Unassociated Document


    ELEVENTH
AMENDMENT TO CREDIT AGREEMENT

    


    This
ELEVENTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as
of July 31, 2009, is entered into by and among THE GYMBOREE CORPORATION, a
Delaware corporation (the “Company”), each other
Borrower named in the signature pages hereof (together with the Company, each a
“Borrower” and,
collectively, the “Borrowers”), and BANK
OF AMERICA, N.A. (the “Lender”).

     

    RECITALS

    


    A. The
Borrowers and the Lender are parties to a Credit Agreement, dated as of August
11, 2003 as amended by (i) that certain Waiver and First Amendment to Credit
Agreement dated as of December 6, 2004, (ii) that certain Second Amendment to
Credit Agreement dated as of July 25, 2005, (iii) that certain Third Amendment
to Credit Agreement dated as of March 30, 2006, (iv) that certain Fourth
Amendment to Credit Agreement dated as of July 5, 2006, (v) that certain Fifth
Amendment to Credit Agreement dated as of February 7, 2007, (vi) that
certain Sixth Amendment to Credit Agreement dated as of April 24, 2007,
(vii) that certain Seventh Amendment to Credit Agreement dated as of June
12, 2007, (viii) that certain Eighth Amendment to Credit Agreement dated as
of July 31, 2007, (ix) that certain Ninth Amendment to Credit Agreement
dated as of November 21, 2007, and (x) that certain Tenth Amendment to Credit
Agreement dated as of August 8, 2008 (collectively, and as the same may be
further amended, restated, extended, supplemented or otherwise modified from
time to time, the “Credit Agreement”),
pursuant to which the Lender has extended certain credit facilities to the
Borrowers.

     

    B. The
Borrowers have requested that the Lender agree to certain amendments to the
Credit Agreement, and the Lender has agreed to such request, subject to the
terms and conditions of this Amendment.

     

    NOW,
THEREFORE, for valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:

     

    1. Defined
Terms.  Unless otherwise defined herein, capitalized terms used
herein shall have the meanings, if any, assigned to such terms in the Credit
Agreement (as amended hereby).  As used herein, “Amendment Documents”
means this Amendment, the Credit Agreement (as amended by this Amendment), and
each certificate and other document executed and delivered by the Borrowers
pursuant to Section
5 hereof.

     

    2. Interpretation.  The
rules of interpretation set forth in Sections 1.02, 1.03, 1.04, 1.05, and 1.06 of the Credit
Agreement shall be applicable to this Amendment and are incorporated herein by
this reference.

     

    3. Amendments to Credit
Agreement.  Subject to the terms and conditions hereof, and
with effect from and after the Effective Date, the Credit Agreement shall be
amended as follows:

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (a) Section 1.01 of the
Credit Agreement shall be amended by amending and restating the definition
“Applicable Rate” to read in full as follows:

     

    “Applicable Rate”
means (a) prior to the Tenth Amendment Date, the following percentages per
annum, based upon the Consolidated Adjusted Leverage Ratio as set forth in the
most recent Compliance Certificate received by the Lender pursuant to Section 6.02(a) in
conjunction with financial statements provided pursuant to Section 6.01(a)
or (b):

     

    
      	
              Pricing
      Level

            	
              Consolidated
      Adjusted Leverage Ratio

            	
              Unused
      Line Fee (%)

            	
              Eurodollar
      Rate Loans/ Letters of Credit (%)

            	
              Base
      Rate Loans (%)

            
	
              1

            	
              >
      3.00:1.00

            	
              0.500

            	
              1.500

            	
              0.250

            
	
              2

            	
              >
      2.50:1.00 but <
      3.00:1.00

            	
              0.400

            	
              1.250

            	
              0.000

            
	
              3

            	
              >
      2.00:1.00 but <
      2.50:1.00

            	
              0.300

            	
              1.000

            	
              0.000

            
	
              4

            	
              < 2.00:1.00

            	
              0.200

            	
              0.750

            	
              0.000

            


    

    


    and (b)
at all times from and after the Tenth Amendment Date until the Eleventh
Amendment Date, the following percentages per annum, based upon the Consolidated
Adjusted Leverage Ratio as set forth in the most recent Compliance Certificate
received by the Lender pursuant to Section 6.02(a)
in conjunction with financial statements provided pursuant to Section 6.01(a)
or (b):

     

    
      	
              Pricing
      Level

            	
              Consolidated
      Adjusted Leverage Ratio

            	
              Unused
      Line Fee (%)

            	
              Eurodollar
      Rate Loans/ Letters of Credit (%)

            	
              Base
      Rate Loans (%)

            
	
              1

            	
              >
      3.00:1.00

            	
              0.600

            	
              1.750

            	
              0.250

            
	
              2

            	
              >
      2.50:1.00 but <
      3.00:1.00

            	
              0.500

            	
              1.500

            	
              0.000

            
	
              3

            	
              >
      2.00:1.00 but <
      2.50:1.00

            	
              0.400

            	
              1.250

            	
              0.000

            
	
              4

            	
              < 2.00:1.00

            	
              0.300

            	
              1.000

            	
              0.000

            


    

    


    and (c)
at all times from and after the Eleventh Amendment Date, the following
percentages per annum, based upon the Consolidated Adjusted Leverage Ratio as
set forth in the most recent Compliance Certificate received by the Lender
pursuant to Section 6.02(a)
in conjunction with financial statements provided pursuant to Section 6.01(a)
or (b):

     

    
      	
              Pricing
      Level

            	
              Consolidated
      Adjusted Leverage Ratio

            	
              Unused
      Line Fee (%)

            	
              Eurodollar
      Rate Loans/ Letters of Credit (%)

            	
              Base
      Rate Loans (%)

            
	
              1

            	
              >
      3.00:1.00

            	
              0.650

            	
              3.000

            	
              0.750

            
	
              2

            	
              >
      2.50:1.00 but <
      3.00:1.00

            	
              0.550

            	
              2.500

            	
              0.500

            
	
              3

            	
              >
      2.00:1.00 but <
      2.50:1.00

            	
              0.450

            	
              2.250

            	
              0.250

            
	
              4

            	
              < 2.00:1.00

            	
              0.350

            	
              2.000

            	
              0.000

            


    

    


    Any
increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Adjusted Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(a) in
conjunction with financial statements provided pursuant to Section 6.01(a)
or (b); provided, however, that if a
Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level 1 shall apply as of the first Business Day after the
date on which such Compliance Certificate was required to have been
delivered.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b) Section 1.01
shall be further amended by adding the following definition, in appropriate
alphabetical order:

     

    “Applicable SLC Rate”
means one-half the Applicable Rate for Letters of Credit.

     

    (c) Section 1.01 of the
Credit Agreement shall be amended by amending and restating “Consolidated
Adjusted Leverage Ratio” to read in full as follows:

     

    “Consolidated Adjusted
Leverage Ratio” means, (a) as determined as of any date prior to
August 1, 2009, the ratio of (i) Consolidated Funded Indebtedness as of such
date plus six
(6) times the amount of Lease Expenses for the Subject Period to (ii) Consolidated
Adjusted EBITDAR for the Subject Period and (b) as determined as of August
1, 2009 or thereafter, the ratio of (i) Consolidated Funded Indebtedness as of
such date plus
eight (8) times the amount of Lease Expenses for the Subject Period to (ii) Consolidated Adjusted
EBITDAR for the Subject Period.

     

    (d) Section 1.01 of the
Credit Agreement shall be further amended by adding the definition “Eleventh
Amendment Date”, in appropriate alphabetical order, to read as
follows:

     

    “Eleventh Amendment
Date” means the “Effective Date” as defined in that Eleventh Amendment to
Credit Agreement dated as of July 31, 2009 among the Borrowers and the
Lender.

     

    (e) Section 1.01 of the
Credit Agreement shall be further amended by amending and restating “Scheduled
Maturity Date” to read in full as follows:

     

    “Scheduled Maturity
Date” means September 1, 2010.

     

    (f) Section 1.01 of the
Credit Agreement shall be further amended by placing the following definitions
in appropriate alphabetical order: “Consolidated EBITDA”,
“Guarantee”,  “Standby L/C
Obligations” and “Subject
Period”.

     

    (g) Section
2.03(a)(ii)(B) and (E) of the Credit
Agreement shall each be amended by replacing the words “90 days” with “180
days”.

     

    (h) Section 2.03(h)(i)
of the Credit Agreement shall be amended and restated  to read in full
as follows:

     

    (i) Standby Letters of
Credit.  The applicable Borrower shall pay to the Lender a
letter of credit fee for each Standby Letter of Credit equal to the Applicable
SLC Rate times
the daily maximum amount available to be drawn under such Letter of Credit
(whether or not such maximum amount is then in effect under such Letter of
Credit).  Such letter of credit fees shall be computed on a quarterly
basis in arrears, and shall be due and payable on the first Business Day after
the end of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Maturity
Date and thereafter on demand.  If there is any change in the
Applicable SLC Rate during any quarter, the daily maximum amount of each Letter
of Credit shall be computed and multiplied by the Applicable SLC Rate separately
for each period during such quarter that such Applicable SLC Rate was in
effect.  Such fees shall be fully earned when paid and are
non-refundable.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (i) Section 2.12 of the
Credit Agreement shall be amended and restated to read in full as
follows:

     

    2.12 Option to Increase
Commitment.  From and after the Tenth Amendment Date, the
Company may, upon written notice to the Lender, on not more than two occasions,
request an increase in the Commitment by up to $20,000,000 in the
aggregate.  Upon approval of such request by the Lender, in its sole
discretion, the Commitment shall be increased by the amount specified in such
notice, not to exceed $20,000,000 in the aggregate for all such requests
together, effective as of the date specified in such request (not to be earlier
than three Business Days after the date such request is approved by Lender) (the
“Increase Effective
Date”).  As conditions precedent to any such increase, the
Company shall deliver to the Lender (i) a certificate of the Company signed by a
Responsible Officer of the Company in the form of Exhibit F hereto and
attaching the resolutions adopted by each Loan Party approving or consenting to
such increase or authorizing a Responsible Officer of the Company to approve
such increase and (ii) an upfront expansion fee equal to 0.125% times the amount
of the requested increase in Commitment.

     

    (j) Section 7.06(e) of
the Credit Agreement shall be amended and restated to read in full as
follows:

     

    (e) the
Company may purchase, redeem or otherwise acquire shares of its capital stock
for cash, in an aggregate amount not to exceed, (i) for all such purchases,
redemptions and other acquisitions together occurring from and after the Second
Amendment Date until the Fifth Amendment Date, the amount of $110,000,000, (ii)
for all such purchases, redemptions and other acquisitions together occurring
from and after the Fifth Amendment Date until the Eleventh Amendment Date, the
amount of $175,000,000, and (iii) for all such purchases, redemptions and
other acquisitions together occurring from and after the Eleventh Amendment
Date, the amount of $75,000,000; provided, in each
case that after giving effect to such proposed action, no Default would
exist.

     

    (k) Section 7.11(c) of
the Credit Agreement shall be amended and restated to read in full as
follows:

     

    (c) Consolidated Adjusted
Leverage Ratio.  Permit the Consolidated Adjusted Leverage
Ratio, (i) at any time prior to the Second Amendment Date, to be greater
than 3.00:1.00, (ii) at any time from and after the Second Amendment Date
and prior to August 1, 2009, to be greater than 4.00:1.00, and
(iii) thereafter, to be greater than 3.50:1.00.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (l) Schedule 2 to Exhibit C to the
Credit Agreement shall be amended and restated in the form attached hereto as
Annex
I.

     

    (m) Schedule 5.14 to the
Credit Agreement shall be amended and restated in the form attached hereto as
Annex
II.

     

    4. Representations and
Warranties.  Each Borrower hereby represents and warrants to
the Lender as follows:

     

    (a) No Default has
occurred and is continuing.

     

    (b) The execution,
delivery and performance by the Borrowers of this Amendment have been duly
authorized by all necessary corporate and other action and do not and will not
require any registration with, consent or approval of, or notice to or action
by, any Person (including any Governmental Authority) in order to be effective
and enforceable.

     

    (c) The Amendment
Documents constitute the legal, valid and binding obligations of the Borrowers
party thereto, enforceable against each such Borrower in accordance with their
respective terms, without defense, counterclaim or offset.

     

    (d) All
representations and warranties of the Borrowers contained in Article V of the
Credit Agreement are true and correct on and as of the Effective Date, except to
the extent that any such representation and warranty specifically relates to an
earlier date, in which case they are true and correct as of such earlier
date.

     

    (e) Each Borrower
is entering into this Amendment on the basis of its own investigation and for
its own reasons, without reliance upon the Lender or any other
Person.

     

    (f) There has
occurred since January 31, 2009 no event or circumstance that has resulted or
could reasonably be expected to result in a Material Adverse
Effect.

     

    (g) The Obligations
of each Borrower under the Credit Agreement and each other Loan Document are not
subject to any defense, counterclaim, set-off, right of recoupment, abatement or
other claim.

     

    5. Effective
Date.

     

    (a) This Amendment
will become effective as of the date shown first above (the “Effective Date”),
provided each of the conditions precedent set forth in this Section 5 has been
satisfied:

     

    (i) The Lender
shall have received from each Borrower a duly executed original (or, if elected
by the Lender, an executed facsimile copy) counterpart to this
Amendment.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (ii) The Lender
shall have received from the Company a certificate signed by the assistant
secretary of each Borrower in form and substance satisfactory to the Lender, and
certifying evidence of the authorization of the execution, delivery and
performance by each Borrower of the Amendment Documents to which it is
party.

     

    (iii) The Lender
shall have received such documents and certifications as the Lender may
reasonably require to evidence that each Borrower is duly organized or formed,
validly existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

     

    (iv) The Borrowers
shall have paid (A) to the Lender an upfront fee of 0.125% times the
Commitment, and (B) to the Lender’s counsel, all reasonable attorneys’ fees
and expenses incurred by the Lender in connection with the development,
preparation, negotiation and delivery of this Amendment and the other Amendment
Documents.

     

    (v) The Lender
shall have received, in form and substance satisfactory to it, such additional
approvals, consents, opinions, documents and other information as the Lender
shall request.

     

    (b) From and after
the Effective Date, the Credit Agreement is amended as set forth,
herein.  Except as expressly amended pursuant hereto, the Credit
Agreement shall remain unchanged and in full force and effect and is hereby
ratified and confirmed in all respects.

     

    6. Reservation of
Rights.  Each Borrower acknowledges and agrees that neither the
execution nor the delivery by the Lender of this Amendment shall (a) be deemed
to create a course of dealing or otherwise obligate the Lender to execute
similar amendments under the same or similar circumstances in the future or (b)
be deemed to create any implied waiver of any right or remedy of the Lender with
respect to any term or provision of any Loan Document (including any term or
provision relating to the occurrence of a Material Adverse Effect).

     

    7. Miscellaneous.

     

    (a) Except as
herein expressly amended, all terms, covenants and provisions of the Credit
Agreement are and shall remain in full force and effect and all references
therein to such Credit Agreement shall henceforth refer to the Credit Agreement
as amended by this Amendment.  This Amendment shall be deemed
incorporated into, and a part of, the Credit Agreement.

     

    (b) This Amendment
shall be binding upon and inure to the benefit of the parties hereto and thereto
and their respective successors and assigns.  No third party
beneficiaries are intended in connection with this Amendment.

     

    (c) THIS AMENDMENT
IS SUBJECT TO THE PROVISIONS OF SECTIONS 9.19, 9.20 and 9.23 OF THE CREDIT
AGREEMENT RELATING TO GOVERNING LAW, VENUE, WAIVER OF RIGHT TO TRIAL BY JURY AND
JUDICIAL REFERENCE, THE PROVISIONS OF WHICH ARE BY THIS REFERENCE INCORPORATED
HEREIN IN FULL.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (d) This Amendment
may be executed in any number of counterparts, each of which shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.  Each of the parties hereto understands and agrees
that this document (and any other document required herein) may be delivered by
any party hereto or thereto either in the form of an executed original or an
executed original sent by facsimile transmission to be followed promptly by
mailing of a hard copy original, and the receipt by the Lender of a facsimile
transmitted document purportedly bearing the signature of a Borrower shall bind
such Borrower with the same force and effect as the delivery of a hard copy
original.  Any failure by the Lender to receive the hard copy executed
original of such document shall not diminish the binding effect of receipt of
the facsimile transmitted executed original of such document of the party whose
hard copy page was not received by the Lender.

     

    (e) This Amendment,
together with the Credit Agreement, contains the entire and exclusive agreement
of the parties hereto with reference to the matters discussed herein and
therein.  This Amendment supersedes all prior drafts and
communications with respect thereto.  This Amendment may not be
amended except in accordance with the provisions of Section 9.01 of the
Credit Agreement.

     

    (f) If any term or
provision of this Amendment shall be deemed prohibited by or invalid under any
applicable law, such provision shall be invalidated without affecting the
remaining provisions of this Amendment or the Credit Agreement,
respectively.

     

    (g) Each Borrower
covenants to pay to or reimburse the Lender, upon demand, for all reasonable
fees and expenses incurred in connection with the development, preparation,
negotiation, execution and delivery of this Amendment and the other Amendment
Documents.

     

    (h) This Amendment
shall constitute a “Loan Document” under
and as defined in the Credit Agreement.

     

    [Remainder of page intentionally left
blank]

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.

     

    
      	 
      	
              THE GYMBOREE
      CORPORATION,

              as
      a Borrower

            
	 	 
	 
      	
              By:

            	
              /s/ Blair W. Lambert

            
	 
      	
              Name:

            	
              Blair
      W. Lambert

            
	 
      	
              Title:

            	
              C.O.O.
      - C.F.O.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              GYMBOREE MANUFACTURING,
      INC.,

              as
      a Borrower

            
	 	 
	 
      	
              By:

            	
              /s/ Blair W. Lambert

            
	 
      	
              Name:

            	
              Blair
      W. Lambert

            
	 
      	
              Title:

            	
              C.O.O.
      - C.F.O.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              GYM-MARK,
      INC.,

              as
      a Borrower

            
	 	 
	 
      	
              By:

            	
              /s/ Blair W. Lambert

            
	 
      	
              Name:

            	
              Blair
      W. Lambert

            
	 
      	
              Title:

            	
                C.O.O.
      - C.F.O.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              GYMBOREE RETAIL STORES,
      INC.,

              as
      a Borrower

            
	 	 	 
	 
      	
              By:

            	
              /s/ Blair W. Lambert

            
	 
      	
              Name:

            	
              Blair
      W. Lambert

            
	 
      	
              Title:

            	
              C.O.O.
      - C.F.O.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              GYMBOREE PLAY PROGRAMS,
      INC.,

              as
      a Borrower

            
	 	 	 
	 
      	
              By:

            	
              /s/ Blair W. Lambert

            
	 
      	
              Name:

            	
              Blair
      W. Lambert

            
	 
      	
              Title:

            	
              C.O.O.
      - C.F.O.

            
	 
      	 
      	 
      
	 
      	 
      	 
      


    

     

    
      
        
          Signature
Page One to Eleventh Amendment to Credit Agreement

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              GYMBOREE
      OPERATIONS, INC.,

              as
      a Borrower

            
	 	 	 
	 	
              By:

            	
              /s/ Blair W. Lambert

            
	 	
              Name:

            	
              Blair
      W. Lambert

            
	 	
              Title:

            	
              C.O.O.
      - C.F.O.

            
	 	 
      	 
      
	 	 
      	 
      
	 	
              GYMBOREE, INC.
      (CANADA),

              as
      a Borrower

            
	 	 	 
	 	
              By:

            	
              /s/ Blair W. Lambert

            
	 	
              Name:

            	
              Blair
      W. Lambert

            
	 	
              Title:

            	
              C.O.O.
      - C.F.O.

            


    

     

    
      
        
          Signature
Page Two to Eleventh Amendment to Credit
Agreement

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              LENDER

               

              BANK OF AMERICA, N.A.,
      as the Lender

            
	 	 	 
	 	
              By:

            	
              /s/ David Leimsieder

            
	 	
              Name:

            	
              David
      Leimsieder

            
	 	
              Title:

            	
              Senior
      Vice President

            


    

     

    
      
        
          Signature
Page Three to Eleventh Amendment to Credit
Agreement

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
I

     

    For the
Quarter/Year ended ___________ (“Statement Date”)

     

    SCHEDULE
2

    to the
Compliance Certificate

    ($ in
000’s)

     

    
      	
              I.

            	
              Section
      7.11(b) — Consolidated Asset Coverage
Ratio

            


    

     

    
      	
              A.   
      Current Assets determined as of Statement Date:

            	 	 	 
	 	 	 	 
	
              1.
      Cash:

            	 	$	 
      	 
	 	 	 	 	 
	
              2.
      Marketable Securities:

            	 	$	  
      	 
	 	 	 	 	 
	
              3.
      Trade Accounts Receivable:

            	 	$	  
      	 
	 	 	 	 	 
	
              4.
      Inventory:

            	 	$	  
      	 
	 	 	 	 	 
	
              5.
      Current Assets (I.A.1 + 2 + 3 + 4):

            	 	$	  
      	 
	 	 	 	 	 
	
              B.   
      Current Liabilities as of Statement Date

            	 	$	  
      	 
	 	 	 	 	 
	
              C.   
      Outstanding Amounts as of Statement Date (without duplication to
      I.B):

            	 	$	  
      	 
	 	 	 	 	 
	 	 	 	 	 
	
              D.   
      Consolidated Asset Coverage Ratio (I.A.5 ÷ (I.B + I.C)):

            	 	 	

              ______to
      1.00 

            	 
	 	 	 	 	 
	
              Minimum
      Required: 1.00:1.00

            	 	 	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              II.

            	
              Section
      7.11(c)/Applicable Rate — Consolidated Adjusted Leverage
      Ratio.

            


    

     

    
      
        	
                A.   Consolidated
      Adjusted EBITDA for four consecutive fiscal quarters ending on above date
      (“Subject
      Period”):

              	 	 	 
	 	 	 	 
	
                1.
      Consolidated Net Income for Subject Period:

              	 	$	  
      	 
	 	 	 	 	 
	
                2.
      Consolidated Interest Charges for Subject Period:

              	 	$	  
      	 
	 	 	 	 	 
	
                3.
      Provision for income taxes payable during Subject Period:

              	 	$	  
      	 
	 	 	 	 	 
	
                4.
      Depreciation expense for Subject Period:

              	 	$	  
      	 
	 	 	 	 	 
	
                5.
      Amortization expense for Subject Period:

              	 	$	  
      	 
	 	 	 	 	 
	
                6.
      Non-cash expenses recognized by the Company during the Subject Period in
      connection with the issuance of stock options and other equity interests
      in the Company in consideration of employee services:

              	 	$	  
      	 
	 	 	 	 	 
	
                7.
      Losses during the Subject Period resulting solely from the UK Dispositions
      and included in the  calculation of Consolidated Net Income
      in  Line II.A.1:

              	 	$	  
      	 
	 	 	 	 	 
	
                8.
      Consolidated Adjusted EBITDA for Subject Period (II.A.1 + 2 + 3 + 4 + 5 +
      6 + 7):

              	 	$	  
      	 
	 	 	 	 	 
	
                B.   
      1. Lease Expenses for Subject Period:

              	 	$	  
      	 
	 	 	 	 	 
	
                2.
      Consolidated Adjusted EBITDAR for Subject Period (II.A.8 +
      II.B.1):

              	 	$	  
      	 
	 	 	 	 	 
	
                C.   
      Consolidated Funded Indebtedness at Statement Date:

              	 	$	  
      	 
	 	 	 	 	 
	
                D.   
      Lease Expenses for Subject Period:

              	 	$	  
      	 
	 	 	 	 	 
	
                E.    8
      × II.D (or, for any Statement Date prior to  August 1, 2009, 6 ×
      II.D):

              	 	$	  
      	 
	 	 	 	 	 
	
                F.   
      Consolidated Leverage Ratio ((II.C+II.E) ÷ II.B.2): Maximum
      permitted:

              	 	 	

                _____
      to 1.00 

              	 
	 	 	 	 	 
	
                (1)
      At any time prior to the Second Amendment Date:

              	 	 	

                3.00:1.00 

              	 
	 	 	 	 	 
	
                (2)
      At any time from and after the Second Amendment Date  and prior
      to August 1, 2009:

              	 	 	

                4.00:1.00 

              	 
	 	 	 	 	 
	
                (3)
      Thereafter:

              	 	 	

                3.50:1.00 

              	 


      

       

      
        
          	
                  III.

                	
                  Section
      7.12 -- Capital Expenditures.

                


        

      

       

      
        	
                A.  
      Capital expenditures made during fiscal year to date:

              	 	$	  
      	 
	 	 	 	 	 
	
                B.   
      Maximum permitted capital expenditures for fiscal year:

              	 	$	  
      	 
	 	 	 	 	 
	
                C.   
      Excess (deficiency) for covenant compliance (Line
      III.B less
    III.A):

              	 	$	  
       	 


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
II

     

    SCHEDULE
5.14

     

    SUBSIDIARIES

    AND
OTHER EQUITY INVESTMENTS

     

    
      	
              Part(i).

            	
              Subsidiaries.

            


    

     

    
      	
            	
              1.

            	
              Gymboree
      Manufacturing, Inc.

            


    

     

    
      	
            	
              2.

            	
              Gym-Mark,
      Inc.

            


    

     

    
      	
            	
              3.

            	
              Gymboree
      Retail Stores, Inc.

            


    

     

    
      	
            	
              4.

            	
              Gymboree
      Island, LLC

            


    

     

    
      	
            	
              5.

            	
              Gym-Card,
      LLC

            


    

     

    
      	
            	
              6.

            	
              Gymboree
      Play Programs, Inc.

            


    

     

    
      	
            	
              7.

            	
              Gymboree
      Operations, Inc.

            


    

     

    
      	
            	
              8.

            	
              Gymboree,
      Inc. (Canada)

            


    

     

    
      	
            	
              9.

            	
              Gymboree
      Industries Limited

            


    

     

    
      	
              Part(ii).

            	
              Other
      Equity Investments.

            


    

     

    None.