exv10w1






Exhibit 10.1




FIRST AMENDMENT TO CREDIT AGREEMENT




     This First Amendment to Credit Agreement (this “First Amendment”) is made as of this
24th day of November, 2009 by and among:



     rue21, inc., a Delaware corporation, for itself and as agent (in such capacity, the “Lead
Borrower”) for the other Borrowers from time to time party to the Credit Agreement (as defined
below);



     r services llc, a Virginia limited liability company (the “Guarantor”);



     BANK OF AMERICA, N.A., as a Lender; and



     BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and L/C
Issuer;



in consideration of the mutual covenants herein contained and benefits to be derived herefrom.



W I T N E S S E T H:




     WHEREAS, reference is made to that certain Credit Agreement, dated as of April 10, 2008 (as
amended, modified, supplemented or restated and in effect from time to time, the “Credit
Agreement”), by and among (i) the Lead Borrower (as successor by merger to rue21, inc., a
Pennsylvania corporation) and the other Borrowers from time to time party thereto (individually, a
“Borrower” and, collectively with the Lead Borrower, the “Borrowers”), (ii) the
Guarantors from time to time party thereto (individually, a “Guarantor” and, collectively,
the “Guarantors”), (iii) the Lenders from time to time party thereto (individually, a
“Lender” and, collectively, the “Lenders”), and (iv) Bank of America, N.A., as
Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer;



     WHEREAS, the Loan Parties have requested that the Administrative Agent and the Lenders amend
certain provisions of the Credit Agreement; and



     WHEREAS, the Administrative Agent and the Lenders have agreed to amend certain provisions of
the Credit Agreement on the terms and conditions set forth herein.



     NOW, THEREFORE, it is hereby agreed as follows:




	1.	 	Definitions. All capitalized terms used herein and not otherwise defined shall have
the same meaning herein as in the Credit Agreement.






	2.	 	Amendments to Article I. The definitions of the following terms in Article I of the
Credit Agreement are hereby amended as follows:






	 	(a)	 	The definition of “Adjustment Date” is hereby deleted in its entirety and the
following substituted in its stead:




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	 	 	 	“Adjustment Date” means the first day of each Fiscal Quarter,
provided that the first Adjustment Date after the First Amendment
Effective Date shall be May 1, 2010.
	 
	 	(b)	 	The definition of “Applicable Margin” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Applicable Margin” means:






     (a) From and after the First Amendment Effective Date until the first
Adjustment Date, the percentages set forth in Level II of the pricing grid below,
unless Average Daily Excess Availability does not support the requirements of Level
II or lower, in which event the Applicable Margin will be set at Level III or Level
IV, as applicable. In no event shall the Applicable Margin be set at Level I prior
to the first Adjustment Date (even if the Average Daily Excess Availability
requirements for Level I have been met); and




     (b) From and after the first Adjustment Date, the Applicable Margin shall be
determined from the following pricing grid based upon the Average Daily Excess
Availability for the most recent Fiscal Quarter ended immediately preceding such
Adjustment Date; provided, however, that notwithstanding anything to
the contrary set forth herein, upon the occurrence of an Event of Default, the
Administrative Agent may, and at the direction of the Required Lenders shall,
immediately increase the Applicable Margin to that set forth in Level IV (even if
the Average Daily Excess Availability requirements for a different Level have been
met) and interest shall accrue at the Default Rate unless and until such time as
such Event of Default has been duly waived as provided in Section 10.01
hereof; provided further that, if any Borrowing Base Certificate
delivered pursuant to Section 6.02 of this Agreement is at any time restated
or otherwise revised, or if the information set forth in any such Borrowing Base
Certificate otherwise proves to be false or incorrect such that the Applicable
Margin would have been higher than was otherwise in effect during any period,
without constituting a waiver of any Default or Event of Default arising as a result
thereof, interest due under this Agreement shall be immediately recalculated at such
higher rate for any applicable periods and shall be due and payable on demand.



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	 	 	Average Daily	 	LIBO Applicable	 	Base Rate
	Level	 	Excess Availability	 	Margin	 	Applicable Margin
	I

	 	Greater than or equal to
$60,000,000
	 	 	2.25	%	 	 	1.25	%
	II

	 	Less than $60,000,000
but greater than or
equal to $40,000,000
	 	 	2.50	%	 	 	1.50	%
	III

	 	Less than $40,000,000
but greater than or
equal to $20,000,000
	 	 	2.75	%	 	 	1.75	%
	IV

	 	Less than $20,000,000
	 	 	3.00	%	 	 	2.00	%







	 	(c)	 	The definition of “Appraisal Percentage” is hereby deleted in its entirety and
the following substituted in its stead:
	 
	 	 	 	“Appraisal Percentage” means the following percentages during the periods
indicated:





	 	 	 	 	 
	Period	 	Appraisal Percentage
	January 1st through September
30th of each year
	 	 	90	%
	October 1st through December
31st of each year
	 	 	92.5	%







	 	(d)	 	The definition of “Base Rate” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Base Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (a) the Federal Funds Rate for such day plus one-half of one percent
(0.50%), (b) the rate of interest in effect for such day as publicly announced from
time to time by Bank of America as its “prime rate”, or (c) the Adjusted LIBO Rate
(calculated utilizing the LIBO Rate for a one-month interest period, as determined
on such day), plus one percent (1.00%). The “prime rate” is a rate set by
Bank of America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a




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	 	 	 	reference point for pricing some loans, which may be priced at, above, or below such
announced rate. If, for any reason, the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Rate or the LIBO Rate for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient quotations
thereof in accordance with the terms hereof, the Base Rate shall be determined
without regard to clauses (a) or (c) of the first sentence of this definition, as
applicable, until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in Bank of America’s “prime rate”, the
Federal Funds Rate or the Adjusted LIBO Rate shall be effective on the effective
date of such change in Bank of America’s “prime rate”, the Federal Funds Rate or the
Adjusted LIBO Rate, respectively.
	 	(e)	 	The definition of “Cash Dominion Event” is hereby deleted in its entirety and
the following substituted in its stead:
	 
	 	 	 	“Cash Dominion Event” means either (a) the occurrence and continuance of any
Event of Default, or (b) the failure of the Borrowers to maintain Excess
Availability for fourteen (14) consecutive days equal to or greater than twenty
percent (20%) of the Borrowing Base at any time. For purposes of this Agreement,
the occurrence of a Cash Dominion Event shall be deemed continuing at the
Administrative Agent’s option (i) so long as such Event of Default has not been
waived, and/or (ii) if such Cash Dominion Event arises as a result of the Borrowers’
failure to achieve Excess Availability as required hereunder, until Excess
Availability for thirty (30) consecutive Business Days is equal to or greater than
twenty percent (20%) of the Borrowing Base, in which case a Cash Dominion Event
shall no longer be deemed to be continuing for purposes of this Agreement;
provided that a Cash Dominion Event shall be deemed continuing (even
if an Event of Default is no longer continuing and/or Excess Availability exceeds
the required amount for thirty (30) consecutive Business Days) at all times after a
Cash Dominion Event has occurred and been discontinued on three (3) occasions after
the Closing Date.
	 
	 	(f)	 	The definition of “Change of Control” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Change of Control” means an event or series of events by which:






     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan) other than SKM
Equity Partners II, L.P. and its Affiliates becomes the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act



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of 1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire,
whether such right is exercisable immediately or only after the passage of time
(such right, an “option right”)), directly or indirectly, of (i) 35% or more
of the Equity Interests of the Lead Borrower entitled to vote for members of the
board of directors or equivalent governing body of the Lead Borrower on a
fully-diluted basis (and taking into account all such Equity Interests that such
“person” or “group” has the right to acquire pursuant to any option right) and (ii)
a percentage that is greater than the percentage of the Equity Interests of the Lead
Borrower entitled to vote for members of the board of directors or equivalent
governing body of the Lead Borrower that is then beneficially owned by SKM Equity
Partners II, L.P. and its Affiliates; or




     (b) during any period of 12 consecutive months, a majority of the members of
the board of directors or other equivalent governing body of the Lead Borrower cease
to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to in
clause (i) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time of
such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of one or
more directors by any person or group other than a solicitation for the election of
one or more directors by or on behalf of the board of directors); or




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




	 	(g)	 	The definition of “Covenant Compliance Event” is hereby deleted from Article I
of the Credit Agreement in its entirety.
	 
	 	(h)	 	Clause (h) of the definition of “Permitted Disposition” is hereby deleted in
its entirety and the following substituted in its stead:






	 	 	 	“(h) the issuance and sale of Equity Interests (other than Disqualified Stock) by
any Loan Party or any Subsidiary thereof, including, without limitation, (i) the




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	 	 	 	sale or issuance of any Equity Interests of the Lead Borrower in connection with a
Public Offering and (ii) the sale or issuance of Equity Interests of the Lead
Borrower to directors, officers, employees and consultants of the Lead Borrower or
any Subsidiary thereof in connection with a management incentive plan or other
compensation arrangement approved by the board of directors of the Lead Borrower.”






	 	(i)	 	Clause (a) of the definition of “Prepayment Event” is hereby amended by
deleting the reference to “$2,500,000” and replacing it with a reference to
“$4,000,000”.
	 
	 	(j)	 	Clause (b) of the definition of “Prepayment Event” is hereby amended by
deleting the reference therein to “$1,000,000” and replacing it with a reference to
“$2,000,000”.
	 
	 	(k)	 	The definition of “Public Offering” is hereby deleted in its entirety and the
following substituted in its stead:
	 
	 	 	 	“Public Offering” means a public offering of the Equity Interests of the
Lead Borrower pursuant to an effective registration statement (other than a
registration statement on Form S-8) under the Securities Act of 1933.
	 
	 	(l)	 	The definition of “Revolving Credit Ceiling” is hereby amended by deleting the
reference to “$60,000,000” and replacing it with a reference to “$85,000,000”.
	 
	 	(m)	 	The following new definitions are hereby added to Article I of the Credit
Agreement in alphabetical order:






	 	(i)	 	“Average Daily Outstandings” means the average daily
Outstandings for the immediately preceding month.
	 
	 	(ii)	 	“Disqualified Stock” means any Equity Interest that, by
its terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, in each case at the option of the holder thereof), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Loans mature; provided, however,
that (i) only the portion of such Equity Interests which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable
at the option of the holder thereof prior to such date shall be deemed to be
Disqualified Stock and (ii) with respect to any Equity Interests issued to any
employee or to any plan for the benefit of employees of the Lead Borrower or
its Subsidiaries or by any such plan to such employees, such Equity Interest
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Lead Borrower or one of its




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	 	 	 	Subsidiaries in order to satisfy applicable statutory or regulatory
obligations or as a result of such employee’s termination, resignation,
death or disability and if any class of Equity Interest of such Person that
by its terms authorizes such Person to satisfy its obligations thereunder by
delivery of an Equity Interest that is not Disqualified Stock, such Equity
Interests shall not be deemed to be Disqualified Stock. Notwithstanding the
preceding sentence, any Equity Interest that would constitute Disqualified
Stock solely because the holders thereof have the right to require a Loan
Party to repurchase such Equity Interest upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Stock. The
amount of Disqualified Stock deemed to be outstanding at any time for
purposes of this Agreement will be the maximum amount that the Lead Borrower
and its Subsidiaries may become obligated to pay upon maturity of, or
pursuant to any mandatory redemption provisions of, such Disqualified Stock
or portion thereof, plus accrued dividends.
	 
	 	(iii)	 	“First Amendment Effective Date” means November 24,
2009.
	 
	 	(iv)	 	“Loan Cap” means, at any time of determination, the
lesser of (a) the Aggregate Commitments or (b) the Borrowing Base.
	 
	 	(v)	 	“Outstandings” means the aggregate Outstanding Amount
of all Loans (including Committed Loans and Swing Line Loans).






	3.	 	Amendments to Article II. The provisions of Article 2 of the Credit Agreement are
hereby amended as follows:






	 	(a)	 	Section 2.09(a) of the Credit Agreement is hereby deleted in its entirety and
the following substituted in its stead:






	 	 	 	“(a) Commitment Fee.






     (i) From and after the First Amendment Effective Date until [May 1, 2010], the
Borrowers shall pay to the Administrative Agent, for the account of each Lender in
accordance with its Applicable Percentage, a commitment fee (the “Commitment
Fee”) equal to the percentage per annum set forth in Level II of the grid below
(the “Commitment Fee Percentage”) times the actual daily amount by
which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of
Loans and (ii) the Outstanding Amount of L/C Obligations; provided
that, if Average Daily Excess Availability does not support the requirements
of Level II or lower, the Commitment Fee Percentage will be set at Level III or
Level IV, as applicable. In no event shall the Commitment Fee Percentage be set at
Level I prior to May 1, 2010 (even if the Average Daily Excess Availability
requirements for Level I have been met).



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     (ii) From and after May 1, 2010, the Borrowers shall pay to the Administrative
Agent, for the account of each Lender in accordance with its Applicable Percentage,
a Commitment Fee equal to the Commitment Fee Percentage set forth in the grid below
determined based upon Average Daily Excess Availability during the calendar month
just ended times the actual daily amount by which the Aggregate Commitments
exceed the sum of (i) the Outstanding Amount of Loans and (ii) the Outstanding
Amount of L/C Obligations; provided that, if any Borrowing Base
Certificate delivered pursuant to Section 6.02 of this Agreement is at any
time restated or otherwise revised, or if the information set forth in any such
Borrowing Base Certificate otherwise proves to be false or incorrect such that the
Commitment Fee Percentage would have been higher than was otherwise in effect during
any period, without constituting a waiver of any Default or Event of Default arising
as a result thereof, the Commitment Fee due under this Agreement shall be
immediately recalculated at such higher rate for any applicable periods and shall be
due and payable on demand.



	 	 	 	 	 	 	 
	 	 	Average Daily Excess	 	Commitment Fee
	Level	 	Availability	 	Percentage
	I

	 	Greater than or equal to $60,000,000
	 	 	0.35	%
	II

	 	Less than $60,000,000 but greater than or equal
to $40,000,000
	 	 	0.40	%
	III

	 	Less than $40,000,000 but greater than or equal
to $20,000,000
	 	 	0.45	%
	IV

	 	Less than $20,000,000
	 	 	0.50	%







	 	 	 	The Commitment Fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article
IV is not met, and shall be due and payable monthly in arrears on the last
Business Day of each calendar month, commencing with the first such date to occur
after the Closing Date, and on the last day of the Availability Period. The
Commitment Fee shall be calculated monthly in arrears, and if there is any change in
the Commitment Fee Percentage during any month, the actual daily amount shall be
computed and multiplied by the Commitment Fee Percentage separately for each period
during such month that such Commitment Fee Percentage was in effect.
	 
	 	(b)	 	Section 2.09(b) of the Credit Agreement is hereby deleted in its entirety and
the following substituted in its stead:




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	 	 	 	“(b) RESERVED.”






	 	(c)	 	The first sentence of Section 2.15(a) of the Credit Agreement is hereby amended
by deleting the reference therein to “$25,000,000” and replacing it with a reference to
“$15,000,000”.






	4.	 	Amendments to Article VI. The provisions of Article VI of the Credit Agreement are
hereby amended as follows:






	 	(a)	 	Section 6.01(c) of the Credit Agreement is hereby deleted in its entirety and
the following substituted in its stead:






	 	 	 	“(c) RESERVED.”






	 	(b)	 	Section 6.02(b) of the Credit Agreement is hereby deleted in its entirety and
the following substituted in its stead:
	 
	 	 	 	“(b) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), (i) a duly completed Compliance
Certificate signed by a Responsible Officer of the Lead Borrower and (ii) a copy of
management’s discussion and analysis with respect to such financial statements in
form and substance substantially similar to the discussion and analysis which the
Lead Borrower delivered to the agent under the Existing Revolving Credit Loan
Agreement immediately prior to the Closing Date, which such changes thereto as the
Administrative Agent may reasonably request from time to time. In the event of any
change in generally accepted accounting principles used in the preparation of such
financial statements, the Lead Borrower shall also provide a statement of
reconciliation conforming such financial statements to GAAP;”
	 
	 	(c)	 	The proviso in Section 6.02(c) of the Credit Agreement is hereby deleted in its
entirety and the following substituted in its stead:
	 
	 	 	 	“;provided that (i) if Excess Availability is less than twenty
percent (20%) of the Borrowing Base at any time, or (ii) any Event of Default has
occurred and is continuing, at the election of the Administrative Agent, such
Borrowing Base Certificate shall be delivered on Wednesday of each week (or, if
Wednesday is not a Business Day, on the next succeeding Business Day), as of the
close of business on the immediately preceding Saturday;”
	 
	 	(d)	 	The third sentence of Section 6.10(b) of the Credit Agreement is hereby deleted
in its entirety and the following substituted in its stead:
	 
	 	 	 	“The Loan Parties acknowledge that the Administrative Agent may, in its Discretion,
undertake one (1) inventory appraisal and one (1) commercial finance examination
each Fiscal Year at the Loan Parties’ expense; provided that, if




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	 	 	 	Average Daily Outstandings as of the end of any month during the term of this
Agreement are greater than $20,000,000, the Loan Parties acknowledge that the
Administrative Agent may, in its Discretion, undertake up to two (2) inventory
appraisals and up to two (2) commercial finance examinations each Fiscal Year at the
Loan Parties’ expense; provided further that the cost of one (1)
inventory appraisal and one (1) commercial finance examination shall not exceed
$60,000 in the aggregate, plus all reasonable out-of-pocket expenses and costs
incurred in connection therewith.”






	5.	 	Amendments to Article VII. The provisions of Article VII of the Credit Agreement are
hereby amended as follows:






	 	(a)	 	The lead-in language in Section 7.06 of the Credit Agreement is hereby deleted
in its entirety and the following is substituted in its stead:
	 
	 	 	 	“7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that, so long as no Default shall have occurred and be continuing prior to,
or immediately after giving effect to, any action described below or would result
therefrom:”
	 
	 	(b)	 	Section 7.06 of the Credit Agreement is hereby amended by deleting the “and” at
the end of clause (c), by deleting the “.” at the end of clause (d) and replacing it
with “; and” and by adding the following new clause (e):
	 
	 	 	 	“(e) the Loan Parties and each Subsidiary may purchase, redeem or otherwise acquire
Equity Interests held by any of its present or former directors, officers, employees
and consultants pursuant to any management equity plan or stock option plan,
provided that Restricted Payments made pursuant to this clause (e)
shall not exceed (i) $500,000 in the aggregate in any Fiscal Year and (ii)
$2,000,000 in the aggregate from and after the First Amendment Effective Date;”
	 
	 	(c)	 	Section 7.09 of the Credit Agreement is hereby deleted in its entirety and the
following is substituted in its stead:
	 
	 	 	 	“7.09 Transactions with Affiliates. Enter into, renew, extend or be a party
to any transaction of any kind with any Affiliate of any Loan Party, whether or not
in the ordinary course of business, other than on fair and reasonable terms
substantially as favorable to the Loan Parties or such Subsidiary as would be
obtainable by the Loan Parties or such Subsidiary at the time in a comparable arm’s
length transaction with a Person other than an Affiliate, provided
that the foregoing restriction shall not apply to:






     (a) a transaction between or among the Loan Parties;



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     (b) payment of reasonable compensation to officers and employees for services
actually rendered to any Loan Party or any Subsidiary thereof pursuant to any
management incentive plan or other compensation arrangement approved by the board of
directors of such Loan Party or any such Subsidiary; and




     (c) a one-time cash payment to SKM Equity Partners II, L.P. in an amount not
to exceed $1,500,000 in connection with termination of the existing management
agreement between the Lead Borrower and SKM Equity Partners II, L.P.,
provided that such payment may not be made if an Event of Default
then exists or would arise therefrom.”




	 	(d)	 	Section 7.15 of the Credit Agreement is hereby deleted in its entirety and the
following is substituted in its stead:
	 
	 	 	 	“7.15 Availability Covenant. Permit Excess Availability at any time to be
less than ten percent (10%) of the Loan Cap.”






	6.	 	Amendments to Article VIII. The provisions of Article VIII of the Credit Agreement
are hereby amended as follows:






	 	(a)	 	Section 8.01(e) of the Credit Agreement is hereby amended by deleting each of
the references therein to “$1,000,000” and replacing each such reference with a
reference to “$2,000,000”.
	 
	 	(b)	 	Section 8.01(h) of the Credit Agreement is hereby amended by deleting the
reference therein to “ten (10) consecutive days” and replacing it with a reference to
fifteen (15) consecutive days”.
	 
	 	(c)	 	Section 8.01(i) of the Credit Agreement is hereby amended by deleting each of
the references therein to “$1,000,000” and replacing each such reference with a
reference to “$2,000,000”.






	7.	 	Amendment to Schedule 6.02. Schedule 6.02 to the Credit Agreement is hereby amended
and restated in its entirety in the form of Schedule 6.02 annexed to this First Amendment.






	8.	 	Ratification of Loan Documents. Except as otherwise expressly provided herein, all
terms and conditions of the Credit Agreement and the other Loan Documents remain in full force
and effect. The Loan Parties hereby ratify, confirm, and reaffirm that all representations
and warranties of the Loan Parties contained in the Credit Agreement or any other Loan
Document are true and correct in all material respects on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an earlier date, in
which case they are true and correct in all material respects as of such earlier date. The
Guarantors hereby acknowledge, confirm and agree that the Guaranteed Obligations of the
Guarantors under, and as defined in, the Facility Guaranty include, without limitation, all
Obligations of the Loan Parties at any time and from time




11









 












	 	 	to time outstanding under the Credit Agreement and the other Loan Documents, as such
Obligations have been increased pursuant to this First Amendment. The Loan Parties hereby
acknowledge, confirm and agree that the Security Documents, and any and all Collateral
previously pledged to the Collateral Agent, for the benefit of the Credit Parties, pursuant
thereto, shall continue to secure all Obligations of the Loan Parties at any time and from
time to time outstanding under the Credit Agreement and the other Loan Documents, as such
Obligations have been increased pursuant to this First Amendment.






	9.	 	Conditions to Effectiveness. This First Amendment shall not be effective until each
of the following conditions precedent has been fulfilled to the reasonable satisfaction of the
Administrative Agent:






	 	(a)	 	The Administrative Agent shall have received counterparts of this First
Amendment duly executed and delivered by each of the parties hereto.
	 
	 	(b)	 	The Administrative Agent shall have received counterparts of that certain First
Amendment to Security Agreement dated as of even date herewith among the Loan Parties
and the Collateral Agent (“Amendment to Security Agreement”) and that certain
First Amendment to Intellectual Property Security Agreement dated as of even date
herewith among the Loan Parties and the Collateral Agent (“Amendment to IP Security
Agreement”), each duly executed and delivered by each of the parties thereto.
	 
	 	(c)	 	All corporate and shareholder action on the part of the Loan Parties necessary
for the valid execution, delivery and performance by the Loan Parties of this First
Amendment, the Amendment to Security Agreement and the Amendment to IP Security
Agreement shall have been duly and effectively taken and evidence thereof reasonably
satisfactory to the Administrative Agent shall have been provided to the Administrative
Agent.
	 
	 	(d)	 	The Lead Borrower shall have delivered to the Administrative Agent, in form and
substance reasonably satisfactory to the Administrative Agent, a certificate of an
authorized officer attaching true and accurate copies of the Lead Borrower’s amended
and restated Certificate of Incorporation and amended and restated By-Laws.
	 
	 	(e)	 	The Loan Parties shall have paid to the Administrative Agent, for its own
account, an amendment fee (the “Amendment Fee”) in the amount of $125,000. The
Amendment Fee shall be fully earned and paid by the Loan Parties to the Administrative
Agent in full on the effective date of this First Amendment. The Amendment Fee shall
not be subject to refund or rebate under any circumstances.
	 
	 	(f)	 	The Loan Parties shall have paid in full all reasonable costs and expenses of
the Agents (including, without limitation, reasonable attorneys’ fees) in connection




12









 






	 	 	 	with the preparation, negotiation, execution and delivery of this First Amendment
and related documents.
	 	(g)	 	After giving effect to this First Amendment, no Default or Event of Default
shall have occurred and be continuing.





     10. Miscellaneous.




	 	(a)	 	This First Amendment may be executed in several counterparts and by each party
on a separate counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page to this First Amendment by telecopy or other
electronic transmission shall be effective as delivery of a manually executed
counterpart of this First Amendment.
	 
	 	(b)	 	This First Amendment expresses the entire understanding of the parties with
respect to the transactions contemplated hereby. No prior negotiations or discussions
shall limit, modify, or otherwise affect the provisions hereof.
	 
	 	(c)	 	Any determination that any provision of this First Amendment or any application
hereof is invalid, illegal or unenforceable in any respect and in any instance shall
not effect the validity, legality, or enforceability of such provision in any other
instance, or the validity, legality or enforceability of any other provisions of this
First Amendment.
	 
	 	(d)	 	The Loan Parties represent and warrant that they have consulted with
independent legal counsel of their selection in connection with this First Amendment
and are not relying on any representations or warranties of the Agents or the Lenders
or their counsel in entering into this First Amendment.
	 
	 	(e)	 	This First Amendment shall be governed by, and construed in accordance with,
the laws of the State of New York.





[SIGNATURE PAGES FOLLOW]




13









 








     IN WITNESS WHEREOF, the parties have hereunto caused this First Amendment to be executed and
their seals to be hereto affixed as of the date first above written.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	rue21, inc., as Lead Borrower and as a Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith McDonough	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Keith McDonough	 	 
	 

	 	Title:
	 	Senior Vice President, Chief Financial 

Officer
and Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	r services llc, as a Guarantor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith McDonough	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Keith McDonough	 	 
	 

	 	Title:
	 	Director and President	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Administrative Agent,
Collateral Agent, L/C Issuer and Swingline Lender and
as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Richard D. Hill, Jr.	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Richard D. Hill, Jr.	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Managing Director	 	 
	 

	 	 	 	 	 	 





Signature Page to First Amendment to Credit Agreement





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Schedule 6.02




	 	 	 	 	 
	Rue21, Inc. Reporting Requirements	 	Included	 
	A. Monthly (within 6 days after the end of each fiscal month) 1
	 	 	 	 
	1. Borrowing Base Certificate
	 	 	 	 
	 
	 	 	 
	2. Inventory Roll-Forward Report
	 	 	 	 
	 
	 	 	 
	3. Returns Report
	 	 	 	 
	 
	 	 	 
	4. Fiscal Year to Date Sales Since Last Physical
	 	 	 	 
	 
	 	 	 
	5. Eligible In-Transit Report
	 	 	 	 
	 
	 	 	 
	6. Major Credit Card Receivables Report
	 	 	 	 
	 
	 	 	 
	7. Customer Credit Liabilities (Gift Cert/Card, Merch. Credits, Cust. Deposits)
	 	 	 	 
	 
	 	 	 
	8. Land Lord Rent Reserve Report
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	B. Quarterly (within 45 days after the end of each fiscal quarter)
	 	 	 	 
	1. Quarterly Financial Statements
	 	 	 	 
	 
	 	 	 
	2. Quarterly Compliance Certificate
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	C. Annually (within 30 days of fiscal year end)
	 	 	 	 
	1. Projected consolidated forecast by month
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	D. Annually (within 90 days of fiscal year end)
	 	 	 	 
	1. Annual Financial Statements
	 	 	 	 
	 
	 	 	 
	2. Annual Compliance Certificate
	 	 	 	 
	 
	 	 	 
	3. Certificate from Registered Public Accounting Firm
	 	 	 	 
	 
	 	 	 







 




			
	1	 	BBC reporting will trigger to weekly reporting (due on the Wednesday of
each week or, if Wednesday is not a Business Day, on the next succeeding Business
Day, as of the close of business on the immediately preceding Saturday;) if Excess
Availability is less than twenty percent (20%) of the Borrowing Base at any time, or
(ii) any