” policies of insurance; provided that so long as no Event of Default shall have occurred
and be continuing, Borrower shall have the right to direct any such settlements and adjustments.
The Credit Parties that are signatories hereto shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $1,000,000 or more, whether or not covered by
insurance. If an Event of Default shall have occurred and be continuing, Agent is hereby
authorized to collect all insurance proceeds relating to the Collateral. After deducting from such
proceeds the expenses, if any, incurred by Agent or any Credit Party in the collection or handling
thereof, Agent may, at its option, apply all net proceeds to the reduction of the Obligations in
accordance with Section 1.3(e), or permit or require Borrower to use such money, or any
part thereof, to replace the Collateral in a diligent and expeditious manner. Notwithstanding the
foregoing, if the casualty giving rise to such insurance proceeds would not reasonably be expected
to have a Material Adverse Effect and such insurance proceeds do not exceed $1,000,000 in the
aggregate, Agent shall permit Borrower to replace the Collateral so long as no Event of Default
shall have occurred and be continuing at the time of
any requested release of funds; provided that, if Borrower shall not have
completed the replacement of the Collateral within 270 days of such casualty, Agent may apply such
insurance proceeds to the Obligations in accordance with Section 1.3(d) or Section
1.3(e), as applicable. Except as otherwise provided in this Section, all insurance proceeds
which are to be made available to Borrower to replace the Collateral shall first be applied by
Agent in accordance with Section 1.3(e) (which application in accordance with Section
1.3(e) shall not result in a permanent reduction of the Revolving Loan Commitments), and any
excess shall be released to Borrower. Upon any application in accordance with Section
1.3(e), Agent shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. Thereafter, such funds shall be made available to Borrower to
provide funds to replace the Collateral as follows: (i) Borrower shall request a Swing Line Advance
or Revolving Credit Advance be made to Borrower in the amount requested to be released; (ii) so
long as the conditions set forth in Section 2.3 have been met, Agent shall make such Swing
Line Advance or Revolving Credit Advance; and (iii) the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Swing Line Advance or Revolving Credit
Advance.



33









 





     5.5 Compliance With Laws. Each Credit Party shall comply with all federal, state and
local laws and regulations applicable to it, including those relating to ERISA, customs import and
export laws and labor matters and Environmental Laws, except to the extent that the failure to so
comply would not have a Material Adverse Effect.



     5.6 Employee Plans. Each Credit Party shall promptly notify Agent of (a) any violation of
ERISA or the IRC with respect to any Plan which results in a material increase in any Credit
Party’s obligations with respect thereto; (b) the occurrence or likely occurrence of an ERISA Event
resulting in a material increase in Borrower’s fixed liabilities under ERISA; (c) the filing for a
funding waiver under Section 412 of the IRC with respect to any Plan; (d) the occurrence of an
“accumulated funding deficiency” under Section 412 of the IRC with respect to any Plan; (e) a
material increase in the Unfunded Pension Liability of any Title IV Plan or a material increase in
the aggregate Unfunded Pension Liability of all Title IV Plans, but only taking into account Title
IV Plans with Unfunded Pension Liability at the time of reference; and (f) a material increase in
any Credit Party’s obligations under any Retiree Welfare Plan. For purposes of clauses (e)
and (f) above and Sections 6.9(d) and (e), a “material increase” shall mean
the lesser of (i) 50% or (ii) $500,000, in each case measured from the Closing Date. In addition,
the Credit Parties shall promptly furnish to the Agent copies of the annual form 5500 filed for
each Title IV Plan.



     5.7 Environmental Matters. Each Credit Party shall (a) notify Agent promptly after such
Credit Party becomes aware of any Release upon or at any Real Estate which is reasonably likely to
result in Environmental Liabilities and Costs in excess of $200,000, and (b) promptly forward to
Agent a copy of any order, notice, permit, application or any communication or report received by
such Credit Party in connection with any such Release, its compliance with Environmental Laws and
Environmental Permits or any other matter relating to the Environmental Laws that may affect
such premises or such Credit Party, in each case whether or not the Environmental Protection
Agency, any other federal agency or any state, local or foreign environmental agency has taken or
threatened any action in connection with any such Release or other matter. So long as any Event of
Default shall have occurred and be continuing, Borrower shall permit Agent or its representatives
to have access to all premises owned or occupied by it for the purpose of conducting such
environmental audits and testing as Agent reasonably deems appropriate, including Phase II
environmental testing. Borrower shall reimburse Agent for the costs of such audits and tests and
the same will constitute a part of the Obligations secured hereunder.



     5.8 Landlords’ Agreements and Bailee Letters. Borrower shall obtain a landlord’s
agreement, or bailee letter, from Bermans with respect to the Distribution Center located in
Brooklyn Park, Minnesota and from each other lessor of a warehouse or bailee in possession of
collateral property or with respect to any other warehouse where Collateral is located. After the
Closing Date, no warehouse space shall be leased or acquired by any Credit Party, unless and until
a landlord agreement or bailee letter, as appropriate, shall first have been obtained with respect
to such location. Although the Credit Parties are not required to obtain landlord waivers as to
Store locations, (i) if an Event of Default has occurred and is continuing, Agent may impose a
Reserve against Borrowing Availability equal to one month’s rent as to all Store locations and (ii)
if any Store Guarantor shall default in the payment of rent under its Store Lease, Agent may impose
a Reserve against Borrowing Availability in the amount of those defaulted rent obligations (which
may exceed one month’s rent). All such landlord and bailee letters shall be in form and substance
satisfactory to Agent. Each Credit Party shall timely and fully pay and perform its obligations
under all leases and other agreements with respect to each leased location or public warehouse
where any Collateral is or may be located.



34









 





     5.9 Ownership of Inventory. Borrower shall purchase directly from suppliers and pay for
all Inventory from time to time held for sale by all Store Guarantors. Borrower shall own all
Inventory held for sale by each Store Guarantor. The Loan Parties shall not and shall not cause or
permit any Store Guarantor to execute any agreement or take any action inconsistent with the
foregoing.



     5.10 Additional Pledges. The Credit Parties signatory hereto shall pledge or cause to be
pledged to Agent for the benefit of Lenders the Stock of all Store Guarantors created or acquired
after the Closing Date.



     6. NEGATIVE COVENANTS



     The Loan Parties jointly and severally covenant and agree that without the prior written
consent of Agent and the Requisite Lenders, which may be granted in their sole and exclusive
discretion, from and after the date hereof until the Termination Date they shall not, and shall not
cause or permit the other Credit Parties to do the following :



     6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or indirectly, by
operation of law or otherwise, (a) form or acquire any Subsidiary, or (b) merge with, consolidate
with, acquire all or substantially all of the assets or capital stock of, or otherwise combine with
or acquire, any Person, except (i) Bermans may be merged with and into Borrower or another Loan
Party, (ii) one or more Store Guarantors may be merged with any other Store Guarantor or any Loan
Party so long as such Loan Party is the survivor in any merger involving a Loan Party; (iii) cash
and financial assets may be transferred among the Loan Parties so long as no Event of Default has
occurred and is continuing; (iv) the Stock or fixed assets, Trademarks and Trademark Licenses of
Store Guarantors may be transferred to other Store Guarantors or to any Loan Party; (v) the Credit
Parties may form new wholly-owned domestic Subsidiaries (other than the Wholesale Subsidiary as
defined below); provided that (x) the aggregate initial cash investment in each
such new domestic Subsidiary in the form of equity shall not exceed $500,000 and (y) the Credit
Parties and each such new domestic Subsidiary shall execute and deliver to Agent forms of the Loan
Documents executed by or with respect to the Loan Parties as of the Closing Date; (vi) the Credit
Parties may form Joint Ventures to own, lease or operate one or more Stores in one or more domestic
airports, as long as the investments therein are permitted pursuant to Section 6.2(c)(vi)
and (vii) a Credit Party may form a new Subsidiary which is, directly or indirectly, wholly-owned
by Ultimate Parent to carry out the New Wholesale Business (“Wholesale Subsidiary”);
provided that (x) the investment in such Wholesale Subsidiary in the form of equity
and/or loans from Credit Parties shall not exceed $5,000,000 in the aggregate at any time
outstanding and (y) promptly after the formation of such Wholesale Subsidiary (1) such Wholesale
Subsidiary shall become a Loan Party under the Credit Agreement, guaranty the Obligations and grant
to Agent, for the benefit of Agent and Lenders, a security interest in all or substantially all of
the assets of such Wholesale Subsidiary to secure the Obligations, (2) the applicable Credit Party
shall pledge to Agent, for the benefit of Agent and Lenders, all of the Stock of such Wholesale
Subsidiary to secure the Obligations, and (3) Borrower and Wholesale Subsidiary shall deliver such
other agreements, documents, opinions, certificates and/or instruments as Agent reasonably request
in connection with the foregoing (the documentation for such guaranty, security and pledge shall be
substantially similar to the applicable Loan Documents previously executed with such modifications
as are reasonably requested by Agent).



35









 





     6.2 Investments; Loans and Advances. No Credit Party shall make any investment in, or
make or accrue loans or advances of money to, any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except that (a) any Loan Party may, so long as no
Default or Event of Default has occurred and is continuing, make investments in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of America or any
agency thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper
maturing no more than one year from the date of creation thereof and having an investment rating of
A-2 or P-2 or better from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc.,
(iii) time deposits, demand deposits and certificates of deposit, maturing no more than one year
from the date of creation thereof, issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided profits of not less
than $300,000,000 and having a senior secured rating of “A” or better by a nationally
recognized rating agency (an “A Bank”), (iv) time deposits, maturing no more than 30
days from the date of creation thereof with an A Bank; (v) overnight repurchase obligations issued
by an A Bank; (b) any Loan Party may, so long as no Default or Event of Default has occurred and is
continuing and no Revolving Credit Advances are outstanding, make investments in (i) asset-backed
securities and taxable or tax-exempt municipal bonds, in each case rated “AAA” or better by
Standard & Poor’s Corporation and maturing in six months or less and (ii) corporate bonds maturing
in six months or less and rated “A” or better by Standard & Poor’s Corporation; and (c) each Credit
Party may (i) maintain its existing investments in its Subsidiaries as of the Closing Date, (ii)
make unlimited investments in Borrower, (iii) make investments in new Subsidiaries as permitted
under Section 6.1 hereof, (iv) upon prior written notice to Agent, maintain equity
investments in Store Guarantors necessary to maintain them as Solvent in an aggregate amount not to
exceed $1,000,000, (v) make intercompany loans as permitted under Section 6.3 hereof, (vi)
make and permit to exist investments described in Section 6.1(vi) as long as (A) at the
time such investment is made no Event of Default shall have occurred and be continuing or would
result after giving effect thereto and Borrower shall have excess Borrowing Availability of at
least $10,000,000 after giving effect thereto and (B) the aggregate amount of all such investments
(1) existing on the Closing Date does not exceed $1,000,000 and (2) made after the Closing Date
does not exceed $2,000,000, and (vii) make other investments not exceeding $1,000,000 in the
aggregate at any time outstanding.



     6.3 Indebtedness. No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (a) Indebtedness secured by Permitted Encumbrances, (b) the Loans and the
other Obligations, (c) reimbursement obligations owed by Borrower to the L/C Issuer with respect to
Letters of Credit and Eligible Trade L/Cs, (d) deferred taxes, (e) unfunded pension fund and other
employee benefit plan obligations and liabilities to the extent they are permitted to remain
unfunded under applicable law, (f) existing Indebtedness set forth in Disclosure Schedule
6.3 and refinancings thereof or amendments or modifications thereto on



36









 







terms and conditions no
less favorable to any Credit Party, Agent or any Lender, as determined by Agent, than the terms of
the Indebtedness being refinanced, amended or modified, (g) intercompany loans among the Loan
Parties for operating expenses incurred in the ordinary course of business, (h) loans by any Loan
Party in the ordinary course of business, to Store Guarantors and loans by Store Guarantors to any
Loan Party in the ordinary course of business to the extent permitted by Sections 6.1 and
6.2 hereof, (i) intercompany loans to Foreign Subsidiaries or Joint Ventures not to exceed
$2,000,000 in the aggregate; provided that at the time any such intercompany loan
is made to a Foreign Subsidiary or Joint Venture no Event of Default shall have occurred and be
continuing or would result after giving effect thereto and Borrower shall have Borrowing
Availability of at least $5,000,000 after giving effect thereto, (j) an unsecured $100,000 customs
bond line from Barclays Bank for the Foreign Subsidiaries and (k) obligations under interest rate
swaps on an unsecured basis. No Credit Party shall directly or indirectly voluntarily prepay,
repurchase or redeem any Indebtedness other than the Obligations. Notwithstanding anything to the
contrary contained herein, Ultimate Parent shall be entitled to incur unsecured Indebtedness in an
aggregate outstanding amount not to exceed $25,000,000 as long as such Indebtedness is (a)
subordinated to the Obligations on terms, and pursuant to documentation, satisfactory to Agent or
(b) (i) matures within ninety one (91) days of the date it is first incurred or issued and (ii) not
guaranteed by any Person and not entitled to any credit support of any nature.



     6.4 Employee Loans and Affiliate Transactions



     (a) No Credit Party shall enter into or be a party to any transaction with any Affiliate
thereof (other than another Credit Party) except in the ordinary course of and pursuant to the
reasonable requirements of such Credit Party’s business and upon fair and reasonable terms that are
no less favorable to such Credit Party than would be obtained in a comparable arm’s length
transaction with a Person not an Affiliate of such Credit Party, except (i) intercompany loans
permitted in clauses (g) and (h) of Section 6.3 and (ii) the Consignment
Agreement. In addition, if any such transaction or series of related transactions involves
payments in excess of $1,000,000 in the aggregate, the terms of these transactions must be
disclosed in advance to Agent (which disclosure may be in the form of a request for issuance of an
Eligible Trade L/C). All such transactions existing as of the date hereof are described on
Disclosure Schedule 6.4(a).



     (b) No Credit Party shall enter into any lending or borrowing transaction with any employee of
any Credit Party, except loans to their respective employees on an arm’s length basis in the
ordinary course of business consistent with past practices for travel expenses, relocation costs
and similar purposes up to a maximum of $200,000 to any employee and up to a maximum of $1,000,000
in the aggregate at any one time outstanding.



     6.5 Capital Structure and Business. No Credit Party shall make any changes in any of its
business objectives, purposes or operations which could in any way adversely affect the repayment
of the Loans or any of the other Obligations or could have or result in a Material Adverse Effect.
No Credit Party other than Ultimate Parent shall (i) make any change in or to its capital structure
as described on Disclosure Schedule 3.8 (including a change in capital structure effected
through the issuance of any shares of Stock, warrants or other securities convertible into Stock or
any revision of the terms of its outstanding Stock), or (ii) amend its charter or bylaws in a
manner which would adversely affect the Agent or Lenders or Borrower’s, First Intermediate Parent’s
or Store Guarantors’ duty or ability to repay the Obligations; provided, however, that nothing
herein shall prohibit a merger or consolidation otherwise permitted by Section 6.1 hereof.



37









 





     6.6 Guaranteed Indebtedness. No Credit Party shall incur any Guaranteed Indebtedness
except (a) by endorsement of instruments or items of payment for deposit to the general account of
any Credit Party, (b) for Guaranteed Indebtedness incurred for the benefit of any other Credit
Party consisting of payments under the Store leases or if the primary obligation is otherwise
expressly permitted by this Agreement and (c) the Barclays customs bond for the Foreign
Subsidiaries described in Section 6.3(j).



     6.7 Liens. No Credit Party shall create, incur, assume or permit to exist any Lien on or
with respect to its Accounts or any of its other properties or assets (whether now owned or
hereafter acquired) except for Permitted Encumbrances and those existing Liens set forth on
Schedule 6.7. In addition, no Credit Party shall become a party to any agreement, note,
indenture or instrument, or take any other action, which would prohibit the creation of a Lien
on any of its properties or other assets in favor of Agent, on behalf of itself and Lenders, as
additional collateral for the Obligations, except operating leases, Capital Leases, purchase money
obligations, or Licenses which prohibit Liens upon the assets that are subject thereto.



     6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey, assign or
otherwise dispose of any of its properties or other assets, including the capital Stock of any of
its Subsidiaries, or any of their Accounts, other than as permitted under Section 6.1 and
(a) the sale of Inventory in the ordinary course of business, (b) the sale, transfer, conveyance or
other disposition by a Credit Party of Equipment, Fixtures or Real Estate that are obsolete or no
longer used or useful in such Credit Party’s business and having a value not exceeding $500,000 in
any single transaction or $1,000,000 in the aggregate in any Fiscal Year, (c) the sale of other
Equipment and Fixtures having a value not exceeding $500,000 in any single transaction or
$1,000,000 in the aggregate in any Fiscal Year and (d) the sale of all of the stock or
substantially all of the assets of one or more Subsidiaries or Joint Ventures in an arms’-length
transaction in an amount not to exceed $2,000,000 in the aggregate (and in connection with such
sale, such Subsidiary or Subsidiaries shall be released from all obligations hereunder and under
the other Loan Documents to which it is subject). No Credit Party, other than Ultimate Parent,
shall sell or issue any of its capital Stock (other than directors’ qualifying shares) to any
Person other than a Credit Party.



     6.9 ERISA. No Credit Party shall cause or permit (a) the occurrence of an ERISA Event
which results, or could reasonably be expected to result, in a distress termination of a Title IV
Plan under Section 4041 of ERISA, an involuntary termination of a Title IV Plan by the PBGC under
Section 4042 of ERISA, a Lien on any property of a Credit Party or ERISA Affiliate or a liability
in excess of $500,000 being assessed against any Credit Party or ERISA Affiliate; (b) any Title IV
Plan to incur an “accumulated funding deficiency” under Section 412 of the IRC in excess of
$500,000, regardless of any waiver; (c) any Credit Party or ERISA Affiliate to apply for a material
funding waiver under Section 412(d) of the IRC; (d) a material increase in the aggregate Unfunded
Pension Liability of all Title IV Plans, but only taking into account Title IV Plans with Unfunded
Pension Liability at the time of reference; or (e) a material increase in any Credit Party’s
obligations under any Retiree Welfare Plan.



38









 





     6.10 [Intentionally Omitted.]



     6.11 Hazardous Materials. No Credit Party shall cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate where such Release
would violate in any material respect, or form the basis for any material Environmental Liabilities
under any Environmental Laws or Environmental Permits or would otherwise materially and adversely
impact the value or marketability of any of the Real Estate or any of the Collateral.



     6.12 Sale-Leasebacks . No Credit Party shall engage in any sale-leaseback, synthetic lease or similar transaction,
involving any of its assets.



     6.13 Cancellation of Indebtedness. No Credit Party shall cancel any claim or debt owing to
it, except for reasonable consideration negotiated on an arm’s-length basis or in the ordinary
course of its business consistent with past practices.



     6.14 Restricted Payments. No Credit Party shall make any Restricted Payment, except (a)
asset or Stock transfers permitted under Section 6.1; (b) intercompany loans permitted
under Section 6.3; (c) restricted payments consisting of cash dividends paid to any Store
Guarantor or to First Intermediate Parent, Second Intermediate Parent, Third Intermediate Parent or
Ultimate Parent and (d) redemptions or repurchases of fractional shares not to exceed $100,000 per
year.



     6.15 Change of Corporate Name or Location; Change of Fiscal Year. No Credit Party shall
(a) change its name as it appears in official filings in the state of its incorporation or other
organization, (b) change its chief executive office, principal place of business, corporate offices
or warehouses or Collateral locations, or the location of its records concerning the Collateral,
(c) change the type of entity that it is or its jurisdiction of organization, (d) change its
organization identification number, if any, issued by its state of incorporation or other
organization, or (e) merge with any other Credit Party in any case without at least twenty (20)
days prior written notice to Agent and completion by the Credit Parties of any action reasonably
requested by Agent in connection therewith, including, without limitation, to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, and
provided that any such new location shall be in the continental United States. Without
limiting the foregoing, no Credit Party shall change its name, identity or corporate structure in
any manner which might make any financing or continuation statement filed in connection herewith
seriously misleading as such term is defined in and/or used in the Code or any other then
applicable provision of the Code except upon prior written notice to Agent and Lenders and
completion by the Credit Parties of any action reasonably requested by Agent in connection
therewith, including, without limitation, any action necessary to continue the perfection of any
Liens in favor of Agent, on behalf of Lenders, in any Collateral.



39









 





     6.16 No Impairment of Upstreaming. No Credit Party shall directly or indirectly enter into
or become bound by any agreement, instrument, indenture or other obligation (other than this
Agreement and the other Loan Documents) which could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or distributions or the
making of intercompany loans by a Subsidiary of First Intermediate Parent (other than a Subsidiary
which is not wholly owned and which is not a Credit Party) to any other Subsidiary of First
Intermediate Parent.



     6.17 [Intentionally Deleted].



     6.18 Eligible Trade L/Cs. Borrower shall not request any documentary letter of credit for
the purchase of finished goods unless each of the following documents are required as conditions to
any draw thereon, unless Agent shall otherwise consent, and such deliveries must constitute
conditions to drawing for a documentary letter of credit to constitute an Eligible Trade L/C:



          (i) the original Eligible Trade L/C, if only one draw is permitted thereunder or if multiple
draws are permitted and the subject draw is the final draw thereunder;




          (ii) all drafts and pre-approved forms of certificates executed by Borrower’s supplier,
certifying that it has met the conditions for a draw under the Eligible Trade L/C;




          (iii) an inspection certificate substantially in the form attached hereto as Schedule
6.18, executed by Borrower’s employee or agent at the point of origin of the finished goods;




          (iv) a commercial invoice with respect to the purchase order(s) against which such finished
goods are being delivered and a packaging list with respect to such goods;




          (v) a non-negotiable ocean bill of lading, freight forwarders cargo receipt, a house bill of
lading or a copy of an airway bill of lading (a “Document of Title”) issued by an Approved
Shipper with respect to the finished goods being shipped and providing for the delivery thereof to
Borrower; and




          (vi) a certificate of origin.




     6.19 Non-Core Businesses. The Loan Parties shall not permit (x) the aggregate revenue
attributable to all Non-Core Businesses or (y) the EBITDA attributable to all Non-Core Businesses,
to exceed 10% of Ultimate Parent’s consolidated revenue or EBITDA, respectively, for any twelve
fiscal month period.



     7. TERM



     7.1 Termination. The financing arrangements contemplated hereby shall be in effect until
the Commitment Termination Date, and the Loans and all other Obligations shall be automatically due
and payable in full on such date.



40









 





     7.2 Survival of Obligations Upon Termination of Financing Arrangements. Except as
otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless
of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or
impair the obligations, duties and liabilities of
Borrower or the rights of Agent and Lenders relating to any unpaid portion of the Loans or any
other Obligations, due or not due, liquidated, contingent or unliquidated or any transaction or
event occurring prior to such termination, or any transaction or event, the performance of which is
required after the Commitment Termination Date. Except as otherwise expressly provided herein or
in any other Loan Document, all undertakings, agreements, covenants, warranties and representations
of or binding upon any Credit Party, and all rights of Agent and each Lender, all as contained in
the Loan Documents, shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination Date.



     8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES



     8.1 Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default” hereunder:



     (a) (i) Borrower shall fail to make any payment of principal of, or interest on, or Fees owing
in respect of, the Loans, when due and payable, or (ii) Borrower shall fail to pay or reimburse
Agent or Lenders for any expense reimbursable hereunder or under any other Loan Document or any
other Obligations within ten (10) days following Agent’s demand for such reimbursement or payment
thereof.



     (b) Any Credit Party shall fail or neglect to perform, keep or observe any of the provisions
of Sections 1.4, 1.8, 5.4,or 6, or any of the provisions set forth
in Schedule E, respectively.



     (c) Borrower shall fail or neglect to perform, keep or preserve any of the provisions of
Section 4 or any provisions set forth in Schedules G or H, respectively,
and the same shall remain unremedied for ten (10) days or more.



     (d) Any Credit Party shall fail or neglect to perform, keep or observe any other provision of
this Agreement or of any of the other Loan Documents (other than any provision embodied in or
covered by any other clause of this Section 8.1) and the same shall remain unremedied for
twenty (20) days or more following notice to such Credit Party.



     (e) A default or breach shall occur under any other agreement, document or instrument to which
any Credit Party is a party which is not cured within any applicable grace period, and such default
or breach (i) involves the failure to make any payment when due in respect of any Indebtedness
(other than the Obligations) of any Credit Party in excess of $2,000,000 in the aggregate, or (ii)
causes, or such permits any holder of such Indebtedness or a trustee to cause, Indebtedness or a
portion thereof in excess of $2,000,000 in the aggregate to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment, regardless of whether such right is
exercised, by such holder or trustee.



41









 





     (f) Any representation or warranty herein or in any Loan Document or in any written statement,
report, financial statement or certificate made or delivered to Agent or any
Lender by any Credit Party shall be untrue or incorrect in any material respect as of the date
when made or deemed made.



     (g) Assets of any Credit Party with a fair market value of $1,000,000 or more shall be
attached, seized, levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of creditors of any
Credit Party and such condition continues for thirty (30) days or more.



     (h) A case or proceeding shall have been commenced against any Material Credit Party a decree
or order in respect of any Material Credit Party (i) under Title 11 of the United States Code, as
now constituted or hereafter amended or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for any Material Credit Party or any substantial part of any
such Person’s assets, or (iii) ordering the winding-up or liquidation of the affairs of any
Material Credit Party, and such case or proceeding shall remain undismissed or unstayed for sixty
(60) days or more or such court shall enter a decree or order granting the relief sought in such
case or proceeding.



     (i) Any Material Credit Party shall (i) file a petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other applicable federal, state
or foreign bankruptcy or other similar law, (ii) consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of any
Material Credit Party or of any substantial part of any such Person’s assets, (iii) make an
assignment for the benefit of creditors, or (iv) take any corporate action in furtherance of any of
the foregoing.



     (j) A final judgment or judgments for the payment of money in excess of $1,000,000 in the
aggregate at any time outstanding shall be rendered against any Credit Party and the same shall
not, within thirty (30) days after the entry thereof, have been discharged or execution thereof
stayed or bonded pending appeal, or shall not have been discharged prior to the expiration of any
such stay.



     (k) Any provision of any Loan Document shall for any reason cease to be valid, binding and
enforceable in accordance with its terms (or any Credit Party shall challenge the enforceability of
any Loan Document or shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any security interest created
under any Loan Document shall cease to be a valid and perfected first priority security interest or
Lien (except as otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby other than as a result of Agent’s failure to take any action within its control.



     (l) Any “Change of Control” shall occur.



42









 





     8.2 Remedies.



     (a) (i) If any Event of Default or Material Adverse Effect shall have occurred and be
continuing, Agent may, in accordance with Section 2.3, suspend this facility with respect
to further Advances and/or the incurrence of further Letter of Credit Obligations and Eligible
Trade L/C Obligations and (ii) if any Event of Default shall have occurred and be continuing, Agent
may (and at the request of the Requisite Lenders shall), following notice, increase the rate of
interest applicable to the Loans and the Letter of Credit Fees to the Default Rate.



     (b) If any Event of Default shall have occurred and be continuing, Agent may (and at the
written request of the Requisite Lenders shall), without notice, (i) terminate this facility with
respect to further Advances or the incurrence of further Letter of Credit Obligations and Eligible
Trade L/C Obligations; (ii) declare all or any portion of the Obligations, including all or any
portion of any Loan to be forthwith due and payable, and require that the Letter of Credit
Obligations and Eligible Trade L/C Obligations be cash collateralized as provided in Schedule
B, all without presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each Credit Party that is a signatory hereto; and (iii) exercise
any rights and remedies provided to Agent under the Loan Documents and/or at law or equity,
including all remedies provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Sections 8.1(g), (h) or (i),
Revolving Loan Commitments to make further Advances or the incurrence of further Letter of Credit
Obligations and Eligible Trade L/C Obligations shall automatically terminate and all of the
Obligations, including the Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.



     (c) Notwithstanding anything to the contrary contained herein or in the Amended and Restated
Security Agreement, if the Loans have been accelerated in accordance with the provisions hereof,
the proceeds from the foreclosure, sale or other disposition of Collateral shall be applied as
follows:



          (i) if such proceeds are from the Term Collateral, such proceeds shall be applied (1)
first, to the expenses of such foreclosure, sale or other disposition of Collateral, (2)
second, to Fees and Agent’s expenses reimbursable hereunder, (3) third, to accrued
interest on the Term Loan B, (4) fourth, to the outstanding principal balance of the Term
Loan B, (5) fifth, to accrued interest on the Swing Line Loan, (6) sixth, to the
outstanding principal balance of the Swing Line Loan, (7) seventh, to the accrued interest
on the Revolving Loan (other than interest owing to a Non-Funding Lender), (8) eighth, to
the outstanding principal balance of the Revolving Loan (other than principal owing to a
Non-Funding Lender), (9) ninth, to the other Obligations (other than Obligations owing to a
Non-Funding Lender) in such order as Agent shall determine, (10) tenth, to the accrued
interest on the Revolving Loan owing to Non-Funding Lenders, (11) eleventh, to the
outstanding principal balance of the Revolving Loan owing to Non-Funding Lenders, and (12)
twelfth, to the other Obligations owing to Non-Funding Lenders; and




43









 








          (ii) if such proceeds are from Collateral other than Term Collateral, such proceeds shall be
applied (1) first, to the expenses of such foreclosure, sale or other disposition of
Collateral, (2) second, to Fees and Agent’s expenses reimbursable hereunder, (3)
third, to accrued interest and the outstanding principal balance of Loans other than
the Term Loan B (other than interest and principal owing to a Non-Funding Lender), and to the cash
collateralization of all outstanding Letter of Credit Obligations and Eligible Trade L/C
Obligations, in such order as Agent shall determine, (4) fourth, to accrued interest on the
Term Loan B, (5) fifth, to the outstanding principal balance of the Term Loan B,(6)
sixth, to the other Obligations (other than Obligations owing to a Non-Funding Lender) in
such order as Agent shall determine, (7) seventh, to the accrued interest on Loans other
than the Term Loan B owing to Non-Funding Lenders, (8) eighth, to the outstanding principal
balance of the Loans other than the Term Loan B owing to Non-Funding Lenders, and (9)
ninth, to the other Obligations owing to Non-Funding Lenders.




     (d) In the event that Borrower and some or all of the Credit Parties are sold as a going
concern or Term Collateral and other Collateral are sold together, and, in either case, the
proceeds are insufficient to pay all of the Obligations in full, then, at the request of the
holders of a majority in principal amount of the Revolving Loan Commitments (or following
acceleration of the Revolving Loan, the holders of a majority of the principal amount of the
Revolving Loan) or at the request of the holders of a majority in principal amount of the Term Loan
B, an independent appraiser selected by the Requisite Lenders will be hired to appraise the
Collateral to be sold with the expenses of such appraiser to be paid by the Lenders in accordance
with their Pro Rata Shares. The appraiser shall determine the fair market values of the Term
Collateral and all other Collateral being directly or indirectly sold in such a transaction. The
portion of the net proceeds of sale equal to a percentage determined by (x) the fair market value
of the Term Collateral sold divided by (y) the fair market value of all Collateral sold, will be
applied to the Term Loan B. The balance of the net proceeds of sale will be applied to the other
Obligations. The appraiser’s determination will be final and binding on all Lenders.



     8.3 Waivers by Credit Parties. Except as otherwise provided for in this Agreement or by
applicable law, each Credit Party waives (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Agent on which any Credit Party may in any way be liable, and hereby ratifies
and confirms whatever Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior to allowing Agent to
exercise any of its remedies, and (c) the benefit of all valuation, appraisal and exemption laws.



     9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT



     9.1 Assignment and Participations.



     (a) Any Lender may assign at any time or times, any of the Loan Documents, Loans, any
Commitment or any portion thereof or interest therein, including, without limitation, any Lender’s
rights, title, interests, remedies, powers or duties thereunder, whether evidenced by
a writing or not, with Borrower’s consent which shall not be unreasonably withheld or delayed;



44









 







provided that so long as any Event of Default shall have occurred and be continuing Borrower’s
consent shall not be required. Any assignment by a Lender shall (i) require the consent of Agent
(which consent shall not be unreasonably withheld or delayed) and the execution of an assignment
agreement (a “Lender Assignment Agreement”) substantially in form attached hereto as Exhibit
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and the Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for investment purposes
and not with a view to the distribution thereof; (iii) if a partial assignment, be in an amount at
least equal to $5,000,000 and, after giving effect to any such partial assignment, the assigning
Lender shall have retained Commitments in an amount at least equal to $5,000,000; and (iv) include
a payment by the assigning Lender to the Agent of an assignment fee of $3,500. In the case of an
assignment by a Lender under this Section 9.1, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as it would if it were a Lender
hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect to its
Commitment or assigned portion thereof from and after the date of such assignment. Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct obligation of Borrower to
the assignee and that the assignee shall be considered to be a “Lender”. In all instances, each
Lender’s liability to make Loans hereunder shall be several and not joint and shall be limited to
such Lender’s Pro Rata Share of the Commitments. In the event Agent or any Lender assigns or
otherwise transfers all or any part of a Note, Agent or any such Lender shall so notify Borrower
and Borrower shall, upon the request of Agent or such Lender, execute new Notes in exchange for the
Notes being assigned.



     (b) Borrower consents to any Lender’s sale of a participation, at any time or times, in all or
part of its Commitment. Any sale of a participation by a Lender of all or any part of its
Commitment shall be made with the understandings that all amounts payable by Borrower hereunder
shall be determined as if that Lender had not sold such participation, except as provided in the
following sentence, and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly affecting (i) any
reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in
which such holder participates, (ii) any extension of the final scheduled maturity date of the
principal amount of any Loan in which such holder participates, and (iii) any release of all or
substantially all of the Collateral (other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Solely for purposes of Sections 1.13,
1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrower to the participant and the participant shall be
considered to be a “Lender”. Except as set forth in the preceding sentence neither Borrower nor
any Credit Party shall have any obligation or duty to any participant. Neither Agent nor any
Lender (other than the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no such sale had
occurred.



     (c) So long as no Event of Default shall have occurred and be continuing, no Lender shall
assign or sell participations in any portion of its Loans or Revolving Loan Commitments to a
potential Lender or participant, if, as of the date of the proposed assignment or sale, the
assignee Lender or participant would be subject to capital adequacy or similar
requirements under Section 1.16(a), increased costs under Section 1.16(b), an
inability to fund LIBOR Loans under Section 1.16(c), or withholding taxes in accordance
with Section 1.16(d).



45









 





     (d) Except as expressly provided in this Section 9.1, no Lender shall, as between
Borrower and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment, transfer or negotiation of, or granting of participation in,
all or any part of the Loans, the Notes or other Obligations owed to such Lender.



     (e) Borrower shall assist any Lender permitted to sell assignments under this Section
9.1 as reasonably required to enable the assigning or selling Lender to effect any such
assignment, including the execution and delivery of any and all agreements, notes and other
documents and instruments as shall be requested, and the participation of management in meetings
with, potential assignees at Borrower’s headquarters. Borrower shall certify the correctness,
completeness and accuracy of all descriptions of Borrower and its affairs contained in any selling
materials provided by it and all other information provided by it and included in such materials,
except that any Projections delivered by Borrower shall only be certified by Borrower as having
been prepared by Borrower in compliance with the representations contained in Section 3.4.



     (f) A Lender may furnish any information concerning Borrower in the possession of such Lender
from time to time to assignees and participants (including prospective assignees and participants).
Each Lender shall obtain from assignees or participants confidentiality covenants substantially
equivalent to those contained herein.



     9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf of all Lenders
as Agent under this Agreement and the other Loan Documents. The provisions of this Section
9.2 are solely for the benefit of Agent and Lenders and no Credit Party nor any other Person
shall have any rights as a third party beneficiary of any of the provisions hereof. In performing
its functions and duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any Credit Party or any other Person. Agent
shall have no duties or responsibilities except for those expressly set forth in this Agreement and
the other Loan Documents. The duties of Agent shall be mechanical and administrative in nature and
Agent shall not have, or be deemed to have, by reason of this Agreement, any other Loan Document or
otherwise a fiduciary relationship in respect of any Lender. Neither Agent nor any of its
Affiliates nor any of their respective officers, directors, employees, agents or representatives
shall be liable to any Lender for any action taken or omitted to be taken by it hereunder or under
any other Loan Document, or in connection herewith or therewith, except for damages solely caused
by its or their own gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.



     If Agent shall request instructions from Requisite Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan Document, then Agent
shall be entitled to refrain from such act or taking such action unless and until Agent shall have
received instructions from Requisite Lenders, and Agent shall not incur
liability to any Person by reason of so refraining. Agent shall be fully justified in failing
or refusing to take any action hereunder or under any other Loan Document (a) if such action



46









 







would,
in the opinion of Agent, be contrary to law or the terms of this Agreement or any other Loan
Document, (b) if such action would, in the opinion of Agent, expose Agent to Environmental
Liabilities and Costs or (c) if Agent shall not first be indemnified to its satisfaction against
any and all liability and expense which may be incurred by it by reason of taking or continuing to
take any such action. Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting hereunder or under
any other Loan Document in accordance with the instructions of Requisite Lenders.



     9.3 Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement or the other Loan Documents,
except for damages solely caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Without limitation of the generality of
the foregoing, Agent: (a) may treat the payee of any Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to Agent; (b) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this Agreement or the other
Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Credit Party or to inspect the Collateral (including the books and
records) of any Credit Party; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the
other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and
(f) shall incur no liability under or in respect of this Agreement or the other Loan Documents by
acting upon any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.



     9.4 GE Capital and Affiliates. With respect to its Commitments hereunder, GE Capital
shall have the same right and powers under this Agreement and the other Loan Documents as any other
Lender and may exercise the same as though it were not Agent; and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may do business with or
own securities of any Credit Party or any such Affiliate, all as if GE Capital were not Agent and
without any duty to account therefor to Lenders. GE Capital and its Affiliates may accept fees
and other consideration from any Credit Party for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.



47









 





     9.5 Lender Credit Decision. Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the Financial Statements referred to
in Section 3.4 and such other documents and information as it has deemed appropriate, made
its own credit and financial analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without reliance upon
Agent 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 this
Agreement. Each Lender acknowledges the potential conflict of interest of each other Lender as a
result of the Lenders holding disproportionate interests in the Loans, and expressly consents to,
and waives any claim based upon, such conflict of interest.



     9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrower and without limiting the obligations of Borrower hereunder), ratably according to their
respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in any way relating to
or arising out of this Agreement or any other Loan Document or any action taken or omitted by Agent
in connection therewith; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from Agent’s gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction. Without limiting the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is
not reimbursed for such expenses by Borrower.



     9.7 Successor Agent. Agent may resign at any time by giving not less than thirty (30)
days’ prior written notice thereof to Lenders and Borrower. Upon any such resignation, the
Requisite Lenders shall have the right to appoint a successor Agent which shall be reasonably
acceptable to Borrower. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within 30 days after the resigning Agent’s giving
notice of resignation, then the resigning Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise
shall be a commercial bank or financial institution organized under the laws of the United States
of America or of any State thereof having a combined capital and surplus of at least $300,000,000.
If no successor Agent has been appointed pursuant to the foregoing, by the 30th day after the
date such notice of resignation was given by the resigning Agent, such resignation shall
become effective and the Requisite Lenders shall thereafter perform all the duties of Agent
hereunder until such time, if any, as the Requisite Lenders appoint a successor Agent (which shall
be reasonably acceptable to Borrower) as provided above. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent, and the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other Loan Documents,
except that any indemnity rights or other rights in favor of such resigning Agent shall continue.
After any resigning Agent’s resignation hereunder, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement and the other Loan Documents.



48









 





     9.8 Setoff and Sharing of Payments. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of such rights, upon the occurrence and during
the continuance of any Event of Default, each Lender and each holder of any Note is hereby
authorized at any time or from time to time, without notice to Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower (regardless of whether such
balances are then due to Borrower and without regard to the adequacy of any other Collateral) and
any other properties or assets any time held or owing by that Lender or that holder to or for the
credit or for the account of Borrower against and on account of any of the Obligations which are
not paid when due. Any Lender or holder of any Note exercising a right to set off shall purchase
for cash (and the other Lenders or holders shall sell) such participations in each such other
Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender
to share the amount so set off with each other Lender or holder in accordance with their respective
Pro Rata Shares. Borrower agrees, to the fullest extent permitted by law, that (a) any Lender or
holder may exercise its right to set off with respect to amounts in excess of its Pro Rata Share of
the Obligations and may sell participations in such amount so set off to other Lenders and holders
and (b) any Lender or holders so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of set-off, bankers’ lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the set-off amount is thereafter recovered
from the Lender that has exercised the right of set-off, the purchase of participations by that
Lender shall be rescinded and the purchase price restored without interest.



     9.9 Advances; Payments; Information; Non-Funding Lender.



     (a) Advances; Payments; Fee Payments.



          (i) The parties hereto agree that, whenever possible, the Swing Line Loan shall be the first
Loan advanced and the first Loan repaid so as to minimize fluctuations in the Revolving Loan
balance. Furthermore, for ease of administration, Agent may, on behalf of Lenders, disburse funds
to Borrower for requested Revolving Credit Advances and the Revolving Loan balance may fluctuate
from day to day through Agent’s disbursement of funds
to, and receipt of funds from, Borrower. In order to minimize the frequency of transfers of
funds between Agent and each Lender, Revolving Credit Advances requested to be made in respect of
Index Rate Loans and payments in respect thereof will be settled according to the procedures
described in Sections 9.9(a)(ii) and 9.9(a)(iii) below. Notwithstanding these
procedures, each Lender’s obligation to fund its portion of any Revolving Credit Advances made by
Agent to Borrower will commence on the date such Advances are made by Agent. Such payments will be
made by each Lender without setoff, counterclaim or reduction of any kind.




49









 








          (ii) Not later than 11:00 a.m. (Chicago time) on the second (2nd) and fifth (5th) Business
Day of each week, or more frequently (including daily) if Agent so elects (each such day being a
“Settlement Date”), Agent will advise each Lender by telephone or telecopy of the amount of
such Lender’s Pro Rata Share of the balance of the Revolving Loan as of the close of business on
the first (1st) Business Day immediately preceding the Settlement Date. In the event that payments
from Agent are necessary to adjust the amount of such Lender’s portion of the Revolving Loan to
such Lender’s Pro Rata Share of the Revolving Loan as of any Settlement Date, Agent will pay each
Lender, in same day funds, by wire transfer to its account not later than 2:00 p.m. (Chicago time)
on the Settlement Date. Agent may allocate payments among the Lenders so as to cause the principal
amount of the Loans outstanding from each Lender to match that Lender’s Pro Rata Share. If Agent
so elects, Agent may require that each Lender make its Pro Rata Share of any requested Revolving
Credit Advance available to Agent for disbursement prior to the funding of such Advance. If Agent
elects to require that such funds be so made available, Agent shall advise each Lender by telephone
or telecopy of the amount of such Lender’s Pro Rata Share of the requested Revolving Credit Advance
no later than noon (Chicago time) on the date of funding of each Index Rate Loan and no later than
11:00 a.m. (Chicago Time) on the date that is two (2) Business Days prior to the proposed funding
date of any LIBOR Loan, and each such Lender shall pay Agent such amount in same day funds, by wire
transfer to the Collection Account not later than 2:00 p.m. (Chicago time) on the date of funding
such Advance.




          (iii) For purposes of this Section 9.9(a)(iii), the following terms will have the
following meanings:





          (A) “Daily Loan Balance” means, with respect to the Revolving Credit
Advances, an amount calculated as of the end of each calendar day by subtracting (i)
the cumulative principal amount paid by Agent to a Lender with respect to the
Revolving Credit Advances from the Closing Date through and including such calendar
day, from (ii) the cumulative principal amount of the Revolving Credit Advances
advanced by such Lender to Agent from the Closing Date through and including such
calendar day.




          (B) “Daily Interest Rate” means, with respect to the Revolving Credit
Advances, an amount calculated by dividing the interest rate payable to a Lender on
the Revolving Credit Advances (as determined pursuant to Section 1.5 and
1.6) as of each calendar day by three hundred sixty (360) days in the case
of LIBOR Loans and three hundred sixty-five (365) days in the case of Index Rate
Loans.




          (C) “Daily Interest Amount” means, with respect to the Revolving Loan,
an amount calculated by multiplying the Daily Loan Balance of the Revolving Credit
Advances by the associated Daily Interest Rate applicable to such Revolving Credit
Advances.




          (D) “Interest Ratio” means, with respect to the Revolving Credit
Advances, a number calculated by dividing the total amount of interest on the
Revolving Credit Advances received by Agent during the immediately preceding month
by the total amount of interest on the Revolving Credit Advances due from Borrower
during the immediately preceding month.



50









 




On the first (1st) Business Day of each calendar month (an “Interest Settlement Date”),
Agent will advise each Lender by telephone or telecopy of the amount of such Lender’s Pro Rata
Share of interest and Fees paid for the benefit of Lenders with respect to the Revolving Credit
Advances as of the end of the last day of the immediately preceding month. Provided that such
Lender has made all payments required to be made by it under this Agreement and the other Loan
Documents, Agent will pay to such Lender such Lender’s Pro Rata Share of principal, interest and
Fees paid for the benefit of Lenders on the Revolving Loans. Such payments shall be made by wire
transfer to such Lender’s account (as specified by such Lender to Agent in writing, as amended by
such Lender from time to time after the date hereof pursuant to the notice provisions contained
herein or in the applicable Lender Assignment Agreement) not later than 12:00 noon (Chicago time)
on the next Business Day following the Interest Settlement Date. Such Lender’s Pro Rata Share of
interest on Revolving Credit Advances will be calculated by adding together such Lender’s Pro Rata
Share of the Daily Interest Amounts for each calendar day of the prior month for the Revolving
Credit Advances and multiplying the total thereof by the Interest Ratio for the Revolving Credit
Advances. Consistent with the foregoing, during those periods between Settlement Dates in which
Agent has advanced more than its Pro Rata Share of the Revolving Credit Advances, the Daily
Interest Amount allocable to the Lenders will be reduced and the interest accrued on such amounts
shall be for the account of Agent.




     (b) Availability of Lender’s Pro Rata Share. Agent may assume that each Lender will
make its Pro Rata Share of each Revolving Credit Advance available to Agent on each Settlement
Date. If such Pro Rata Share is not, in fact, paid to Agent by such Lender when due, Agent will be
entitled to recover such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith upon
Agent’s demand, Agent shall promptly notify Borrower and Borrower shall immediately repay such
amount to Agent. Nothing in this Section 9.9 or elsewhere in this Agreement or the other
Loan Documents shall be deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Revolving Loan Commitments hereunder or to
prejudice any rights that Borrower may have against any Lender as a result of any default by such
Lender hereunder.



     (c) Return of Payments.



          (i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that
a related payment has been or will be received by Agent from Borrower
and such related payment is not received by Agent, then Agent will be entitled to recover such
amount from such Lender on demand without set-off, counterclaim or deduction of any kind.




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




51









 








     (d) Non-Funding Lenders. The failure of any Lender (such Lender, a “Non-Funding
Lender”) to make any Revolving Credit Advance to be made by it on the date specified therefor
shall not relieve any other Lender (each such other Lender, an “Other Lender”) of its
obligations to make a Revolving Credit Advance on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make a Revolving Credit Advance
to be made by such Non-Funding Lender, and no Other Lender shall have any obligation to Agent or
any Other Lender for the failure by such Non-Funding Lender. Notwithstanding anything set forth
herein to the contrary so long as any Lender continues to be a Non-Funding Lender, such Non-Funding
Lender shall not have any voting or consent rights under or with respect to any Loan Document or
constitute a “Lender” (or be included in the calculation of “Requisite Lenders” hereunder) for any
voting or consent rights under or with respect to any Loan Document.



     (e) Dissemination of Information. Agent will use reasonable efforts to provide
Lenders with any notice of Default or Event of Default received by Agent from, or delivered by
Agent to, any Credit Party, with notice of any Event of Default of which Agent has actually become
aware and with notice of any action taken by Agent following any Event of Default; provided,
however, that Agent shall not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable solely to Agent’s gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction. Lenders acknowledge that Borrower is
required to provide Financial Statements and Collateral Reports to certain of the Lenders in
accordance with Schedules G and H hereto and agree that Agent shall have no duty to
provide the same to Lenders.



     (f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or
enforce its rights arising out of this Agreement or the Notes (including, without limitation,
exercising any rights of set-off) without first obtaining the prior written consent of Agent or
Requisite Lenders, it being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the direction or with the
consent of the Agent.



     (g) Regulation A. Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or a portion of its rights under this
Agreement (including, without limitation, the Advances owing to it and the Note held
by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.



     10. SUCCESSORS AND ASSIGNS



     10.1 Successors and Assigns. This Agreement and the other Loan Documents shall be binding
on and shall inure to the benefit of each Credit Party signatory hereto, Agent, Lenders and their
respective successors and assigns (including, in the case of any Credit Party, a
debtor-in-possession on behalf of such Credit Party), except as otherwise provided herein or
therein. No Credit Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan Documents without the
prior express written consent of Agent and Requisite Lenders. Any such purported assignment,
transfer, hypothecation or other conveyance by any Credit Party signatory hereto without the prior
express written consent of Agent and Requisite Lenders shall be void. The terms and provisions of
this Agreement are for the purpose of defining the relative rights and obligations of each Credit
Party signatory hereto, Agent and Lenders with respect to the transactions contemplated hereby and
no Person shall be a third party beneficiary of any of the terms and provisions of this Agreement
or any of the other Loan Documents.



52









 





     11. MISCELLANEOUS



     11.1 Complete Agreement; Modification of Agreement. The Loan Documents constitute the
complete agreement between the parties with respect to the subject matter thereof and may not be
modified, altered or amended except as set forth in Section 11.2 below. Any letter of
interest, commitment letter, fee letter (other than the GE Capital Fee Letter) or confidentiality
agreement between any Credit Party and Agent or any Lender or any of their respective affiliates,
predating this Agreement and relating to a financing of substantially similar form, purpose or
effect shall be superseded by this Agreement.



     11.2 Amendments and Waivers.



     (a) Except as otherwise provided below, no amendment, modification, termination or waiver of
any provision of this Agreement or any of the Notes, or any consent to any departure by any Credit
Party therefrom, shall in any event be effective unless the same shall be in writing and signed by
Agent and each Credit Party signatory hereto, and by Requisite Lenders.



     (b) No amendment, modification, termination or waiver of or consent with respect to any
provision of this Agreement which increases the percentage advance rates set forth in the
definition of Borrowing Base, shall be effective unless the same shall be in writing and signed by
Agent, all Lenders and each Credit Party signatory hereto.



     (c) No amendment, modification, termination or waiver shall, unless in writing and signed by
Agent and each Lender directly affected thereby, do any of the following: (i) increase the
principal amount of the Commitment of any Lender (and all Lenders shall be
deemed to be affected thereby) or amend the definition of Borrowing Base or any component
thereof which would have the effect of increasing the credit available to Borrower hereunder; (ii)
reduce the principal of, rate of interest on or Fees payable with respect to any Loan, Letter of
Credit Obligations or Eligible Trade L/C Obligations of any affected Lender; (iii) extend the final
scheduled maturity date of the principal amount of any Loan of any affected Lender; (iv) waive,
forgive, defer, extend or postpone any payment of interest or Fees as to any affected Lender; (v)
release any Guaranty of a Material Credit Party; (vi) except as otherwise permitted herein or in
the other Loan Documents, release or subordinate the Agent’s Liens upon, or permit any Credit Party
to sell or otherwise dispose of, any Collateral with a value exceeding $5,000,000 in the aggregate
other than sales of Inventory in the ordinary course; (vii) increase the L/C Sublimit (and all
Lenders shall be deemed to be affected thereby); (viii) change the percentage of the Revolving Loan
Commitments or of the aggregate unpaid principal amount of the Loans which shall be required for
Lenders or any of them to take any action hereunder; and (ix) amend or waive Section 8.2(c) or
(d) or this Section 11.2 or the definitions of the terms used in Section 8.2(c) or
(d) or this Section 11.2 insofar as the definitions affect the substance of Section
8.2(c) or (d) or this Section 11.2. Without limiting the foregoing, no amendment,



53









 







modification, termination or waiver which (i) impacts, affects or involves the Term Collateral or
(ii) impacts the Term Lender in a manner different than the impact upon the Revolving Lenders shall
be effective without the consent of the Term Lender and Requisite Lenders. Furthermore, no
amendment, modification, termination or waiver affecting the rights or duties of Agent under this
Agreement or any other Loan Document shall be effective unless in writing and signed by Agent, in
addition to Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for the specific purpose
for which it was given. No amendment, modification, termination or waiver shall be required for
Agent to take additional Collateral pursuant to any Loan Document. No notice to or demand on any
Credit Party in any case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 11.2 shall be
binding upon each holder of the Notes at the time outstanding and each future holder of the Notes.



     (d) If, in connection with any proposed amendment, waiver or termination (a “Proposed
Change”):



          (i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is
obtained, but the consent of other Lenders whose consent is required is not obtained (each such
Lender whose consent is not obtained as described in this clause (i) or in clause
(ii) below being referred to as a “Non Consenting Lender”), or




          (ii) requiring the consent of Requisite Lenders, the consent of Lenders holding 50.1% of the
aggregate Revolving Loan Commitments is obtained, but the consent of Requisite Lenders is not
obtained,



then, so long as Agent is not a Non-Consenting Lender, Agent shall have the right in its sole
discretion (but shall be under no obligation) to purchase from such Non-Consenting Lenders, and
such Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent,
all of the Revolving Loan Commitments of such Non-Consenting Lender for an amount
equal to the principal balance of all Loans held by the Non-Consenting Lender and all accrued
interest and Fees with respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Lender Assignment Agreement.




     (e) Upon indefeasible payment in full in cash and performance of all of the Obligations (other
than indemnification Obligations under Section 1.13) and termination of the Revolving Loan
Commitments, and so long as no suits, actions, proceedings or claims are pending or threatened
against any Indemnified Person asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrower termination statements, termination letters regarding
bailee agreements and blocked account agreements and other documents necessary or appropriate to
evidence the termination of the Liens securing payment of the Obligations.



54









 





     11.3 Fees and Expenses. Borrower shall reimburse Agent for all out-of-pocket expenses
incurred in connection with the preparation of the Loan Documents (including the reasonable fees
and expenses of all of its special loan counsel, advisors, consultants and auditors retained in
connection with the Loan Documents and advice in connection therewith). Borrower shall reimburse
Agent (and, with respect to clauses (c), (d) and (e) below, each Lender)
for all fees, costs and expenses, including the fees, costs and expenses of counsel (including the
allocated cost of in-house counsel) or other advisors (including environmental and management
consultants) for advice, assistance, or other representation in connection with:



     (a) the forwarding to Borrower or any other Person on behalf of Borrower by Agent of the
proceeds of the Loans;



     (b) any amendment, modification or waiver of, or consent with respect to, any of the Loan
Documents or advice in connection with the administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;



     (c) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent,
any Lender, Borrower or any other Person) in any way relating to the Collateral, any of the Loan
Documents or any other agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a case commenced by or
against Borrower or any other Person that may be obligated to Agent by virtue of the Loan
Documents;



     (d) any attempt to enforce any rights of Agent or any Lender against any or all of the Credit
Parties or any other Person that may be obligated to Agent or any Lender by virtue of any of the
Loan Documents;



     (e) any work-out or restructuring of the Loans during the pendency of one or more Events of
Default, but only as to Persons who are Lenders as of the Closing Date and who continue to hold
7.5% or more of the total Revolving Loan Commitments;



     (f) efforts to (i) consistent with the terms of the Loan Documents, monitor the Loans or any
of the other Obligations, (ii) consistent with the terms of the Loan Documents verify, observe or
assess any of the Credit Parties or their respective affairs, and (iii) protect, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;


including, without limitation, all the attorneys’ and other professional and service providers’
fees arising from such services, including those in connection with any appellate proceedings; and
all expenses, costs, charges and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or actions described in this
Section 11.3 shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include: fees, costs and
expenses of accountants, environmental advisors, appraisers, investment bankers, management and
other consultants and paralegals; court costs and expenses; photocopying and duplication expenses;
court reporter fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for travel, lodging and
food paid or incurred in connection with the performance of such legal or other advisory services.




55









 








     11.4 No Waiver. Agent’s or any Lender’s failure, at any time or times, to require strict
performance by the Credit Parties of any provision of this Agreement and any of the other Loan
Documents shall not waive, affect or diminish any right of Agent or such Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether the same is prior or
subsequent thereto and whether the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of any Credit Party contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by Agent or any Lender, unless such waiver or
suspension is by an instrument in writing signed by an officer of or other authorized employee of
Agent and Requisite Lenders and directed to Borrower specifying such suspension or waiver.



     11.5 Remedies. Agent’s and Lenders’ rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Agent or any Lender may have
under any other agreement, including the other Loan Documents, by operation of law or otherwise.
Recourse to the Collateral shall not be required.



     11.6 Severability. Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement.



     11.7 Conflict of Terms. Except as otherwise provided in this Agreement or any of the other
Loan Documents by specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with, any provision in
any of the other Loan Documents, the provision contained in this Agreement shall govern and
control.



     11.8 Authorized Signature. Until Agent shall be notified by Borrower to the contrary, the
signature upon any Notice of Revolving Credit Advance, Notice of Swing Line Advance, Notice of
Continuation/Conversion or other notice or certificate delivered in accordance herewith delivered
pursuant hereto of an officer of Borrower listed on Schedule 11.8 shall bind Borrower and
be deemed to be the act of Borrower affixed pursuant to and in accordance with resolutions duly
adopted by Borrower’s Board of Directors.



     11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS,
IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, CITY OF CHICAGO, ILLINOIS



56









 







SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER, AGENT
AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED,
THAT AGENT, LENDERS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, CITY OF CHICAGO, ILLINOIS AND, PROVIDED,
FURTHER NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF AGENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
BORROWER AT THE ADDRESS SET FORTH IN SCHEDULE J OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.



     11.10 Notices. Except as otherwise provided herein, whenever it is provided herein that any
notice, demand, request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other parties, or whenever any of the parties
desires to give or serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other communication shall be
in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier
of actual receipt and three (3) Business Days after deposit in the United States Mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (b) upon transmission,
when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile
promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 11.10), (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges, prepaid or (d) when delivered, if hand-delivered by messenger,
all of which shall be addressed to the party to be notified and sent to the address or facsimile
number indicated on Schedule J or to such other address (or facsimile number) as may be
substituted by notice given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower or Agent) designated on Schedule J to receive copies shall in
no way adversely affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.



57









 





     11.11 Section Titles. The Section titles and Table of Contents contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto.



     11.12 Counterparts. This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.



     11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND BORROWER ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.



     11.14 Press Releases. Each Credit Party agrees that neither it nor its Affiliates will in
the future issue any press release or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement or the other Loan Documents without at least two (2)
Business Days’ prior notice to GE Capital and without the prior written consent of GE Capital
unless (and only to the extent that) such Credit Party or Affiliate is required to do so by law or
regulation and then, in any event, such Credit Party or Affiliate will consult with GE Capital
before issuing such press release or other public disclosure. Each Credit Party consents to the
publication by Agent of a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement and after such publication, Borrower may make public
disclosure of the same information set forth in the tombstone. Furthermore, Borrower may make
private disclosures to its suppliers of the existence of this Agreement, the Maximum Amount
hereunder, and the fact that GE Capital acts as Agent hereunder. Agent reserves the right to
provide to industry trade organizations information necessary and customary for inclusion in league
table measurements.



     11.15 Reinstatement. This Agreement shall remain in full force and effect and continue to
be effective should any petition be filed by or against Borrower for liquidation or reorganization,
should Borrower become insolvent or make an assignment of the benefit of any creditor or creditors
or should a receiver or trustee be appointed for all or any significant part of Borrower’s assets,
and shall continue to be effective or to be reinstated, as the case may be, if at any time payment
and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.



58









 





     11.16 Advice of Counsel. Each of the parties represents to each other party hereto that it
has discussed this Agreement and, specifically, the provisions of Sections 11.9 and
11.13, with its counsel.



     11.17 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.



     11.18 Confidentiality. Agent and Lenders shall maintain as confidential all nonpublic
information provided to them by the Credit Parties for a period of two (2) years following the
Commitment Termination Date, provided that, Agent and Lenders may disclose such
information (i) to Persons employed or engaged by Agent or any Lender in evaluating, approving.
structuring or administering the Loans and the Revolving Loan Commitments, (ii) to any bona fide
assignee or participant that has agreed to comply with the covenant contained in this Section
11.18 (and any such bona fide assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (i) above), (iii) as required or
requested by any Governmental Authority, (iv) pursuant to legal process, or (v) in connection with
the exercise of any remedy under the Loan Documents; provided, further that, the foregoing
restrictions shall cease to apply to any information that becomes publicly available other than by
the actions of Agent, Lenders or any Persons described in clauses (i) or (ii)
above.



[signature pages follow]





59









 





          IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.




	 	 	 	 	 	 	 
	 	 	BORROWER:  
	 
	 	 	 	 	 	 
	 	 	WILSONS LEATHER HOLDINGS INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stacy Kruse	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Chief Financial Officer and Treasurer	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Revolving Loan Commitment:

$65,000,000 (including $10,000,000

Swing Line Commitment)	 	GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent, Lender and Swing Line Lender
	 
	 	 	 	 	 	 
	Term Loan B Commitment:
	 	 	 	 	 	 
	$20,000,000

	 	By:
	 	/s/ Kristina M. Miller	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Duly Authorized Signatory	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Revolving Loan Commitment:

$50,000,000	 	WELLS FARGO RETAIL FINANCE, LLC, as

Lender and Syndication Agent
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Didi Do	 	 
	 

	 	Title:
	 	 

AVP
	 	 
	 

	 	 	 	 	 	 






S-1









 






          The undersigned are executing this Credit Agreement in their capacity as Credit Parties, but
only as to the representations, warranties and covenants contained in Sections 3, 5
and 6:




	 	 	 	 	 
	Wilsons The Leather Experts Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stacy A. Kruse	 	 
	 

	 	 	 	 
	Title:

	 	Chief Financial Officer and Treasurer	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Wilsons Center, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stacy A. Kruse	 	 
	 

	 	 	 	 
	Title:

	 	Chief Financial Officer and Treasurer	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Rosedale Wilsons, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stacy A. Kruse	 	 
	 

	 	 	 	 
	Title:

	 	Chief Financial Officer and Treasurer	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	River Hills Wilsons, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stacy A. Kruse	 	 
	 

	 	 	 	 
	Title:

	 	Chief Financial Officer and Treasurer	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Bermans The Leather Experts Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stacy A. Kruse	 	 
	 

	 	 	 	 
	Title:

	 	Chief Financial Officer and Treasurer	 	 
	 

	 	 	 	 






S-2









 






SCHEDULE A




DEFINITIONS




          Capitalized terms used in this Agreement shall have (unless otherwise provided elsewhere in
this Agreement) the following respective meanings and all section references in the following
definitions shall refer to Sections of this Agreement:




          “Account Debtor” shall mean any Person who may become obligated to any Credit Party
under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles
(including a payment intangible).




          “Accounts” shall mean all “accounts,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, including (a) all accounts receivable, other
receivables, book debts and other forms of obligations (other than forms of obligations evidenced
by Chattel Paper or Instruments) now owned or hereafter received or acquired by or belonging or
owing to any Credit Party (including any such obligations that may be characterized as an account
or contract right under the Code), (b) all of each Credit Party’s rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods or services, (c) all of
each Credit Party’s rights to any goods represented by any of the foregoing (including, without
limitation, unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to any Credit
Party for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of
insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered or to be rendered
by such Credit Party or in connection with any other transaction (whether or not yet earned by
performance on the part of such Credit Party) now or hereafter in existence, (e) all health care
insurance receivables and (f) all collateral security of any kind now or hereafter in existence,
given by any Account Debtor or any other Person with respect to any of the foregoing.




          “Advance” shall mean any Revolving Credit Advance or Swing Line Advance, as the
context may require.




          “Affiliate” shall mean, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary,
five percent (5%) or more of the Stock having ordinary voting power in the election of directors of
such Person, (b) each Person that controls, is controlled by or is under common control with such
Person or (c) each of such Person’s officers, directors, joint venturers and partners. For the
purposes of this definition, “control” of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management of policies, whether
through the ownership of voting securities, by contract or otherwise; provided,
however, that the term “Affiliate” shall specifically exclude Agent and each
Lender.




          “Agent” shall mean GE or its successor appointed pursuant to Section 9.7.




A-1









 








          “Agreement” shall mean the Fifth Amended and Restated Credit Agreement by and among
Borrower, GE Capital, as Lender, Term Lender, Swing Line Lender and Agent and the other Lenders
signatory, as amended, modified, restated or extended from time to time.




          “Amended and Restated Security Agreement” shall mean the Security Agreement and the
Supplemental Security Agreement, as amended and restated as of June 19, 2001 and as further
amended, modified or restated, from time to time and each Supplemental Security Agreement entered
into thereafter.




          “Appendices” shall have the meaning assigned to it in the recitals to this Agreement.




          “Applicable Documentary L/C Margin” shall mean the per annum letter of credit fee
payable with respect to Eligible Trade L/C Obligations incurred in connection with documentary
letters of credit, determined by reference to Section 1.6.




          “Applicable Margins” shall mean the Applicable Index Margin, Applicable LIBOR Margin,
Applicable Standby L/C Margin, Applicable Documentary L/C Margin and Applicable Swing Line Margin.




          “Applicable Index Margin” shall mean a per annum rate of interest payable in addition
to the Index Rate on Index Rate Loans, determined by reference to Section 1.6.




          “Applicable LIBOR Margin” shall mean a per annum rate of interest payable in addition
to the LIBOR Rate on LIBOR Rate Loans, determined by reference to Section 1.6.




          “Applicable Standby L/C Margin” shall mean the per annum letter of credit fee payable
with respect to Letter of Credit Obligations incurred in connection with standby letters of credit,
determined by reference to Section 1.6.




          “Applicable Swing Line Margin” shall mean the per annum rate of interest payable in
addition to the LIBOR Rate on Swing Line Loans, determined by reference to Section 1.6.




          “Approved Shipper” shall mean any reputable and creditworthy shipper or freight
forwarder that has entered into a bailee letter with Agent on terms acceptable to Agent regarding
in-transit Inventory and which transports finished goods Inventory from overseas to Borrower’s
Distribution Centers or, at Borrower’s direction, to Store Guarantors’ Stores.




          “Assignment Agreement” shall mean an agreement substantially in form attached hereto
as Exhibit 9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by,
Agent whereby a portion of any or all of the Revolving Loan Commitments are assigned to a Lender
after the Closing Date.




          “Bermans” means Bermans The Leather Experts Inc., a Delaware corporation.




          “Borrower” shall have the meaning assigned thereto in the recitals to this Agreement.




A-2









 








          “Borrowing Availability” shall have the meaning assigned to it in Section
1.1(a).




          “Borrowing Availability Utilizer” shall mean a fraction (a) the numerator of which is
the difference of (i) the average daily Borrowing Availability minus (ii) the average daily
closing balances of the Revolving Loan, Letter of Credit Obligations, Eligible Trade L/C
Obligations and the Swing Line Loan outstanding during such Fiscal Quarter and (b) the denominator
of which is the average daily Borrowing Availability during such Fiscal Quarter as calculated by
the Agent.




          “Borrowing Base” shall mean, as of any date of determination, the sum of:





     (a) the difference of (A) the sum of (i) 90% of the NOLV of Eligible Inventory-Apparel
plus (ii) the lesser of (x) 10% of the sum of (1) the NOLV of Eligible
Inventory-Apparel, (2) the NOLV of Eligible Inventory-Wholesale, (3) Eligible
Accounts-Retail, (4) Eligible Accounts-Wholesale, (5) the NOLV of Inventory-Apparel (which
shall exist upon a draw on the applicable Eligible Trade L/C-Retail) and (6) the NOLV of
Eligible Inventory-Wholesale (which shall exist upon a draw on the applicable Eligible Trade
L/C-Wholesale) or (y) the amount of the then outstanding principal balance of Term Loan B
minus (B) the book value of Eligible In-Transit Inventory-Retail which is in excess
of (i) 40% of the book value of all Eligible Inventory-Apparel during the period from and
including the first day of the Fiscal Month of July to and including December 15 of each
year, and (ii) 25% of the book value of all Eligible Inventory-Apparel during the period
from and including December 16 of each year to but excluding the first day of the Fiscal
Month of July of the next year; plus




     (b) the lesser of (i) $10,000,000 or (ii) 50% of (A) the book value of Eligible
Inventory-Wholesale (including Eligible In-Transit Inventory-Wholesale) at all times
minus (B) the book value of Eligible In-Transit Inventory-Wholesale in excess of
$5,000,000 at all times; plus




     (c) 90% of the book value of Eligible Accounts-Retail at all times; plus




     (d) the lesser of (i) $10,000,000 or (ii) 90% of the book value of Eligible
Accounts-Wholesale at all times; plus




     (e) 90% of the NOLV of the Inventory-Apparel, which shall exist upon a draw on the
applicable Eligible Trade L/C-Retail; plus




     (f) 50% of the book value of the Eligible Inventory-Wholesale, which shall exist upon a
draw on the applicable Eligible Trade L/C-Wholesale;




     less the Term Loan B Reserve, less the Minimum Excess Availability Reserve and less any
additional Reserve established by Agent at such time.



          “Borrowing Base Certificate” shall mean a certificate to be executed and delivered
from time to time by Borrower in the form attached to this Agreement as Exhibit 4.1(b).




A-3









 








          “Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the State of Illinois or the State of Minnesota and
in reference to LIBOR Loans shall mean any such day that is also a LIBOR Business Day.




          “Capital Expenditures” shall mean all payments during any measuring period (including
the principal portion of payments under Capital Leases, installment purchase agreements and other
similar purchase money financing arrangements) for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of more than one year and
that are required to be capitalized under GAAP.




          “Capital Lease” shall mean, with respect to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, either
would be required to be classified and accounted for as a capital lease on a balance sheet of such
Person or otherwise be disclosed as such in a note to such balance sheet.




          “Capital Lease Obligation” shall mean, with respect to any Capital Lease, the amount
of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance
sheet of such lessee in respect of such Capital Lease or otherwise be disclosed in a note to such
balance sheet.




          “Cash Management Systems” shall have the meaning assigned to it in Section
1.8.




          “Change of Control” shall mean any event, transaction or occurrence as a result of
which (a) Ultimate Parent shall cease to own and control all of the economic and voting rights
associated with all of the outstanding capital stock of First Intermediate Parent or (b) First
Intermediate Parent shall cease to own and control all of the economic and voting rights associated
with all of the outstanding capital stock of each of its direct and indirect Subsidiaries, except
as permitted under Section 6.1 and Section 6.8 of this Agreement and except for the
Joint Ventures and Foreign Subsidiaries or (c) any person or group of persons (within the meaning
of the Securities Exchange Act of 1934, as amended), other than the Peninsula Investment Partners,
L.P. (“Peninsula”) (and Persons which, as of the Closing Date, are Affiliates of
Peninsula), shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of
30% or more of the issued and outstanding shares of capital Stock of Ultimate Parent having the
right to vote for the election of directors of Ultimate Parent under ordinary circumstances or (d)
during any period of twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Ultimate Parent (together with any new directors whose
election by the board of directors of Ultimate Parent or whose nomination for election by
stockholders of Ultimate Parent was approved by a vote of at least a majority of the directors then
still in office who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office.




          “Charges” shall mean all federal, state, county, city, municipal, local, foreign or
other governmental taxes (including, without limitation, taxes owed to the PBGC at the time due and
payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a)
the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of
any Credit Party, (b) any Credit Party’s ownership or use of any properties or other assets, or (e)
any other aspect of any Credit Party’s business.




A-4









 








          “Chattel Paper” shall mean any “chattel paper,” as such term is defined in the Code,
including electronic chattel paper, now owned or hereafter acquired by any Credit Party.




          “Closing Date” shall mean December 29, 2006.




          “Code” shall mean the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of Illinois; provided, that to the extent that the Code
is used to define any term herein or in any Loan Document and such term is defined differently in
different Articles or Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies
with respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State of Illinois, the
term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions.




          “Collateral” shall mean the property covered by the Amended and Restated Security
Agreement and the other Collateral Documents and any other personal property, tangible or
intangible, now existing or hereafter acquired, that may at any time be or become subject to a
security interest or Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations, including, but not limited to, the Term Collateral.




          “Collateral Documents” shall mean the Amended and Restated Security Agreement, the
Consignment Agreement, the Pledge Agreements, the Guaranties, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security Agreement and all similar agreements entered
into guaranteeing payment of, or granting a Lien upon property as security for payment of, the
Obligations.




          “Collateral Reports” shall mean the reports with respect to the Collateral referred to
in Schedule H.




          “Collection Account” shall mean that certain account of Agent, account number 50279513
in the name of Agent at DeutscheBank Trust Company Americas, New York, NY or any substitute
Collection Account established in accordance with Schedule E hereto.




          “Commitments” means (a) as to any Lender, the aggregate of such Lender’s Revolving
Loan Commitment (including without duplication the Swing Line Lender’s Swing Line Commitment as a
subset of its Revolving Loan Commitment) and Term Loan B Commitment as set forth on the signature
pages hereto or in the most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate of all Lenders’ Revolving Loan Commitments (including without duplication
the Swing Line Lender’s Swing Line Commitment as a subset of its Revolving Loan Commitment) and the
Term Loan B Commitment of the Term Lender, which aggregate commitment shall be One Hundred Thirty
Five Million Dollars ($135,000,000) on the Closing Date, as to each of clauses (a) and
(b), as such Commitments may be reduced, amortized or adjusted from time to time in accordance
with this Agreement.




A-5









 








          “Commitment Termination Date” shall mean the earliest of (a) June 30, 2010, (b) the
date of termination of Lenders’ obligations to make Advances and/or incur Letter of Credit
Obligations and Eligible Trade L/C Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible prepayment in full by Borrower
of the Loans and the cancellation and return of all Letters of Credit or the cash collateralization
of all Letter of Credit Obligations and Eligible Trade L/C Obligations pursuant to Schedule
B, and the permanent reduction of the Revolving Loan Commitment and the Swing Line Commitment
to zero dollars ($0), in accordance with the provisions of Section 1.3(c).




          “Concentration Account” shall have the meaning assigned to it on Schedule E.




          “Consignment Agreement” shall mean the Amended and Restated Master Consignment
Agreement dated as of April 23, 2002 among Borrower and each of the Store Guarantors, as amended,
restated or otherwise modified from time to time.




          “Contracts” shall mean all “contracts,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, in any event, including all contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Credit Party may now or hereafter have any right, title or interest, including, without
limitation, any and all agreements relating to the terms of payment or the terms of performance of
any Account.




          “Credit Parties” shall mean Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent, Third Intermediate Parent, Borrower, and each other Store Guarantor.




          “Default” shall mean any event which, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.




          “Default Rate” shall have the meaning assigned to it in Section 1.5(d).




          “Deposit Accounts” shall mean all “deposit accounts” as such term is defined in the
Code, now or hereafter held in the name of any Credit Party.




          “Distribution Center” shall mean the warehouse and distribution center operated by
Borrower, located at 7401 Boone Avenue North, Brooklyn Park, Minnesota 55428.




          “Documents” shall mean all “documents,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located.




          “Dollars or $” shall mean lawful currency of the United States of America.




A-6









 








          “EBITDA” means, with respect to Ultimate Parent for any fiscal period, without
duplication, an amount equal to (a) consolidated net income of Ultimate Parent for such period,
determined in accordance with GAAP, minus (b) the sum of (i) income tax credits, (ii)
interest
income, (iii) gain from extraordinary items for such period, (iv) any aggregate net gain (but
not any aggregate net loss) during such period arising from the sale, exchange or other disposition
of capital assets by Ultimate Parent (including any fixed assets, whether tangible or intangible,
all inventory sold in conjunction with the disposition of fixed assets and all securities), and (v)
any other non-cash gains that have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of Ultimate Parent for such
period in accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) interest expense, (iii) loss from extraordinary items for such
period, (iv) depreciation and amortization for such period, (v) amortized debt discount for such
period, and (vi) the amount of any deduction to consolidated net income as the result of any grant
to any members of the management of Ultimate Parent of any Stock, in each case to the extent
included in the calculation of consolidated net income of Ultimate Parent for such period in
accordance with GAAP, but without duplication. For purposes of this definition, the following
items shall be excluded in determining consolidated net income of Ultimate Parent: (1) the income
(or deficit) of any other Person accrued prior to the date it became a Subsidiary of, or was merged
or consolidated into, Ultimate Parent or any of Ultimate Parent’s Subsidiaries; (2) the income (or
deficit) of any other Person (other than a Subsidiary) in which Ultimate Parent has an ownership
interest, except to the extent any such income has actually been received by Ultimate Parent in the
form of cash dividends or distributions; (3) the undistributed earnings of any Subsidiary of
Ultimate Parent to the extent that the declaration or payment of dividends or similar distributions
by such Subsidiary is not at the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of income accrued during
such period; (5) any write-up of any asset; (6) any net gain from the collection of the proceeds of
life insurance policies; (7) any net gain arising from the acquisition of any securities, or the
extinguishment, under GAAP, of any Indebtedness, of Ultimate Parent; (8) in the case of a successor
to Ultimate Parent by consolidation or merger or as a transferee of its assets, any earnings of
such successor prior to such consolidation, merger or transfer of assets and (9) any deferred
credit representing the excess of equity in any Subsidiary of Ultimate Parent at the date of
acquisition of such Subsidiary over the cost to Ultimate Parent of the investment in such
Subsidiary.




          “Eligible Accounts” shall mean the Eligible Accounts-Retail and Eligible
Accounts-Wholesale.




          “Eligible Accounts-Retail” shall have the meaning assigned to it in Section
1.22 hereof.




          “Eligible Accounts-Wholesale” shall have the meaning assigned to it in Section
1.22 hereof.




          “Eligible In-Transit Inventory” shall mean Eligible In-Transit Inventory-Retail and
Eligible In-Transit Inventory-Wholesale.




          “Eligible In-Transit Inventory-Retail” shall have the meaning assigned to it in
Section 1.21 hereof.




A-7









 








          “Eligible In-Transit Inventory-Wholesale” shall have the meaning assigned to it in
Section 1.21 hereof.




          “Eligible Inventory” shall mean Eligible Inventory-Apparel and Eligible
Inventory-Wholesale as set forth in Section 1.19 and Section 1.20 hereof.




          “Eligible Inventory-Apparel” shall have the meaning assigned to it in Section
1.19 hereof.




          “Eligible Inventory-Wholesale” shall have the meaning assigned to it in Section
1.20 hereof.




          “Eligible Trade L/C Obligations” shall mean all outstanding obligations incurred by
Agent and Lenders at the request of Borrower, whether direct or indirect, contingent or otherwise,
due or not due, in connection with the issuance of Eligible Trade L/Cs by Agent or a Subsidiary
thereof or a reimbursement agreement or guaranty by Agent with respect to Eligible Trade L/Cs. The
amount of any such Eligible Trade L/C Obligations shall equal the maximum amount which may be
payable by Agent or Lenders thereupon or pursuant thereto.




          “Eligible Trade L/Cs” shall mean Eligible Trade L/Cs-Retail and Eligible Trade
L/Cs-Wholesale.




          “Eligible Trade L/Cs-Retail” shall have the meaning assigned to it in Section
1.23 hereof.




          “Eligible Trade L/Cs-Wholesale” shall have the meaning assigned to it in Section
1.23 hereof.




          “Environmental Laws’ shall mean all federal, state, local and foreign laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as amend or supplemented
from time to time, and any applicable judicial or administrative interpretation thereof, including
any applicable judicial or administrative order, consent decree or judgment, relative to the
applicable real estate, relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include, but are not limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et seq.) (“CERCLA”); the Hazardous
Material Transportation Act, as amended (49 U.S.C. §§ 1801 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. §§ 136 et seq.); the
Resource Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901 et seq.) (“RCRA”);
the Toxic Substance Control Act, as amended (15 U.S.C. §§ 2601 et seq.); the Clean Air Act,
as amended (42 U.S.C. §§ 740 et seq.); the Federal Water Pollution Control Act, as amended
(33 U.S.C. §§ 1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
§§ 651 et seq.) (“OSHA”); and the Safe Drinking Water Act, as amended (42 U.S.C. §§ 300(f)
et seq.), and any and all regulations promulgated thereunder, and all analogous state,
local and foreign counterparts or equivalents and any transfer of ownership notification or
approval statutes.




A-8









 








          “Environmental Liabilities and Costs” shall mean all liabilities, obligations,
responsibilities, remedial actions, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies), fines, penalties,
sanctions and interest incurred as a result of any claim, suit, action or demand by any person or
entity, whether based in contract, tort, implied or, express warranty, strict liability, criminal
or civil statute or common law (including any thereof arising under any Environmental Law, permit,
order or agreement with any Governmental Authority) and which relate to any health or safety
condition regulated under any Environmental Law or in connection with any other environmental
matter or Release, threatened Release or the presence of a Hazardous Material or threatened Release
of a Hazardous Material.




          “Environmental Permits” shall mean all permits, licenses, administrative orders,
consent orders, consent decrees, governmental agency agreements, or other written documents
detailing required environmental performance expected of or permitted by any Credit party by
Governmental Authority.




          “Equipment” means all “equipment,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located and, in any event, including all such
Credit Party’s machinery and equipment, including processing equipment, conveyors, machine tools,
data processing and computer equipment, including embedded software and peripheral equipment and
all engineering, processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks,
forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and Fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for
any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights
with respect thereto, and all products and proceeds thereof and condemnation awards and insurance
proceeds with respect thereto.




          “ERISA” shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any regulations promulgated
thereunder.




          “ERISA Affiliate” shall mean, with respect to any Credit Party, any trade or business
(whether or not incorporated) which, together with such Credit Party, are treated as s single
employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC with respect to any
period after the Closing Date.




          “ERISA Event” shall mean, with respect to any Credit Party or any ERISA Affiliate, (a)
any event described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal
of any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during
a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c)
the complete or partial withdrawal of any Credit Party or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC;




A-9









 







(f) the failure by any Credit Party or ERISA Affiliate to make when due required contributions
to a Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041 of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 of ERISA; or (i) the loss of a Qualified
Plan’s qualification or tax exempt status.




          “ESOP” shall mean a Plan which is intended to satisfy the requirements of Section
4975(e)(7) of the IRC.




          “Event of Default” shall have the meaning assigned to it in Section 8.1.




          “Fees” shall mean any and all fees payable to Agent or any Lender pursuant to this
Agreement or any of the other Loan Documents.




          “Financial Statements” shall mean the consolidated income statement, statements of
cash flows and balance sheets of Ultimate Parent and/or its Subsidiaries delivered in accordance
with Section 3.4 of this Agreement and Schedule G to this Agreement.




          “First Intermediate Parent” shall mean Wilsons Center, Inc., a Minnesota corporation.




          “Fiscal Month” shall mean any of the monthly accounting periods of Ultimate Parent.




          “Fiscal Quarter” shall mean any of the four 13 calendar week accounting periods of
Ultimate Parent ending on or about the last day of January, April, July and October of each year.




          “Fiscal Year” shall mean any of the annual accounting periods of Ultimate Parent
ending on the Saturday closest to the last day of January of each year.




          “Fixtures” means all “fixtures” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party.




          “Foreign Subsidiaries” shall mean Wilsons Leather of Hong Kong Limited, and any other
Subsidiary of the Ultimate Parent incorporated in a jurisdiction outside of the United States.




          “GAAP” shall mean generally accepted accounting principles in the United States of
America as from time to time in effect, consistently applied.




          “GE Capital” shall mean General Electric Capital Corporation, a New York corporation.




A-10









 








          “GE Capital Fee Letter” shall mean that certain letter agreement, dated as of May 24,
1999 and supplemented and superseded in part (as applicable) by those certain letter agreements
dated as of October 31, 2000, May 29, 2001, April 23, 2002, November 1, 2002, April 15, 2004, April
27, 2004, March 2, 2005, January 31, 2006 and December 29, 2006, each between GE Capital and
Borrower with respect to certain Fees to be paid from time to time by Borrower to GE Capital, and
as further amended, restated, supplemented or otherwise modified from time to time.




          “General Intangibles” shall mean all “general intangibles,” as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including all right, title and
interest that such Credit Party may now or hereafter have in or under any Contract (including the
Consignment Agreement, as amended or modified from time to time), all payment intangibles, customer
lists, any Licenses, copyrights, Trademarks, service marks, tradenames, business names, corporate
names, trade styles, logos and other source or business identifiers, patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in intellectual property, interests
in partnerships, joint ventures and other business associations, licenses, permits, copyrights,
trade secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark registration, or Trademark licensed under any
Trademark License), all rights and claims in or under insurance policies (including insurance for
fire, damage, loss and casualty, whether covering personal property, tangible rights or intangible
rights, all liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and other bank accounts,
rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.




          “Goods” shall mean all “goods” as defined in the Code, now owned or hereafter acquired
by any Credit Party, wherever located, including embedded software to the extent included in
“goods” as defined in the Code, manufactured homes, standing timber that is cut and removed for
sale and unborn young of animals.




          “Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity exercising executing,
legislative, judicial, regulatory or administrative functions of or pertaining to government.




A-11









 








          “Guaranteed Indebtedness” shall mean, as to any Person, any obligation of such Person
guaranteeing any indebtedness, lease, dividend, or other obligation (“primary obligation”)
of any other Person (the “primary obligor”) in any manner, including any obligation or
arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to
advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount
equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation
in respect of which such Guaranteed Indebtedness is made or (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably anticipated liability
(assuming full performance) in respect thereof.




          “Guaranties” shall mean, collectively, the Parent Guaranty, the Store Guarantors’
Guaranty and any other guaranty executed by any Guarantor in favor of Agent and Lenders in respect
of the Obligations.




          “Guarantors” shall mean Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent, Third Intermediate Parent, each other Store Guarantor, and each other Person,
if any, which executes a guarantee or other similar agreement in favor of Agent in connection with
the transactions contemplated by this Agreement and the other Loan Documents.




          “Hazardous Material” shall mean any substance, material or waste, the generation,
handling, storage, treatment or disposal of which is regulated by or forms the basis of liability
now or hereafter under, any Governmental Authority in any jurisdiction in which Borrower or any
Subsidiary thereof has owned, leased, or operated real property or disposed of hazardous materials,
or by any Federal government authority, including, without limitation, any material or substance
which is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous
substance,” “extremely hazardous waste” or “restricted hazardous waste” or other similar term or
phrase under any Environmental Laws, (b) petroleum, or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls (PCB’s), any radioactive substance, methane, volative
hydrocarbons or any industrial solvent, (c) designated as a “hazardous substance” pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. §§ 1251 et seq. (33 U.S.C. §§ 1321) or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. §1317), (d) defined as a “hazardous
waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. § 6901,
et seq. (42 U.S.C. § 6903), or (e) defined as a “hazardous substance” pursuant to Section
1012 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601
et seq. (42 U.S.C. § 9601).




          “Indebtedness” of any Person shall mean without duplication (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property payment for which is
deferred six (6) months or more, but excluding obligations to trade creditors incurred in the
ordinary course of business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to letters of credit,
bankers’ acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by
notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property

A-12









 








acquired by such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of such property ), (e)
all Capital Lease Obligations, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case whether contingent or
matured, (g) all obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement
designed to alter the risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred to above secured
by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, and (i) the Obligations.




          “Index Rate” shall mean the higher of (a) the highest of the most recently published
or announced prime, corporate, base, reference or similar benchmark rate, however designated,
announced by any of the five (5) largest member banks of the New York Clearing House Association
and (b) one half of one percent (.5%) per annum over the Federal funds rate, in each case as of the
date of determination. Changes in the rate of interest applicable to Index Rate Loans shall occur
simultaneously with changes in the Index Rate.




          “Index Rate Loan” shall mean the Revolving Loan or any portion thereof bearing
interest by reference to the Index Rate.




          “Instruments” shall mean all “instruments,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, and, in any event, including all
certificated securities, all certificates of deposit, and all promissory notes and other evidences
of indebtedness, other than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.




          “Intellectual Property” shall mean any and all Licenses, Trademarks, trade secrets and
customer lists.




          “Interest Payment Date” means (a) as to any Index Rate Loan and the Swing Line Loan,
the first Business Day of each month to occur while such Loan is outstanding, and (b) as to each
LIBOR Loan, the last day of the LIBOR Period applicable thereto; provided, however,
that, in addition to the foregoing, each of (x) the date upon which all of the Commitments have
been terminated and the Loans have been paid in full and (y) the Commitment Termination Date shall
be deemed to be an “Interest Payment Date” with respect to any interest which is then accrued under
this Agreement.




          “In-Transit Inventory” shall mean Inventory owned by Borrower consisting of leather
apparel and accessories and luggage and accessories and related products, which is in-transit from
the manufacturer thereof to the Distribution Centers or by drop ship to one or more Stores operated
by a Store Guarantor and reflected on Borrower’s monthly balance sheet as in-transit inventory.




A-13









 








          “Inventory” shall mean all “inventory,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located, and in any event including inventory,
merchandise, goods and other personal property that are held by or on behalf of any Credit Party
for sale or lease or are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods, or materials or supplies
of any kind, nature or description used or consumed or to be used or consumed in such Credit
Party’s business or in the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.




          “Inventory-Apparel” shall mean finished goods Inventory owned by Borrower valued on a
first-in, first-out basis in accordance with GAAP (and as set forth on the Borrower’s stock ledger
perpetual system).




          “Inventory-Wholesale” shall mean all product manufactured or purchased for sale
through wholesale channels and all product sold through wholesale channels.




          “Investment Property” shall mean all “investment property” as such term is defined in
the Code now owned or hereafter acquired by any Credit Party, wherever located, including (i) all
securities, whether certificated or uncertificated, including stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund
shares; (ii) all securities entitlements of any Credit Party, including the rights of any Credit
Party to any securities account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party; (iv) all commodity
contracts held by any Credit Party; and (v) all commodity accounts held by any Credit Party.




          “IRC” shall mean the Internal Revenue Code of 1986, as amended, and any successor
thereto.




          “IRS” shall mean the Internal Revenue Service, or any successor thereto.




          “Joint Venture” shall mean any business enterprise, regardless of form, domestic or
foreign, in which Ultimate Parent or any of its Subsidiaries has an equity interest which
constitutes less than 100% of the total equity thereof (other than any directors qualifying shares
or similar de minimus ownership interests required by the laws of any state or country), which
business enterprise is formed or acquired for business purposes permitted hereby (including a
Non-Core Business).




          “L/C Availability” shall have the meaning ascribed thereto in Section 1.2 of
this Agreement.




          “L/C Issuer” shall have the meaning assigned to such term in Schedule B and
shall mean, initially, GE Capital or a subsidiary of GE Capital.




          “L/C Fee” shall have the meaning ascribed thereto in Schedule B to this
Agreement.




A-14









 








          “L/C Sublimit” shall mean $75,000,000.




          “Lenders” shall mean GE Capital, the other Lenders named on the signature page of this
Agreement including without limitation the Swing Line Lender, and, if any such Lender shall decide
to assign all or any portion of the Obligations, such term shall include such assignee.




          “Letter of Credit Obligations” shall mean all outstanding obligations incurred by
Agent and Lenders at the request of Borrower, whether direct or indirect, contingent or otherwise,
due or not due, in connection with the issuance Letters of Credit by Agent or a Subsidiary thereof
or a reimbursement agreement or guaranty by Agent with respect to a Letter of Credit issued by any
other L/C Issuer. The amount of such Letter of Credit Obligations shall equal the maximum amount
which may be payable by Agent or Lenders pursuant thereto. This term expressly excludes Eligible
Trade L/C Obligations.




          “Letter-of-Credit Rights” shall mean letter-of-credit rights as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, including rights to payment or
performance under a letter of credit, whether or not such Credit Party, as beneficiary, has
demanded or is entitled to demand payment or performance.




          “Letters of Credit” shall mean documentary or standby letters of credit other than
Eligible Trade L/Cs issued for the account of Borrower by L/C Issuer, and bankers’ acceptances
issued by Borrower, for which Agent and Lenders have incurred Letter of Credit Obligations.




          “LIBOR Business Day” shall mean a Business Day on which banks in the city of London
are generally open for interbank or foreign exchange transactions.




          “LIBOR Loan” shall mean a Loan or any portion thereof bearing interest by reference to
the LIBOR Rate.




          “LIBOR Period” shall mean, with respect to any LIBOR Loan, each period commencing on a
LIBOR Business Day selected by Borrower pursuant to this Agreement and ending seven (7) days or,
one, two or three months thereafter, as selected by Borrower in an irrevocable notice to Agent as
set forth in Section 1.5(e); provided that the foregoing provision relating to
LIBOR Periods is subject to the following:





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




          (b) any LIBOR Period that would otherwise extend beyond the Commitment Termination Date
shall end two (2) LIBOR Business Days prior to such date;




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


A-15









 










          (d) Borrower shall select LIBOR Periods so as not to require a payment or prepayment of
any LIBOR Loan during a LIBOR Period for such Loan; and




          (e) Borrower shall select LIBOR Periods so that there shall be no more than ten (10)
separate LIBOR Loans outstanding at any one time.



          “LIBOR Rate” shall mean for each LIBOR Period, a rate of interest equal to:





          (a) the offered rate for deposits in United States Dollars for the applicable LIBOR
Period which appears on Telerate Page 3750 as of 11:00 a.m., London time, two (2) LIBOR
Business Days prior to the beginning of each LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be used); divided by




          (b) a number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on the day which
is two (2) LIBOR Business Days prior to the beginning of such LIBOR Period (including,
without limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve system or other governmental
authority having jurisdiction with respect thereto, as now and from time to time in effect)
for Eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation
D of such Board) which are required to be maintained by a member bank of the Federal Reserve
System.




          If such interest rates shall cease to be available from Telerate News Service, the
LIBOR Rate shall be determined from such financial reporting service or other information as
shall be mutually acceptable to Agent and Borrower.



          “License” shall mean any Trademark License or other written license of rights or
interests in Trademarks now held or hereafter acquired by any Credit Party.




          “Lien” shall mean any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any synthetic lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or comparable law of
any jurisdiction).




          “Litigation” shall have the meaning assigned to it in Section 3.13.




          “Loan Account” shall have the meaning assigned to it in Section 1.12.




A-16









 








          “Loan Documents” shall mean this Agreement, the Notes, the Collateral Documents and
all other agreement, instruments, documents and certificates identified in the
Schedule of Documents executed and delivered to, or in favor of, Agent and/or Lenders and
including (without limitation) all other pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore, now or hereafter executed by
or on behalf of any Material Credit Party, and delivered to Agent or any Lender in connection with
this Agreement or the transactions contemplated hereby. Any reference in this Agreement or any
other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto,
and all amendments, restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference becomes operative.




          “Loan Parties” shall mean Ultimate Parent, First Intermediate Parent, Borrower, Second
Intermediate Parent, and Third Intermediate Parent.




          “Loans” shall mean the Revolving Loan, the Term Loan B and the Swing Line Loan.




          “Material Adverse Effect” shall mean a material adverse effect on (a) the business,
assets, operations or financial or other condition of the Loan Parties considered as a whole, (b)
Borrower’s ability to pay any of the Loans or any of the other Obligations in accordance with the
terms thereof, (c) any material part of the Collateral or Agent’s Liens, on behalf of itself and
Lenders, on such Collateral or the priority of such Liens, or (d) Agent’s or any Lender’s rights
and remedies under this Agreement and the other Loan Documents. For purposes of the foregoing, any
event or occurrence which results or could reasonably be expected to result in uninsured losses,
costs or liabilities in excess of 15% of the Borrowing Base as of any date of determination shall
be deemed to have a Material Adverse Effect.




          “Material Credit Party” shall mean Ultimate Parent, First Intermediate Parent, Second
Intermediate Parent, Third Intermediate Parent, Borrower and each other Store Guarantor that
operates more than twelve (12) Stores.




          “Maximum Amount” shall mean, at any particular time, an amount equal to the Revolving
Loan Commitment (including as a subpart thereof the Swing Line Commitment) of all Lenders.




          “Minimum Excess Availability Reserve” shall mean a special Reserve established by
Agent on the Closing Date and maintained by Agent in an amount at all times equal to 10% of the
lesser of (i) the Maximum Amount and (ii) the sum of the amounts set forth in clauses (a), (b),
(c), (d), (e) and (f) of the definition of Borrowing Base.




          “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making or is obligated to
make contributions on behalf of participants who are or were employed by any of them after the
Closing Date.




A-17









 








          “Net Orderly Liquidation Value” or “NOLV” shall mean the appraised orderly
liquidation value (expressed as a percentage) of Inventory-Apparel and Inventory-Wholesale, as
applicable (without duplication as to any Reserves) less reasonable liquidation expenses (to the
extent not reflected in the applicable appraisals) as determined in accordance with the then
most recent appraisal delivered to the Agent pursuant to subsection (g) of Schedule
H hereto or, until the first such appraisal is delivered, in accordance with the most recent
appraisal delivered to Agent prior to the Closing Date.




          “New Wholesale Business” shall mean a line of wholesale business including the design,
development, manufacture and marketing of exclusive licensed products, proprietary brands and
private label brands of leather and textile consumer products for sale through wholesale channels,
including, but not limited to, e-commerce, specialty retailers, retail distributors, mid-tier
department stores, premium department stores, specialty department stores, sports retailers,
discount retailers and mass retailers.




          “Non-Core Business” shall mean any retail or wholesale business other than the retail
leather apparel and accessories business, the retail luggage and accessories business, the New
Wholesale Business and the wholesale business consisting of selling goods against firm purchase
orders.




          “Non-Funding Lender” shall have the meaning assigned to it in Section 9.9(d).




          “Non-use Fee” shall have the meaning assigned to it in Section 1.9(b).




          “Notes” shall mean the Revolving Notes, the Term B Note and the Swing Line Note,
collectively.




          “Notice of Conversion/Continuation” shall have the meaning assigned to it in
Section 1.5(e).




          “Notice of Revolving Credit Advance” shall have the meaning assigned to it in
Section 1.1(a).




          “Notice of Swing Line Advance” shall have the meaning assigned to it in Section
1.1(c)(i).




          “Obligations” shall mean all loans, advances, debts, liabilities and obligations, for
the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated or determinable)
owing by any Credit Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement
or other instrument, arising under this Agreement or any of the other Loan Documents. This term
includes all principal, interest (including, without limitation, all interest which accrues after
the commencement of any case or proceeding in bankruptcy after the insolvency of, or for the
reorganization of any Credit Party, whether or not allowed in such proceeding), Fees, Charges,
expenses, attorneys’ fees and any other sum chargeable to any Credit Party under this Agreement or
any of the other Loan Documents.




          “Overadvance” shall have the meaning assigned to it in Section 1.1(a)(iii).




A-18









 








          “Parent Guaranty” shall mean the Amended and Restated Guaranty executed and delivered
by Ultimate Parent, First Intermediate Parent, Second Intermediate Parent and Third Intermediate
Parent, as amended, modified or restated from time to time.




          “PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.




          “Permitted Encumbrances” shall mean the following encumbrances: (a) Liens for taxes
or assessments or other governmental Charges not yet due and payable or which are being contested
in accordance with Section 5.2; (b) pledges or deposits securing obligations under
workmen’s compensation, unemployment insurance, social security or public liability laws or similar
legislation; (c) pledges or deposits securing bids, tenders, contracts, other than contracts for
the payment of money) or leases to which any Credit Party is a party as lessee made in the ordinary
course of business; (d) deposits securing statutory obligations of any Credit Party; (e) workers’,
mechanics’ suppliers’ or similar liens arising in the ordinary course of business; (f) carriers’,
warehousemen’s or other similar possessory liens arising in the ordinary course of business; (g)
deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which any
Credit Party is a party; (h) any attachment or judgment lien not constituting an Event of Default
under Section 8.1(j) of this Agreement; (i) zoning restrictions, easements, licenses, or
other restrictions on the use of any Real Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (j) Liens existing on the Closing Date and listed on
Schedule 6.7 hereto; (k) presently existing or hereinafter created Liens in favor of Agent,
on behalf of Lenders; and (l) Liens created after the date hereof, by conditional sale or other
title retention agreements (including, without limitation, Capital Leases) or in connection with
purchase money Indebtedness with respect to assets acquired by any Credit Party in the ordinary
course of business, involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $10,000,000 outstanding at any one time for all such
Liens (provided that such Liens attach only to the assets subject to such purchase money debt and
such Indebtedness is incurred within thirty (30) days following such purchase and does not exceed
100% of the purchase price of the subject assets and including purchase money Indebtedness and
Capital Leases incurred or assumed in connection with a Permitted Acquisition).




          “Person” shall mean any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability company,
institution, public benefit corporation, other entity or government (whether federal, state,
county, city, municipal, local, foreign, or otherwise, including any instrumentality, division,
agency, body or department thereof).




          “Plan” shall mean, at any time after the Closing Date, an employee benefit plan, as
defined in Section 3(3) of ERISA, which any Credit Party maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed by any Credit Party.




A-19









 








          “Pledge Agreements” shall mean the separate Pledge Agreements, executed by each of
Ultimate Parent, First Intermediate Parent and Second Intermediate Parent with respect
to the Stock of their respective Subsidiaries and by Third Intermediate Parent with respect to
the Stock of Borrower, the Store Guarantors, Bermans and Wilsons International, Inc., as amended,
modified or restated from time to time.




          “Prior Credit Agreement” shall have the meaning assigned thereto in the recitals of
this Agreement.




          “Prior Loans” shall have the meaning assigned thereto in the recitals of this
Agreement.




          “Proceeds” shall mean “proceeds,” as such term is defined in the Code, including (a)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Credit Party
from time to time with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral
by any Governmental Authority (or any Person acting under color of governmental authority), (c) any
claim of any Credit Party against third parties (i) for past, present or future infringement of any
patent or patent license, or (ii) for past, present or future infringement or dilution of any
copyright, copyright license, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the Collateral including
claims arising out of the loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral, (e) all amounts collected on, or distributed
on account of, other Collateral, including dividends, interest, distributions and Instruments with
respect to Investment Property and pledged Stock, and (f) any and all other amounts, rights to
payment or other property acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.




          “Projections” shall mean for any Fiscal Year Ultimate Parent’s forecasted consolidated
balance sheets, profit and loss statements and cash flow statements, in each case prepared in a
manner consistent with the historical Financial Statements of Ultimate Parent together with
appropriate supporting details and a statement of underlying assumptions.




          “Pro Rata Share” shall mean with respect to all matters relating to any Lender, (a)
with respect to the Revolving Loan, the percentage obtained by dividing (i) the Revolving Loan
Commitment and Swing Line Commitment of that Lender by (ii) the aggregate Revolving Loan
Commitments and Swing Line Commitment of all Lenders; and (b) with respect to all Loans, the
percentage obtained by dividing (i) the Commitment of that Lender by (ii) the aggregate Commitments
of all Lenders.




          “Qualified Plan” shall mean a Plan which is intended to be tax-qualified under Section
401(a) of the IRC maintained by a Credit Party after the Closing Date.




          “Real Estate” shall have the meaning assigned to it in Section 3.6.




          “Refunded Swing Line Loan” shall have the meaning assigned to it in Section
1.1(c)(iii).




A-20









 








          “Release” shall mean, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping of, leaching or migration of
Hazardous Materials in the indoor or outdoor environment by such person, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or property, which, in
any event, has resulted in the creation of any material unpaid liability for such Person.




          “Requisite Lenders” shall mean (a) Lenders having more than seventy-five percent (75%)
of the Commitments of all Lenders, or (b) if the Commitments have been terminated, more than
seventy-five percent (75%) of the aggregate outstanding amount of the Loans (with Swing Line Loans
being attributed to the Lenders participating therein) and Letter of Credit Obligations and
Eligible Trade L/C Obligations; provided, that when the Term Loan B has been paid in full,
such percentage shall be reduced to sixty-six and two-thirds percent (66 2/3 %) in each instance.




          “Reserves” shall mean, for purposes of calculating the Borrowing Base, (a) reserves
established by Agent from time to time against the Borrowing Base pursuant to Section 5.8
of this Agreement, (b) reserves established pursuant to Section 5.4(c) of this Agreement,
(c) reserves established pursuant to Section 1.11(c) of this Agreement and (d) reserves
established pursuant to Sections 1.19, 1.20, 1.21, 1.22, and 1.23 of this Agreement and
such other reserves which Agent may, in its reasonable credit judgment, establish from time to
time. Without limiting the generality of the foregoing, shrinkage Reserves consistent with those
established by Borrower under GAAP, Reserves established to ensure the payment of accrued and
unpaid customs duties, customs and shipping charges with respect to Eligible In-Transit Inventory
and a sales and use tax Reserve for sales and use taxes due within ninety (90) days shall be deemed
to be a reasonable exercise of Agent’s credit judgment.




          “Restricted Payment” shall mean (a) the declaration or payment of any dividend or the
incurrence of any liability to make any other payment or distribution of cash or other property or
assets in respect of a Person’s Stock, (b) any payment on account of the Purchase, redemption,
defeasance, sinking fund or other retirement or a Person’s Stock or any other payment or
distribution made in respect thereof, either directly or indirectly, (c) any payment or prepayment
of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for
rescission with respect to, any Subordinated Debt; (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire Stock of such Person now or hereafter outstanding; (e) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising from the purchase or
sale of, any shares of such Person’s Stock or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages, or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any Stockholder of
such Person and (g) any payment of management fees (or other fees of a similar nature) by such
Person to any Stockholder of such Person or their Affiliates.




          “Retiree Welfare Plan” shall mean, at any time, a Plan that is a “welfare plan” as
defined in Section 3(2) of ERISA, that provides for continuing coverage or benefits for any
participant or any beneficiary of a participant after such participant’s termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole
expense of the participant or the beneficiary of the participant which is maintained by a Credit
Party, after the Closing Date.




A-21









 








          “Revolving Credit Advance” shall have the meaning assigned to it in Section
1.1(a)(i).




          “Revolving Loan” shall mean as the context may require, at any time, the sum of (i)
the aggregate amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
aggregate Letter of Credit Obligations and Eligible Trade L/C Obligations incurred on behalf of
Borrower.




          “Revolving Loan Commitment” shall mean (a) as to any Lender, the aggregate commitment
of such Lender to make Revolving Credit Advances, Swing Line Advances and/or incur Letter of Credit
Obligations and Eligible Trade L/C Obligations as set forth in the signature pages hereto or in the
most recent Lender Assignment Agreement executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Credit Advances, Swing Line Advances and/or
incur Letter of Credit Obligations and Eligible Trade L/C Obligations, which aggregate commitment
shall be One Hundred Fifteen Million Dollars ($115,000,000) on the Closing Date, as such amount may
be adjusted, if at any, from time to time in accordance with this Agreement.




          “Revolving Note” shall have the meaning assigned to it in Section 1.1(a)(ii).




          “Seasonal Store” shall mean kiosks and holiday stores temporarily operated by a Store
Guarantor during the Christmas holiday season and located in the United States.




          “Schedule of Documents” shall mean the schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in connection with
this Agreement, the other Loan Documents and the transactions contemplated thereunder,
substantially in the form attached hereto as Schedule F.




          “Second Intermediate Parent” shall mean Rosedale Wilsons, Inc., a Minnesota
corporation.




          “Security Agreement” shall mean the Security Agreement dated May 25, 1996 entered into
among Agent, on behalf of itself and Lenders, and each Credit Party thereto.




          “Software” shall mean all “software” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, other than software embedded in any category of goods,
including all computer programs and all supporting information provided in connection with a
transaction related to any program.




A-22









 








          “Solvent” shall mean, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person on a going concern basis is greater than the
total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair
salable value of the assets of such Person on a going concern basis is not less than the amount
that will be required to pay the probably liability of such Person on its debts as they become
absolute and matured; (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute an unreasonably
small capital. The amount of contingent liabilities (such as litigation, guarantees and pensions
plan liabilities) at any time shall be computed as the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can be reasonably expected to
become an actual or matured liability.




          “Stock” shall mean all shares, options, warrants, general or limited partnership
interest or other equivalents (regardless of how designated) of or in a corporation, partnership or
equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other
“equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended).




          “Store” shall mean a location at which goods are sold at retail operated by a Store
Guarantor including the Seasonal Stores.




          “Store Guarantor” shall mean any Subsidiary of Ultimate Parent other than (i) First
Intermediate Parent, (ii) Borrower, (iii) Foreign Subsidiaries and (iv) Joint Ventures (in each
case, whether or not such Person operates a retail store), and “Store Guarantors” shall
mean all of the foregoing, collectively.




          “Store Guarantors’ Guaranty” shall mean the Amended and Restated Guaranty executed by
the Store Guarantors (excluding the Second Intermediate Parent and Third Intermediate Parent) in
favor of the Lenders, as amended, modified or restated from time to time.




          “Subordinated Debt” shall mean any Indebtedness of any Credit Party subordinated to
the Obligations in a manner and form satisfactory to the Agent and the Lenders in their sole
discretion, as to right and time of payment and as to any other rights and remedies thereunder.




          “Subsidiary” shall mean, with respect to any Person, (a) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding Stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of whether, at the
time, Stock of any other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such Person, or with
respect to which any such Person and/or one or more Subsidiaries of such Person, or with respect to
which any such Person has the right to vote or designate the vote of fifty percent (50%) or more of
such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person and/or one or more Subsidiaries of such Person shall
have an interest (whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or of which any such Person is a general partner or
may exercise the powers of a general partner. Unless the context otherwise
requires all references to Subsidiaries in this Agreement or in the other Loan Documents shall
be deemed to refer to Subsidiaries of First Intermediate Parent.




A-23









 








          “Supplemental Security Agreement” shall collectively mean (i) the Supplemental
Security Agreements dated as May 24, 1999, (ii) the Supplemental Security Agreement dated October
31, 2000 and (iii) various additional Supplemental Security Agreements and Joinders by the Credit
Parties signatory thereto.




          “Supporting Obligations” shall mean all “Supporting Obligations” as such term is
defined in the Code, including letters of credit and guaranties issued in support of Accounts,
Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property.




          “Swing Line Advance” has the meaning assigned to it in Section 1.1(c)(i).




          “Swing Line Availability” has the meaning assigned to it in Section 1.1(c)(i).




          “Swing Line Commitment” shall mean, as to the Swing Line Lender, the commitment of the
Swing Line Lender to make Swing Line Loans as set forth on the signature page to this Agreement,
which commitment constitutes a part of the Revolving Loan Commitment of the Swing Line Lender.




          “Swing Line Lender” shall mean GE Capital.




          “Swing Line Loan” shall mean as the context may require, at any time, the aggregate
amount of Swing Line Advances outstanding to Borrower.




          “Swing Line Loan Participation Certificate” shall mean a certificate delivered
pursuant to Section 1.1(c)(iv).




          “Swing Line Note” has the meaning assigned to it in Section 1.1(c)(ii).




          “Taxes” shall mean taxes, levies, imposes, deductions, Charges or withholdings, and
all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of
Agent or a Lender by the federal government or any State or political subdivision thereof.




          “Term Collateral” shall mean all of the Equipment (and the Proceeds thereof) of each
Credit Party covered by the Amended and Restated Security Agreement dated June 19, 2001, in each
case whether now existing or hereinafter acquired.




          “Term Lender” shall mean GE Capital.




          “Term Loan B” has the meaning assigned to it in Section 1.1(b)(i).




          “Term Loan B Commitment” means, as to the Term Lender, the commitment of the Term
Lender to continue Term Loan B on the Closing Date as set forth in Section 1.1(b)(i) of this
Agreement, the amount of which commitment is Twenty Million Dollars ($20,000,000). After advancing
the Term Loan B, each reference to a Term Lender’s Term Loan B Commitment shall refer to that Term
Lender’s Pro Rata Share of the outstanding Term Loan B.




A-24









 








          “Term Loan B Reserve” shall mean a special Reserve established by Agent on the Closing
Date and maintained by Agent in an amount equal to the then outstanding principal balance of Term
Loan B.




          “Term B Note” has the meaning assigned to it in Section 1.1(b)(i).




          “Termination Date” shall mean the date on which the Loans have been indefeasibly
repaid in full and all other Obligations under this Agreement and the other Loan Documents have
been completely discharged and Borrower shall not have any further right to borrow any monies
thereunder.




          “Third Intermediate Parent” shall mean River Hills Wilsons, Inc., a Minnesota
corporation.




          “Title IV Plan” shall mean an employee pension benefit plan, as defined in Section
3(2) of ERISA (other than a Multiemployer Plan), which is covered by Title IV of ERISA, and which
any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to contribute to
after the Closing Date on behalf of participants who are or were employed by any of them.




          “Trade L/C Inventory” shall mean goods for which an Eligible Trade L/C has been issued
hereunder.




          “Trademark” or “Trademarks” shall mean any and all of the following now owner
or hereafter acquired by any Credit Party: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and general intangibles
of like nature (whether registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision thereof; (b) all reissues,
extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any of the
foregoing.




          “Trademark License” shall mean any and all rights now owned or hereafter acquired by
any Credit Party under any written agreement granting any right to use any Trademark.




          “Trademark Security Agreements” shall mean the Trademark Security Agreements made in
favor of Agent, on behalf of Lenders, by each applicable Credit Party, as amended, modified or
restated from time to time.




          “Unfunded Pension Liability” shall mean, at any time after the Closing Date, the
aggregate amount, if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan
allocable to such benefits in accordance with Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for a period of five (5) years
following a transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any Credit Party or any
ERISA Affiliate as a result of such transaction.




A-25









 








          “Ultimate Parent” shall mean Wilsons The Leather Experts Inc., a Minnesota
corporation.




          “Uniform Commercial Code jurisdiction” shall mean any jurisdiction that has adopted
all or substantially all of Article 9 as contained in the 2000 Official Text of the Uniform
Commercial Code, as recommended by the National Conference of Commissioners on Uniform State Laws
and the American Law Institute, together with any subsequent amendments or modifications to the
Official Text.




          “Wells Fargo” shall mean Wells Fargo Retail Finance, LLC.




          “Wholesale Subsidiary” shall have the meaning assigned to it in Section 6.1
hereof.




          “WWT” shall mean WWT, Inc., a Delaware corporation and wholly owned subsidiary of
Third Intermediate Parent.




          All other undefined terms contained in any of the Loan Documents shall, unless the context
indicates otherwise, have the meanings provided for by the Code as in effect in the State of
Illinois to the extent the same are used or defined therein. The words “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole, including all
Exhibits and Schedules, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause contained in this Agreement
or any such Exhibit or Schedule.




          Wherever from the context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, feminine and neuter genders. The words “including”,
“includes” and “include” shall be deemed to be followed by the words “without limitation”;
references to Persons include their respective successors and assigns (to the extent and only to
the extent permitted by the Loan Documents) or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons, and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes and regulations.




A-26









 








SCHEDULE B




LETTERS OF CREDIT




          (a) Issuance. Subject to the terms and conditions of this Agreement, Agent agrees to
incur from time to time, upon the request of Borrower on behalf of Borrower and for Borrower’s
account, Letter of Credit Obligations and Eligible Trade L/C Obligations by causing Letters of
Credit and Eligible Trade L/Cs to be issued on terms acceptable to Agent and by Agent, a subsidiary
of Agent or a bank or other legally authorized Person acceptable to Agent and Borrower (each, an
“L/C Issuer”) for Borrower’s account and guaranteed by Agent; provided,
however, that the aggregate amount of the sum of all such Letter of Credit Obligations
plus Eligible Trade L/C Obligations shall not at any time exceed the lesser of (i)
Seventy-Five Million Dollars ($75,000,000) (the “L/C Sublimit”), or (ii) the Maximum Amount
less the aggregate outstanding principal balance of the Revolving Credit Advances;
provided further that Letter of Credit Obligations plus Eligible Trade L/C
Obligations shall not exceed the Borrowing Base less the outstanding balance of the
Revolving Credit Advances and Swing Line Advances. No such Letter of Credit Obligation or Eligible
Trade L/C Obligation shall have an expiry date which is more than one year following the date of
issuance thereof, and Agent and the Lenders shall be under no obligation to incur Letter of Credit
Obligations or Eligible Trade L/C Obligations in respect of any Letter of Credit or Eligible Trade
L/C having an expiry date which is later than the Commitment Termination Date. The Borrower may
request to change the LC Issuer, subject to consent by Agent, which consent shall not be
unreasonably withheld.




          (b) (i) Advances Automatic; Participations. When Agent makes any payment on or
pursuant to any Letter of Credit Obligation or Eligible Trade L/C Obligation, such payment shall
then be deemed automatically to constitute a Swing Line Advance to the extent of Swing Line
Availability (and if Swing Line Availability is zero, a Revolving Credit Advance) to Borrower under
this Agreement regardless of whether a Default or Event of Default shall have occurred and be
continuing and notwithstanding Borrower’s failure to satisfy the conditions precedent set forth in
Section 2 of this Agreement, and, in the case of a Revolving Credit Advance, each Lender
shall be obligated to pay its Pro Rata Share thereof in accordance with this Agreement. The
failure of any Lender to make available to Agent for Agent’s own account its Pro Rata Share of any
such Revolving Credit Advance or payment by Agent under or in respect of a Letter of Credit or
Eligible Trade L/C shall not relieve any other Lender of its obligation hereunder to make available
to Agent its Pro Rata Share thereof, but no Lender shall be responsible for the failure of any
other Lender to make available such other Lender’s Pro Rata Share of any such payment.




               (ii) If it shall be illegal or unlawful for Borrower to incur Revolving Credit Advances as
contemplated by paragraph (b)(i) above because of an Event of Default described in Section
8.1(h) or (i) or otherwise or if it shall be illegal or unlawful for any Lender to be
deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, then
(i) immediately and without further action whatsoever, such Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent an undivided interest and participation equal
to such Lender’s Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations or Eligible Trade L/C Obligations in respect of all Letters of Credit or Eligible Trade
L/Cs then outstanding and (ii) thereafter, immediately
upon issuance of any Letter of Credit or Eligible Trade L/C, each Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent an undivided interest and participation
in such Lender’s Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations or Eligible Trade L/C Obligations with respect to such Letter of Credit or Eligible
Trade L/C on the date of such issuance. Each Lender shall fund its participation in all payments
or disbursements made under the Letters of Credit or Eligible Trade L/Cs in the same manner as
provided in this Agreement with respect to Revolving Credit Advances.



B-1









 





          (c) Cash Collateral. If any Letter of Credit Obligations or Eligible Trade L/C
Obligations, whether or not then due and payable, shall for any reason be outstanding on the
Commitment Termination Date, or if L/C Availability is less than zero or would be reduced to less
than zero upon the incurrence of additional Letter of Credit Obligations or Eligible Trade L/C
Obligations (an “L/C Availability Short-Fall”), Borrower will pay to Agent for the benefit of the
Lenders cash or cash equivalents acceptable to Agent (“Cash Equivalents”) in an amount
equal to the greater of (1) 100% of the maximum then available to be drawn under each applicable
Letter of Credit or Eligible Trade L/C outstanding for the benefit of Borrower, plus such
amount as Agent may request to cover fees, costs and expenses (including attorneys’ fees and
expenses) which may be incurred with respect thereto in the case of cash collateral to be provided
on the Commitment Termination Date or (2) in the amount of the L/C Availability Short-Fall in the
case where L/C Availability is or would be reduced to less than zero. Such funds or Cash
Equivalents shall be held by Agent in a cash collateral account (the “Cash Collateral
Account”) maintained at a bank or financial institution acceptable to agent. The Cash
Collateral Account shall be in the name of Agent (as a cash collateral account), and shall be under
the sole dominion and control of Agent and subject to the terms of this Schedule B.
Borrower hereby pledges and grants to Agent, on behalf of Lenders, a security interest in all such
funds and Cash Equivalents held in the Cash Collateral Account from time to time and all proceeds
thereof, as security for the payment of all amounts due in respect of the Letter of Credit
Obligations, Eligible Trade L/C Obligations and other Obligations, whether or not then due. This
Agreement, including this Schedule B, shall constitute a security agreement under
applicable law.




          From time to time after funds or cash equivalents are deposited in the Cash Collateral Account
by Borrower, Agent may apply such funds or Cash Equivalents then held in the Cash Collateral
account to the payment of any amounts, in such order as Agent may elect, as shall be or shall
become due and payable by Borrower to the Lenders with respect to such Letter of Credit Obligations
or Eligible Trade L/C Obligations and, upon the satisfaction in full of all Letter of Credit
Obligations or Eligible Trade L/C Obligations of Borrower outstanding at the Commitment Termination
Date or otherwise upon elimination of the L/C Availability Short-Fall, to any other Obligations of
Borrower then due and payable. All sums remaining after application of funds from the Cash
Collateral Account as herein provided shall be returned to Borrower.




          Agent shall at the direction of Borrower invest the funds in the Cash Collateral Account in
short term investments issued or fully guaranteed by the United States government or an agency
thereof, and to the extent not applied to the Obligations as provided herein, interest and earnings
thereon, if any, shall be the property of Borrower.




B-2









 








          (d) Fees and Expenses. Borrower agrees to pay to Agent for the benefit of the
Lenders, as compensation to such Lenders for Letter of Credit Obligations and Eligible Trade L/C
Obligations incurred hereunder, (x) all costs and expenses incurred by Agent or any Lender on
account of such Letter of Credit Obligations or Eligible Trade L/C Obligations, and (y) commencing
with the month in which any such Letter of Credit Obligations or Eligible Trade L/C Obligation is
incurred by the Lenders and on the first day of each month in arrears for each month during which
such Letter of Credit Obligation or Eligible Trade L/C Obligation shall remain outstanding, a fee
(the “L/C Fee”) in an amount equal to the Applicable Documentary L/C Margin or Applicable
Standby L/C Margin (as applicable) per annum multiplied by the daily average of the maximum amount
available to be drawn under the applicable Letters of Credit and Eligible Trade L/C’s outstanding
during each month. In addition, Borrower agrees that Borrower (and not Agent or any Lender) shall
be responsible for the payment of all L/C Issuer fees, costs, and expenses in connection with the
issuance of Letters of Credit and Eligible Trade L/Cs at such times and in such amounts as Borrower
and L/C issuer shall agree, pursuant to the application and related documentation under which any
Letter of Credit or Eligible Trade L/C is issued. The L/C Fees due under this paragraph
(d) shall be calculated on the basis of a 360-day year for the actual number of days elapsed
(except as may be otherwise specified in any agreement between Borrower and the L/C Issuer) and
shall be paid to Agent for the benefit of the applicable Lenders.




          (e) Requests for Letters of Credit. Borrower shall be deemed to request the
incurrence of all documentary Letter of Credit Obligations and Eligible Trade L/C Obligations by
electronically forwarding to Agent at its address as set forth in this Agreement an application for
issuance of a Letter of Credit or Eligible Trade L/C in the form approved by the L/C Issuer or its
processor. Provided that all other criteria for incurrence of Letter of Credit Obligations or
Eligible Trade L/C Obligations are met, such application shall be electronically forwarded to the
L/C Issuer with Agent’s authorization to issue the requested Letter of Credit or Eligible Trade L/C
(i) the same day as the application is received by Agent, if such application is forwarded to Agent
on or before 12:00 noon (Chicago time) on any Business Day, or (ii) the Business Day following the
Business Day that the application is received by Agent, in all other cases. All standby Letter of
Credit Obligations shall be incurred upon Borrower’s submission of a completed written Application
for Standby Letter of Credit in the form provided by Agent. Each standby Letter of Credit shall be
issued within two Business Days following finalization of mutually satisfactory letter of credit
and drawing certificate provisions.




          (f) Obligation Absolute. The obligation of Borrower to reimburse Agent and Lenders
for payments made with respect to any Letter of Credit Obligation or Eligible Trade L/C Obligation
shall be absolute, unconditional and irrevocable, without necessity of presentment, demand, protest
or other formalities, and the obligations of each Lender to make payments to Agent with respect to
Letters of Credit and Eligible Trade L/Cs shall be unconditional and irrevocable. Such obligations
of Borrower and Lenders shall be paid strictly in accordance with the terms hereof under all
circumstances including the following circumstances:




               (i) any lack of validity or enforceability of any Letter of Credit or Eligible Trade
L/C or this Agreement or the other Loan Documents or any other agreement;



B-3









 





               (ii) the existence of any claim, set-off, defense or other right which Borrower or any
of its Affiliates or any Lender may at any time have against a beneficiary or any transferee
of any Letter of Credit or Eligible Trade L/C (or any Persons or entities for whom any such
transferee may be acting), Agent, any Lender, or any other Person, whether in connection
with this Agreement, the Letter of Credit or Eligible Trade L/C, the transactions
contemplated herein or therein or any unrelated transaction (including any underlying
transaction between Borrower and the beneficiary for which the Letter of Credit or Eligible
Trade L/C was procured);



               (iii) any draft, demand, certificate or any other document presented under any Letter
of Credit or Eligible Trade L/C proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;



               (iv) payment by L/C Issuer under any Letter of Credit or Eligible Trade L/C against
presentation of a demand, draft or certificate or other document which does not comply with
the terms of such Letter of Credit or Eligible Trade L/C;



               (v) any other circumstance or happening whatsoever, which is similar to any of the
foregoing; or



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



          (g) Indemnification: Nature of Lender’s Duties. In addition to amounts payable as
elsewhere provided in this Agreement, Borrower hereby agrees to pay and protect, indemnify, and
save harmless Agent and each Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including attorneys’ fees and allocated costs of
internal counsel) which Agent or any Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit or Eligible Trade L/C, or (ii) the failure of
Agent, any Lender or such L/C Issuer seeking indemnification to honor a demand for payment under
any Letter of Credit Obligation or Eligible Trade L/C Obligation as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a result of the gross
negligence or willful misconduct of Agent or such Lender (as finally determined by a court of
competent jurisdiction). Nothing herein contained shall be deemed to limit or expand the scope of
any indemnity or release contained in any agreement between Borrower and the L/C Issuer.




          As between Agent and any Lender and Borrower, Borrower assumes all risks of the acts and
omissions of, or misuse of any Letter of Credit or Eligible Trade L/C by beneficiaries of any
Letter of Credit or Eligible Trade L/C. In furtherance and not in limitation of the foregoing, to
the fullest extent permitted by law neither Agent nor any Lender shall be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any Letter of Credit or Eligible Trade
L/C, even if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged, (ii) for the validity or sufficiency of any instrument




B-4









 







transferring or assigning or purporting to transfer or assign any Letter of Credit or Eligible
Trade L/C 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; (iii) for failure of the beneficiary of any
Letter of Credit or Eligible Trade L/C to comply fully with conditions required in order to demand
payment under such Letter of Credit or Eligible Trade L/C or the failure of the L/C Issuer to
require strict compliance with such conditions; provided that, in the case of any payment
by Agent of any Letter of Credit Obligation or Eligible Trade L/C Obligation, Agent shall be liable
to the extent such payment was made solely as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction) in determining that the
demand for payment of such Letter of Credit Obligation or Eligible Trade L/C Obligation thereof
complies on its face with any applicable requirements for a demand for payment thereof; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a payment under any Letter of Credit or Eligible Trade L/C
or of the proceeds thereof; (vii) for the credit of the proceeds of any drawing under any Letter of
Credit or Eligible Trade L/C; and (viii) for any consequences arising from causes beyond the
control of Agent. None of the above shall affect, impair, or prevent the vesting of any of Agent’s
or any Lender’s rights or powers hereunder or under this Agreement.




          Nothing herein contained shall be deemed to waive or release any right or claim that Borrower may
have against the L/C Issuer in its capacity as such.




B-5









 








SCHEDULE C




INTENTIONALLY OMITTED





C-1









 








SCHEDULE D




INTENTIONALLY OMITTED





D-1









 








SCHEDULE E




CASH MANAGEMENT SYSTEMS




          Borrower shall, and shall cause the Credit Parties to, establish and maintain the Cash
Management Systems described below:




               (a) Until the Termination Date, each Credit Party which maintains a depository account (each,
a “Credit Party Account”) with any bank (each, a “Relationship Bank”) shall
instruct each of its Relationship Banks to transfer all good funds on deposit in such Credit Party
Account (less reserves for returned items and account fees) by wire transfer or automated clearing
house procedures on a daily basis into a bank account in Borrower’s name (the “Concentration
Account”) at Wells Fargo Bank, N.A. or another bank mutually agreed upon in advance by Agent and
Borrower (the “Concentration Account Bank”).



               (b) Borrower may maintain, in its name, accounts (each a “Disbursement Account” and
collectively, the “Disbursement Accounts”) at a bank acceptable to Agent into which, Agent
shall, from time to time, deposit proceeds of Revolving Credit Advances and Swing Line Advances
made to Borrower pursuant to Section 1.1 of the Agreement.



               (c) On or before the Closing Date, the Concentration Account Bank shall enter into a tri-party
blocked account agreement with Agent with respect to the Concentration Account, for the benefit of
itself and Lenders, and Borrower, in form and substance acceptable to Agent, which shall become
operative on the Closing Date. Such blocked account agreement shall provide, among other things,
that (i) all items of payment and funds deposited in the Concentration Account and proceeds thereof
deposited in such account are held by such bank, as agent or bailee-in-possession for the Agent, on
behalf of Lenders, (ii) the bank executing such agreement has no rights of setoff or recoupment or
any other claim against such account other than for payment of its service fees and other charges
directly related to the administration of such account and for returned checks or other items of
payment and (iii) from and after the Concentration Account Bank’s receipt of a notice (an
“Activation Notice”) from Agent (which Activation Notice may be given by Agent at any time at which
an Event of Default has occurred and is continuing), to immediately forward all amounts received in
the Concentration Account to the Collection Account through daily sweeps from such Concentration
Account into the Collection Account. From and after the date Agent has delivered an Activation
Notice to the Concentration Account Bank, Borrower shall not, and shall not cause or permit any
Guarantor to, accumulate or maintain cash in any disbursement accounts and payroll accounts as of
any date of determination in excess of checks outstanding against such accounts as of that date and
amounts necessary to meet minimum balance requirements. Absent the issuance of an Activation
Notice, Borrower shall be entitled to transfer funds from the Concentration Account to any place it
may elect.



E-1









 





               (d) So long as no Event of Default has occurred and is continuing, any Store Guarantor may act
to add or replace a Relationship Bank or Credit Party Account and Borrower may replace any
Concentration Account Bank or Concentration Account; provided, however, (i) in the
case of a replacement Concentration Account Bank, prior to the time of the
opening of an account with such new Concentration Account Bank, Borrower and such bank shall
have executed and delivered to Agent a tri-party blocked account agreement, in form and substance
satisfactory to Agent. Borrower shall close any Concentration Account (and establish a replacement
Concentration Account in accordance with the foregoing sentence) promptly and in any event within
thirty (30) days of notice from Agent that the creditworthiness of any Concentration Account Bank
is no longer acceptable in Agent’s reasonable judgment, or as promptly as practicable and in any
event within sixty (60) days of notice from Agent that the operating performance, funds transfer
and/or availability procedures or performance with respect to the Concentration Account or the
Agent’s liability under any tri-party blocked account agreement with such bank is no longer
acceptable in Agent’s reasonable judgment.



               (e) The Concentration Account shall be a cash collateral account, with all cash and other
items of payment in such accounts securing payment of the Loans and all other Obligations, and in
which Borrower shall have granted a Lien to Agent, on behalf of itself and Lenders, pursuant to the
Amended and Restated Security Agreement.



               (f) All amounts deposited in the Collection Account shall be deemed received by Agent in
accordance with the Agreement and shall be applied (and allocated) by Agent in accordance with the
Agreement.



               (g) Each Store Guarantor and its respective officers, employees, agents, directors or other
Persons acting for or in concert with Borrower (each a “Related Person”) agrees to (i) hold in
trust for the Agent, for the benefit of itself and Lenders, all checks, cash and other items of
payment received by such Store Guarantor or any such Related Person, and (ii) within one (1)
Business Day after receipt by such Store Guarantor or any such Related Person of any checks, cash
or other items or payment, deposit the same into the appropriate Credit Party Account. Each Store
Guarantor acknowledges and agrees that all cash, checks or items of payment constituting proceeds
of Collateral are pledged to Agent for the benefit of Lenders.



               (h) Upon the request of the Agent, each Credit Party shall use good faith efforts to cause
each Relationship Bank to enter into tri-party blocked account agreements in form and substance
satisfactory to the Agent. Each such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and proceeds thereof deposited in the
applicable Credit Party Accounts are held by such bank, as agent or bailee-in-possession for the
Agent, on behalf of itself and Lenders, (ii) the bank executing such agreement has no rights of
setoff or recoupment or any other claim against such account, as the case may be, other than for
payment of its service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) such bank agrees to forward
immediately all amounts in each Credit Party Account to the Concentration Account Bank (or other
applicable bank) and to commence the process of daily sweeps from such Credit Party Account into
the Concentration Account (or an account that sweeps, on a daily basis into the Concentration
Account).



E-2









 





SCHEDULE F




SCHEDULE OF ADDITIONAL 

CLOSING DOCUMENTS




See Attached




F-1









 





SCHEDULE F




ADDITIONAL CLOSING DOCUMENTS




relating to the




U.S. $135,000,000

FIFTH AMENDED AND RESTATED CREDIT AGREEMENT




by and among




WILSONS LEATHER HOLDINGS INC.,

as Borrower




and




THE LENDERS NAMED THEREIN,

as Lenders




GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent, Lender, Term Lender and Swing Line Lender




GE CAPITAL MARKETS, INC.




as Lead Arranger




and




WELLS FARGO RETAIL FINANCE, LLC




as Lender and Syndication Agent




DATE OF CLOSING: December 29, 2006




Sch.F-1









 





     Set forth below is a Schedule of Documents which lists the documents to be delivered in
connection with the closing of the transactions contemplated by the Fifth Amended and Restated
Credit Agreement (“Credit Agreement”) listed herein as Document No. 1. Each capitalized term used
but not defined herein shall have the meaning ascribed to such term in the Credit Agreement and all
section references herein are to Sections of the Credit Agreement, unless otherwise indicated. All
documents shall be dated as of December 29, 2006 unless otherwise indicated.



PARTIES AND THEIR COUNSEL




	 	 	 
	General Electric Capital Corporation, 

a Delaware corporation

	 	(“GE Capital”, in its
individual capacity, a
“Lender”, “Term Lender” and
the “Swing Line Lender” and
as agent, “Agent”)
	 
	 	 
	Wilsons Leather Holdings Inc.,
a Minnesota corporation

	 	(“Borrower”)
	 
	 	 
	Wilsons The Leather Experts Inc.,
a Minnesota corporation

	 	(“Ultimate Parent”)
	 
	 	 
	Wilsons Center, Inc.,
a Minnesota corporation

	 	(“First Intermediate Parent”)
	 
	 	 
	Rosedale Wilsons, Inc.,
a Minnesota corporation

	 	(“Second Intermediate Parent”)
	 
	 	 
	River Hills Wilsons, Inc.,
a Minnesota corporation

	 	(“Third Intermediate Parent”)
	 
	 	 
	Bermans The Leather Experts Inc.,
a Delaware corporation

	 	(“Bermans”)
	 
	 	 
	Latham & Watkins, counsel to General
Electric Capital Corporation

	 	(“L&W”)
	 
	 	 
	Faegre & Benson LLP, counsel to the
Borrower

	 	(“Faegre”)






Sch.F-2









 





	 	 	 
	Doc.	 	 
	No.	 	Description of Document
	 
	 	 
	I.

	 	Amended and Restated Credit Agreement
	 
	 	 
	1.

	 	Fifth Amended and Restated Credit Agreement dated as of December 29,
2006 by and among Borrower, the Lenders signatory thereto and GE
Capital, as Agent, Lender, Term Lender and Swing Line Lender (the
“Agreement”), with the following Exhibits and Schedules attached
hereto:
	 
	 	 
	 

	 	Schedules
	 

	 	Schedule A — Definitions
	 

	 	Schedule B — Letters of Credit
	 

	 	Schedule C — Intentionally Omitted
	 

	 	Schedule D — Intentionally Omitted
	 

	 	Schedule E — Cash Management System
	 

	 	Schedule F — Schedule of Additional Closing Documents
	 

	 	Schedule G — Financial Statements and Projections —Reporting
	 

	 	Schedule H — Collateral Reports
	 

	 	Schedule I — Financial Covenants
	 

	 	Schedule J — Notice Addresses
	 

	 	Schedule 1.1 — Responsible Individual
	 

	 	Schedule 2.1(e) — Distribution Center Leases
	 

	 	Schedule 3.2 — Executive Offices/Inventory-Wholesale locations
	 

	 	Schedule 3.5 — Material Adverse Effect
	 

	 	Schedule 3.6 — Real Estate and Leases
	 

	 	Schedule 3.7 — Labor Matters
	 

	 	Schedule 3.8 — Ventures, Subsidiaries and Affiliates; Outstanding Stock
	 

	 	Schedule 3.11 — Tax Matters
	 

	 	Schedule 3.12 — ERISA Plans
	 

	 	Schedule 3.13 — Litigation
	 

	 	Schedule 3.15 — Intellectual Property
	 

	 	Schedule 3.17 — Hazardous Materials
	 

	 	Schedule 3.18 — Insurance
	 

	 	Schedule 3.19 — Deposit and Disbursement Accounts
	 

	 	Schedule 3.20 — Government Contracts
	 

	 	Schedule 3.22 — Material Agreements
	 

	 	Schedule 5.1 — Trade Names
	 

	 	Schedule 6.3 — Indebtedness
	 

	 	Schedule 6.4(a) — Transactions with Affiliates
	 

	 	Schedule 6.7 — Existing Liens
	 

	 	Schedule 6.18 — Form of Transportation Certificate
	 

	 	Schedule 11.8 — Authorized Signatures






Sch.F-3









 





	 	 	 
	Doc.	 	 
	No.	 	Description of Document
	 
	 	 
	 

	 	Exhibits
	 

	 	Exhibit 1.1(a)(i) — Form of Notice of Revolving Credit Advances
	 

	 	Exhibit 1.1(a)(ii) — Form of Revolving Note
	 

	 	Exhibit 1.1(b)(i) — Form of Term B Note
	 

	 	Exhibit 1.1(c)(i) — Form of Notice of Swing Line Advance
	 

	 	Exhibit 1.1(c)(ii) — Form of Swing Line Note
	 

	 	Exhibit 1.5(e) — Form of Notice of Conversion/Continuation
	 

	 	Exhibit 4.1(b) — Form of Borrowing Base Certificate
	 

	 	Exhibit 9.1(a) — Form of Assignment Agreement
	 
	 	 
	II.

	 	Collateral Documents
	 
	 	 
	2.

	 	Reaffirmation of Guaranty — Store and Parent Guarantors
	 
	 	 
	3.

	 	Revolving Notes by Borrower in favor of:
	 

	 	(i) GE Capital
	 

	 	(iv) Wells Fargo Retail Finance, LLC
	 
	 	 
	4.

	 	Swing Line Note by Borrower in favor of GE Capital
	 
	 	 
	5.

	 	Term B Note by Borrower in favor of GE Capital
	 
	 	 
	III

	 	UCC DOCUMENTATION
	 
	 	 
	6.

	 	UCC searches against each Credit Party
	 
	 	 
	III.

	 	Counsel Opinions
	 
	 	 
	7.

	 	Legal Opinion of Faegre & Benson LLP, counsel to Borrower and the
other Credit Parties
	 
	 	 
	IV.

	 	Officer’s Certificates and Corporate Documentation
	 
	 	 
	 

	 	A.     Ultimate Parent Corporate Documents






Sch.F-4









 





	 	 	 
	Doc.	 	 
	No.	 	Description of Document
	 
	 	 
	8.

	 	Certificate of Ultimate Parent’s secretary or assistant secretary certifying to (a) the resolutions of Ultimate
Parent’s board of directors, (b) the incumbency and signatures of the officers or representatives executing the
Agreement and the Loan Documents, (c) Ultimate Parent’s articles of incorporation and all amendments thereto,
certified by the Secretary of the State of Minnesota, and (d) Ultimate Parent’s by-laws
	 
	 	 
	9.

	 	Required certificates of status/good-standing for the state of Minnesota
	 
	 	 
	 

	 	B.     First Intermediate Parent Corporate Documents
	 
	 	 
	10.

	 	Certificate of First Intermediate Parent’s secretary or assistant secretary certifying to (a) the resolutions of
First Intermediate Parent’s board of directors, (b) the incumbency and signatures of the officers or
representatives executing the Agreement and the Loan Documents, (c) First Intermediate Parent’s articles of
incorporation and all amendments thereto, certified by the Secretary of the State of Minnesota, and (d) First
Intermediate Parent’s by-laws
	 
	 	 
	11.

	 	Required certificates of status/good-standing for the state of Minnesota
	 
	 	 
	 

	 	C.     Second Intermediate Parent Corporate Documents
	 
	 	 
	12.

	 	Certificate of Second Intermediate Parent’s secretary or assistant secretary certifying to (a) the resolutions of
Second Intermediate Parent’s board of directors, (b) the incumbency and signatures of the officers or
representatives executing the Agreement and the Loan Documents, (c) Second Intermediate Parent’s articles of
incorporation and all amendments thereto, certified by the Secretary of the State of Minnesota, and (d) Second
Intermediate Parent’s by-laws
	 
	 	 
	13.

	 	Required certificates of status/good-standing for the state of Minnesota
	 
	 	 
	 

	 	D.     Third Intermediate Parent Corporate Documents
	 
	 	 
	14.

	 	Certificate of Third Intermediate Parent’s secretary or assistant secretary certifying to (a) the resolutions of
Third Intermediate Parent’s board of directors, (b) the incumbency and signatures of the officers or
representatives executing the Agreement and the Loan Documents, (c) Third Intermediate Parent’s articles of
incorporation and all amendments thereto, certified by the Secretary of the State of Minnesota, and (d) Third
Intermediate Parent’s by-laws
	 
	 	 
	15.

	 	Required certificates of status/good-standing for the state of Minnesota






Sch.F-5









 





	 	 	 
	Doc.	 	 
	No.	 	Description of Document
	 
	 	 
	 

	 	E.     Borrower Corporate Documents
	 
	 	 
	16.

	 	Certificate of Borrower’s secretary or assistant secretary certifying to (a) the resolutions of Borrower’s board
of directors, (b) the incumbency and signatures of the officers or representatives executing the Agreement and the
Loan Documents, (c) Borrower’s articles of incorporation and all amendments thereto, and (d) Borrower’s by-laws
	 
	 	 
	17.

	 	Required certificates of status/good-standing for the state of Minnesota
	 
	 	 
	 

	 	F.     Bermans Corporate Documents
	 
	 	 
	18.

	 	Certificate of Bermans’ secretary or assistant secretary certifying to (a) the resolutions of Bermans’ board of
directors, (b) the incumbency and signatures of the officers or representatives executing the Agreement and the
Loan Documents, (c) Bermans’ articles of incorporation and all amendments thereto, and (d) Bermans’ by-laws
	 
	 	 
	19.

	 	Required certificates of status/good-standing for the state of Delaware
	 
	 	 
	20.

	 	Officer’s Certificate of the Chief Executive Officer or Chief Financial Officer of each Credit Party certifying to
the statements set forth in Section 3.5 of the Agreement
	 
	 	 
	V.

	 	Miscellaneous Documents
	 
	 	 
	21.

	 	GE Capital Fee Letter
	 
	 	 
	22.

	 	Assignment Agreement between The CIT Group/Business Credit, Inc. and GECC
	 
	 	 
	23.

	 	Assignment Agreement between LASALLE RETAIL FINANCE, a division of LaSalle Business Credit, as agent for Standard
Federal Bank National Association and GECC
	 
	 	 
	24.

	 	First Amendment to Wells Fargo Restricted Account Agreement
	 
	 	 
	25.

	 	Trademark Security Agreement by WWT, Inc. in favor of Agent
	 
	 	 
	26.

	 	Trademark Security Agreement by River Hills Wilsons, Inc. in favor of Agent







Sch.F-6









 





SCHEDULE G




FINANCIAL
STATEMENTS AND PROJECTIONS - REPORTING




          Borrower shall deliver or cause to be delivered to Agent or to Agent and to each Lender which
a signatory to the Loan Agreement as of the Closing Date or which holds 10 % or more of the
Revolving Loan Commitments, as indicated, the following:




          (a) Monthly Financials. To Agent and Lenders, within thirty (30) days after the end
of each Fiscal Month, financial information regarding Ultimate Parent and its Subsidiaries,
certified by the Chief Financial Officer of Ultimate Parent, consisting of consolidated (i)
unaudited balance sheets as of the close of such Fiscal Month and the related statements of income
and cash flow for that portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii)
unaudited statements of income and cash flows for such Fiscal Month, setting forth in comparative
form the figures for the corresponding period in the prior year and the figures contained in the
most recent annual Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments). Such financial information shall be accompanied by the
certification of the Chief Financial Officer of Ultimate Parent that (x) such financial information
presents fairly in accordance with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of First Intermediate Parent and its Subsidiaries, on a
consolidated basis, in each case as at the end of such month and for the period then ended and (y)
any other information presented is true, correct and complete in all material respects and that
there was no Default or Event of Default in existence as of such time or, if a Default or Event of
Default shall have occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default.




          (b) Quarterly Financials. To Agent and Lenders, within forty-five (45) days after the
end of each Fiscal Quarter, copies of the Ultimate Parent’s 10-Q. Such financial information shall
be accompanied by the Certification of the Chief Financial Officer of Ultimate Parent that (i) such
financial information presents fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and statements of cash flows of First
Intermediate Parent and its Subsidiaries, on a consolidated basis, as at the end of such Fiscal
Quarter and for the period then ended, (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default or Event of Default in existence as
of such time or, if a Default or Event of Default shall have occurred and be continuing, describing
the nature thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrower shall deliver to Agent and Lenders, within forty-five (45) days after the end of
each Fiscal Quarter, a management discussion and analysis which includes a comparison to budget for
that Fiscal Quarter and a comparison of performance for that Fiscal Quarter to the corresponding
period in the prior year;




          (c) Plan and Budgets. To Agent and Lenders, as soon as available, but not later than
thirty (30) days after the end of each Fiscal Year, an annual operating plan, approved by the Board
of Directors of Ultimate Parent, for the following Fiscal Year (which operating plan will include a
statement of all of the material assumptions on which such plan is based, will include monthly
balance sheets and budgets for such Fiscal Year and will integrate sales, gross profits, operating
expenses, operating profit, cash flow projections and borrowing availability
projections all prepared on the same basis and in similar detail as that on which operating
results are reported (and in the case of cash flow projections, representing management’s good
faith estimates of future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and Stores);




G-1









 








          (d) Annual Audited Financials. To Agent and Lenders, within ninety (90) days after
the end of each Fiscal Year, copies of the Ultimate Parent’s 10-K. Such Financial Statements shall
be accompanied by, (i) upon Agent’s request, a report from such accounting firm to the effect that,
in connection with their audit examination, nothing has come to their attention to cause them to
believe that a Default or Event of Default has occurred (or specifying those Defaults and Events of
Default that they became aware of), it being understood that such audit examination extended only
to accounting matters and that no special investigation was made with respect to the existence of
Defaults or Events of Default, (ii) a letter addressed to Agent, on behalf of itself and Lenders,
in form and substance reasonably satisfactory to Agent and subject to standard qualifications taken
by nationally recognized accounting firms, signed by such accounting firm acknowledging that Agent
and Lenders are entitled to rely upon such accounting firm’s certification of such audited
Financial Statements, and (iii) the annual letters to such accountants in connection with their
audit examination detailing contingent liabilities and material litigation matters;




          (e) Management Letters. To Agent and Lenders, within (10) Business Days after receipt
of by any Credit Party, copies of all management letters, exception reports or similar letters or
reports received by such Credit Party from its independent certified public accountants;




          (f) Default Notices. To Agent and Lenders, as soon as practicable, and in any event
within five (5) Business Days after an executive officer of Borrower has actual knowledge of the
existence of any Default, Event of Default or other event which has had a Material Adverse Effect,
telephonic or telecopied notice specifying the nature of such Default or Event of Default or other
event, including the anticipated effect thereof, which notice, if given telephonically, shall be
promptly confirmed in writing on the next Business Day;




          (g) SEC Filings and Press Releases. To Agent, promptly upon their becoming
available, copies of: (i) all Statements, reports, notices and proxy statements made publicly
available by any Credit Party to its security holders; (ii) all regular and periodic reports and
all registration statements and prospectuses, if any, filed by any Credit Party with any securities
exchange or with the Securities and Exchange Commission or any governmental or private regulatory
authority, and (iii) all press releases and other statements made available by any Credit Party to
the public concerning material adverse changes or developments in the business of any such Person.




          (h) Litigation. To Agent in writing, promptly upon any executive officer of Ultimate
Parent or Borrower learning thereof, notice of any Litigation commenced or threatened against any
Credit Party that (i) seeks damages in excess of $500,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or against any Credit Party
or ERISA Affiliate in connection with any Plan and seeks remedies in excess of $500,000, (iv)
alleges criminal misconduct by any Credit Party, or (v) alleges the violation of any law
regarding, or seeks remedies in excess of $500,000 in connection with, any Environmental
Liabilities and Costs,




G-2









 








          (i) Insurance Notice. To Agent, disclosure of losses or casualties required by
Section 5.4 of this Agreement.




          (j) Default Notices. To Agent, copies of (i) any and all default notices received
under or with respect to any leased location or public warehouse where Collateral is located (other
than Leased Stores), and (ii) such other notices or documents as Agent may request in its
reasonable discretion; and




          (k) Other Documents. To Agent and Lenders, such other financial and other information
respecting any Credit Party’s business or financial condition as Agent or any Lender shall, from
time to time, reasonably request.




          Unless otherwise specifically provided herein, any accounting term used in this Agreement
shall have the meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP consistently applied. That
certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall
in no way be construed to limit the foregoing. If any “Accounting Changes” (as defined below)
occur and such changes result in a material change in the calculation of the standards or terms
used in this Agreement or any other Loan Document, then the Credit Parties, Agent and Lenders agree
to enter into negotiations in order to amend such provisions of this Agreement so as to equitably
reflect such Accounting Changes with the desired result that the criteria for evaluating Ultimate
Parent and its Subsidiaries’ financial condition shall be the same after such Accounting Changes as
if such Accounting Changes had not been made; provided, however, that this Agreement of Requisite
Lenders to any required amendments of such provisions shall be sufficient to bind all Lenders.
“Accounting Changes” mean (a) changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any agency with similar
functions), (b) changes in accounting principles concurred in by Borrower’s certified public
accountants; (c) purchase accounting adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and the
application of the accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of such reserves; and
(d) the reversal (but not the use) of any reserves established as a result of purchase accounting
adjustments. If Agent, the Credit Parties and Requisite Lenders agree upon the required
amendments, then after amendments have been executed and the underlying Accounting Change with
respect thereto has been implemented, any reference to GAAP contained in this Agreement or in any
other Loan Document shall, only to the extent of such Accounting Change, refer to GAAP,
consistently applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrower and Requisite Lenders cannot agree upon the required amendments within thirty (30)
days following the date of implementation of any Accounting Change, then all Financial Statements
delivered and other standards and terms in accordance with this Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying Accounting Change.




G-3









 








SCHEDULE H




COLLATERAL REPORTS




          Borrower shall deliver or cause to be delivered the following:




          (a) (i) To Agent, (1) upon its request and no less frequently than weekly, by 12:00 p.m.
(Chicago time) on Wednesday of each week, a Borrowing Base Certificate with respect to Borrower,
accompanied by such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion, which shall be prepared by the Borrower as of the last Friday of the
immediately preceding week or the date 2 days prior to the date of any such request (provided that
if the percentage of the Borrowing Availability Utilizer during the immediately preceding Fiscal
Quarter is greater than 80%, such Borrowing Base Certificate may be delivered monthly until such
time when the Borrowing Availability Utilizer during the immediately preceding Fiscal Quarter is
equal to, or less than, 80%, on or prior to 5 Business Days after the end of each Fiscal Month,
with respect to the immediately preceding Fiscal Month) and (2) on or prior to 3 Business Days
following the last day of the last month in each Fiscal Quarter, a Borrowing Base Certificate with
respect to Borrower, accompanied by such supporting detail and documentation as shall be requested
by Agent in its reasonable discretion, which shall be prepared by the Borrower as of the last day
of the last month of such Fiscal Quarter to be delivered pursuant to Section 1.6 hereof
setting forth in reasonable detail the information necessary to enable Agent to calculate the
Applicable Margins; and




          (ii) To Agent, upon its request and no less frequently than monthly, within 5 Business Days
after the end of each Fiscal Month, with respect to Borrower, a summary of Inventory by location
and type with a supporting perpetual Inventory report, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable discretion, each of which
shall be prepared by the Borrower as of the last day of the immediately preceding Fiscal Month or
the date 2 days prior to the date of any such request.




          (b) To Agent (and to any Lender requesting a copy of the same in writing after the Closing
Date), on a daily basis, collateral reports with respect to Eligible Accounts, including all
additions and reductions (cash and non-cash) with respect to Eligible Accounts of Borrower, in each
case accompanied by such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion each of which shall be prepared by the Borrower as of the immediately
preceding day;




          (c) To Agent, at the time of delivery of each of the monthly Financial Statements delivered
pursuant to Schedule G:





          (i) a reconciliation of the most recent Borrowing Base, general ledger and month-end
Inventory reports of Borrower to Borrower’s general ledger and monthly Financial Statements
delivered pursuant to such Schedule G, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable discretion;



H-1









 






          (ii) a listing of accounts payable and a reconciliation of those accounts payable to
Borrower’s general ledger and monthly Financial Statements delivered pursuant to
Schedule G, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;




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



          (d) To Agent, at the time of delivery of each of the quarterly Financial Statements delivered
pursuant to Schedule G a list of any applications for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency which any Credit Party thereof has filed in the
prior Fiscal Quarter;




          (e) Borrower, at its own expense, shall deliver to Agent, for Agent’s inspection, the results
of each physical verification, if any, which Borrower or any of its Subsidiaries may in their
discretion have made, or caused any other Person to have made on their behalf, of all or any
portion of their Inventory (and, if an Event of Default shall have occurred and be continuing,
Borrower shall, upon the request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);




          (f) Borrower, at its own expense shall deliver to Agent and Lenders, if requested by Agent or
Requisite Lenders, not more frequently than once each Fiscal Year, a review of Inventory owned by
Borrower and held by Borrower and each Store Guarantor, prepared by Universal Asset-Based Services,
Inc. or another appraiser acceptable to Agent, and Borrower, at its own expense, shall deliver to
Agent such appraisals of its assets as Agent may request at any time after the occurrence and
during the continuance of an Event of Default, such appraisals to be conducted by an appraiser, and
in form and substance, satisfactory to Agent; and




          (g) Borrower, at its own expense, shall deliver to Agent at least (x) two times in each year
so long as the percentage of the Borrowing Availability Utilizer during the immediately preceding
Fiscal Quarter is equal to, or greater than, 20% or (y) four times in each year so long as the
percentage of the Borrowing Availability Utilizer during the immediately preceding Fiscal Quarter
is less than 20%, at such times as requested by Agent, an appraisal of Borrower’s assets as of the
last day of the Fiscal Month preceding such request (or such other time as requested by the Agent),
provided, that (i) such appraisals shall be conducted by an appraiser selected by
Agent and consented to by Borrower (which consent cannot be unreasonably withheld by Borrower), and
shall be in form and substance, reasonably satisfactory to Agent; (ii) Borrower may, within 30 days
following the receipt by Borrower of such appraisal, dispute the assumptions set forth therein by
delivery of a written notice to Agent (“Notice of Dispute”); (iii) Agent shall use good faith
efforts to resolve such dispute with Borrower within 15 days following the receipt by Agent of the
Notice of Dispute, and (iv) until a resolution has been reached with respect to the assumptions in
question, Agent, in its sole discretion, may implement Reserves to reflect the
going-out-of-business appraisal then most recently delivered to
Agent. Notwithstanding the foregoing, if an Event of Default has occurred or is continuing,
Agent may select the appraiser without the consent of Borrower and items (ii)-(iv) above shall not
be applicable.





H-2









 








SCHEDULE I




[INTENTIONALLY OMITTED]




I-1









 





SCHEDULE J




NOTICE ADDRESSES




(A) If to Agent or GE Capital, at



General Electric Capital Corporation

500 West Monroe

Chicago, Illinois 60661

Attention: Wilsons Leather Account Manager

Telecopier No.: (312) 463-3855

Telephone No.: (312) 463-2257



with copies to:



Latham & Watkins

233 South Wacker Drive

Suite 5800

Chicago, Illinois 60606

Attention: Jeffrey Moran

Telecopier No.: (312) 993-9767

Telephone No.: (312) 876-7660



and



General Electric Capital Corporation

401 Merritt 7, P.O. Box 5201

Norwalk, Connecticut 06856-5201

Attention: Corporate Counsel

Telecopier No.: (203) 956-4009

Telephone No.: (203) 956-4406




(B) If to Borrower, at



Wilsons Leather Holdings Inc.

7401 Boone Avenue North

Brooklyn Park, Minnesota 55428

Attention: Chief Financial Officer

Telecopier No.: (763) 391-4906

Telephone No.: (763) 391-4000




J-1









 







with copies to:



Faegre & Benson LLP

2200 Wells Fargo Center

90 South Seventh Street Minneapolis, Minnesota 55402

Attention: Susan Jacobson

Telecopier No.: (612) 766-1600

Telephone No.: (612) 766-6808




(C) If to Wells Fargo, at:



Wells Fargo Retail Finance, LLC

One Boston Place, 18th Floor

Boston, MA 02108

Attention: Didi Do

Telecopier No.: (617) 523-4027

Telephone No.: (617) 854-7263





J-2









 








EXHIBIT 1.1(a)(i)




FORM OF

NOTICE OF REVOLVING CREDIT ADVANCE




__________, ______




General Electric Capital Corporation,
 for
itself, as Lender, Term Lender, Swing Line Lender
 and
as Agent for Lenders

500 West Monroe

Chicago, Illinois 60661




Attention: [           ]




Re: Revolving Credit Advance




Ladies and Gentlemen:




          The undersigned, Wilsons Leather Holdings Inc. (“Borrower”), refers to the Fifth Amended and
Restated Credit Agreement, dated as of December 29, 2006 (the “Credit Agreement”, the terms defined
therein being used herein as therein defined), by and among Borrower, General Electric Capital
Corporation, for itself, as Lender, Term Lender, Swing Line Lender and as Agent for Lenders, and
Lenders, and hereby gives you notice, irrevocably, pursuant to Section 1.1 (a) of the Credit
Agreement, that the undersigned hereby requests a Revolving Credit Advance under the Credit
Agreement, and in that connection sets forth below the information relating to such Revolving
Credit Advance as required by Section 1.1(a) of the Credit Agreement:




I. New Revolving Credit Advances





	 	(i)	 	The date of the requested Revolving Credit Advance is                     ,                     .
	 
	 	(ii)	 	The amount of the requested Revolving Credit Advance is $                    .
	 
	 	(iii)	 	The requested Revolving Credit Advance is [an Index Rate Loan] [a LIBOR Loan
with a LIBOR Period of                      days/months].






The undersigned acknowledges that unless the undersigned shall also have complied with the
requirements of Section 1.5(e) of the Credit Agreement, the requested Revolving Credit Advance
shall bear interest by reference to the Index Rate.



Exh.1.1(a)(i)-1









 





II. The requested Revolving Credit Advance is to be sent to:



[Name of Bank]

[City of Bank]

Beneficiary:

Account No.: [number]

ABA No.: [number]

Attn: [name]




               The undersigned hereby certifies that all of the conditions contained in Section 2.3
of the Credit Agreement have been satisfied on the date hereof, and will continue to be satisfied
before and after giving effect to the Revolving Credit Advance and to the application of the
proceeds therefrom.




	 	 	 	 	 	 	 
	 	 	Very truly yours,  
	 
	 	 	 	 	 	 
	 	 	WILSONS LEATHER HOLDINGS INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exh.1.1(a)(i)-2









 






EXHIBIT 1.1(a)(ii)




FORM OF

REVOLVING NOTE




			
	 	 	 
	$                    
	 	December 29, 2006






          FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a Minnesota corporation
(hereinafter referred to as “Borrower”), hereby PROMISES TO PAY to the order of
                                         (“Lender), at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, as agent (in such capacity, “Agent”), at 500 West Monroe, Chicago, Illinois
60661 or at such other place as Agent may designate from time to time in writing, in lawful money
of the United States of America and in immediately available funds, the amount of
                                                             DOLLARS ($ ), or, if less, the aggregate unpaid principal amount
of all advances made to Borrower by Agent pursuant to Section 1.1(a) of the Credit
Agreement (as hereinafter defined) and represented by this Note together with interest on the
unpaid principal amount of this Revolving Note outstanding from time to time from the date hereof
at the rate or rates provided in the Credit Agreement.




          This Revolving Note is issued pursuant to that certain Fifth Amended and Restated Credit
Agreement, dated as of December 29, 2006 among Borrower, Agent, Lender and the other Lenders named
therein (as the same from time to time may be amended, restated, supplemented or otherwise
modified, the “Credit Agreement”), and is entitled to the benefit and security of the Loan
Documents provided for therein, to which reference is hereby made for a statement of all of the
terms and conditions under which the Revolving Loan evidenced hereby is made and is to be repaid
and for a statement of Agent’s and Lenders’ remedies upon the occurrence and during the continuance
of an Event of Default. All capitalized terms, unless otherwise defined herein, shall have the
meanings ascribed to them in Schedule A to the Credit Agreement.




          The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and
on the dates specified in the Credit Agreement. Interest thereon shall be paid until such
principal amount is paid in full at such interest rates and at such times as are specified in the
Credit Agreement.




          To the extent that this Revolving Note evidences Obligations outstanding under the Fourth
Amended and Restated Credit Agreement dated as of April 23, 2002 (as amended prior to the date
hereof), this Revolving Note does not evidence a repayment and refunding or novation of such
Obligations, and such Obligations are in all respects continuing.




          Upon and after the occurrence of an Event of Default, this Revolving Note may, as provided in
the Credit Agreement, and without demand, notice or legal process of any kind, be declared, and,
upon such declaration, immediately shall become, due and payable.




Exh.1.1(a)(ii)-2









 








          Demand, presentment, protest and notice of nonpayment and protest are hereby waived by
Borrower to the fullest extent permitted by law.




[Signature Page Follows]





 









 








          This Revolving Note shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of Illinois, without regard to conflict of law provisions.




	 	 	 	 	 	 	 
	 	 	WILSONS LEATHER HOLDINGS INC.  
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exh.1.1(a)(ii)-2









 






EXHIBIT 1.1(b)(i)




FORM

OF TERM B NOTE




			
	 	 	 
	$20,000,000
	 	December 29, 2006






          FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a Minnesota corporation
(hereinafter referred to as “Borrower”), hereby PROMISES TO PAY to the order of
                                         (“Lender”), at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, as agent, (in such capacity, “Agent”), at 500 West Monroe, Chicago, Illinois
60661 or at such other place as Agent may designate from time to time in writing, in lawful money
of the United States of America and in immediately available funds, the amount of TWENTY MILLION
DOLLARS ($20,000,000).




          This Term B Note is issued pursuant to that certain Fifth Amended and Restated Credit
Agreement, dated as of December 29, 2006 among Borrower, Agent, Lender and the other Lenders named
therein (as the same from time to time may be amended, restated, supplemented or otherwise
modified, the “Credit Agreement”), and is entitled to the benefit and security of the Loan
Documents provided for therein, to which reference is hereby made for a statement of all of the
terms and conditions under which the Term Loan B evidenced hereby is made and is to be repaid and
for a statement of Agent’s and Lenders’ remedies upon the occurrence and during the continuance of
an Event of Default. All capitalized terms, unless otherwise defined herein, shall have the
meanings ascribed to them in Schedule A to the Credit Agreement. The principal balance of
the Term Loan B, the rates of interest applicable thereto and the date and amount of each payment
made on account of the principal thereof, shall be recorded by Agent on its books; provided that
the failure of Agent to make any such recordation shall not affect the obligations of Borrower to
make a payment when due of any amount owing under the Credit Agreement or this Term B Note.




          The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and
on the dates specified in the Credit Agreement. Interest thereon shall be paid until such
principal amount is paid in full at such interest rates and at such times as are specified in the
Credit Agreement.




          To the extent that this Term B Note evidences Obligations outstanding under the Third Amended
and Restated Credit Agreement dated as of April 23, 2002 (as amended prior to the date hereof),
this Term B Note does not evidence a repayment and refunding or novation of such Obligations, and
such Obligations are in all respects continuing.




          Upon and after the occurrence of an Event of Default, this Term B Note may, as provided in the
Credit Agreement, and without demand, notice or legal process of any kind, be declared, and, upon
such declaration, immediately shall become, due and payable.




Exh.1.1(b)(i)-2









 








          Demand, presentment, protest and notice of nonpayment and protest are hereby waived by
Borrower to the fullest extent permitted by law.




          This Term B Note shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of Illinois, without regard to conflict of law provisions.




[Signature Page Follows]




Exh.1.1(b)(i)-2









 








	 	 	 	 	 	 	 
	 	 	WILSONS LEATHER HOLDINGS INC.  
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exh.1.1(b)(i)-3









 






EXHIBIT 1.1(c)(i)




FORM OF

NOTICE OF SWING LINE ADVANCE




                                        ,                     




General Electric Capital Corporation,
 for
itself as Lender, Term Lender, Swing Line Lender
 and
as Agent for Lenders

500 West Monroe,

Chicago, Illinois 6066103




Attention: [            ]




Re: Swing Line Advance




Ladies and Gentlemen:




          The undersigned, Wilsons Leather Holdings Inc. (“Borrower”), refers to the Fifth Amended and
Restated Credit Agreement dated as of December 29, 2006 (the “Credit Agreement”, the terms
defined therein being used herein as therein defined), by and among Borrower, General Electric
Capital Corporation, for itself, as Lender, Term Lender, Swing Line Lender and as Agent for
Lenders, and Lenders, and hereby gives you notice, irrevocably, pursuant to Section 1.1(c)
of the Credit Agreement, that the undersigned hereby requests a Swing Line Advance under the Credit
Agreement, and in that connection sets forth below the information relating to such Swing Line
Advance as required by Section 1.1(c) of the Credit Agreement:




I. New Swing Line Advances





	 	(i)	 	The date of the requested Swing Line Advance is                                         ,                     .
	 
	 	(ii)	 	The amount of the requested Swing Line Advance is $                    .





II. The requested Swing Line Advance is to be sent to:



[Name of Bank]

[City of Bank] Beneficiary:

Account No.: [number]

ABA No.: [number]

Attn: [name]




Exh.1.1(c)(i)-1









 








          The undersigned hereby certifies that all of the conditions contained in Section 2.3
of the Credit Agreement have been satisfied on the date hereof, and will continue to be satisfied
before and after giving effect to the Swing Line Advance and to the application of the proceeds
therefrom.




	 	 	 	 	 	 	 
	 	 	Very truly yours,  
	 
	 	 	 	 	 	 
	 	 	WILSONS LEATHER HOLDINGS INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exh.1.1(c)(i)-3









 






EXHIBIT 1.1(c)(ii)




FORM OF

SWING LINE NOTE




			
	 	 	 
	$10,000,000
	 	December 29, 2006






          FOR VALUE RECEIVED, the undersigned, WILSONS LEATHER HOLDINGS INC., a Minnesota corporation
(hereinafter referred to as “Borrower”), hereby PROMISES TO PAY to the order of GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation, as swing line lender, (in such capacity, “Swing Line
Lender”), at 500 West Monroe, Chicago, Illinois 60661 or at such other place as Swing Line Lender
may designate from time to time in writing, in lawful money of the United States of America and in
immediately available funds, the amount of TEN MILLION DOLLARS ($10,000,000), or, if less, the
aggregate unpaid principal amount (with any refunding of such amounts as provided in the Credit
Agreement being deemed a repayment) of all advances made to Borrower by Agent pursuant to
Section 1.1(c) of the Credit Agreement (as hereinafter defined) together with interest on
the unpaid principal amount of this Swing Line Note outstanding from time to time from the date
hereof at the rate or rates provided in the Credit Agreement




          This Swing Line Note is issued pursuant to that certain Fifth Amended and Restated Credit
Agreement dated as of December 29, 2006 among Borrower, Agent, Swing Line Lender and the other
Lenders named therein (as the same from time to time may be amended, restated, supplemented or
otherwise modified, the “Credit Agreement”), and is entitled to the benefit and security of the
Loan Documents provided for therein, to which reference is hereby made for a statement of all of
the terms and conditions under which the Swing Line Loan evidenced hereby is made and is to be
repaid and for a statement of Agent’s and Lenders’ remedies upon the occurrence and during the
continuance of an Event of Default. All capitalized terms, unless otherwise defined herein, shall
have the meanings ascribed to them in Schedule A to the Credit Agreement.




          The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and
on the dates specified in the Credit Agreement. Interest thereon shall be paid until such
principal amount is paid in full at such interest rates and at such times as are specified in the
Credit Agreement.




          To extent that this Swing Line Note evidences Obligations outstanding under the Third Amended
and Restated Credit Agreement dated as of April 23, 2002 (as amended prior to the date hereof),
this Swing Line Note does not evidence a repayment and refunding or novation of such Obligations,
and such Obligations are in all respects continuing.




          Upon and after the occurrence of an Event of Default, this Swing Line Note may, as provided in
the Credit Agreement, and without demand, notice or legal process of any kind, be declared, and,
upon such declaration, immediately shall become, due and payable.




Exh.1.1(c)(ii)-1









 








          Demand, presentment, protest and notice of nonpayment and protest are hereby waived by
Borrower to the fullest extent permitted by law.




          This Swing Line Note shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of Illinois, without regard to conflict of law provisions.




[Signature Page Follows]





Exh.1.1(c)(ii)-2









 








	 	 	 	 	 	 	 
	 	 	WILSONS LEATHER HOLDINGS INC.  
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exh.1.1(c)(ii)-2









 






EXHIBIT 1.5(e)




FORM OF NOTICE OF

CONVERSION/CONTINUATION




                                        ,                     




General Electric Capital Corporation,
 for
itself, as Lender, Term Lender, Swing Line Lender
 and
as Agent for Lenders

500 West Monroe

Chicago, Illinois 60661




Attention: [            ]




Re: Continuation/Conversion Notice




Ladies and Gentlemen:




          The undersigned, Wilsons Leather Holdings Inc. (“Borrower”), refers to the Fifth Amended and
Restated Credit Agreement, dated as of December 29, 2006 (the “Credit Agreement”, the terms defined
therein being used herein as therein defined), by and among Borrower, General Electric Capital
Corporation, for itself, as Lender, Swing Line Lender and as Agent for Lenders, and Lenders, and
hereby gives you notice, irrevocably, pursuant to Section 1.5(e) of the Credit Agreement.




          Subject to the terms and conditions of the Credit Agreement and all other Loan Documents,
please:




	 	 	 	 	 
	 

	 	                    
	 	convert for the benefit of Borrower
on ___, ___, $___ of the
outstanding principal amount of the Revolving Loan, currently a [Index][LIBOR] Rate
Loan, into a [Index](LIBOR) Rate Loan [having an Interest Period of ___
days/month(s)];
	 
	 	 	 	 
	 

	 	                    
	 	continue for the benefit of Borrower on ___, ___, $___ of
the outstanding principal amount of the Revolving Loan, currently a LIBOR Rate Loan, as
a LIBOR Rate Loan having an Interest Period of ___ days/month(s);






          The undersigned hereby certifies that all of the statements contained in Section 2.3
of the Credit Agreement have been satisfied on the date hereof, and will continue to be satisfied
before and after giving effect to conversion/continuation described herein and to the application
of the proceeds therefrom.




          IN WITNESS WHEREOF, this Conversion/Continuation
Notice has been duly executed as of                     ,                     .




Exh.1.5(e)-1









 








	 	 	 	 	 	 	 
	 	 	WILSONS LEATHER HOLDINGS INC.  
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exh.1.5(e)-2









 






EXHIBIT 4.1(b)




FORM OF

BORROWING BASE CERTIFICATE




[Attached hereto]




Exh.4.1(b)-1









 





Wilsons Leather

Borrowing Base Certificate

As of x/x/xx




	 	 	 	 	 	 	 	 	 
	Credit Card Receivables per x/x/xx Sales Audit System
	 	 	 	 	 	$	—	 
	Advance Rate
	 	 	 	 	 	 	90.0	%
	 
	 	 	 	 	 	 	 
	Total Credit Card Receivables Availability
	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 
	Wholesale Accounts Receivable per x/x/xx Report
	 	 	 	 	 	$	—	 
	Less Ineligibles
	 	 	 	 	 	 	 	 
	> 60 days past due (or > 90 days from invoice date)
	 	 	—	 	 	 	 	 
	Other Ineligibles
	 	 	—	 	 	 	 	 
	Total Ineligibles
	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 
	Eligible Wholesale Accounts Receivable
	 	 	 	 	 	$	—	 
	Advance Rate
	 	 	 	 	 	 	90.0	%
	 
	 	 	 	 	 	 	 
	Total Wholesale Accounts Receivables Availability
	 	 	 	 	 	$	—	 
	Maximum
	 	 	 	 	 	$	10,000,000	 
	Lesser of Total and Maximum
	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 
	Inventory per the x/x/xx External Stock Ledger
	 	 	 	 	 	$	—	 
	E-commerce Inventory per the x/x/xx Stock Ledger
	 	 	 	 	 	 	—	 
	Merchandise In-transit — Wires
	 	 	 	 	 	 	—	 
	Merchandise In-transit — LC’s
	 	 	 	 	 	 	—	 
	Merchandise In-transit — Domestic Freight
	 	 	 	 	 	 	—	 
	Merchandise
In-transit — Prepaid
	 	 	 	 	 	 	—	 
	Total Inventory
	 	 	 	 	 	$	—	 
	Less Ineligibles
	 	 	 	 	 	 	 	 
	Merchandise In-transit — Unfunded LC’s
	 	$	—	 	 	 	 	 
	Layaway Inventory
	 	 	—	 	 	 	 	 
	Liquidation Store Inventory
	 	 	—	 	 	 	 	 
	Book to Physical Adjustment Reserve
	 	 	—	 	 	 	 	 
	Discontinued Product Lines
	 	 	—	 	 	 	 	 
	Locations < $50,000
	 	 	—	 	 	 	 	 
	License Inventory With No Disposition Agreement
	 	 	 	 	 	 	 	 
	Inventory Not Located in 48 Contiguous States
	 	 	—	 	 	 	 	 
	Inventory at E-commerce Location (No Landlord Waiver)
	 	 	—	 	 	 	 	 
	Total Ineligibles
	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 
	Eligible Inventory
	 	 	 	 	 	$	—	 
	NOLV Percentage through December 2006
	 	 	 	 	 	 	95.1	%
	 
	 	 	 	 	 	 	 
	NOLV Value Inventory
	 	 	 	 	 	$	—	 
	Advance Rate
	 	 	 	 	 	 	90.0	%
	 
	 	 	 	 	 	 	 
	Inventory Availability
	 	 	 	 	 	$	—	 
	Less Reserves:
	 	 	 	 	 	 	 	 
	Landed Costs of In-transit
	 	$	—	 	 	 	 	 
	In-transit Greater Than 25% through June 30
	 	$	—	 	 	 	 	 
	Gift Certificates
	 	 	—	 	 	 	 	 
	Credit Memos
	 	 	—	 	 	 	 	 
	Gift Cards
	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Total Reserves
	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 
	Total Inventory Availability
	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 
	Import LC Inventory
	 	 	 	 	 	$	—	 
	Less: Import Payments
	 	 	 	 	 	 	—	 
	Plus: New Import LC Issuances
	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 
	Net Import LC Inventory
	 	 	 	 	 	$	—	 
	NOLV Percentage through December 2006
	 	 	 	 	 	 	59.4	%
	 
	 	 	 	 	 	 	 
	NOLV Value LC Inventory
	 	 	 	 	 	$	—	 






Page 1 of 2








 




	 	 	 	 	 	 	 	 	 
	Advance Rate
	 	 	 	 	 	 	90.0	%
	 
	 	 	 	 	 	 	 
	Available Import LC Inventory
	 	 	 	 	 	$	—	 
	Less: Landed Costs
	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 
	Total Import LC Inventory Availability
	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 
	Wholesale Inventory
	 	 	 	 	 	$	—	 
	Less Ineligibles:
	 	 	 	 	 	 	 	 
	In-transit Greater Than $5,000,000
	 	 	—	 	 	 	 	 
	License Inventory With No Disposition Agreement
	 	 	—	 	 	 	 	 
	Eligible Wholesale Inventory
	 	 	 	 	 	$	—	 
	Advance Rate
	 	 	 	 	 	 	50.0	%
	 
	 	 	 	 	 	 	 
	Total Wholesale Inventory Availability
	 	 	 	 	 	$	—	 
	Maximum
	 	 	 	 	 	$	10,000,000	 
	Lesser of Total and Maximum
	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 
	Revolver Availability
	 	 	 	 	 	$	—	 
	Maximum Revolver
	 	 	 	 	 	$	115,000,000	 
	Lesser of Revolver Availability and Maximum Revolver
	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 
	Eligible Credit Card AR
	 	$	—	 	 	 	 	 
	Eligible Wholesale AR
	 	 	—	 	 	 	 	 
	NOLV Value Inventory
	 	 	—	 	 	 	 	 
	NOLV Value LC Inventory
	 	 	—	 	 	 	 	 
	Eligible Wholesale Inventory
	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	$	—	 
	Advance Rate
	 	 	 	 	 	 	10.0	%
	 
	 	 	 	 	 	 	 
	Term B Availability
	 	 	 	 	 	$	—	 
	Maximum Term B Loan
	 	 	 	 	 	$	20,000,000	 
	Lesser of Term B Availability and Maximum Term B Loan
	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 
	Total Revolver and Term B Availability
	 	 	 	 	 	$	—	 
	Less:
	 	 	 	 	 	 	 	 
	Revolver Outstanding
	 	 	—	 	 	 	 	 
	Import LC’s
	 	 	—	 	 	 	 	 
	Stand-by LC’s
	 	 	—	 	 	 	 	 
	Term Loan Outstanding
	 	 	20,000,000	 	 	 	 	 
	10% Excess Availability Covenant
	 	 	—	 	 	 	 	 
	Other
	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Total Outstanding
	 	 	 	 	 	 	20,000,000	 
	 
	 	 	 	 	 	 	 
	Excess Availability
	 	 	 	 	 	$	(20,000,000	)





Wilsons Leather Holdings Inc. hereby certifies that the foregoing accurately reflects its
Borrowing Availability as of the date hereof in accordance with the Fifth Amended and Restated
Credit Agreement dated as of December 29, 2006, among it, General Electric Capital Corporation as
agent and a lender and the other parties thereto.




	 	 	 
	Date:
	 	 
	 

	 	 
	 
	 	 
	WILSONS LEATHER HOLDINGS INC.
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Its:
	 	 
	 

	 	 






Page 2 of 2










 





EXHIBIT 9.1(a)




FORM OF

ASSIGNMENT AGREEMENT




          This Assignment Agreement (this “Agreement”) is made as of                                         ,         
             by and between
                
                 
                 
           (“Assignor Lender”) and      
                     
               (“Assignee
Lender”) and acknowledged and consented to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent
(“Agent”). All capitalized terms used in this Agreement and not otherwise defined herein will have
the respective meanings set forth in the Credit Agreement as hereinafter defined.




RECITALS:




          WHEREAS, Wilsons Leather Holdings Inc., a Minnesota corporation, (the “Borrower”), the Credit
Parties, Agent, Assignor Lender and other Persons signatory thereto as Lenders have entered into
that certain Fifth Amended and Restated Credit Agreement dated as of December 29, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”)
pursuant to which Assignor Lender has agreed to make certain Loans to, and incur certain Letter of
Credit Obligations and Eligible Trade L/C Obligations for Borrower;




          WHEREAS, Assignor Lender desires to assign to Assignee Lender [all/a portion] of its interest
in the Loans (as described below), the Letter of Credit Obligations and Eligible Trade L/C
Obligations and the Collateral and to delegate to Assignee Lender [all/a portion] of its
Commitments and other duties with respect to such Loans, Letter of Credit Obligations, Eligible
Trade L/C Obligations and Collateral;




          WHEREAS, Assignee Lender desires to become a Lender under the Credit Agreement and to accept
such assignment and delegation from Assignor Lender; and




          WHEREAS, Assignee Lender desires to appoint Agent to serve as agent for Assignee Lender under
the Credit Agreement.




          NOW, THEREFORE, in consideration of the premises and the agreements, provisions, and covenants
herein contained, Assignor Lender and Assignee Lender agree as follows:




Exh.9.1(b)-1









 








     1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE



          1.1 Assignment. Assignor Lender hereby transfers and assigns to Assignee Lender,
without recourse and without representations or warranties of any kind (except as set forth in
Section 3.2), [all/such percentage] of Assignor Lender’s right, title, and interest in [the
Revolving Loan ], [the Term Loan B], [the Loans], [Letter of Credit Obligations], [Eligible Trade




          L/C Obligations], Loan Documents and Collateral as will result in Assignee Lender having as of
the Effective Date (as hereinafter defined) a Pro Rata Share thereof, as follows:




	 	 	 	 	 	 	 	 	 
	     Assignee Lender’s Loans	 	Principal Amount	 	Pro Rata Share
	Term Loan B
	 	$	                    	 	 	 	                    	%
	Revolving Loan
	 	$	                    	 	 	 	                    	%






          1.2 Delegation. Assignor Lender hereby irrevocably assigns and delegates to Assignee
Lender [all/a portion] of its Commitments and its other duties and obligations as a Lender under
the Loan Documents equivalent to [100%/___%] of Assignor Lender’s Commitment (such percentage
representing a commitment of $                     ).




          1.3 Acceptance by Assignee Lender. By its execution of this Agreement, Assignee
Lender irrevocably purchases, assumes and accepts such assignment and delegation and agrees to be a
Lender with respect to the delegated interest under the Loan Documents and to be bound by the terms
and conditions thereof. By its execution of this Agreement, Assignor Lender agrees, to the extent
provided herein, to relinquish its rights and be released from its obligations and duties under the
Credit Agreement.




          1.4 Effective Date. Such assignment and delegation by Assignor Lender and acceptance
by Assignee Lender will be effective and Assignee Lender will become a Lender under the Loan
Documents as of [the date of this Agreement] (“Effective Date”) and upon payment of the Assigned
Amount and the Assignment Fee (as each term is defined below). [Interest and Fees accrued prior to
the Effective Date are for the account of Assignor Lender, and Interest and Fees accrued from and
after the Effective Date are for the account of Assignee Lender.]




     2. INITIAL PAYMENT AND DELIVERY OF NOTES



          2.1 Payment of the Assigned Amount. Assignee Lender will pay to Assignor Lender, in
immediately available funds, not later than 12:00 noon (New York time) on the Effective Date, an
amount equal to its Pro Rata Share of the then outstanding principal amount of the Loans as set
forth above in Section 1.1 [together with accrued interest, fees and other amounts as set
forth on Schedule 2.1] (the “Assigned Amount”).




Exh.9.1(b)-2









 








          2.2 Payment of Assignment Fee. [Assignor Lender and/or Assignee Lender] will pay to
Agent, for its own account in immediately available funds, not later than 12:00 noon (New York
time) on the Effective Date, the assignment fee in the amount of $3,500 (the “Assignment Fee”) as
required pursuant to Section 9.1(a) of the Credit Agreement.




          2.3 Execution and Delivery of Notes. Following payment of the Assigned Amount and the
Assignment Fee, Assignor Lender will deliver to Agent the Notes previously delivered to Assignor
Lender for redelivery to Borrower and Agent will obtain from Borrower for delivery to [Assignor
Lender and] Assignee Lender, new executed Notes evidencing Assignee Lender’s [and Assignor Lender’s
respective] Pro Rata Share[s] in the Loans after giving effect to the assignment described in
Section 1. Each new Note will be issued in the aggregate maximum principal amount of the
[applicable] Commitments [of the Lender to whom such Note is issued] OR [the Assignee Lender].




     3. REPRESENTATIONS, WARRANTIES AND COVENANTS



          3.1 Assignee Lender’s Representations, Warranties and Covenants. Assignee Lender
hereby represents, warrants, and covenants the following to Assignor Lender and Agent:




          (a) This Agreement is a legal, valid, and binding agreement of Assignee Lender, enforceable
according to its terms;




          (b) The execution and performance by Assignee Lender of its duties and obligations under this
Agreement and the Loan Documents will not require any registration with, notice to, or consent or
approval by any Governmental Authority;




          (c) Assignee Lender is familiar with transactions of the kind and scope reflected in the Loan
Documents and in this Agreement;




          (d) Assignee Lender has made its own independent investigation and appraisal of the financial
condition and affairs of each Credit Party, has conducted its own evaluation of the Loans and
Letter of Credit Obligations, the Loan Documents and each Credit Party’s creditworthiness, has made
its decision to become a Lender to Borrower under the Credit Agreement independently and without
reliance upon Assignor Lender or Agent, and will continue to do so;




          (e) Assignee Lender is entering into this Agreement in the ordinary course of its business,
and is acquiring its interest in the Loans, the Letter of Credit Obligations and the Eligible Trade
L/C Obligations for its own account and not with a view to or for sale in connection with any
subsequent distribution; provided, however, that at all times the distribution of Assignee Lender’s
property shall, subject to the terms of the Credit Agreement, be and remain within its control;




          (f) No future assignment or participation granted by Assignee Lender pursuant to Section
9.1 of the Credit Agreement will require Assignor Lender, Agent, or Borrower to file any
registration statement with the Securities and Exchange Commission or to apply to qualify under the
blue sky laws of any state;




Exh.9.1(b)-3









 








          (g) Assignee Lender has no loans to, written or oral agreements with, or equity or other
ownership interest in any Credit Party;




          (h) Assignee Lender will not enter into any written or oral agreement with, or acquire any
equity or other ownership interest in, any Credit Party without the prior written consent of Agent;
and




          (i) As of the Effective Date, Assignee Lender (i) is entitled to receive payments of principal
and interest in respect of the Obligations without deduction for or on account of any taxes imposed
by the United States of America or any political subdivision thereof, (ii) is not subject to
capital adequacy or similar requirements under Section 1.16(a) of the Credit Agreement,
(iii) does not require the payment of any increased costs under Section 1.16(b) of the
Credit Agreement, (iv) is not unable to fund LIBOR Loans under Section 1.16(c) of the
Credit Agreement, and (v) is not subject to any withholding taxes in accordance with Section
1.16(d) and Assignee Lender will indemnify Agent from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, or expenses that result from Assignee
Lender’s failure to fulfill its obligations under the terms of Section 1.15(c) of the
Credit Agreement or from any other inaccuracy in the foregoing.




          3.2 Assignor Lender’s Representations, Warranties and Covenants. Assignor Lender
hereby represents, warrants and covenants the following to Assignee Lender:




          (a) Assignor Lender is the legal and beneficial owner of the Assigned Amount;




          (b) This Agreement is a legal, valid and binding agreement of Assignor Lender, enforceable
according to its terms;




          (c) The execution and performance by Assignor Lender of its duties and obligations under this
Agreement and the Loan Documents will not require any registration with, notice to or consent or
approval by any Governmental Authority;




          (d) Assignor Lender has full power and authority, and has taken all action necessary to
execute and deliver this Agreement and to fulfill the obligations hereunder and to consummate the
transactions contemplated hereby;




          (e) Assignor Lender is the legal and beneficial owner of the interests being assigned hereby,
free and clear of any adverse claim, lien, encumbrance, security interest, restriction on transfer,
purchase option, call or similar right of a third party; and




          (f) This Assignment by Assignor Lender to Assignee Lender complies, in all material respects,
with the terms of the Loan Documents.




Exh.9.1(b)-4









 








     4. LIMITATIONS OF LIABILITY



          Neither Assignor Lender (except as provided in Section 3.2) nor Agent makes any
representations or warranties of any kind, nor assumes any responsibility or liability whatsoever,
with regard to (a) the Loan Documents or any other document or instrument furnished pursuant
thereto or the Loans, Letter of Credit Obligations or other Obligations, (b) the creation,
validity, genuineness, enforceability, sufficiency, value or collectibility of any of them, (c) the
amount, value or existence of the Collateral, (d) the perfection or priority of any Lien upon the
Collateral, or (e) the financial condition of any Credit Party or other obligor or the performance
or observance by any Credit Party of its obligations under any of the Loan Documents. Neither
Assignor Lender nor Agent has or will have any duty, either initially or on a continuing basis, to
make any investigation, evaluation, appraisal of, or any responsibility or liability with respect
to the accuracy or completeness of, any information provided to Assignee Lender which has been
provided to Assignor Lender or Agent by any Credit Party. Nothing in this Agreement or in the Loan
Documents shall impose upon the Assignor Lender or Agent any fiduciary relationship in respect of
the Assignee Lender.




     5. FAILURE TO ENFORCE



          No failure or delay on the part of Agent or Assignor Lender in the exercise of any power,
right, or privilege hereunder or under any Loan Document will impair such power, right, or
privilege or be construed to be a waiver of any default or acquiescence therein. No single or
partial exercise of any such power, right, or privilege will preclude further exercise thereof or
of any other right, power, or privilege. All rights and remedies existing under this Agreement are
cumulative with, and not exclusive of, any rights or remedies otherwise available.




     6. NOTICES



          Unless otherwise specifically provided herein, any notice or other communication required or
permitted to be given will be in writing and addressed to the respective party as set forth below
its signature hereunder, or to such other address as the party may designate in writing to the
other.




     7. AMENDMENTS AND WAIVERS



          No amendment, modification, termination, or waiver of any provision of this Agreement will be
effective without the written concurrence of Assignor Lender, Agent and Assignee Lender.




     8. SEVERABILITY



          Whenever possible, each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law. In the event any provision of this Agreement is or is
held to be invalid, illegal, or unenforceable under applicable law, such provision will be
ineffective only to the extent of such invalidity, illegality, or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of this Agreement.




Exh.9.1(b)-5









 







In addition, in the event any provision of or obligation under this Agreement is or is held to be
invalid, illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability
of the remaining provisions or obligations in any other jurisdictions will not in any way be
affected or impaired thereby.




     9. SECTION TITLES



          Section and Subsection titles in this Agreement are included for convenience of reference
only, do not constitute a part of this Agreement for any other purpose, and have no substantive
effect.




     10. SUCCESSORS AND ASSIGNS



          This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.




     11. APPLICABLE LAW



          THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.




     12. COUNTERPARTS



          This Agreement and any amendments, waivers, consents, or supplements may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which,
when so executed and delivered, will be deemed an original and all of which shall together
constitute one and the same instrument.




[signature page follows]




Exh.9.1(b)-6









 









          IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.




	 	 	 	 	 	 	 	 	 
	ASSIGNEE LENDER:	 	ASSIGNOR LENDER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Notice Address:	 	Notice Address:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ACKNOWLEDGED AND CONSENTED TO:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	GENERAL ELECTRIC CAPITAL CORPORATION	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ACKNOWLEDGED AND CONSENTED TO:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	WILSONS LEATHER HOLDINGS INC.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 





Exh.9.1(b)-8









 






SCHEDULE 2.1



Assignor Lender’s Loans




					
	Principal Amount	 	 	 	 
	Revolving Loan
	 	$	                    	 
	Term Loan B
	 	$	                    	 
	Subtotal
	 	$	 	 
	Accrued Interest
	 	$	                    	 
	Unused Line Fee
	 	$	                    	 
	Other + or -
	 	$	                    	 
	Total
	 	$	 	 





All determined as of the Effective Date.





Exh.9.1(b)-8