exv10w1






Exhibit 10.1




Execution Version




FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




     FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”)
dated as of June 23, 2011 between



     GENESCO INC., a Tennessee corporation (the “Lead Borrower”),



     the Other Borrowers party hereto (together with the Lead Borrower, the “Borrowers”),



     the Lenders party hereto, and



     BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent and Canadian Agent;



     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, the Borrowers, the Lenders, the Administrative Agent, the Collateral Agent and the
Canadian Agent have entered into a certain Second Amended and Restated Credit Agreement dated as of
January 21, 2011 (the “Credit Agreement”); and



     WHEREAS, the Lead Borrower has (i) informed the Administrative Agent that it has formed two
Subsidiaries under the laws of the United Kingdom to consummate the acquisition of substantially
all of the equity interests of Schuh Group Limited, a company organized under the laws of Scotland,
(ii) requested that the Lenders consent to the making of certain Investments by the Lead Borrower
in such Subsidiaries and the Guarantee by the Lead Borrower of certain Indebtedness of such
Subsidiaries in connection with such acquisition (collectively, the “Transactions”), and
(iii) requested certain other modifications to the Credit Agreement, including, without limitation,
an increase to the Domestic Commitments and the addition of certain Tranche A-1 Commitments; and



     WHEREAS, the Borrowers, the Lenders, the Administrative Agent, the Collateral Agent and the
Canadian Agent have agreed to amend the Credit Agreement to, among other things, provide for the
Transactions as set forth herein.



     NOW THEREFORE, in consideration of the mutual promises and agreements herein contained, the
parties hereto hereby agree as follows:




	1.	 	Incorporation of Terms and Conditions of Credit Agreement. All of the terms and
conditions of the Credit Agreement (including, without limitation, all definitions set forth
therein) are specifically incorporated herein by reference. All capitalized terms not
otherwise defined herein shall have the same meaning as in the Credit Agreement, as
applicable.




-1-









 












	2.	 	Representations and Warranties. Each Credit Party hereby represents and warrants
that after giving effect to this Amendment, (i) no Default or Event of Default exists under
the Credit Agreement or under any other Loan Document, and (ii) all representations and
warranties contained in Section 3 of the Credit Agreement and in the other Loan Documents are
true and correct in all material respects (except in the case of any representation and
warranty qualified by materiality, which is true and correct in all respects) 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 (except in the
case of any representation and warranty qualified by materiality, which is true and correct in
all respects) as of such earlier date.






	3.	 	Ratification of Loan Documents. The Credit Agreement, as hereby amended, and all
other Loan Documents, are hereby ratified and re-affirmed in all respects and shall continue
in full force and effect.






	4.	 	Amendment to Credit Agreement.






	 	a.	 	Composite Credit Agreement. The Credit Agreement (other than the
Schedules and Exhibits thereto) is hereby amended in its entirety to reflect the
modifications identified in the document annexed hereto as Annex A.
	 
	 	b.	 	Exhibit A-1. Exhibit A-1 (Form of Assignment and Acceptance
(Tranche A-1)) is hereby added to the Credit Agreement in the form attached to this
Amendment as Exhibit A-1.
	 
	 	c.	 	Exhibit B-4. Exhibit B-4 (Form of Tranche A-1 Note) is hereby
added to the Credit Agreement in the form attached to this Amendment as Exhibit
B-4.
	 
	 	d.	 	Amendment to Schedule 1.1. Schedule 1.1 (Lenders and
Commitments) to the Credit Agreement is hereby deleted in its entirety and replaced
with Schedule 1.1 attached to this Amendment.
	 
	 	e.	 	Amendment to Schedule 3.6. Schedule 3.6 (Disclosures) to the
Credit Agreement is hereby deleted in its entirety and replaced with Schedule
3.6 attached to this Amendment.






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






	 	a.	 	This Amendment shall have been duly executed and delivered by the Credit
Parties and the Lenders. The Administrative Agent shall have received a fully executed
original hereof.




-2-









 












	 	b.	 	All action on the part of the Credit Parties necessary for the valid execution,
delivery and performance by the Credit Parties of this Amendment shall have been duly
and effectively taken.
	 
	 	c.	 	After giving effect to this Amendment, no Default or Event of Default shall
have occurred and be continuing.
	 
	 	d.	 	The Credit Parties shall have paid to the Administrative Agent the fees set
forth in that certain supplemental fee letter dated as of even date herewith among the
Credit Parties and the Administrative Agent.
	 
	 	e.	 	The Transactions shall be consummated contemporaneously herewith and after
giving effect to the Investment by the Borrower in UK Acquisition and UK LP on the
First Amendment Effective Date, the Payment Conditions shall have been satisfied.






	6.	 	Binding Effect. The terms and provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their heirs, representatives, successors and assigns.






	7.	 	Expenses. The Credit Parties shall reimburse the Administrative Agent for all
expenses incurred in connection herewith, including, without limitation, reasonable attorneys’
fees to the extent provided in the Credit Agreement.






	8.	 	Multiple Counterparts. This Amendment may be executed in multiple counterparts,
each of which shall constitute an original and together which shall constitute but one and the
same instrument.






	9.	 	Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.




-3-









 






     IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by each of the parties
hereto as a sealed instrument as of the date first above written.



	 	 	 	 	 
	 	DOMESTIC BORROWERS:


GENESCO INC.

as Lead Borrower

 	 
	 	By  	 	 

	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	

GENESCO BRANDS, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	

HAT WORLD CORPORATION

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	

HAT WORLD, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



-4-









 







	 	 	 	 	 
	 	FLAGG BROS. OF PUERTO RICO, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	

KEUKA FOOTWEAR, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	

CANADIAN BORROWER:


GCO CANADA INC.

as Canadian Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



-5-









 







	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as Administrative

Agent, Collateral Agent, Canadian Agent and as

a Lender

 	 
	 	By:  	 	 
	 	 	Name: 	 	 
	 	 	Title: 	 	 



-6-









 







[SIGNATURE BLOCKS OF OTHER REQUIRED LENDERS]




-7-









 








Annex A




Second Amended and Restated Credit Agreement



[See Attached]






-8-











 





Execution Version




SECOND AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

January 21, 2011




among



GENESCO INC.

a Domestic Borrower and the Lead Borrower,

GENESCO BRANDS, INC., HAT WORLD CORPORATION,

HAT WORLD, INC., FLAGG BROS. OF PUERTO RICO, INC.,

KEUKA FOOTWEAR, INC.

as the Other Domestic Borrowers,



GCO CANADA INC.

as the Canadian Borrower



The LENDERS Party Hereto,



BANK OF AMERICA, N.A.

as Administrative Agent and Collateral Agent



BANK OF AMERICA, N.A. (ACTING THROUGH ITS CANADA BRANCH)

as Canadian Agent



WELLS FARGO CAPITAL FINANCE, LLC

U.S. BANK NATIONAL ASSOCIATION

and

SUNTRUST BANK

as Co-Syndication Agents,



PNC BANK, NATIONAL ASSOCIATION

as Documentation Agent,



and



MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

as Sole Lead Arranger



MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

WELLS FARGO CAPITAL FINANCE, LLC

U.S. BANK NATIONAL ASSOCIATION

and

SUNTRUST ROBINSON HUMPHREY, INC.,

as Joint Bookrunners



 





 









 





TABLE OF CONTENTS




	 	 	 	 	 

	1. DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	1.1 Defined Terms
	 	 	2	 
	1.2 Terms Generally; Interpretation
	 	 	4548	 
	1.3 Accounting Terms
	 	 	4649	 
	1.4 Rounding
	 	 	4750	 
	1.5 Times of Day
	 	 	4750	 
	1.6 Letter of Credit Amounts
	 	 	4750	 
	 
	 	 	 	 
	2. AMOUNT AND TERMS OF CREDIT
	 	 	4750	 
	 
	 	 	 	 
	2.1 Commitments of the Lenders
	 	 	4750	 
	2.2 Reserves; Changes to Reserves
	 	 	4953	 
	2.3 Making of Loans
	 	 	5054	 
	2.4 Overadvances
	 	 	5256	 
	2.5 Swingline Loans
	 	 	5256	 
	2.6 Letters of Credit
	 	 	5356	 
	2.7 Settlements Among Lenders
	 	 	5761	 
	2.8 Notes; Repayment of Loans
	 	 	5862	 
	2.9 Interest on Loans
	 	 	5963	 
	2.10 Default Interest
	 	 	6064	 
	2.11 Certain Fees
	 	 	6064	 
	2.12 Unused Commitment Fee
	 	 	6064	 
	2.13 Letter of Credit Fees
	 	 	6064	 
	2.14 Nature of Fees
	 	 	6165	 
	2.15 Termination or Reduction of Commitments
	 	 	6165	 
	2.16 Alternate Rate of Interest
	 	 	6266	 
	2.17 Conversion and Continuation of Loans
	 	 	6266	 
	2.18 Mandatory Prepayment; Cash Collateral; Commitment Termination
	 	 	6368	 
	2.19 Optional Prepayment of Loans; Reimbursement of Lenders
	 	 	6569	 
	2.20 Maintenance of Loan Account; Statements of Account
	 	 	6671	 
	2.21 Cash Receipts
	 	 	6772	 
	2.22 Application of Payments
	 	 	6974	 
	2.23 Increased Costs
	 	 	7075	 
	2.24 Change in Legality
	 	 	7176	 
	2.25 Payments; Sharing of Setoff
	 	 	7277	 
	2.26 Taxes
	 	 	7378	 
	2.27 Security Interests in Collateral
	 	 	7580	 
	2.28 Mitigation Obligations; Replacement of Lenders
	 	 	7580	 
	 
	 	 	 	 
	3. REPRESENTATIONS AND WARRANTIES
	 	 	7680	 
	 
	 	 	 	 
	3.1 Organization; Powers
	 	 	7680	 
	3.2 Authorization; Enforceability
	 	 	7681	 
	3.3 Governmental Approvals; No Conflicts
	 	 	7681	 
	3.4 Financial Condition
	 	 	7681	 
	3.5 Properties
	 	 	7782	 
	3.6 Litigation and Environmental Matters
	 	 	7782	 
	3.7 Compliance with Laws and Agreements
	 	 	7883	 
	3.8 Investment Company or Holding Company Status
	 	 	7883	 
	3.9 Taxes
	 	 	7883	 






i









 






	 	 	 	 	 

	3.10 ERISA/Canadian Pension Plan
	 	 	7883	 
	3.11 Interdependence of Credit Parties
	 	 	7983	 
	3.12 Disclosure
	 	 	7984	 
	3.13 Subsidiaries
	 	 	7984	 
	3.14 Insurance
	 	 	8084	 
	3.15 Labor Matters
	 	 	8084	 
	3.16 Certain Transactions
	 	 	8085	 
	3.17 Restrictions on the Credit Parties
	 	 	8085	 
	3.18 Security Documents
	 	 	8085	 
	3.19 Federal Reserve Regulations
	 	 	8185	 
	3.20 Solvency
	 	 	8186	 
	3.21 Franchises, Patents, Copyrights, Etc.
	 	 	8186	 
	3.22 Brokers
	 	 	8186	 
	3.23 Casualty
	 	 	8186	 
	3.24 Intellectual Property; Licenses, Etc.
	 	 	8186	 
	 
	 	 	 	 
	4. CONDITIONS
	 	 	8186	 
	 
	 	 	 	 
	4.1 Effective Date
	 	 	8186	 
	4.2 Conditions Precedent to Each Loan and Each Letter of Credit
	 	 	8489	 
	 
	 	 	 	 
	5. AFFIRMATIVE COVENANTS
	 	 	8589	 
	 
	 	 	 	 
	5.1 Financial Statements and Other Information
	 	 	8590	 
	5.2 Notices of Material Events
	 	 	8792	 
	5.3 Information Regarding Collateral
	 	 	8893	 
	5.4 Existence; Conduct of Business
	 	 	8893	 
	5.5 Payment of Obligations
	 	 	8993	 
	5.6 Maintenance of Properties
	 	 	8994	 
	5.7 Insurance
	 	 	8994	 
	5.8 Casualty and Condemnation
	 	 	9095	 
	5.9 Books and Records; Inspection and Audit Rights
	 	 	9095	 
	5.10 Fiscal Year
	 	 	9196	 
	5.11 Physical Inventories
	 	 	9196	 
	5.12 Compliance with Laws
	 	 	9196	 
	5.13 Use of Proceeds and Letters of Credit
	 	 	9296	 
	5.14 Additional Subsidiaries
	 	 	9297	 
	5.15 Further Assurances
	 	 	9297	 
	5.16 Compliance with Terms of Leaseholds
	 	 	9398	 
	5.17 Environmental Laws
	 	 	9398	 
	 
	 	 	 	 
	6. NEGATIVE COVENANTS
	 	 	9398	 
	 
	 	 	 	 
	6.1 Indebtedness
	 	 	9398	 
	6.2 Liens
	 	 	9499	 
	6.3 Fundamental Changes
	 	 	95100	 
	6.4 Investments, Loans, Advances, Guarantees and Acquisitions
	 	 	96100	 
	6.5 Asset Sales
	 	 	97102	 
	6.6 Restrictive Agreements
	 	 	98103	 
	6.7 Restricted Payments; Certain Payments of Indebtedness
	 	 	98103	 
	6.8 Transactions with Affiliates
	 	 	98103	 
	6.9 Additional Subsidiaries
	 	 	98104	 
	6.10 Amendment of Material Documents
	 	 	98104	 
	6.11 Fixed Charge Coverage Ratio
	 	 	99104	 






ii









 






	 	 	 	 	 

	6.12 Environmental Laws
	 	 	99104	 
	6.13 Fiscal Year
	 	 	99104	 
	 
	 	 	 	 
	7. EVENTS OF DEFAULT
	 	 	99104	 
	 
	 	 	 	 
	7.1 Events of Default
	 	 	99104	 
	7.2 When Continuing
	 	 	102107	 
	7.3 Remedies on Default
	 	 	102107	 
	7.4 Application of Proceeds
	 	 	102107	 
	 
	 	 	 	 
	8. THE AGENTS
	 	 	105111	 
	 
	 	 	 	 
	8.1 Administration by Administrative Agent
	 	 	105111	 
	8.2 The Collateral Agent
	 	 	106111	 
	8.3 Sharing of Excess Payments
	 	 	107112	 
	8.4 Agreement of Applicable Lenders
	 	 	107113	 
	8.5 Liability of Agents
	 	 	108113	 
	8.6 Notice of Default
	 	 	108114	 
	8.7 Lenders’ Credit Decisions
	 	 	109114	 
	8.8 Reimbursement and Indemnification
	 	 	109114	 
	8.9 Rights of Agents
	 	 	109115	 
	8.10 Notice of Transfer
	 	 	109115	 
	8.11 Successor Agent
	 	 	110115	 
	8.12 Reports and Financial Statements
	 	 	110115	 
	8.13 Administrative Agent May File Proofs of Claim
	 	 	110115	 
	8.14 Delinquent Lender
	 	 	111116	 
	8.15 Agency for Perfection
	 	 	112117	 
	8.16 Risk Participation
	 	 	112117	 
	8.17 Co-Syndication Agents and Documentation Agent
	 	 	113118	 
	 
	 	 	 	 
	9. MISCELLANEOUS
	 	 	113118	 
	 
	 	 	 	 
	9.1 Notices
	 	 	113118	 
	9.2 The Platform
	 	 	113119	 
	9.3 Waivers; Amendments
	 	 	114119	 
	9.4 Expenses; Indemnity; Damage Waiver
	 	 	115121	 
	9.5 Designation of Lead Borrower as Borrowers’ Agent
	 	 	117122	 
	9.6 Successors and Assigns
	 	 	117123	 
	9.7 Survival
	 	 	119125	 
	9.8 Counterparts; Integration; Effectiveness
	 	 	120125	 
	9.9 Severability
	 	 	120125	 
	9.10 Right of Setoff
	 	 	120125	 
	9.11 Governing Law; Jurisdiction; Consent to Service of Process
	 	 	120126	 
	9.12 WAIVER OF JURY TRIAL
	 	 	121126	 
	9.13 Headings
	 	 	121126	 
	9.14 Interest Rate Limitation
	 	 	121126	 
	9.15 Additional Waivers
	 	 	121127	 
	9.16 Confidentiality
	 	 	122128	 
	9.17 Release of Collateral and Guaranty Obligations
	 	 	123128	 
	9.18 Amendment and Restatement
	 	 	123129	 
	9.19 Commitments
	 	 	124130	 
	9.20 Judgment Currency
	 	 	124130	 
	9.21 USA Patriot Act Notice
	 	 	125130	 
	9.22 Foreign Asset Control Regulations
	 	 	125130	 






iii









 






	 	 	 	 	 

	9.23 Canadian Anti-Money Laundering Legislation
	 	 	125131	 
	9.24 No Advisory or Fiduciary Responsibility
	 	 	126131	 
	9.25 Limitation of Canadian Borrower Liability
	 	 	126132	 
	9.26 Language
	 	 	126132	 






iv









 






EXHIBITS




	 	 	 

	A

	 	Form of Assignment and Acceptance (Tranche A)
	A-1
	 	Form of Assignment and Acceptance (Tranche A-1)
	B-1

	 	Form of Canadian Revolving Note
	B-2

	 	Form of Domestic Revolving Note
	B-3

	 	Form of Swingline Note
	B-4

	 	Form of Tranche A-1 Note 
	C

	 	Form of Effective Date Guaranty
	D

	 	Form of Borrowing Base Certificate
	E

	 	Form of Compliance Certificate
	F

	 	Closing Agenda
	G

	 	Form of DDA Notification






v









 






SCHEDULES




	 	 	 

	1.1

	 	Lenders and Commitments
	1.2

	 	Leased Distribution Centers and Warehouses
	1.3

	 	Closing Date Secured Equipment Leases
	2.6(j)

	 	Existing Letters of Credit
	2.21(b)

	 	Credit Card Arrangements
	2.21(c)

	 	Concentration Accounts and Investment Accounts
	3.5(b)

	 	Properties
	3.6

	 	Litigation and Environmental Matters
	3.9

	 	Taxes
	3.10

	 	ERISA
	3.13

	 	Subsidiaries
	3.14

	 	Insurance
	3.16

	 	Certain Transactions
	3.21

	 	Franchises, Patents, Copyrights, etc.
	5.1(i)

	 	Financial Reporting Requirements
	6.1

	 	Indebtedness
	6.2

	 	Liens
	6.4

	 	Investments, Loans, Advances, Guarantees and Acquisitions







vi











 





     This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as of January 21, 2011 (this
“Agreement”) among GENESCO INC., a corporation organized under the laws of the State of
Tennessee having a place of business at Genesco Park, 1415 Murfreesboro Road, P.O. Box 731,
Nashville, TN 37202-0731, as a Domestic Borrower and the Lead Borrower (as hereinafter defined);
the Other Domestic Borrowers (as defined below); GCO CANADA INC., as the Canadian Borrower; the
LENDERS party hereto; BANK OF AMERICA, N.A., a national banking association having a place of
business at 100 Federal Street, Boston, Massachusetts 02110, as Administrative Agent for the
Lenders and as Collateral Agent for the Secured Parties (as each such term is hereinafter defined);
BANK OF AMERICA, N.A. (ACTING THROUGH ITS CANADA BRANCH), as Canadian Agent; and WELLS FARGO
CAPITAL FINANCE, LLC, U.S. BANK NATIONAL ASSOCIATION and SUNTRUST BANK, as Co-Syndication Agents;
and PNC BANK, NATIONAL ASSOCIATION, as Documentation Agent.



W I T N E S S E T H:




     WHEREAS, the Borrowers have requested that the Lenders make available to the Domestic
Borrowers, as co-borrowers, a revolving credit facility (including a letter of credit sub-facility)
in an initial maximum amount not to exceed $300,000,000, the proceeds of which, in each case, shall
be used by the Borrowers for purposes permitted under, and otherwise in accordance with and subject
to the terms of, this Agreement;



     WHEREAS, the Other Borrowers are direct or indirect wholly-owned Subsidiaries of the Lead
Borrower, and together with the Lead Borrower are related entities that collectively constitute an
integrated business;



     WHEREAS, each Borrower is sufficiently dependent upon the others and the Borrowers are related
in such a way that any advance made hereunder to any Borrower will benefit all of the Borrowers as
a result of their related operations and identity of interests;



     WHEREAS, the Domestic Borrowers have requested that the Agents and Lenders treat them as
co-borrowers hereunder, jointly and severally responsible for the obligations of each other;



     WHEREAS, each Lender is willing to agree (severally and not jointly) to make such loans and
provide such financial accommodations to the Borrowers on a pro rata basis according to its
Commitment on the terms and conditions set forth herein, and Bank of America, N.A. is willing to
act as Administrative Agent and Collateral Agent for the Lenders on the terms and conditions set
forth herein and in the other Loan Documents;



     WHEREAS, each Canadian Lender is willing to agree (severally and not jointly) to make such
loans and provide such financial accommodations to the Canadian Borrower according to its Canadian
Commitment on the terms and conditions set forth herein, and Bank of America, N.A. (acting through
its Canada Branch) is willing to act as Canadian Agent for the Lenders on the terms and conditions
set forth herein and in the other Loan Documents;



     WHEREAS, prior to the date of this Agreement, the Lead Borrower, on the one hand, and Bank of
America, N.A., as Administrative Agent thereunder, and the Lenders on the other hand, previously
entered into an Amended and Restated Credit Agreement dated as of December 1, 2006 (as amended and
in effect, the “Existing Credit Agreement”), pursuant to which the Lenders provided the
Lead Borrower and certain of the Other Domestic Borrowers with certain financial accommodations;



     WHEREAS, in accordance with SECTION 9.2 of the Existing Credit Agreement, the Borrowers, the
Lenders, and the Agents desire to amend and restate the Existing Credit Agreement as provided
herein.



1









 





     NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this
Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged,
the undersigned hereby agree that the Existing Credit Agreement shall be amended and restated in
its entirety to read as follows (it being agreed that this Agreement shall not be deemed to
evidence or result in a novation or repayment and reborrowing of the Obligations under the Existing
Credit Agreement):



     1. DEFINITIONS.



     1.1 Defined Terms. As used in this Agreement, the following terms have the meanings
specified below:



     “Accelerated Borrowing Base Delivery Event” means either (i) the occurrence and
continuance of any Event of Default, or (ii) the failure of the Borrowers to maintain Excess
Availability at least equal to the greater of $35,000,000 or fifteen percent (15%) of the Loan Cap.
For purposes of this Agreement, the occurrence of an Accelerated Borrowing Base Delivery Event
shall be deemed continuing (i) so long as such Event of Default has not been waived, and/or (ii) if
the Accelerated Borrowing Base Delivery Event arises as a result of the Borrowers’ failure to
achieve Excess Availability as required hereunder, until Excess Availability has exceeded the
greater of $35,000,000 or fifteen percent (15%) of the Loan Cap for thirty (30) consecutive
calendar days. The termination of an Accelerated Borrowing Base Delivery Event as provided herein
shall in no way limit, waive or delay the occurrence of a subsequent Accelerated Borrowing Base
Delivery Event in the event that the conditions set forth in this definition again arise.



     “Account Control Agreements” shall mean agency agreements with banks or other
institutions maintaining a checking or other demand deposit account, lockbox account or investment
account of any Borrower (excluding store-level deposit accounts), including without limitation any
DDA into which the proceeds of any other DDA are regularly swept on a daily basis, establishing
control (as defined in the UCC) of such account by the Collateral Agent and whereby the bank
maintaining such account agrees, upon the occurrence and during the continuance of a Cash Dominion
Event, to comply only with instructions originated by the Collateral Agent without the further
consent of any Credit Party, each of which agreements shall be in form and substance reasonably
satisfactory to the Administrative Agent.



     “Account Debtor” shall mean any Person who is obligated under an
Account.



     “Account Debtor List” has the meaning provided therefor in Section
2.21(m).



     “Account Reserves” means such reserves as may be established from time to time by the
Administrative Agent in the Administrative Agent’s Permitted Discretion (after consultation with
the Lead Borrower (whose consent to any Account Reserve shall not be required)) with respect to the
collectability of any Eligible Wholesale Receivable or any Eligible Credit Card and Debit Card
Receivable, including, without limitation, Dilution Reserves. Account Reserves shall be established
and calculated in a manner and methodology consistent with the Administrative Agent’s practices as
of the Effective Date with other similarly situated borrowers.



     “Accounts” shall mean “accounts” as defined in the UCC and in the PPSA, (or to the
extent governed by the Civil Code of Québec, defined as all “claims” for the purposes of the Civil
Code of Québec), and also all accounts, accounts receivable, and rights to payment (whether or not
earned by performance): (i) for property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of; (ii) for services rendered or to be rendered; (iii) arising out
of a policy of insurance issued or to be issued; (iv) arising out of a secondary obligation
incurred or to be incurred; or (v) arising out of the use of a debit, credit or charge card or
information contained on or used with that card.



2









 





     “ACH” shall mean automated clearing house
transfers.



     “Act” has the meaning provided therefor in
Section 9.21.



     “Additional Commitment Lender” has the meaning provided therefor in Section 2.1(c).



     “Adjusted LIBO Rate” means, with respect to any LIBO Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
the LIBO Rate for such Interest Period multiplied by the Statutory Reserve Rate. The Adjusted LIBO
Rate will be adjusted automatically as to all LIBO Borrowings then outstanding as of the effective
date of any change in the Statutory Reserve Rate.



     “Adjustment Date” means the first day of each Fiscal Quarter, commencing with the
first Fiscal Quarter occurring after the expiration of three months following the Effective Date.



     “Administrative Agent” means Bank of America, in its capacity as administrative agent
for the Lenders hereunder.



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



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



     “Affiliate” means, with respect to a specified Person, (i) any director or officer of
that Person, (ii) any other Person Controlling, Controlled by or under direct or indirect common
Control with that Person (and if that Person is an individual, any member of the immediate family
(including parents, siblings, spouse, children, stepchildren, nephews, nieces and grandchildren) of
such individual and any trust whose principal beneficiary is such individual or one or more members
of such immediate family and any Person who is Controlled by any such member or trust), (iii) any
other Person directly or indirectly holding 15% or more of any class of the capital stock or other
equity interests (including options, warrants, convertible securities and similar rights) of that
Person, and (iv) any other Person 15% or more of any class of whose capital stock or other equity
interests (including options, warrants, convertible securities and similar rights) is held directly
or indirectly by that Person.



     “Agents” shall mean collectively, the Administrative Agent, the Canadian Agent and the
Collateral Agent.



     “Agreement” means this Credit Agreement, as modified, amended, supplemented or
restated and in effect from time to time.



     “Applicable Fiscal Period” means the period of twelve (12) Fiscal Months ended as of
the end of the last Fiscal Month.



     “Applicable Law” means as to any Person: (i) all statutes, rules, regulations, orders,
or other requirements having the force of law and (ii) all court orders and injunctions, and/or
similar rulings, in each instance ((i) and (ii)) of or by any Governmental Authority, that are
applicable to such Person or any property of such Person.



3









 





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



     “Applicable Margin ” means the rates for Prime Rate Loans, U.S. Index Rate Loans,
BA Equivalent Loans, LIBO Loans and Tranche A-1 LIBO Loans set forth below:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable	 	 	 	 	 	 	Applicable	 	 	 	 
	 	 	 	 	 	 	Margin	 	 	 	 	 	 	Margin for	 	 	Applicable	 
	 	 	 	 	 	 	for LIBO	 	 	 	 	 	 	Domestic Prime	 	 	Margin for	 
	 	 	 	 	 	 	Loans and	 	 	Applicable	 	 	Rate Loans, U.S.	 	 	Domestic	 
	 	 	 	 	Average	 	BA	 	 	Margin for	 	 	Index Rate Loans	 	 	Tranche A-1	 
	 	 	 	 	Daily	 	Equivalent	 	 	Tranche A-1	 	 	and Canadian	 	 	Prime Rate	 
	Level	 	 	Availability	 	Loans	 	 	LIBO Loans	 	 	Prime Rate Loans	 	 	Loans	 
	 	I	 	 	Greater than or
equal to 60% of the
Loan Cap
	 	 	2.25	%	 	 	3.75 %	 	 	1.25	%	 	 	2.75 %
	II	 	Greater than or
equal to 30% of the
Loan Cap but less
than 60% of the
Loan Cap
	 	 	2.50	%	 	 	4.00 %	 	 	1.50	%	 	 	3.00 %
	III	 	Less than 30% of
the Loan Cap
	 	 	2.75	%	 	 	4.25 %	 	 	1.75	%	 	 	3.25 %





From and after the First Amendment Effective Date until the first third Adjustment Date occurring
after the expiration of three months following the First Amendment Effective Date (but, in any
event, until February 1, 2012), the Applicable Margin shall be established at the percentages set
forth in Level III of the pricing grid set forth above. From and after such first Adjustment Date
following the First Amendment Effective Date and on each Adjustment Date thereafter, the Applicable
Margin shall be determined from the pricing grid set forth above based upon the Average Daily
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 III
(even if the Average Daily Availability requirements for a different Level have been met) and
interest shall accrue at the rate of interest set forth in Section 2.10; provided further if any
Borrowing Base Certificate is at any time restated or otherwise revised or if the information set
forth in any 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.




     “Appraised Value ” means with respect to Eligible Inventory, the
appraised orderly liquidation value, net of costs and expenses to be incurred in connection with any such liquidation, which
value is



4









 




expressed as a percentage of Cost of Eligible Inventory as set forth in the inventory stock ledger
of the Borrower Consolidated Group, which value shall be determined from time to time by the most
recent appraisal undertaken by an independent appraiser engaged by the Administrative Agent.




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



     “Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section 9.6),
and accepted by the Administrative Agent, in the form of Exhibit A or A-1 or any other form
approved by the Administrative Agent.



     “Audited Financial Statements” means the audited consolidated balance sheet of the
Borrower Consolidated Group for the Fiscal Year ended January 30, 2010, and the related
consolidated statements of income or operations, shareholders’ equity and cash flows for such
Fiscal Year of the Borrower Consolidated Group, including the notes thereto.



     “Availability Reserves” means such reserves (but without duplication of any Account
Reserves or Inventory Reserves or any factors included in the determination of the Appraised Value
of Eligible Inventory) as the Administrative Agent from time to time determines in the
Administrative Agent’s Permitted Discretion (after consultation with the Lead Borrower (whose
consent to any Availability Reserve shall not be required)) as being appropriate (a) to reflect the
impediments to the Agents’ ability to realize upon the Collateral, (b) to reflect claims and
liabilities that the Administrative Agent determines will need to be satisfied in connection with
the realization upon the Collateral, or (c) to reflect that a Default or an Event of Default then
exists. Without limiting the generality of the foregoing, Availability Reserves may include (but
are not limited to) reserves based on (i) rent (A) on account of past due rent, (B) for leased
distribution center locations as to which the Administrative Agent has not received a Collateral
Access Agreement from the applicable landlord, and (C) for locations for which the landlord has
been granted a Lien on the assets of any Person included in the Borrower Consolidated Group or in
those states in which the landlord has a statutory landlord’s Lien; (ii) Customer Credit
Liabilities; (iii)outstanding taxes and other governmental charges, including, without limitation,
ad valorem, real estate, personal property, sales, claims of the PBGC and other taxes or claims
which might have priority over the interests of the Collateral Agent or the Canadian Agent in the
Collateral; (iv) customs duties, and other costs to release Inventory which is being imported into
the United States or Canada; (v) salaries, wages and benefits due to employees of any Credit Party,
provided that Availability Reserves under this clause (v) will not be imposed except during the
continuance of a Cash Dominion Event; (vi) customer deposits; (vii) reserves for reasonably
anticipated changes in the Appraised Value of Eligible Inventory between appraisals resulting from
any significant or material decrease in comparable store sales trends, gross margins, any
significant changes in Inventory mix, store operating expense structure or markdown activity, or
any other factor that could reasonably be expected to result in a decrease to Appraised Value of
Eligible Inventory, provided that if the Administrative Agent notifies the Lead Borrower of its
intention to impose such an Availability Reserve, the Lead Borrower may, at its expense, engage an
appraiser reasonably satisfactory to the Administrative Agent, to conduct an updated Inventory
appraisal and, upon the Administrative Agent’s receipt and satisfactory review of the results of
such appraisal, the previously imposed Availability Reserve under this clause (vii) will be
terminated (without limiting the Administrative Agent’s right to re-establish such an Availability
Reserve under this clause (vii) if circumstances so warrant); (viii) warehousemen’s or bailee’s
charges and other Permitted Encumbrances which may have priority over the interests of the
Collateral Agent or the Canadian Agent in the Collateral; (ix) amounts due to vendors on account of
consigned goods; (x) the Agents’ estimate of Canadian Priority Payable Reserves; (xi) Cash
Management Reserves; and (xii)



5









 




Bank Products Reserves. Availability Reserves shall be established and calculated in a manner and
methodology consistent with the Administrative Agent’s practices as of the Effective Date with
other similarly situated borrowers.




     “Average Daily Availability” shall mean, in respect of any Adjustment Date, the
average daily Excess Availability for the immediately preceding Fiscal Quarter.



     “BA Equivalent Loan” means any Canadian Loan in CD$ bearing interest at a rate
determined by reference to the BA Rate in accordance with the provisions of Article II.



     “BA Equivalent Loan Borrowing” means any Borrowing comprised of BA
Equivalent Loans.



     “BA Rate” means, for the Interest Period applicable to a BA Equivalent Loan, the
rate of interest per annum equal to the annual rates applicable to CD$ bankers’ acceptances having
an identical or comparable term as the proposed BA Equivalent Loan displayed and identified as such
on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuter
Monitor Money Rates Service as at approximately 10:00 A.M. (Toronto time) on such day (or, if such
day is not a Business Day, as of 10:00 A.M. (Toronto time) on the immediately preceding Business
Day), plus five (5) basis points; provided that if such rates do not appear on the CDOR Page at
such time on such date, the rate for such date will be the annual discount rate (rounded upward to
the nearest whole multiple of 1/100 of 1%) as of 10:00 A.M. on such day at which a Canadian
chartered bank listed on Schedule 1 of the Bank Act (Canada) as selected by the Canadian Agent is
then offering to purchase CD$ bankers’ acceptances accepted by it having such specified term (or a
term as closely as possible comparable to such specified term), plus five (5) basis points.



     “Bank of America” shall mean Bank of America, N.A., a national banking
association.



     “Bank of America-Canada Branch” means Bank of America, N.A. (acting through its
Canada branch), a banking corporation carrying on business under the Bank Act (Canada).



     “Bank of America Concentration Account” has the meaning provided therefor in Section
2.21(d).



     “Bank of Canada Overnight Rate” means, on any date of determination, the rate of
interest charged by the Bank of Canada on one-day Canadian dollar loans to financial institutions,
for such date.



     “Bank Product Reserves” means such reserves as the Administrative Agent from time to
time determine in its Permitted Discretion as being appropriate to reflect the anticipated
liabilities and obligations of the Credit Parties with respect to Bank Products then provided or
outstanding.



     “Bank Products” means any services or facilities provided to any Credit Party by the
Administrative Agent, the Canadian Agent, any Lender, or any of their respective Affiliates,
including, without limitation, on account of (a) Hedging Agreements, (b) purchase cards, (c)
foreign exchange facilities, and (d) leasing, but excluding Cash Management Services.



     “Banker’s Acceptance” means a time draft or bill of exchange or other deferred
payment obligation relating to a Commercial Letter of Credit which has been accepted by the Issuing
Bank.



     “Bankruptcy Code” shall mean the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. §101, et
seq.), as amended and in effect from time to time, and the regulations issued from time to time
thereunder.



6









 





     “Base Rate” means for any day a fluctuating rate per annum equal to the highest of
(a) the Domestic Prime Rate; (b) the Federal Funds Effective Rate for such day, plus 0.50%; and (c)
the LIBO Rate for a 30 day interest period as determined on such day, plus 1.0%.



     “BIA ” means the Bankruptcy and Insolvency Act (Canada).



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



     “Borrower Consolidated Group” shall mean the Lead Borrower and its Subsidiaries.



     “Borrower Materials” has the meaning specified in Section 5.1.



     “Borrowers” means, individually and collectively, the Lead Borrower, the Other
Borrowers and any other Person who subsequently becomes a Borrower hereunder.



     “Borrowing” shall mean (a) a Canadian Borrowing or a Domestic Borrowing, as
applicable, or (b) the incurrence of a Swingline Loan.



     “Borrowing Base Certificate” has the meaning assigned to such term in Section
5.1(f).



     “Borrowing Request” means a request by the Lead Borrower on behalf of the
Borrowers for a Borrowing in accordance with Section 2.3.



     “Breakage Costs” shall have the meaning set forth in Section 2.19(b).



     “Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in Charlotte, North Carolina or New York, New York are authorized or required by
law to remain closed, or are in fact closed in the state where the Administrative Agent’s Office is
located, provided that, when used in connection with a LIBO Loan or a Tranche A-1 LIBO Loan, the
term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market and provided further that when used in connection with any
Loan by a Canadian Lender, the term “Business Day” shall also exclude any day on which banks are
authorized or required by law to be closed in Toronto, Ontario, Canada.



     “Canadian Agent” means Bank of America-Canada Branch, for its own benefit and the
benefit of the other Canadian Secured Parties, or any successor Canadian Agent.



     “Canadian Agent’s Office” means the Canadian Agent’s address and, as appropriate,
account as set forth on the signature page  hereto, or such other address or account as the
Canadian Agent may from time to time notify the Canadian Borrower and the Canadian Lenders.



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



     (a) the Canadian Loan Cap



     minus



     (b) the Canadian Credit Extensions on such
date.



7









 





     In calculating Canadian Availability at any time and for any purpose under this Agreement,
any amount calculated or referenced in Dollars shall also refer to the Equivalent CD$
Amount.



     “Canadian Borrower” means GCO Canada Inc., a corporation organized under the federal
laws of Canada.



     “Canadian Borrowing” means a borrowing consisting of simultaneous Canadian Loans of
the same Type and, in the case of BA Equivalent Loans or LIBO Loans, having the same Interest
Period made by each of the Canadian Lenders pursuant to Section 2.3.



     “Canadian Borrowing Base” means, at any time of calculation, an Equivalent CD$
Amount in Dollars equal to:




     (a) the product of (i)the Inventory Advance Rate multiplied by (ii) the Appraised Value of
Eligible Inventory of the Canadian Borrower multiplied by (iii)(A) the Cost of Eligible Inventory of
the Canadian Borrower, minus (B) Inventory Reserves related to Eligible Inventory of the Canadian
Borrower;




     plus




     (b) the product of (i) eighty-five percent (85%) multiplied by (ii)(A) the then Eligible
Wholesale Receivables of the Canadian Borrower (other than Eligible Wholesale Receivables
consisting of Lids Team Sports Receivables of the Canadian Borrower), minus (B) Account Reserves
related to such Eligible Wholesale Receivables of the Canadian Borrower;




     plus




     (c) the lesser of (i) the product of fifty percent (50%) multiplied by (A) the then Eligible
Wholesale Receivables consisting of Lids Team Sports Receivables of the Canadian Borrower, minus
(B) Account Reserves related to such Eligible Wholesale Receivables of the Canadian Borrower, or
(ii) the Lid Team Sports Cap;




     plus




     (d) the product of (i) ninety percent (90%) multiplied by (ii)(A) the then Eligible Credit
Card and Debit Card Receivables of the Canadian Borrower, minus (B) Account Reserves related to
Eligible Credit Card and Debit Card Receivables of the Canadian Borrower;




     minus




     (e) without duplication, the then amount of all Availability Reserves established with respect
to matters affecting the Canadian Borrower.



     “Canadian Commitment Percentage” means the Commitment Percentages of the Canadian
Lenders.



     “Canadian Commitments” means, as to each Canadian Lender, its obligation to (a) make
Canadian Loans to the Canadian Borrower pursuant to Section 2.1 and (b) purchase participations in
Canadian Letter of Credit Outstandings, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Canadian Lender’s name on Schedule 1.1
or in the Assignment



8









 





and Acceptance pursuant to which such Canadian Lender becomes a party hereto, as applicable, as
such amount may be adjusted from time to time in accordance with this Agreement.




     “Canadian Credit Extensions” as of any day, shall be equal to the sum of (a) the
principal balance of all Canadian Loans then outstanding, and (b) the then amount of the Canadian
Letter of Credit Outstandings.



     “Canadian Credit Parties” means, collectively, the Canadian Borrower and each Material
Subsidiary that is or becomes a guarantor of the Canadian Liabilities. “Canadian Credit Party”
means any one of such Persons.



     “Canadian Dollars” and “CD$” refer to lawful money of Canada.



     “Canadian Lenders” means Bank of America-Canada Branch and any other Person having
Canadian Commitments from time to time or at any time. A Person may be a Canadian Lender only if it
is a financial institution that is listed on Schedule I, II or III of the Bank Act (Canada), has
received an approval to have a financial establishment in Canada pursuant to Section 522.21 of the
Bank Act (Canada) or is not a foreign bank for purposes of the Bank Act (Canada), and if such
financial institution is not resident in Canada and is not deemed to be resident in Canada for
purposes of the Income Tax Act (Canada), then such financial institution deals at arm’s length with
each Canadian Credit Party for purposes of the Income Tax Act (Canada).



     “Canadian Letter of Credit” means each Letter of Credit issued hereunder for the
account of the Canadian Borrower.



     “Canadian Letter of Credit Outstandings” shall mean, at any time, the sum of (a) with
respect to Canadian Letters of Credit outstanding at such time, the aggregate maximum amount that
then is or at any time thereafter may become available for drawing or payment thereunder plus (b)
all amounts theretofore drawn or paid under Canadian Letters of Credit for which the Issuing Bank
has not then been reimbursed.



     “Canadian Letter of Credit Sublimit” means an amount equal to $5,000,000. The
Canadian Letter of Credit Sublimit is part of, and not in addition to, the Canadian Total
Commitments. A permanent reduction of the Canadian Total Commitments shall not require a
corresponding pro rata reduction in the Canadian Letter of Credit Sublimit; provided, however,
that if the Canadian Total Commitments are reduced to an amount less than the Canadian Letter of
Credit Sublimit, then the Canadian Letter of Credit Sublimit shall be reduced to an amount equal
to (or, at Canadian Borrower’s option, less than) the Canadian Total Commitments.



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



     “Canadian Loan” means an extension of credit by a Canadian Lender to
the Canadian Borrower (to the extent based on Canadian Availability) under Article II.



9









 





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



     “Canadian Note” means a promissory note made by the Canadian Borrower in favor of a
Canadian Lender evidencing Canadian Loans made by such Canadian Lender, substantially in the form
of Exhibit B-1.



     “Canadian Pension Plan” means any pension plan that is subject to the Pension
Benefits Act (Ontario) or similar legislation of another Canadian province or territory and the
Income Tax Act (Canada) and that is either (a) maintained or sponsored by any Canadian Credit Party
or any Canadian Subsidiary for employees, or (b) maintained pursuant to a collective bargaining
agreement, or other arrangement under which more than one employer makes contributions and to which
any Canadian Credit Party or any Canadian Subsidiary is making or accruing an obligation to make
contributions or has within the preceding five years made or accrued such contributions.



     “Canadian Prime Rate” means, for any day, the greater of (i) the fluctuating rate of
interest per annum equal to the rate of interest in effect for such day as publicly announced from
time to time by Bank of America-Canada Branch as its reference rate of interest for loans made in CD$ and designated as its “prime” rate being a rate set by Bank of America-Canada Branch based upon
various factors, including Bank of America-Canada Branch’s costs and desired return, general
economic conditions and other factors and is used as a reference point for pricing some loans,
provided that in the event that the Bank of America-Canada Branch (including any successor or
assignor) does not at any time publicly announce a prime rate, such rate shall be the “prime rate”
publicly announced by a Schedule 1 chartered bank in Canada selected by the Canadian Agent, (ii)
the Bank of Canada Overnight Rate, plus 0.50%, and (iii) the BA Rate for a one month Interest
Period as determined on such day, plus 1.0%. Any change in the prime rate announced by the Bank
of America-Canada Branch shall take effect at the opening of business on the day specified in the
public announcement of such change. Each interest rate based on the Canadian Prime Rate hereunder,
shall be adjusted simultaneously with any change in the Canadian Prime Rate.



     “Canadian Prime Rate Loan” means a Canadian Loan in CD$ that bears interest based on
the Canadian Prime Rate.



     “Canadian Priority Payable Reserves” means, at any time, without duplication, the
obligations, liabilities and indebtedness at such time which have, or could in any proceeding have,
a trust, deemed trust, right of garnishment, right of distress, charge or statutory Lien imposed to
provide for payment or Liens ranking or capable of ranking senior to or pari passu with Liens
securing the Canadian Liabilities on any of the Collateral under federal, provincial, state, county, territorial, municipal, or local law including, to the extent that there is such a trust,
statutory Liens or Liens in respect of the specified item that has or is capable of having such
rank, claims for unremitted and accelerated rents, utilities, taxes (including sales taxes, value
added taxes, amounts deducted or withheld or not paid and remitted when due under the Income Tax
Act (Canada), excise taxes, goods and services taxes (“GST”) and harmonized sales taxes (“HST”)
payable pursuant to Part IX of the Excise Tax Act (Canada) or similar taxes under provincial or
territorial law), the claims of a clerk, servant, travelling salesperson, labourer or worker
(whether full-time or part-time) who is owed wages (including any amounts protected by the Wage
Earner Protection Program Act (Canada)), salaries, commissions, disbursements, compensation or
other amounts (such as union dues payable on behalf of employees) by the Credit Parties (but only to
the extent that the claims of such parties may rank or be capable of ranking senior to or pari
passu with Liens securing the Obligations on any of the Collateral), vacation pay, severance pay,
employee source deductions, workers’ compensation obligations, government royalties or pension fund
obligations (including claims in respect of, and all amounts currently or past due and not
contributed, remitted or paid to, or pursuant to, any Canadian Pension Plan, the Pension Benefits
Act (Ontario) or any similar law) (but only to the extent ranking or capable of ranking senior to
or pari



10









 



passu with Liens securing the Obligations on any of the Collateral),together with the aggregate
value, determined in accordance with GAAP, of all Eligible Inventory which may be or may become
subject to a right of a supplier to recover possession thereof or to exercise rights of
revendication with respect thereto under any federal, provincial, state, county, municipal,
territorial or local law, where such supplier’s right may have priority over Liens securing the
Obligations including Eligible Inventory subject to a right of a supplier to repossess goods
pursuant to Section 81.1 of the BIA or the Civil Code of
Québec.




     “Canadian Secured Party” or “Canadian Secured Parties” has the meaning
assigned to such term in the General Security Agreement dated as of the Effective Date among the
Canadian Credit Parties and the Collateral Agent.



     “Canadian Security Documents” means (a) the General Security Agreement dated as of
the Effective Date among the respective Canadian Credit Parties and the Collateral Agent for the
benefit of the Canadian Secured Parties, (b) the deed of hypothec charging the universality of
moveable property granted by the Canadian Credit Parties in favor of the Collateral Agent, and
(c)and each other security agreement or other instrument or document executed and delivered by any
Canadian Credit Party to the Collateral Agent pursuant to this Agreement or any other Loan Document
granting a Lien on assets of any Canadian Credit Party for the benefit of the Canadian Secured
Parties, as security for the Canadian Liabilities.



     “Canadian Subsidiary” means any Subsidiary that is organized under the laws of Canada
or any province or territory thereof.



     “Canadian Total Commitments” means the aggregate of the Canadian Commitments of all
Canadian Lenders. On the Effective Date, the Canadian Total Commitments are $8,000,000.



     “Capital Expenditures” of any Person means, for any period, to the extent treated as
a capital expenditure in accordance with GAAP, any expenditure for fixed assets (both tangible and
intangible), including assets being constructed (whether or not completed), leasehold improvements,
installment purchases of machinery and equipment, acquisitions of real estate and other similar
expenditures including without duplication, expenditures in or from any construction-in-progress
account of any of the Credit Parties, provided that “Capital Expenditures” shall not include any
portion of the purchase price of a Permitted Acquisition which is allocated to property, plant or
equipment acquired as part of such Permitted Acquisition.



     “Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.



     “Cash Collateral Account” shall mean an interest-bearing account established by the
Domestic Borrowers with the Collateral Agent under the sole and exclusive dominion and control of
the Collateral Agent designated as the “Genesco Inc. Cash Collateral Account”, and, in the
case of the Canadian Borrower, an interest-bearing account established by the Canadian Borrower
with the Canadian Agent at Bank of America-Canada branch under the sole and exclusive dominion and
control of the Canadian Agent designated as the “GCO Canada Cash Collateral Account”.



     “Cash Collateralize” means, as of any date, the deposit by the Borrowers in the Cash
Collateral Account of an amount in cash equal to 102% of the Letter of Credit Outstandings plus
any accrued and unpaid interest thereon.



11









 





     “Cash
Dominion Event” means either (i) the occurrence and continuance of any Event of
Default, or (ii) the failure of the Borrowers to maintain Excess Availability in an amount equal to
the greater of (A) fifteen percent (15%) of the Loan Cap, or (B) $35,000,000. For purposes of this
Agreement, the occurrence of a Cash Dominion Event shall be deemed
continuing (i) so long as such
Event of Default has not been waived, and/or (ii) if the Cash Dominion Event arises as a result of
the Borrowers’ failure to achieve Excess Availability as required hereunder, until Excess
Availability has exceeded the greater of $45,000,000 or 15% of the Loan Cap for forty-five (45)
consecutive days, in which case a Cash Dominion Event shall no longer be deemed to be continuing
for purposes of this Agreement; provided that a Cash Dominion Event shall be deemed continuing for
a twelve month period (even if an Event of Default is no longer continuing and/or Excess
Availability exceeds the greater of $45,000,000 or 15% of the Loan Cap for forty-five (45)
consecutive days) after a Cash Dominion Event has occurred and been discontinued on two (2)
occasions in any twelve month period. The termination of a Cash Dominion Event as provided herein
shall in no way limit, waive or delay the occurrence of a subsequent Cash Dominion Event in the
event that the conditions set forth in this definition again arise.



     “Cash Management Reserves” means such reserves as the Administrative Agent, from time
to time, determines in its Permitted Discretion as being appropriate to reflect the reasonably
anticipated liabilities and obligations of the Credit Parties with respect to Cash Management
Services then provided or outstanding.



     “Cash Management Services” means any one or more of the following types of services or
facilities provided to any Credit Party by the Administrative Agent, the Canadian Agent or any
Lender or any of their respective Affiliates: (a) ACH transactions, (b) cash management services,
including, without limitation, controlled disbursement services, treasury, depository, overdraft,
and electronic funds transfer services, (c) credit card processing services, and (d) credit or
debit cards.



     “Cash Receipts” has the meaning provided therefor in Section 2.21(d).



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



     “Change in Control” means, at any time, (a) occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Lead Borrower by Persons who were
neither (i) nominated by the board of directors of the Lead Borrower nor (ii) appointed by
directors so nominated; or (b) any person or group (as such terms are used in the Securities and
Exchange Act of 1934, as amended), is or becomes the beneficial owner (within the meaning of Rule
13d-3 and 13d-5 of the Securities and Exchange Act of 1934, as amended) directly or indirectly of
fifty percent (50%) or more of the total voting power of the Voting Stock of the Lead Borrower on a
fully diluted basis, whether as a result of the issuance, sale or distribution of securities of the
Lead Borrower, any merger or consolidation to which the Lead Borrower is a party, or otherwise, (c)
except as otherwise permitted pursuant to this Agreement, the failure of the Lead Borrower to own,
directly or indirectly, at least eighty percent (80%) of the Voting Stock or ownership interest, as
applicable, of all of the Borrower Consolidated Group (other than with respect to Genesco Partners
Joint Venture, for which such percentage shall be sixty-five percent (65%) and SIOPA Sports of
America, LLC and SIOPA Clubhouse Stores, LLC and their successors or assigns, for which such
percentage shall be 50%), or (d) there occurs a “Change in Control” (or any comparable term) under
and as determined in any document governing Material Indebtedness of any Credit Party.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement (or, in the case of any Person which becomes a Lender or Participant thereafter, the date on which such Person becomes a Lender or Participant), (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental Authority after the
date of this Agreement (or, in



12









 




the case of any Person which becomes a Lender or Participant thereafter, the date on which such
Person becomes a Lender or Participant) or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.23, by any lending office of such Lender or by such Lender’s or the
Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the date of this
Agreement (or, in the case of any Person which becomes a Lender or Participant thereafter, the
date on which such Person becomes a Lender or Participant); provided however, for purposes of this
Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
guidelines or directives in connection therewith are deemed to have gone into effect and been
adopted after the Effective Date.




     “Charges” has the meaning provided therefor in Section 9.14.



     “Chattel Paper” has the meaning ascribed to such term in the UCC or in the PPSA,
as applicable.



     “Closing Date” means December 1, 2006.



     “Co-Syndication Agents” means Wells Fargo Capital Finance, LLC, U.S. Bank National
Association and SunTrust Bank.



     “Code” means the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, as amended from time to time.



     “Collateral” means any and all “Collateral” as defined in any applicable Security
Document.



     “Collateral Access Agreement” means an agreement reasonably satisfactory in form and
substance to the Collateral Agent executed by (a) a bailee or other Person in possession of
Collateral, and (b) any landlord of Real Estate leased by any Credit Party, pursuant to which such
Person (i) acknowledges the Collateral Agent’s or Canadian Agent’s Lien on the Collateral,
(ii) releases or subordinates such Person’s Liens in the Collateral held by such Person or located
on such Real Estate, (iii) provides the Collateral Agent or the Canadian Agent, as applicable, with
access to the Collateral held by such bailee or other Person or located in or on such Real Estate,
(iv) as to any landlord, provides the Collateral Agent or the Canadian Agent, as applicable, with a
reasonable time to sell and dispose of the Collateral from such Real Estate, and (v) makes such
other agreements with the Collateral Agent and the Canadian Agent as the Agents may reasonably
require. Any Collateral Access Agreement executed and delivered to, and accepted by, the Collateral
Agent will be deemed to satisfy the requirements set forth in this definition. The Collateral
Access Agreements obtained in connection with the Existing Credit Agreement will be deemed to be
effective Collateral Access Agreements for the purposes contained herein.



     “Collateral Agent” means Bank of America, in its capacity as collateral agent
under the Security Documents.



     “Collateral Control Agreement” means a tri-party agreement in form and substance
satisfactory to the Collateral Agent, in its Permitted Discretion, among the Collateral Agent, a
Borrower and a customs broker, freight forwarder or other carrier, in which the customs broker,
freight forwarder or other carrier acknowledges that it has control over and holds the documents
evidencing ownership of the subject Inventory for the benefit of the Collateral Agent and agrees,
upon notice from the Collateral Agent following the occurrence and during the continuance of an
Event of Default, to hold and dispose of the subject Inventory solely as directed by the Collateral
Agent.



13









 




     “Combined
Borrowing Base” means the sum of
(i) the Domestic
Borrowing Base and, as long as Canadian, (ii) as long as Canadian Commitments remain outstanding, the Canadian Borrowing
Base, and (iii) as long as Tranche A-1 Commitments remain
outstanding, the Canadian Tranche A-1
Borrowing Base.



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



     
“Commitment” shall mean, with respect to each Lender,
the Canadian Commitment, the
Domestic Commitment and the Domestic Tranche A-1 Commitment of such Lender hereunder.



     “Commitment Fee” has the meaning provided therefor in Section 2.12(a).



     “Commitment Fee Rate” means (a) if the average daily Credit Extensions for the
preceding Fiscal Quarter are greater than or equal to 50% of the Total Commitments, 0.375% per
annum, or (ii) if the average daily Credit Extensions for the preceding Fiscal Quarter are less than
50% of the Total Commitments, 0.50% per annum.



     “Commitment Increase” has the meaning provided therefor in Section 2.1(c).



     “Commitment Increase Date” has the meaning provided therefor in Section 2.1(d).



     “Commitment Percentage” shall mean, with respect to (a) any Domestic Lender (other
than a Tranche A-1 Lender) at any time, the percentage (carried out to the ninth decimal place) of
the Domestic Total Commitments represented by such Domestic Lender’s Domestic Commitment at such
time, (b) any Tranche A-1 Lender at any time, the percentage (carried out to the ninth decimal
place) of the Tranche A-1 Commitments represented by such Tranche A-1 Lender’s Tranche A-1
Commitment at such time, (c) any Canadian Lender at any time, the percentage (carried out to the
ninth decimal place) of the Canadian Total Commitments represented by such Canadian Lender’s
Canadian Commitment at such time, and (cd) any Lender at any time, the percentage (carried out to
the ninth decimal place) of the Total Commitments represented by such Lender’s Commitment at such
time. If the Domestic Commitments, Tranche A-1 Commitments and/or Canadian Commitments of each
Lender to make Loans and the obligation of the Issuing Bank to issue Letters of Credit have been
terminated pursuant to Section 2.15 or Section 7.1 or if the Total Commitments have expired, then
the Commitment Percentage of each Lender shall be determined based on the Commitment Percentage of
such Lender most recently in effect, giving effect to any subsequent assignments. The initial
Commitment Percentage of each Lender is set forth opposite the name of such Lender on Schedule 1.1
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as
applicable, or as may subsequently be set forth in the Register from time to time, and as such
Commitments may be reduced from time to time pursuant to Section 2.15 hereof or increased from time
to time pursuant to Section 2.1(c) hereof.



     “Concentration Accounts” means collectively, the Bank of America Concentration
Account and any concentration account established by the Canadian Borrower at Bank of America-Canada
Branch, together with any and all other concentration accounts opened by any of the Credit
Parties and consented to, in writing, by the Administrative Agent.



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



14









 





     “Consolidated EBITDA” of any Person means, for any Applicable Fiscal Period, the
following for such Person for such period: (i) Consolidated Net
Income, plus (ii) depreciation,
amortization and all other non-cash charges that were deducted in the calculation of Consolidated
Net Income for such period, plus (iii) provisions for income taxes that were deducted in the
calculation of Consolidated Net Income for such period, plus (iv) Consolidated Interest Expense for
such period, plus (v) extraordinary non-cash losses for such period to the extent such losses have
not been and are not expected to become cash losses in a later fiscal period, minus (viplus (vi)
payments on account of the Schuh Earnout that were deducted in the calculation of Consolidated Net
Income for such period, plus (vii) payments on account of the Schuh Seller Notes that were deducted
in the calculation of Consolidated Net Income for such period, minus (viii) federal, state, local
and, to the extent not included in the calculation of taxes under clause (iii) above, foreign,
income tax credits, minus (viiix) all non-cash items (including, without limitation, all
extraordinary non-cash gains) increasing Consolidated Net Income.



     “Consolidated Interest Expense”  means, for any Person for any period, total interest
and all amortization of debt discount and expense (including that attributable to Capital Lease
Obligations in accordance with GAAP) of such Person on a Consolidated basis with respect to all
outstanding Indebtedness of such Person calculated in accordance with GAAP.



     “Consolidated Net Income” means, for any Person for any period, the net income (or
loss) of such Person on a Consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP, provided that there shall be excluded (i) the income (or loss)
of any Person that is not a Subsidiary in which any other Person (other than the Lead Borrower or
any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or
other distributions actually paid to the Lead Borrower or any of its Subsidiaries by such Person
during such period, and (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of the Lead Borrower or any of its Subsidiaries or is merged into or
consolidated with the Lead Borrower or any of its Subsidiaries or that Person’s assets are acquired
by the Lead Borrower or any of its Subsidiaries.



     “Consolidated Net Worth” means, with respect to any Person, the difference between
its Consolidated total assets and its Consolidated total liabilities, all as determined in
accordance with GAAP.



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



     “Controlled Account Banks” shall mean the banks or other depository institutions
with whom the Borrowers have entered into Account Control Agreements.



     “Controlled Accounts” shall mean each deposit account, lockbox account or
investment account of the Borrowers that is the subject of an Account Control Agreement.



     “Cost” means the cost of Inventory, based upon the Borrowers’ method of accounting as
in effect on the Effective Date, as such calculated cost is reflected in the Borrowers’ stock
ledger or perpetual inventory records (and without giving effect to any inventory reserves
maintained in the Borrowers’ general ledger).



     “Covenant Compliance Event” means that Excess Availability at any time is less than
the greater of $27,500,000 or 12.5% of the Loan Cap. For purposes hereof, the occurrence of a
Covenant Compliance Event shall be deemed continuing until Excess Availability has exceeded the
greater of $27,500,000 or 12.5% of the Loan Cap for forty-five (45) consecutive days, in which
case a Covenant Compliance Event shall no longer be deemed to be continuing for purposes of this
Agreement. The termination of a Covenant




15











 




Compliance Event as provided herein shall in no way limit, waive or delay the occurrence of a
subsequent Covenant Compliance Event in the event that the conditions set forth in this definition again
arise.




     “Credit Card Notifications” has the meaning provided therefor in Section 2.21(a).



     “Credit Extensions” shall mean, collectively, the Canadian Credit Extensions and the
Domestic Credit Extensions.



     “Credit Parties” shall mean, collectively, the Canadian Credit Parties and the
Domestic Credit Parties (each, individually, a “Credit Party”).



     “Customer Credit Liabilities” means, at any time, the aggregate face value at such
time of (a) outstanding gift certificates and gift cards of the Borrowers entitling the holder
thereof to use all or a portion of the certificate to pay all or a portion of the purchase price
for any Inventory, including, without limitation, discount cards, and (b) outstanding merchandise
credits of the Borrowers.



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



     “DDA List” has the meaning provided therefor in Section 2.21(a).



     “DDA Notification” has the meaning provided therefor in Section 2.21(a).



     “ Debtor Relief Law” shall mean, collectively, (i) the Bankruptcy Code, (ii) the BIA,
the Companies’ Creditors Arrangement Act (Canada) and the Winding-up and Restructuring Act
(Canada), and (iii) all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United
States, Canada, or other applicable jurisdictions from time to time in effect affecting the rights
of creditors generally, in each case as amended from time to time.



     “Default” means any event or condition that constitutes an Event of Default or that
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.



     “Delinquent Lender” has the meaning given that term in Section 8.14.



     “Delinquent Lender’s Future Commitment” has the meaning given that term in Section
8.14.



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



     “Determination Date” shall mean the date upon which each of the following has occurred:




     (a) The Canadian Commitments, Tranche A-1 Commitments and/or the Domestic
Commitments have been terminated by the Required Lenders (or are deemed terminated) upon the
occurrence of an Event of Default; and



16









 









     (b) The Obligations and/or the Canadian Liabilities have been declared to be due and
payable (or have become automatically due and payable) and have not been paid in accordance with
the terms of this Agreement.



     “Dilution Reserve” means, for any period, the excess of (a) that percentage reasonably
determined by the Administrative Agent by dividing (i) the amount of charge-offs and other account
adjustments of Eligible Wholesale Receivables and returns of goods purchased from the Borrowers
during such period which had, at the time of sale, resulted in the creation of an Eligible
Wholesale Receivable, by (ii) the amount of sales (exclusive of sales and other similar taxes) of
the Borrowers during such period over (b) five percent (5%) (but in no event shall the Dilution
Reserve be less than zero).



     “Disqualified Stock” means any capital stock or other 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. Notwithstanding the preceding sentence, any
equity interest that would constitute Disqualified Stock solely because the holders thereof have
the right to require a Credit 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 Borrowers and their 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.



     “Documentation Agent” means PNC Bank, National Association.



     “Dollars” or “$” refers to lawful money of the United States of America.



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



     (a) the Domestic Loan Cap



     minus




     (b) the Domestic Credit Extensions on such
date.



     “Domestic Borrowers” means the Lead Borrower and the Other Domestic Borrowers.



     “Domestic Borrowing” means a borrowing consisting of simultaneous Domestic Loans
or Tranche A-1 Loans of the same Type and, in the case of LIBO Rate Loans or Tranche A-1 LIBO Loans, having the same Interest Period made by each of the Domestic Lenders pursuant to
Section 2.3.



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



     (a) the
product of (i) the Inventory Advance Rate multiplied by (ii) the Appraised Value
of Eligible Inventory of the Domestic Borrowers multiplied by
(iii)(A) the Cost of Eligible
Inventory of the Domestic Borrowers, minus (B) Inventory Reserves related to Eligible Inventory of
the Domestic Borrowers;



     plus



17









 







     (b) the product of (i) eighty-five percent (85%) multiplied by (ii)(A) the then Eligible
Wholesale Receivables of the Domestic Borrowers (other than Eligible Wholesale Receivables
consisting of Lids Team Sports Receivables of the Domestic Borrowers), minus (B) Account
Reserves related to such Eligible Wholesale Receivables of the Domestic Borrowers;



     plus




     (c) the lesser of (i) the product of fifty percent (50%) multiplied by (A) the then
Eligible Wholesale Receivables consisting of Lids Team Sports Receivables of the Domestic
Borrowers, minus (B) Account Reserves related to such Eligible Wholesale Receivables of the
Domestic Borrowers, or (ii) the Lid Team Sports Cap;



     plus




     (d) the product of (i) ninety percent (90%) multiplied by (ii)(A) the then Eligible Credit
Card and Debit Card Receivables of the Domestic Borrowers, minus (B) Account Reserves related to
Eligible Credit Card and Debit Card Receivables of the Domestic Borrowers;



     minus




     (e) without duplication, the then amount of all Availability Reserves established with
respect to matters affecting the Domestic Borrowers.



     “Domestic Commitment Percentage” means the Commitment Percentages (other than the
Tranche A-1 Commitment Percentages) of the Domestic Lenders.



     “Domestic Commitments” means, as to each Domestic Lender, its obligation to (a) make
Domestic Loans to the Domestic Borrowers pursuant to Section 2.1 and (b) purchase participations in
Domestic Letter of Credit Outstandings, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Domestic Lender’s name on Schedule 1.1
or in the Assignment and Acceptance pursuant to which such Domestic Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.



     “Domestic Credit Extensions” as of any day, shall be equal to the sum of (a) the
principal balance of all Domestic Loans then outstanding, and (b) the then amount of the Domestic
Letter of Credit Outstandings.



     “Domestic Credit Parties” means, collectively, the Domestic Borrowers and each
Material Domestic Subsidiary that is or becomes a guarantor of the Obligations. “Domestic
Credit Party” means any one of such Persons.



     “Domestic Lenders” means the Lenders (including Tranche A-1 Lenders) having Domestic
Commitments and/or Tranche A-1 Commitments from time to time or at any time.



     “Domestic Letter of Credit” means each Letter of Credit issued hereunder for the
account of a Domestic Borrower.



     “Domestic Letter of Credit Outstandings” shall mean, at any time, the sum of (a) with
respect to Domestic Letters of Credit outstanding at such time, the aggregate maximum amount that
then is or at any time thereafter may become available for drawing or payment thereunder plus (b)
all amounts theretofore drawn or paid under Domestic Letters of Credit for which the Issuing Bank
has not then been reimbursed.



18









 





     “Domestic Letter of Credit Sublimit” means an amount equal to $70,000,000. The
Domestic Letter of Credit Sublimit is part of, and not in addition to, the Domestic Total
Commitments. A permanent reduction of the Domestic Total Commitments shall not require a
corresponding pro rata reduction in the Domestic Letter of Credit Sublimit; provided, however, that
if the Domestic Total Commitments are reduced to an amount less than the Domestic Letter of Credit
Sublimit, then the Domestic Letter of Credit Sublimit shall be reduced to an amount equal to (or,
at the Lead Borrower’s option, less than) the Domestic Total Commitments.



     “Domestic Loan” means an extension of credit (other than a Tranche A-1 Loan) by a
Domestic Lender to the Domestic Borrowers (to the extent based on Domestic Availability) under
Article II.



     “Domestic Loan Cap” means, at any time of determination, the lesser of (a) the
Domestic Total Commitments, minus the then outstanding principal balance of the Canadian
Credit Extensions, and (b) the Domestic Borrowing Base.



     “Domestic Note” means a promissory note made by the Domestic Borrowers in favor of a
Domestic Lender evidencing Domestic Loans made by such Domestic Lender, substantially in the form
of Exhibit B-2.



     “Domestic Obligations” means all Obligations other than Canadian
Liabilities.



     “Domestic Prime Rate” shall mean, for any day, the annual rate of interest then most
recently announced by Bank of America at its head office in Charlotte, North Carolina as its “prime
rate”. The Domestic Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate being charged to any customer. Any change in the Domestic Prime Rate due to a change in
Bank of America’s prime rate shall be effective on the effective date of such change in Bank of
America’s prime rate.



     “Domestic Prime Rate Loan” shall mean any Loan  (other than a Tranche A-1 Loan)
bearing interest at a rate determined by reference to the Base Rate in accordance with the
provisions of Section 2.3.



     “Domestic Secured Party” or “Domestic Secured Parties” has the meaning
assigned to such term in the Security Agreement.



     “Domestic Subsidiary” means any Subsidiary other than a Foreign Subsidiary.



     “Domestic Total Commitments” means the aggregate of the Domestic Commitments of all
Domestic Lenders. On the First Amendment Effective Date, the Domestic Total Commitments are
$300,000,000. 375,000,000.



     “Domestic Tranche A-1 Prime Rate Loan” shall mean any Tranche A-1 Loan bearing interest
at a rate determined by reference to the Base Rate in accordance with the provisions of Section 2.3.



     “Effective Date” means the date on which the conditions specified in Section 4.1
are satisfied (or waived by the Agents).



     “Effective Date Guaranty” means the Guaranty executed by the Domestic Borrowers in
favor of the Canadian Secured Parties substantially in the form of Exhibit C hereto.



     “Eligible
Assignee” means (a) a Lender or any of its Affiliates; (b) a bank, insurance
company, or company engaged in the business of making commercial loans, which Person, together with
its Affiliates, has a combined capital and surplus in excess of $250,000,000; (c) an Approved Fund;
(d) any Person to



19









 






whom a Lender assigns its rights and obligations under this Agreement as part of an assignment and
transfer of such Lender’s rights in and to a material portion of such Lender’s portfolio of asset
based credit facilities, and (e) any other Person (other than a natural person) approved by the
Administrative Agent, such approval not to be unreasonably withheld or delayed; provided
that notwithstanding the foregoing, (i) “Eligible Assignee” shall not include a Credit Party or any
of the Credit Parties’ Affiliates or Subsidiaries, and (ii) an Eligible Assignee who is assigned a
Canadian Commitment shall meet the criteria set forth in the definition of “Canadian Lender”.




     “Eligible Credit Card and Debit Card Receivables” means Accounts due to a Borrower on
a non-recourse basis from Visa, MasterCard, American Express Company, Discover, and other major
credit card or debit card processors, in each case acceptable to the Administrative Agent in its
Permitted Discretion, as arise in the ordinary course of business, that have been earned by
performance and are deemed by the Administrative Agent in its Permitted Discretion to be eligible
for inclusion in the calculation of the Domestic Borrowing Base, Tranche A-1 Borrowing Base or the
Canadian Borrowing Base, as applicable. Without limiting the foregoing, unless the Administrative
Agent otherwise agrees, none of the following shall be deemed to be Eligible Credit Card and Debit
Card Receivables:



     (a) Accounts that have been outstanding for more than five (5) Business Days from the date of
sale;



     (b) Accounts with respect to which a Borrower does not have good and valid title, free and
clear of any Lien (other than Liens granted to the Collateral Agent for its own benefit and the
ratable benefit of the other applicable Secured Parties and Permitted Encumbrances for which the
Administrative Agent may, in its Permitted Discretion, establish adequate Reserves pursuant to
Section 2.2);



     (c) Accounts that are not subject to a first priority security interest in favor of the
Collateral Agent for its own benefit and the ratable benefit of the other applicable Secured
Parties (it being the intent that chargebacks in the ordinary course by the credit card and debit
card processors, and Permitted Encumbrances for which the Administrative Agent may, in its
Permitted Discretion, establish adequate Reserves pursuant to Section 2.2, shall not be deemed
violative of this clause);



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



     (e) Accounts which are acquired in a Permitted Acquisition unless and until the Administrative
Agent has completed a commercial finance examination of such Accounts, establishes an advance rate
and reserves (if applicable) therefor, and otherwise agrees that such Accounts shall be deemed
Eligible Credit Card and Debit Card Receivables; or



     (f) Accounts which the Administrative Agent determines in its Permitted Discretion to be
uncertain of collection.



     “Eligible Hat World Inventory” shall mean, as of the date of determination thereof,
without duplication of other Eligible Inventory, Inventory which is to be sold through the Hat
World operations of the Borrowers and which would otherwise constitute Eligible Inventory.



     “Eligible Inventory” shall mean, as of the date of determination thereof (without
duplication), (a) Eligible Hat World Inventory, (b) Eligible Johnston & Murphy Inventory, (c)
Eligible Journeys Inventory, (d) Eligible Keuka Inventory, (e) Eligible Wholesale Inventory, (f)
Eligible Underground Station Inventory, and (e) other items of Inventory of the Borrowers that are
finished goods, merchantable and



20









 





readily saleable to the public in the ordinary course deemed by the Administrative Agent in its
Permitted Discretion to be eligible for inclusion in the calculation of the Domestic Borrowing Base, Tranche A-1 Borrowing Base or the Canadian Borrowing Base, as applicable. Without limiting
the foregoing, unless otherwise approved in writing by the Administrative Agent, none of the
following shall be deemed to be Eligible Inventory:




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



     (b) Inventory that is not located at a warehouse facility or store that is owned or leased by
a Borrower (it being understood that any Inventory that is in transit between a warehouse facility
and a store or between stores that are owned or leased by one or more Borrowers will not be
rendered “ineligible” by the application of this clause (b));



     (c) Inventory
that represents (i) goods damaged, defective or otherwise unmerchantable, or (ii)
goods returned to the vendor;



     (d) Inventory that is not located in the United States of America
(including Puerto Rico, but excluding other territories and possessions of the United States of
America) or Canada;



     (e) Inventory that is not subject to a perfected first priority security interest in favor of
the Collateral Agent for the benefit of the applicable Secured Parties (it being the intent that
Permitted Encumbrances for which the Administrative Agent, in its Permitted Discretion, has
established adequate Reserves pursuant to Section 2.2 shall not be deemed violative of this
clause);



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



     (g) Inventory as to which insurance in compliance with the provisions of Section 5.7 hereof is
not in effect;



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



     (i) Inventory which is acquired in a Permitted Acquisition or which is owned by a Borrower
created after the Effective Date (except to the extent that such Inventory has been acquired by
such Borrower from another Borrower and otherwise constitutes Eligible Inventory) unless and until
the Administrative Agent has completed an appraisal of such Inventory and establishes an Inventory
Advance Rate and Inventory Reserves (if applicable) therefor;



     (j) Inventory
that is located (i) in a distribution center or warehouse leased by a Borrower
described on Schedule 1.2 hereto unless in each case, the applicable lessor has delivered
to the Collateral Agent or the Canadian Agent a Collateral Access Agreement; or (ii) in any other
leased distribution center or warehouse in which Inventory having a Cost of at least $5,000,000 is
maintained, unless in each case, the applicable lessor has delivered to the Collateral Agent or the
Canadian Agent a Collateral Access Agreement within 90 days after the Effective Date (unless the
Administrative Agent establishes an Availability Reserve for rent in such amounts as it deems
appropriate from time to time in its Permitted Discretion);



21









 





     (k) Inventory that is (i) located at location #1493 of the Borrowers or (ii) owned by any
joint venture of the Borrowers; or



     (l) Inventory that is subject to any licensing, patent, royalty, trademark, trade name or
copyright agreement with any third party from which any Borrower or any of its Subsidiaries has
received written notice to limit, restrict or terminate (in whole or in part) the right of the
Borrowers or any of their Subsidiaries to Dispose of any Inventory which is the subject of such
agreement; provided that if any such licensing, patent, royalty, trademark, trade name or
copyright agreement permits the Borrowers (or the Borrowers are otherwise permitted) to Dispose of
the Inventory which is the subject thereof after receipt of such written notice (the “Sell-off
Period”), then, so long as the Collateral Agent would not be precluded from Disposing of such
Inventory in a Liquidation, such Inventory shall continue to constitute Eligible Inventory during
the Sell-off Period (as long it would not otherwise be excluded under this definition), but the
Inventory Advance Rate for such Inventory shall reduce by 2.5% each week until such Inventory is
Disposed of.



     “Eligible Johnston & Murphy Inventory” shall mean, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory which is sold through the
Johnston & Murphy operations of the Borrowers and which would otherwise constitute Eligible
Inventory.



     “Eligible Journeys Inventory” shall mean, as of the date of determination thereof,
without duplication of other Eligible Inventory, Inventory which is sold through the Journeys
operations of the Borrowers and which would otherwise constitute Eligible Inventory.



     “Eligible Keuka Inventory” shall mean, as of the date of determination thereof,
without duplication of other Eligible Inventory, Inventory which is to be sold by Keuka Footwear,
Inc. and which would otherwise constitute Eligible Inventory.



     “Eligible Underground Station Inventory” shall mean, as of the date of determination
thereof, without duplication of other Eligible Inventory, Inventory which is to be sold through the
Underground Station operations of the Borrowers and which would otherwise constitute Eligible
Inventory.



     “Eligible Wholesale Inventory” shall mean, without duplication of other Eligible
Inventory, Inventory which is sold at wholesale through the licensed brands operations, the Team
Sports wholesale operations, and/or the Johnston & Murphy wholesale operations of the Borrowers and
which would otherwise constitute Eligible Inventory.



     “Eligible Wholesale Receivables” shall mean each Account acceptable to the
Administrative Agent in its Permitted Discretion, as arises in the ordinary course of business from
the sale of finished goods inventory or rendering of services by the Borrowers to wholesale
customers, that have been earned by performance and are deemed by the Administrative Agent in its
Permitted Discretion to be eligible for inclusion in the calculation of the Domestic Borrowing
Base, Tranche A-1 Borrowing Base or the Canadian Borrowing Base, as applicable. Without limiting
the foregoing, unless the Administrative Agent otherwise agrees, no Account shall be deemed to be
an Eligible Wholesale Receivable if:



     (a) it is not subject to a valid perfected first priority security interest in favor of the
Collateral Agent for the benefit of the applicable Secured Parties, subject to no other Lien other than
Permitted Encumbrances for which the Administrative Agent, in its Permitted Discretion, has
established adequate Reserves pursuant to Section 2.2;



22









 





     (b) it is not evidenced by an invoice, statement or other documentary evidence reasonably
satisfactory to the Administrative Agent;



     (c) it arises out of services rendered or sales to, or out of any other transaction between,
among or with, one or more Affiliates or employees of Borrowers;



     (d) it
remains unpaid for longer than the earlier of (i) sixty-one (61) calendar days after the
original due date, or (ii) ninety-one (91) calendar days after the date of sale;



     (e) it is owed by an Account Debtor and/or its Affiliates with respect to which more than 50%
of the aggregate balance of all Accounts owing from such Account Debtor and/or its Affiliates
remain unpaid for longer than the earlier of (i) sixty-one (61) calendar days after the original due
date, or (ii) ninety-one (91) calendar days after the date of sale;



     (f) with respect to all Accounts owed by any particular Account Debtor and/or its Affiliates,
50% or more  of all such Accounts are deemed not to be Eligible Wholesale Receivables by the
Administrative Agent in its Permitted Discretion (which percentage may, in the Administrative
Agent’s Permitted Discretion, be increased or decreased);



     (g) all Accounts owed by the corresponding Account Debtor and/or its Affiliates together
exceed twenty percent (20%) (such percentage or any higher percentage now or hereafter established
by the Administrative Agent in its Permitted Discretion for any particular Account Debtor, a
“Concentration Limit”) of the net collectible dollar value of all Accounts at any one time (but
the portion of the Accounts not in excess of the applicable percentages may be deemed Eligible
Wholesale Receivables, in the Administrative Agent’s Permitted Discretion);



     (h) any covenant, agreement, representation or warranty contained in any Loan Document with
respect to such Account has been breached and remains uncured;



     (i) the Account Debtor for such Account has commenced a voluntary case under any Debtor Relief
Law or has made an assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in respect of such Account Debtor in an involuntary
case under any Debtor Relief Law, or any other petition or application for relief under any Debtor
Relief Law has been filed against such Account Debtor, or such Account Debtor has failed, suspended
business or ceased to be solvent, called a meeting of its creditors, or has consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs;



     (j) it arises from the sale of property or services rendered to one or more  Account Debtors
outside the continental United States or Canada or that have their principal place of business or
chief executive offices outside the continental United States or Canada;



     (k) it represents the sale of goods to an Account Debtor on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or other repurchase or return basis or is evidenced
by Chattel Paper or an Instrument of any kind not delivered to the Collateral Agent or the Canadian
Agent or has been reduced to judgment;



     (l) the applicable Account Debtor for such Account is any Governmental Authority (except with
respect to Lids Team Sports Receivables, the term “Governmental Authority” shall refer solely to
the United States of America), unless (i) if an Account due from the United States of America,
rights to payment of such Account have been assigned to Agent, for the benefit of itself and
Lenders, pursuant to the



23









 





Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727, et seq. and 41 U.S.C.
Section 15, et seq.),or otherwise, or (ii) if an Account due from the federal government of Canada
or a political subdivision thereof, or any province or territory, or any municipality or department
or agency or instrumentality thereof, then the provisions of the Financial Administration Act
(Canada) or any applicable provincial, territorial or municipal law of similar purpose and effect
restricting the assignment thereof have been complied with, and, in each case, all applicable
statutes or regulations respecting the assignment of government Accounts have been complied with;



     (m) it is subject to an offset, credit (including any resource or other income credit or
offset), deduction, defense, discount, chargeback, freight claim, allowance, adjustment, dispute or
counterclaim, or is contingent in any respect or for any reason (but only to the extent of such
offset, credit, deduction, defense, discount, chargeback, freight claim, allowance, adjustment,
dispute or counterclaim or contingency);



     (n) there is an agreement with an Account Debtor for any deduction from such Account, except
for discounts or allowances made in the ordinary course of business for prompt payment, all of
which discounts or allowances are reflected in the calculation of the face value of each invoice
related thereto, such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Wholesale Receivable;



     (o) any return, rejection or repossession of goods or services related to it has occurred;



     (p) it is not payable to a Borrower;



     (q) the applicable Borrower has agreed to accept or has accepted any non-cash payment for
such Account;



     (r) it constitutes a re-billing of an amount previously billed or double billing (i.e.,
counted twice);



     (s) it constitutes a billing for a sample for which there is no written invoice or similar
agreement evidencing the Account Debtor’s agreement to pay such Account;



     (t) with respect to any Account arising from the sale of goods, the goods have not been
shipped to the Account Debtor or its designee;



     (u) with respect to any Account arising from the performance of services, the services have
not been actually performed or the services were undertaken in violation of any law;



     (v) the applicable Account Debtor for such Account is located in the States of New Jersey,
Minnesota, or West Virginia (or any other state that requires a creditor to file a business
activity report or similar document in order to bring suit or otherwise enforce its remedies against
such Account Debtor in the courts or through any judicial process of such state),unless the
requisite Borrower has qualified to do business in New Jersey, Minnesota, West Virginia, or such
other states, or has filed a business activities report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate, for the then-current year,
or is exempt from such filing requirement;



     (w) it is an Account subject to a debit memo issued by any Borrower;



24









 





     (x) such Account does not arise from the actual and bona  fide  sale and delivery of goods by a
Borrower or rendition of services by a Borrower in the ordinary course of its business which
transactions are completed in accordance with the terms and provisions contained in any documents
related thereto;



     (y) it is an Account subject to a surety bond, guaranty, indemnity or other similar
arrangement;



     (z) it is an Account owed by an Account Debtor that is subject to legal process by a Borrower
or against which a Borrower has asserted a mechanics’ or other similar lien or that is subject to
collection by a Borrower;



     (aa) it is an Account (i) owing from any Person that is also a supplier to or creditor of a
Borrower or (ii) representing any manufacturer’s or supplier’s credits, discounts, incentive plans
or similar arrangements entitling a Borrower to discounts on future purchase therefrom;



     (bb) it is an Account evidenced by a promissory note or other instrument; or



     (cc) it fails to meet such other specifications and requirements which may from time to time
be established by the Administrative Agent on a prospective basis or is not otherwise satisfactory
to the Administrative Agent, as determined in the Administrative Agent’s Permitted Discretion.



     “Environmental Laws ” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by or with any Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, or handling, treatment, storage, disposal, Release or threatened
Release of any Hazardous Material.



     “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, natural resource damage, costs of environmental remediation, administrative
oversight costs, fines, penalties or indemnities), of any Person directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.



     “Equivalent CD$ Amount ” means, on any date, the rate at which Canadian Dollars may be
exchanged into Dollars, determined by reference to the Bank of Canada noon rate as published on the
Reuters Screen BOFC on the immediately preceding Business Day. In the event that such rate does
not appear on such Reuters page, “Equivalent CD$ Amount” shall mean, on any date, the amount of
Dollars into which an amount of Canadian Dollars may be converted or the amount of Canadian Dollars
into which an amount of Dollars may be converted, in either case, at, in the case of the Canadian
Borrower, the Canadian Agent’s spot buying rate in Toronto as at approximately 12:00 noon (Toronto
time) on such date and, in the case of a Domestic Borrower, the Administrative Agent’s spot buying
rate in New York as at approximately 12:00 noon (New York City time) on the immediately preceding
Business Day.



     “ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.



     “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with any Borrower, is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414 of the Code.



25









 





     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an event for which the 30
day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by a
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by a Borrower or any ERISA Affiliate from the PBGC or
a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by a Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan
(which is subject to Section 4063 of ERISA) or Multiemployer Plan; or (g) the receipt by a Borrower
or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.



     “Event of Default” has the meaning assigned to such term in Section 7.1. An “Event of
Default” shall be deemed to have occurred and to be continuing in accordance with the provisions of
Section 7.2 hereof.



     “Excess Availability” means, as of any date of determination, the excess, if any,
of (a) the Loan Cap, over (b) the Total Outstandings.



     “Excluded DDA ” means all DDAs maintained by any Credit Party in the ordinary course
of business and actually used solely (i) for payroll and payroll taxes and other trust funds,
(ii) for sales taxes or other taxes, (iii) to fund a reserve account pursuant to a processing
agreement entered into in the ordinary course of business with a credit card or debit card
processor or check processor, or (iv) after the occurrence and during the continuation of a Cash
Dominion Event, to fund chargebacks, fees, fines, penalties and other charges due and owing to
credit card or debit card processors or check processors arising in the ordinary course of business
with respect to the processing of credit card or debit card charges or checks.



     “Excluded Taxes ” means, with respect to any Agent, any Lender, the Issuing Bank or
any other recipient of any payment to be made by or on account of any obligation of the Borrowers
hereunder, (a) income, franchise or similar taxes imposed on (or measured by) its gross or net
income as a result of a present of former connection between such Agent, such Lender or the Issuing
Bank and the jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such connection arising solely
from such Agent, such Lender or the Issuing Bank having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any other Loan Document),
(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by
any other jurisdiction in which any Borrower is located (c) in the case of a Foreign Lender (other
than a Canadian Lender) any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.26,
except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time
of designation of a new lending office (or assignment), to receive additional amounts from the
Borrowers with respect to such withholding tax pursuant to Section 2.26, and (d) in the case of a
Canadian Lender (other than the original Canadian Lenders hereunder), any withholding tax that is
imposed on amounts payable to such Canadian Lender at the time such Canadian Lender becomes a party
to this Agreement (or designates a new Lending Office) or is attributable to such Canadian Lender’s
failure or inability (other than as a result of a Change in Law) to comply with Section 2.26, except
to the extent that such Canadian Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive



26









 




additional amounts from the Canadian Borrower with respect to such withholding tax pursuant to
Section 2.26.




     “Existing Credit Agreement” shall mean the Amended and Restated Credit Agreement
dated as of December 1, 2006, as amended, by and among the Lead Borrower and certain of the Other
Domestic Borrowers, on the one hand, and Bank of America, N.A and other lenders identified therein,
on the other hand.



     “Existing Financing Agreements” shall mean the “Loan Documents”, as defined in the
Existing Credit Agreement.



     “Existing Letters of Credit” means each of the letters of credit listed on Schedule
2.6(j) hereto.



     “Extraordinary Receipt” means any cash received by or paid to or for the account of
any Person not in the ordinary course of business, including, without limitation, tax refunds,
pension plan reversions, indemnity payments and any purchase price adjustments.



     “Facility Guaranty” means any Guaranty made by the Guarantors in favor of the
applicable Secured Parties, in form reasonably satisfactory to the Administrative Agent.



     “Federal Funds Effective Rate” means, for any day, the per annum rate equal to the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds brokers of recognized
standing selected by it. 

     “Fee Letter” means the letter between the Borrowers and the Administrative
Agent dated as of November 1, 2010, as such letter may from time to time be amended.



     “Financial Officer” means, with respect to any Borrower, the chief financial officer,
controller, assistant controller, treasurer, or assistant treasurer of such Borrower. Any document
delivered hereunder that is signed by a Financial Officer of a Borrower shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or other action on the
part of such Borrower and such Financial Officer shall be conclusively presumed to have acted on
behalf of such Borrower.



     “First Amendment Effective Date” means June 23, 2011.



     “Fiscal Month” means any four or five week fiscal period of any Fiscal Year in
accordance with the fiscal accounting calendar of the Credit Parties.



     “Fiscal Quarter” means any thirteen week fiscal period of any Fiscal Year in
accordance with the fiscal accounting calendar of the Credit Parties.



     “Fiscal Year” means any period of four consecutive Fiscal Quarters ending on the
Saturday closest to January 31 of any calendar year.



     “Fixed Charge Coverage Ratio”means, as of the last day of any Fiscal Month, for the
Lead Borrower on a Consolidated basis for the Applicable Fiscal Period then ended, the ratio of (a)
an amount equal to Consolidated EBITDA less Capital Expenditures and Taxes paid in cash, in each
case for such



27









 





period, to (b) Fixed Charges for such period. Consolidated EBITDA, Capital Expenditures, Taxes and
Fixed Charges shall be calculated without regard to (i) those items attributable to any Person prior
to the date it becomes a Domestic Subsidiary of the Lead Borrower or any of its other Domestic
Subsidiaries or is merged into or consolidated with the Lead Borrower or any of its Domestic
Subsidiaries or that Person’s assets are acquired by the Lead Borrower or any of its Domestic
Subsidiaries and (ii) any Subsidiaries other than Domestic Subsidiaries.




     “Fixed Charges” means, with respect to any Person, the sum of (a) Consolidated
Interest Expense paid in cash and (b) scheduled principal payments on any Indebtedness for such
period (excluding the Obligations but including Capital Lease Obligations), and (c) without
duplication of the foregoing, and for purposes of calculating the Fixed Charge Coverage Ratio
pursuant to Section 6.11 only, payments on account of the Schuh Earnout and the Schuh Seller Notes.



     “Foreign Lender ”  means any Lender that is organized under the laws of a jurisdiction
other than the United States of America or any State thereof or the District of Columbia.



     “Foreign Subsidiary”  means any Subsidiary that is organized under the laws of a
jurisdiction other than the United States of America or any State thereof or the District of Columbia.



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



     “GAAP”  means accounting principles which are (a) consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its predecessors (or successors) in effect
and applicable to that accounting period in respect of which reference to GAAP is being made, and
(b) consistently applied with past financial statements of the Credit Parties adopting the same
principles provided that, with respect to Foreign Subsidiaries organized under the laws of
Canada, or any province or territory thereof, unless GAAP is being applied, “GAAP” shall mean
principles which are consistent with those promulgated or adopted by the Canadian Institute of
Chartered Accountants and its predecessors (or successors) in effect and applicable to the
accounting period in respect of which reference to GAAP is being made.



     “Genesco Partners Joint Venture” means that certain Joint Venture between and among
the Lead Borrower and Hat World, Inc., on the one hand, and Corliss Stone—Littles, LLC, a Delaware
limited liability company, on the other hand, pursuant to that certain Joint Venture Agreement
dated as of October 2, 2006.



     “Governmental Authority” means the government of the United States of America,
Canada, any other nation or any political subdivision thereof, whether state or local, provincial,
territorial or municipal and any agency, authority, instrumentality, regulatory body, court,
tribunal, central bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.



     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (b) to purchase or lease property, securities or
services for the primary purpose of assuring the owner of such Indebtedness or other obligation of
the payment thereof, (c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay
such



28









 




Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or
letter of guaranty issued to support such Indebtedness or obligation, provided that the
term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of
business.




     “Guarantor” means (i)each Material Domestic Subsidiary of the Lead Borrower that shall be
required to execute and deliver a Facility Guaranty of the Obligations pursuant to Section 5.14,
and (ii)each Material Subsidiary of the Canadian Borrower that shall be required to execute and
deliver a Facility Guaranty of the Canadian Liabilities pursuant to Section 5.14.



     “Hazardous Materials ” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes, and all other substances or wastes of any nature regulated pursuant
to any Environmental Law, including any material listed as a hazardous substance under Section
101(14) of CERCLA.



     “Hedging Agreement ” means any interest rate protection agreement, interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, foreign currency exchange
agreement, commodity price protection agreement, or other interest or currency exchange rate or
commodity price hedging arrangement designed to hedge against fluctuations in interest rates or
foreign exchange rates.



     “Indebtedness ” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money (including any obligations of such Person that are without recourse to
the credit of such Person), (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such Person upon which interest charges are
customarily paid under conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding current accounts payable incurred in the ordinary course
of business), (e) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed,
(f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of
such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (i) all obligations, contingent or otherwise,
of such Person in respect of bankers’ acceptances, (j) to the extent not otherwise included, all net
obligations of such Person under Hedging Agreements, (k) all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of Disqualified Stock,
and (l) the principal and interest portions of all rental obligations of such Person under any
Synthetic Lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet
financing where such transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which such Person is a
general partner) to the extent such Person is liable therefor as a result of such Person’s
ownership interest in or other relationship with such entity, except to the extent the terms of
such Indebtedness provide that such Person is not liable therefor.



     “Indemnified Taxes ” means Taxes other than Excluded Taxes.



     “Indemnitee” has the meaning provided therefor in Section
9.4(b).



     “Instrument ” has the meaning ascribed to such term
in the UCC.



29









 





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



     “Interest Payment Date” means (a) with respect to any Domestic Prime Rate Loan
(including a Swingline Loan), Canadian Prime Rate Loan, Domestic Tranche A-1 Prime Rate Loan or
U.S. Index Rate Loan, the first day of each calendar month, and (b) with respect to any LIBO Loan,
Tranche A-1 LIBO Loan or BA Rate Loan, the last day of the Interest Period applicable to
the Borrowing of which such Loan is a part, and, in addition, if such LIBO Loan, Tranche A-1 LIBO
Loan or BA Rate Loan has an Interest Period of greater than 90 days, on the last day of the third
month of such Interest Period.



     “Interest Period” means, with respect to any LIBO Borrowing or BA Equivalent Loan
Borrowing, the period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months thereafter, as the
Lead Borrower or Canadian Borrower may elect by notice to the Administrative Agent in accordance
with the provisions of this Agreement, provided that (a) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next succeeding Business
Day unless such next succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that
commences on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month during which such Interest Period ends)
shall end on the last Business Day of the calendar month during which such Interest Period ends,
(c) any Interest Period which would otherwise end after the Termination Date shall end on the
Termination Date, and (d) notwithstanding the provisions of clause (c), no Interest Period shall
have a duration of less than one month, and if any Interest Period applicable to a LIBO Borrowing
or BA Equivalent Loan Borrowing would be for a shorter period, such Interest Period shall not be
available hereunder. For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.



     “Inventory” has the meaning assigned to such term in the Security Agreement.



     “Inventory Advance Rate” means 90% or, in the case of Inventory acquired in a
Permitted Acquisition, such rate as the Administrative Agent shall establish, in its Permitted
Discretion, after completion of an appraisal on such Inventory, provided that such rate
shall not exceed 90%.



     “Inventory Reserves” means such reserves as may be established from time to time by
the Administrative Agent in the Administrative Agent’s Permitted Discretion (after consultation
with the Lead Borrower (whose consent to any Inventory Reserve shall not be required)) with respect
to the determination of the saleability, at retail, of the Eligible Inventory or which reflect such
other factors as affect the Appraised Value of the Eligible Inventory. Without limiting the
generality of the foregoing, Inventory Reserves may include (but are not limited to) reserves based
on (i) obsolescence; (ii) seasonality; (iii)




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Shrink; (iv) imbalance; (v) change in Inventory character; (vi) change in Inventory
composition; (vii) change in Inventory mix; (viii)markdowns (both permanent and point of sale); and
(ix)retail mark-ons and markups inconsistent with prior period practice and performance; industry
standards; current business plans; or advertising calendar and planned advertising events.
Inventory Reserves shall be established and calculated in a manner and methodology consistent with
the Administrative Agent’s practices as of the Effective Date with other similarly situated
borrowers.




     “Investment” has the meaning provided therefore in Section 6.4.



     “Investment Accounts” means all accounts maintained by any of the Credit Parties for
Investments as of the Effective Date and thereafter opened by any of the Credit Parties and
consented to by the Administrative Agent.



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



     “Issuing Bank” means, with respect to Domestic Letters of Credit, Bank of America and,
with respect to Canadian Letters of Credit, Bank of America-Canada Branch; provided that
if such Issuing Bank is unable to issue any Letter of Credit as a result of the provisions of
Section 2.6(b)(ii) hereof, the Lead Borrower may appoint one other Lender who agrees to accept such
appointment to act as Issuing Bank hereunder. The Issuing Bank may, in its discretion, arrange for
one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the
term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.



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



     “L/C Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of
Credit.



     “Lead Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.



     “Lead Borrower” means Genesco Inc. and any replacement that the Borrowers appoint to
act as Lead Borrower upon the consent of the Administrative Agent, which consent shall not be
unreasonably withheld.



     “Lease” means any agreement, whether written or oral, no matter how styled or
structured, pursuant to which a Credit Party is entitled to the use or occupancy of any real
property for any period of time.



     “Lenders” shall mean the Persons identified on Schedule 1.1 and each
assignee that becomes a
party to this Agreement as set forth in Section 9.6(b).



     “Letter of Credit” shall mean a Standby Letter of Credit, Commercial Letter of Credit
or Banker’s Acceptance that is (i) issued pursuant to this Agreement for the account of any
Borrower or any Guarantor, (ii) issued in connection with the purchase of Inventory by any Borrower
or any Guarantor or for any other purpose that is reasonably acceptable to the Administrative
Agent, and (iii) in form and substance reasonably satisfactory to the Issuing Bank. The term
“Letter of Credit “ shall include, without limitation, all Existing Letters of Credit and all
Banker’s Acceptances.



31









 





     “Letter of Credit Fees” shall mean the fees payable in respect of Letters of Credit
pursuant to
Section 2.13.



     “Letter of Credit Outstandings” shall mean, collectively, Canadian Letter of Credit
Outstandings and Domestic Letter of Credit Outstandings. For purposes of computing the amounts
available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 1.6. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be “outstanding” in the amount so remaining available to be drawn.




     “LIBO Borrowing” shall
mean a Borrowing comprised of LIBO Loans or Tranche A-1 LIBO Loans.



     “LIBO Loan” shall mean any Loan bearing interest at a rate determined by reference
to the
Adjusted LIBO Rate in accordance with the provisions of Section 2.3.



     “LIBO Rate” means for any Interest Period with respect to a LIBO Loan or Tranche A-1
LIBO Loan, the rate per annum equal to the British Bankers Association LIBOR Rate ( “BBA LIBOR”),
as published by Reuters (or other commercially available source providing quotations of BBA LIBOR
as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.
If such rate is not available at such time for any reason, then the “LIBO Rate” for such Interest
Period shall be the rate per annum determined by the Administrative Agent to be the rate at which
deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the
approximate amount of the LIBO Loan or Tranche A-1 LIBO Loan being made, continued or converted by
Bank of America and with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar market at their request
at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period.



     “Lids Team Sports Cap” means an amount not to exceed five percent (5%) of the Canadian
Borrowing Base or, the Domestic Borrowing Base or the Tranche A-1 Borrowing Base, as applicable.



     “Lids Team Sports Receivables” means wholesale Accounts due from any Person or
Governmental Authority (other than the United States of America) arising from the sale at wholesale
through the Team Sports wholesale operations of the Borrower Consolidated Group.



     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.



     “Liquidation” means the exercise by any Agent of those rights and remedies accorded to
such Agent under the Loan Documents and Applicable Law as a creditor of the Borrowers with respect
to the realization on the Collateral, including (after the occurrence and during the continuation
of an Event of Default) the conduct by the Borrowers acting with the consent of the Administrative
Agent, of any public, private or “going-out-of-business”, “store closing” or other similar sale or
any other disposition of the



32









 





Collateral for the purpose of liquidating the Collateral. Derivations of the word “Liquidation”
(such as
“Liquidate”) are used with like meaning in this Agreement.




     “Liquidation Percentage” means, for any Lender, a fraction, the numerator of which is
the sum of such Lender’s Domestic Commitment, Tranche A-1 Commitment and Canadian Commitment on
the Determination Date and the denominator of which is the Total Commitments of all Lenders on the
Determination Date.



     “Loan” means a Revolving Loan or a Swingline Loan, as applicable.



     “Loan Account” has the meaning assigned to such term in Section 2.20(a).



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



     “Loan Documents” means this Agreement, the Notes, the Letters of Credit, the Fee
Letter, all Borrowing Base Certificates, the Account Control Agreements, the DDA Notifications, the
Credit Card Notifications, the Security Documents, the Perfection Certificate, the Effective Date
Guaranty, the Facility Guaranty, and any other instrument or agreement now or hereafter executed
and delivered in connection herewith or therewith, each as amended and in effect from time to time.



     “Margin Stock” has the meaning assigned to such term in Regulation U.



     “Material Adverse Effect” means a material adverse effect on (a) the business,
operations, property, assets, condition, financial or otherwise, of the Credit Parties, taken as a
whole (b) the ability of the Credit Parties, taken as a whole, to perform any material obligation
or to pay any Obligations under this Agreement or any of the other Loan Documents, or (c) the
validity or enforceability of this Agreement or any of the other Loan Documents or any of the
material rights or remedies of the Administrative Agent, the Collateral Agent, the Canadian Agent
or the Lenders hereunder or thereunder.



     “Material Domestic Subsidiary” means, as of any date of determination, any Domestic
Subsidiary (a) the total tangible assets (after intercompany eliminations) of which, as determined
in accordance with GAAP, exceeds five percent (5%) of the Consolidated total tangible assets of the
Lead Borrower (after intercompany eliminations) measured as of the end of the most recently ended
Fiscal Quarter with respect to which the Administrative Agent has received financial statements
required to be delivered pursuant to Sections 5.1(a) and 5.1(b), as applicable, or (b) which
represents more than ten percent (10%) of Consolidated Net Income of the Lead Borrower for the
previous twelve Fiscal Months ending as of the last day of such Fiscal Quarter. “Material Domestic
Subsidiary ” shall include, without limitation, any Subsidiary whose principal assets are one or
more Material Domestic Subsidiaries.



     “Material Foreign Subsidiary” means each Foreign Subsidiary which is a direct
Subsidiary of a Borrower which, as of the last day of any Fiscal Quarter, satisfied any one or more
of the following tests:



     (a) such Foreign Subsidiary’s total tangible assets (after intercompany eliminations), as
determined in accordance with GAAP, exceeds 10% of Consolidated total tangible assets of the Lead
Borrower; or



     (b) such Foreign Subsidiary’s Consolidated Net Income for the previous twelve months ending as
of the last day of such Fiscal Quarter exceeds 10% of Consolidated Net Income of the Lead Borrower
for the previous twelve months ending as of the last day of such Fiscal Quarter; or



33









 





     (c) such Foreign Subsidiary’s Consolidated Net Worth exceeds 10% of the Consolidated Net
Worth of the Lead Borrower.



     “Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit) of any
one or more of the Borrowers in an aggregate principal amount exceeding $20,000,000.



     “Material Subsidiary” means a Material Domestic Subsidiary or a Material Foreign
Subsidiary. A Material Subsidiary may include, at the sole option of Lead Borrower, any Subsidiary
designated by Borrower to be a “Material Subsidiary” by written notice to Administrative Agent and
compliance with the requirements of Section 5.14. Additionally, Lead Borrower may designate
any Material Subsidiary which does not constitute a Material Domestic Subsidiary or a Material
Foreign Subsidiary under the respective definitions thereof as no longer constituting a Material
Subsidiary and a Material Domestic Subsidiary or Material Foreign Subsidiary, as the case may be.



     “Maturity Date” means January 21, 2016.



     “Maximum Rate” has the meaning provided therefor in Section 9.14.



     “Minority Lenders” has the meaning provided therefor in Section
9.3(c).



     “Moody’s” means Moody’s Investors Service, Inc.



     “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.



     “Net
Proceeds” means, with respect to any Prepayment
Event, the excess, if any, of (i)
the sum of cash and cash equivalents received in connection with such transaction (including any
cash or cash equivalents received by way of deferred payment pursuant to, or by monetization of, a
note receivable or otherwise, but only as and when so received) over
(ii) the sum of (A) the
principal amount, interest, prepayment penalties or fees with respect to any Indebtedness that is
secured by the applicable asset by a Lien permitted hereunder which is senior to the Collateral
Agent’s Lien or Canadian Agent’s Lien, as applicable, on such asset and that is required to be
repaid (or to establish an escrow for the future repayment thereof) in connection with such
transaction (other than Indebtedness under the Loan Documents), (B) the reasonable and customary
out-of-pocket expenses incurred by such Borrower or such Subsidiary in connection with such
transaction (including, without limitation, appraisals, and brokerage, legal, title and recording
or transfer tax expenses and commissions) paid by such Borrower to third parties (other than
Affiliates) and (C) the amount of taxes paid (or reasonably estimated to be payable) and the amount
of any reserves established to fund contingent liabilities reasonably estimated to be payable;
provided that unless the amounts described in this clause (C) are funded and deposited into
a segregated account to be used solely for the payment of such taxes or liabilities, the
Administrative Agent may, in its Permitted Discretion, establish an Availability Reserve in an
amount equal to such taxes and liabilities.




     “Noncompliance Notice” has the meaning provided therefor in Section 2.5(b).



     “Notes” shall mean, collectively, the Canadian Notes, the Domestic Notes, the Tranche A–1 Notes
and the Swingline Note.



     “Obligations” means (a) the principal of, and interest (including all interest that
accrues after the commencement of any case or proceeding by or against any Borrower under any federal,
state or provincial bankruptcy, insolvency, receivership or similar law, whether or not allowed in
such case or proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (b) the obligations of the Borrowers under this
Agreement in respect of any Letter



34









 




of Credit, when and as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral, (c) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise, of the Borrowers to the Secured Parties under this Agreement and the other Loan
Documents (including all such amounts that accrue or are incurred after the commencement of any
case or proceeding by or against any Borrower under any federal, state or provincial bankruptcy,
insolvency, receivership or similar law, whether or not allowed in such case or proceeding), (d)
all covenants, agreements, obligations and liabilities of the Borrowers under or pursuant to this
Agreement and the other Loan Documents, and (e) the payment and performance under any transaction
of a Borrower with any Lender or any of its Affiliates that arises out of (i) any Cash Management
Services, or (ii)any Bank Products provided by any such Person. Without limiting the foregoing, the
term “Obligations” includes all Canadian Liabilities.




     “Other Borrowers” means the Other Domestic Borrowers and the Canadian Borrower.



     “Other Canadian Liabilities” means any obligation of the Canadian Borrower arising
on account
of clause (e) of the definition of “Obligations”.



     “Other Domestic Borrowers” means Genesco Brands, Inc., a Delaware corporation; Hat
World Corporation, a Delaware corporation; Hat World, Inc., a Minnesota corporation; Flagg Bros. of
Puerto Rico, Inc., a Delaware corporation; Keuka Footwear, Inc., a Delaware corporation, and any
other Material Domestic Subsidiary that is not a Guarantor.



     “Other Domestic Liabilities” means any obligation of the Domestic Credit Parties
arising on
account of clause (e) of the definition of “Obligations”.



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



     “Overadvance” means, at any time of calculation, a circumstance in which the Credit
Extensions
plus the outstanding amount of the Tranche A-1 Loans exceed the Loan Cap.



     “Participant” has the meaning provided therefore in Section 9.6(e).



     “Patent Security Agreement” shall mean the Patent Security Agreement dated as of the
Closing Date and executed and delivered by certain of the Domestic Borrowers to the Collateral
Agent for the benefit of the Secured Parties, as amended and in effect on the Effective Date.



     “Payment Conditions” means, as of the date of the making of any Restricted Payment or
consummation of any Acquisition, that (a) no Default or Event of Default exists or would arise
after giving effect to such Restricted Payment or Acquisition, and (b) either (i) the Borrowers
have pro forma projected Excess Availability for the following six month period equal to or greater
than 50% of the Loan Cap, after giving pro forma effect to such Restricted Payment or Acquisition,
or (ii)(A) the Borrowers have pro forma projected Excess Availability for the following six month
period of less than 50% of the Loan Cap but equal to or greater than 20% of the Loan Cap, after
giving pro forma effect to the Restricted Payment or Acquisition, and (B) the Fixed Charge Coverage
Ratio, on a pro-forma basis for the twelve months preceding such Restricted Payment or Acquisition,
will be equal to or greater than 1.0:1.0 and (c) after giving effect to such Restricted Payment
or Acquisition, the Borrowers are Solvent. In the event that the aggregate amount of any payment
paid by the Borrowers for any Restricted Payment or in an Acquisition or a series of related
Restricted Payments or Acquisitions equals or exceeds $10,000,000 during any consecutive thirty
(30) day period, then the Borrowers shall provide a certificate signed by a Financial



35









 




Officer,
no later than five (5) days prior to the anticipated date of such Restricted Payment or
Acquisition (or the first such Restricted Payment or Acquisition, if in connection with a series of
Restricted Payment or Acquisitions) certifying as to the satisfaction of the applicable Payment
Conditions (on a basis (including, without limitation, giving due consideration to results for
prior periods) reasonably satisfactory to the Administrative Agent) including the relevant
calculations therefor and accompanied by such information required to be delivered to the
Administrative Agent pursuant to Section 5.1(j), if applicable, (to the extent not previously
delivered) provided that if pro forma projected Excess Availability for the following six month
period is less than or equal to 50% of the Loan Cap, such a certificate shall be provided if the
aggregate amount of any Restricted Payment or Acquisition paid by the Borrowers in a transaction or
a series of related transactions equals or exceeds $5,000,000.




     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.



     “Perfection Certificate” means, collectively, (i) a certificate of the Domestic
Borrowers in the form approved by the Collateral Agent as to certain matters regarding the
Collateral and (ii) a certificate of the Canadian Borrower in the form approved by the Canadian
Agent as to certain matters regarding the Collateral.



     “Permitted Acquisition” means (a) the acquisition (in a transaction or series of
related transactions) of not less than eighty percent (80%) of the capital stock or other equity
interests of, or (b) the acquisition (in a transaction or series of related transactions) of all
or substantially all of the assets or properties of, or any division or business unit of, any
Person, whether or not pursuant to a transaction of merger or
consolidation, or (c) any acquisition
of any store locations or Leases of any Person (each of the foregoing
an “Acquisition”) in each
case which satisfies each of the following conditions:




	 	(i)	 	The Acquisition is of a business permitted to be conducted by the Borrowers pursuant to
Section 6.3(b) hereof; and
	 
	 	(ii)	 	Prior to and after giving effect to the Acquisition, no Default or Event of Default will
exist or will arise therefrom; and
	 
	 	(iii)	 	The Person making the Acquisition must be a Borrower or a Subsidiary which will become a
Borrower or Guarantor (if required) in accordance with Section 5.14 hereof and the Borrowers
(including such Person) shall take such steps as are necessary to grant to the Collateral Agent,
for the benefit of the Secured Parties, a legal, valid and enforceable first priority security
interest (except as provided in Section 6.2 hereof) in all of the assets and capital stock or other
equity interests acquired in connection with such acquisition; and
	 
	 	(iv)	 	If a Borrower shall merge with such other Person, such Borrower shall be the surviving
party of such merger; and
	 
	 	(v)	 	Either (A) the aggregate consideration for such Acquisition, together with the
consideration for all other Acquisitions undertaken by the Borrowers in such Fiscal Year, shall not
exceed $30,000,000 in any Fiscal Year, or (B) the Payment Conditions shall have been satisfied; and
	 
	 	(vi)	 	In the case of the Acquisition of capital stock or other equity interests of another
Person, the board of directors (or other comparable governing body) of such other Person shall have
duly approved such Acquisition.




36









 











     “Permitted Discretion” means the Administrative Agent’s good faith credit judgment
based upon any factor or circumstance which it reasonably believes in
good faith: (i) will or could
reasonably be expected to adversely affect the value of the Collateral, the enforceability or
priority of the Collateral Agent’s or the Canadian Agent’s Liens thereon in favor of the applicable
Secured Parties or the amount which the Collateral Agent, the Canadian Agent and the applicable
Secured Parties would likely receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral; (ii) suggests that any collateral report or
financial information delivered to any Agent by or on behalf of a Borrower is incomplete,
inaccurate or misleading in any material respect; (iii) could reasonably be expected to increase
materially the likelihood of a bankruptcy, reorganization or other insolvency proceeding involving
any of the Credit Parties; or (iv)creates or reasonably could be expected to create a Default or
Event of Default. In exercising such judgment, the Administrative Agent may consider factors or
circumstances already included in or tested by the definition of Eligible Inventory, Eligible
Wholesale Receivables or Eligible Credit Card and Debit Card Receivables, as well as any of the
following: (A) changes in demand for and pricing of Inventory; (B) changes in any concentration of
risk with respect to Inventory or Accounts; (C) any other factors or circumstances that will or
could reasonably be expected to have a Material Adverse Effect; (D) audits of books and records by
third parties, history of chargebacks or other credit adjustments, or other relevant information
regarding the creditworthiness of Account Debtors; and (E) any other factors that change or could
reasonably be expected to change the credit risk of lending to the Borrowers on the security of the
Inventory or Accounts. Notwithstanding the foregoing, it shall not be within Permitted Discretion
for the Administrative Agent to establish Reserves which are duplicative of each other whether or
not such reserves fall under more than one reserve category.



     “Permitted Encumbrances” means:



     (i) Liens imposed by law for taxes that are not yet due or are being contested in compliance
with Section 5.5;



     (ii) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing obligations that are not
overdue by more than 60 days or are being contested in compliance with Section 5.5;



     (iii) pledges and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance, old-age pension and other social security laws or regulations
(other than any Lien imposed under ERISA);



     (iv) deposits to secure the performance of bids, trade contracts, leases, contracts (other
than for the repayment of borrowed money), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the ordinary course of
business;



     (v) judgment liens in respect of judgments that do not constitute an Event of
Default under Section 7.1(m);



     (vi) easements, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the affected
property or materially interfere with the ordinary conduct of business of the Borrowers or
any of the other Credit Parties;



     (vii) Possessory liens in favor of brokers and dealers arising in connection with the
acquisition or disposition of Investments owned as of the date hereof and Permitted
Investments, provided that such liens (a) attach only to such Investments and (b) secure only
obligations incurred in the ordinary course and




37











 




arising in connection with the acquisition or disposition of such Investments and not any
obligation in connection with margin financing;




     (viii) Liens in favor of a financial institution encumbering deposits (including the right of
setoff) held by such financial institution in the ordinary course of its business and which are
within the general parameters customary in the banking industry;



     (ix) Landlords’ and lessors’ liens in respect of rent that is not overdue by more than thirty (30)
days or which is being contested in compliance with Section 5.5;



     (x) leases or subleases granted by any Credit Party to any Person other than a Credit Party,
provided that such lease or sublease does not interfere in any material respect with the business
of such Credit Party or materially impair the Collateral Agent’s interest in the Collateral;



     (xi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment
of customs duties in connection with the importation of goods and securing obligations that are not
overdue by more than sixty (60) days, or are being contested in compliance with Section 5.5;



     (xii) Liens deemed to exist in connection with Investments in repurchase agreements permitted
under Section 6.4;



     (xiii) Liens of a collecting bank arising under Section 4-210 of the UCC on items in the course of
collection;



     (xiv) reservations, limitations, provisos and conditions expressed in any original
grant from the Crown or other grants of real or immovable property, or interests therein, that do
not materially affect the use of the affected land for the purpose for which it is used by that
Person;



     (xv) the right reserved to or vested in any Governmental Authority by the terms of any lease,
license, franchise, grant or permit acquired by that Person or by any statutory provision to
terminate any such lease, license, franchise, grant or permit, or to require annual or other
payments as a condition to the continuance thereof;



     (xvi) security given to a public utility or any Governmental Authority when required by such
utility or authority in connection with the operations of that Person in the ordinary course of its
business; and



     (xvii) Liens in favor of a credit card processor or check processor, as applicable,
on proceeds of credit card charges or checks, as applicable, held by such processor to secure (A)
chargebacks, fees, fines, penalties and other charges arising in the ordinary course of business
with respect to the processing of credit card charges or checks, as applicable; or (B) equipment
leases described on Schedule 1.3 (but no other such leases);



     provided
that, except as provided in any one or more of clauses (i) through
(xiii) above, the
term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.



     “Permitted Investments” means each of the following:



     (i) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America or Canada (or by any agency or
instrumentality thereof to the extent such obligations are backed by the full faith and credit of
the United



38









 




States of America or Canada, as applicable), in each case maturing within one year from the date of
acquisition thereof;




     (ii) Investments in commercial paper maturing within 270 days from the date of acquisition thereof
and having, at such date of acquisition, a credit rating of at least A-1 from S&P or P-1 from
Moody’s;



     (iii) Investments in certificates of deposit, banker’s acceptances and time deposits maturing
within 270 days from the date of acquisition thereof issued or guaranteed by or placed with, and
demand deposit and money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any state thereof or
under the Bank Act (Canada) that has a combined capital and surplus and undivided profits of not
less than $100,000,000;



     (iv) fully collateralized repurchase agreements with a term of not more than 30 days for securities
described in clause (i) above (without regard to the limitation on maturity contained in such
clause) and entered into with a financial institution satisfying the criteria described in clause
(iii) above or with any primary dealer and having a market value at the time that such repurchase
agreement is entered into of not less than 100% of the repurchase obligation of such counterparty
entity with whom such repurchase agreement has been entered into;



     (v) money market mutual funds, 90% of the investments of which are in cash or investments
contemplated by clauses (i) through (iv) of this definition; and



     (vi) Investments by the Lead Borrower consistent with the Lead Borrower’s investment policy, which
investment policy is approved by the Administrative Agent from time to time, such approval not to
be unreasonably withheld;



     provided that, notwithstanding the foregoing, after the occurrence and during the continuance of a
Cash Dominion Event, (i) no such new Investments shall be permitted by a Borrower unless either (A)
no Loans are then outstanding, or (B) the Investment is a temporary Investment pending expiration
of an Interest Period for a LIBO Loan, Tranche A-1 LIBO Loan or BA Equivalent Loan, the proceeds
of which Investment will be applied to the Obligations after the expiration of such Interest
Period, and (ii) all such Investments are pledged by the applicable Borrower to the Collateral
Agent or the Canadian Agent, as applicable, as additional collateral for the Obligations pursuant
to such agreements as may be reasonably required by the Administrative Agent.



     “Permitted Overadvance” means an Overadvance, as determined by the Administrative
Agent, in its Permitted Discretion, (a) which is made to maintain, protect or preserve the
Collateral and/or the Lenders’ rights under the Loan Documents, or (b) which is otherwise in the
Lenders’ interests; provided that Permitted Overadvances shall not (i) exceed ten percent
(10%) of the then Combined Borrowing Base in the aggregate
outstanding at any time or (ii) unless a
Liquidation is occurring, remain outstanding for more than ninety (90) consecutive Business Days,
unless in case of clause (ii) the Required Lenders otherwise agree; and provided further
that the foregoing shall not (1) modify or abrogate any of the provisions of Section 2.6(f)
regarding the Lenders’ obligations with respect to L/C Disbursements, or (2) result in any claim or
liability against the Administrative Agent (regardless of the amount of any Overadvance) for
Unintentional Overadvances and such Unintentional Overadvances shall not reduce the amount of
Permitted Overadvances allowed hereunder, and further provided that in no event shall the
Administrative Agent make an Overadvance, if after giving effect thereto, the principal amount of
the Credit Extensions plus the outstanding amount of Tranche A-1 Loans (including any Overadvance
or proposed Overadvance) would exceed the Total Commitments.



39









 






     “Permitted Refinancing” means, with respect to any Person, any Indebtedness issued in
exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease
or refund (collectively, to “Refinance”), the Indebtedness being Refinanced (or previous
refinancings thereof constituting a Permitted Refinancing); provided, that (a) the
principal amount (or accreted value, if applicable) of such Permitted Refinancing does not exceed
the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus
unpaid accrued interest and premiums thereon and underwriting discounts, defeasance costs, fees,
commissions and expenses), (b) the weighted average life to maturity of such Permitted Refinancing
is greater than or equal to the weighted average life to maturity of the Indebtedness being
Refinanced (c) such Permitted Refinancing shall not require any scheduled principal payments due
prior to the Maturity Date in excess of, or prior to, the scheduled principal payments due prior to
such Maturity Date for the Indebtedness being Refinanced, (d) if the Indebtedness being Refinanced
is subordinated in right of payment to the Obligations, such Permitted Refinancing shall be
subordinated in right of payment to such Obligations on terms at least as favorable to the Secured
Parties as those contained in the documentation governing the Indebtedness being Refinanced, (e) no
Permitted Refinancing shall have different direct or indirect obligors, or greater guarantees or
security, than the Indebtedness being Refinanced, (f) such Permitted Refinancing shall be otherwise
on terms not materially less favorable to the Credit Parties than those contained in the
documentation governing the Indebtedness being Refinanced, including, without limitation, with
respect to amortization, maturity, financial and other covenants, and (g) at the time thereof, no
Default or Event of Default shall have occurred and be continuing.



     “Permitted Senior Debt” means Indebtedness of the Borrowers in the aggregate principal amount
of up to $250,000,000, provided that:



          (a) no portion of the principal of such Indebtedness in excess of 1% per annum shall be
required to be paid, whether by stated maturity, mandatory or scheduled prepayment or redemption or
otherwise, prior to the date that is 90 days after the Maturity Date, other than in the event of
(i) a default under such Indebtedness, (ii) a change of control of the Lead Borrower or (iii)
certain asset sales in each case, if such Indebtedness is secured, subject to the standstill and
the lien subordination provisions described in clause (d) below;




          (b) such Indebtedness may be secured by a first priority Lien on the trade names of the
Borrowers and the capital stock of the Lead Borrower’s Subsidiaries only and a second priority Lien
on any Collateral (provided the Administrative Agent for the benefit of the Secured Parties is
granted a second priority Lien on the trade names of the Borrowers and the capital stock of the Lead
Borrower’s Subsidiaries securing such Indebtedness);




          (c) if secured, the security documents and instruments pursuant to which such Indebtedness
shall be issued or outstanding shall be in form and substance reasonably satisfactory to the
Administrative Agent;




          (d) the covenants relating to restrictions on indebtedness and liens, in each case contained
in the documentation pursuant to which such Indebtedness shall be issued or outstanding, shall be
reasonably satisfactory to the Administrative Agent; and




          (e) if such Indebtedness is secured, it shall be subject to an intercreditor agreement
reasonably acceptable to the Administrative Agent that may include,
among other things, (A) the
priority of the Liens securing the Collateral, the trade names of the Borrowers and the capital
stock of the Lead Borrower’s Subsidiaries and the payment of proceeds therefrom, (B) a reasonable
standstill by the holders of such Indebtedness as to remedies against the Collateral, (C) waivers by
the holders of such Indebtedness of rights to contest validity or priority of Liens of the
Administrative Agent or the Lenders (which waiver may be reciprocal) or object to dispositions of
Collateral (including an affirmative agreement by such






40









 






holders to release Liens of such holders in the event of a disposition of Collateral approved by
the
Administrative Agent), (D) waiver of rights to object to the use of cash collateral or sale of
Collateral, and reasonable restrictions on certain claims and actions, in any proceeding under any
Debtor Relief Laws by the holders of such Indebtedness, and (E) restrictions on amendments to, or
consents, waivers or other modifications with respect to, the documents evidencing such
Indebtedness to the extent the same would be materially adverse to the Lenders.




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



     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which a Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.



     “Platform” has the meaning set forth in Section 5.1.



     “Pledge Agreements” means any Pledge Agreement executed and delivered by one or more
of the Borrowers to the Collateral Agent, for the benefit of the Secured Parties, or to the
Canadian Agent, for the benefit of the Canadian Secured Parties, as applicable, as the same may be
amended and in effect from time to time, pursuant to which, without limitation, all of the issued
and outstanding capital stock and other equity interests of initially, the Borrowers (other than
the Lead Borrower and the Canadian Borrower) and thereafter, (i) all Material Domestic Subsidiaries
that are not Borrowers owned by a Borrower and (ii) sixty-five percent (65%) (or such lesser amount
as is owned by such Borrower or will not subject the Borrowers to materially adverse tax
consequences) of all of the issued and outstanding capital stock or other equity interests of all
Foreign Subsidiaries (including the Canadian Borrower) is pledged to the Collateral Agent or the
Canadian Agent, as applicable (in each case, other than Subsidiaries that are not directly or
indirectly wholly owned by such Borrower) as security for the Obligations.



     “Post Effective DDA” means any DDA (other than a store-level DDA) opened after the
Effective Date.



     “Pounds Sterling” or “₤” refers to lawful money of the United Kingdom.



     “PPSA” means the Personal Property Security Act (Ontario) and the Regulations
thereunder, as from time to time in effect; provided, however, if attachment, perfection or
priority of the Canadian Agent’s security interests in any Collateral are governed by the personal
property security laws of any jurisdiction other than Ontario (including Quebec), PPSA shall mean
those personal property security laws in such other jurisdiction, including the Civil Code of
Quebec, for the purposes of the provisions hereof relating to such attachment, perfection or
priority and for the definitions related to such provisions.



     “Prepayment Event” means:




     (a) Any disposition of any Collateral outside of the ordinary course of business (but,
including in any event, pursuant to a store closing sale); and




     (b) Any casualty or other insured damage to, or any taking under power of eminent
domain or by condemnation or similar proceeding of (and payments in lieu thereof), of any
Collateral;



41









 






     (c) The receipt by any Credit Party of any Extraordinary Receipts arising from
Collateral; and




     (d) After the occurrence and during the continuance of a Cash Dominion Event, any
disposition of any real estate owned by the Borrower Consolidated Group (including any
sale-leaseback transaction);




     provided that, in the absence of a continuing Cash Dominion Event, any such
events occurring under clauses (a) through (c) above resulting in aggregate Net Proceeds of
$15,000,000 or less in the aggregate in any Fiscal Year shall not constitute a Prepayment
Event.



     “Prime Rate Loans” shall mean Domestic Prime Rate Loans, Domestic Tranche A-1 Prime
Rate Loans, or Canadian Prime Rate Loans, as applicable.



     “Pro Forma Availability Condition” shall mean, for any date of calculation with
respect to any transaction or payment, the Pro Forma Excess Availability following, and after
giving effect to, such transaction or payment, will be equal to or greater than twenty percent
(20%) of the Loan Cap.



     “Pro Forma Excess Availability” shall mean, for any date of calculation, after giving
pro forma effect to the transaction then to be consummated, the projected Excess Availability for
each Fiscal Month during any subsequent projected six (6) Fiscal Months.



     “Proceeds” shall have the meaning ascribed to it in the UCC or the PPSA, as
applicable, and shall include proceeds of all Collateral.



     “Proceeds of Crime Act” means the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act (Canada), as amended from time to time, and including all regulations thereunder.



     “Real Estate” means all land, together with the buildings, structures, parking areas,
and other improvements thereon, now or hereafter owned by any of the Credit Parties, including all
fixtures and equipment used in connection with the operation of such structures and all easements,
rights-of-way and similar rights relating thereto and all leases, tenancies, and occupancies
thereof.



     “Register” has the meaning set forth in Section 9.6(c).



     “Regulation U” means Regulation U of the Board as from time to time in effect and
all official
rulings and interpretations thereunder or thereof.



     “Regulation X” means Regulation X of the Board as from time to time in effect and
all official
rulings and interpretations thereunder or thereof.



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



     “Release” has the meaning set forth in Section 101(22) of CERCLA.



     “Required Lenders” shall mean, at any time, Lenders having Commitments greater than
50% of the Total Commitments, or if the Commitments have been terminated, Lenders whose percentage
of the outstanding Loans and Letter of Credit Outstandings aggregate greater than 50% of all such
Loans and Letter of Credit Outstandings, provided that such calculation shall exclude any
Delinquent Lenders and any



42









 




such Delinquent Lender’s Commitment in the event that such Delinquent Lender’s rights to
participate
shall have been suspended or terminated pursuant to Section 8.14 of this Agreement.




     “Required Supermajority Lenders” shall mean, at any time, Lenders having Commitments
greater than 66 2/3% of the Total Commitments, or if the Commitments have been terminated, Lenders
whose percentage of the outstanding Loans and Letter of Credit Outstandings aggregate greater than
66 2/3% of all such Loans and Letter of Credit Outstandings, provided that such
calculation shall exclude any Delinquent Lenders and any such Delinquent Lender’s Commitment in the
event that such Delinquent Lender’s rights to participate shall have been suspended or terminated
pursuant to Section 8.14 of this Agreement.



     “Reserves” means the Account Reserves, the Inventory Reserves and the Availability
Reserves.



     “Restricted
Payment” means (i) any dividend or other distribution, directly or
indirectly (whether in cash, securities or other property) with respect to any shares of any class
of capital stock or other equity interests of any of the Credit Parties, or any payment or other
distribution (whether in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such shares of capital stock or other equity interests of any of the Credit
Parties or any option, warrant or other right to acquire any such shares of capital stock or other
equity interests of any of the Credit Parties; or (ii) any payment or other distribution, directly
or indirectly (whether in cash, securities, or other property) of or in respect of principal of or
interest on any Indebtedness, or any payment or other distribution (whether in cash, securities, or
other property), including any sinking fund or similar deposit on, an account of the purchase,
redemption, retirement, acquisition, cancellation, or termination of any Indebtedness (other than
the Obligations).



     “Revolving Loans” means all Canadian Loans and,
Domestic Loans and Tranche A-1
Loans at any time made by a Lender pursuant to Section 2.3.



     “S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.



     “Schuh Acquisition” means the acquisition by UK Acquisition of Schuh Group Limited, a company
incorporated in Scotland, on the First Amendment Effective Date pursuant to the Schuh Acquisition
Documents.



     “Schuh Acquisition Documents” means the Sale and Purchase Agreement relating to the issued
share capital of Schuh Group Limited dated June 23, 2011 by and among the Sellers party thereto,
Schuh Group Limited, UK Acquisition and the Lead Borrower, and all documents, instruments and
agreements executed and/or delivered in connection therewith.



     “Schuh
Earnout” means the earnout consideration payable by UK Acquisition to the Sellers
under the Schuh Acquisition Documents in an aggregate amount not to exceed £25,000,000.



     “Schuh Seller Notes” means those certain [Promissory Notes] in an aggregate amount not to
exceed £25,000,000 issued by UK Acquisition to the Sellers under the Schuh Acquisition Documents.



     “SEC” means the United States Securities and Exchange Commission.



     “Secured
Party” or “Secured
Parties” means, collectively, the Canadian
Secured Parties and the
Domestic Secured Parties.



43









 





     “Security Agreement” means the Second Amended and Restated Security Agreement dated as
of the Effective Date and executed and delivered by each of the Domestic Credit Parties to the
Collateral Agent for the benefit of the Secured Parties, as amended and in effect from time to
time.



     “Security Documents” means the Security Agreement, the Trademark Security Agreement,
the Patent Security Agreement, the Pledge Agreements, the Facility Guaranty, the Effective Date
Guaranty, the Account Control Agreements, the Collateral Control Agreements, the Canadian Security
Documents, and each other security agreement, mortgage (if any), guaranty or other instrument or
document executed and delivered pursuant to Section 5.15 or any other provision hereof or any other
Loan Document, to secure any of the Obligations and the Canadian Liabilities.



     “Settlement Date” has the meaning provided in Section 2.7(b).



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



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



     “Standby Letter of Credit” means any Letter of Credit other than a Commercial Letter
of Credit and that (a) is used in lieu or in support of performance guaranties or performance,
surety or similar bonds (excluding appeal bonds) arising in the ordinary course of business, (b) is
used in lieu or in support of stay or appeal bonds, or (c) supports the payment of insurance
premiums for reasonably necessary insurance carried by any of the Borrowers.



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



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



     “Subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation,



44









 




limited
liability company, partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of the ordinary
voting power for the election of directors or other members of its governing body (other than
securities or ownership interests having such power only upon satisfaction of a contingency) or, in
the case of a partnership, more than 50% of the general partnership interests are, as of such date,
owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent
and/or one or more Subsidiaries of the parent. Unless otherwise specified, all references herein to
a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Lead
Borrower.




     “Substantial Liquidation” shall mean either (a) the Liquidation of substantially all
of the Collateral, or (b) the sale or other disposition of substantially all of the Collateral by
the Credit Parties.



     “Swingline Lender” means Bank of America, in its capacity as lender of Swingline
Loans
hereunder.



     “Swingline Loan” shall mean a Loan made by the Swingline Lender to the Domestic
Borrowers
pursuant to Section 2.5 hereof.



     “Swingline Note” means a promissory note of the Domestic Borrowers substantially in
the form of Exhibit B-3, payable to the Swingline Lender if requested by the Swingline Lender,
evidencing the Swingline Loans.



     “Swingline Sublimit” means an amount equal to the lesser of (a) $40,000,000 and (b)
the Total Commitments. The Swingline Sublimit is part of, and not in addition to, the Total
Commitments.



     “Synthetic Lease” means any lease or other agreement for the use or possession of
property creating obligations which do not appear as Indebtedness on the balance sheet of the
lessee thereunder but which, upon the insolvency or bankruptcy of such Person, would be
characterized as Indebtedness of such lessee without regard to the accounting treatment.



     “Taxes” means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority, including any interest
or penalties thereon and any additions thereto.



     “Termination
Date” shall mean the earliest to occur of (i) the
Maturity Date, (ii) the date on which the maturity of the Loans are accelerated and the Commitments are terminated in
accordance with Section 7.1, or (iii) the date of the occurrence of any Event of Default pursuant to
Section 7.1(j) or 7.1(k) or (iv) the termination of the Commitments in accordance with the provisions
of Section 2.15 hereof.



     “Termination Event” shall mean (a) the whole or partial withdrawal of the Canadian
Borrower or any Canadian Subsidiary from a Canadian Pension Plan during a plan year; or (b) the
filing of a notice to terminate in whole or in part a Canadian Pension Plan; or (c) the institution
of proceedings by any Governmental Authority to terminate in whole or in part or have a trustee
appointed to administer a Canadian Pension Plan.



     “Total Commitments” shall mean, at any time, the sum of the Commitments at such
time. As of
the First Amendment Effective Date, the Total Commitments aggregate $300,000,000.405,000,000.



     “ Total Outstandings” shall mean the sum of the Canadian Credit
Extensions and, the Domestic Credit Extensions and the Tranche A-1 Loans.


45









 











     “Trademark Security Agreement” shall mean the Trademark Security Agreement dated as of
the Closing Date and executed and delivered by certain of the Domestic Borrowers to the Collateral
Agent for the benefit of the Secured Parties, as amended and in effect on the Effective Date.



     “Tranche A-1 Availability” means, as of any date of determination thereof, the result, if a
positive number, of:



     (a) the Tranche A-1 Loan Cap



     minus



     (b) the Tranche A-1 Loans on such date.





     “Tranche A-1 Borrowing Base” means, at any time of calculation, an amount equal to:




     (a)
the product of (i) the Tranche A-1 Inventory Advance Rate multiplied
by (ii) the Appraised Value of Eligible Inventory of the Domestic
Borrowers multiplied by (iii) the Cost
of Eligible Inventory of the Domestic Borrowers, minus (B) Inventory Reserves related to
Eligible Inventory of the Domestic Borrowers;




     plus




     (b) the product of (i) the Tranche A-1 Wholesale Receivables Advance Rate multiplied
by (ii)(A) the then Eligible Wholesale Receivables of the Domestic Borrowers (other than
Eligible Wholesale Receivables consisting of Lids Team Sports Receivables of the Domestic
Borrowers), minus (B) Account Reserves related to such Eligible Wholesale Receivables of
the Domestic Borrowers;




     plus




     (c)
the product of (i) five percent (5%) multiplied by (ii)(A) the then Eligible Credit
Card and Debit Card Receivables of the Domestic Borrowers, minus (B) Account Reserves
related to Eligible Credit Card and Debit Card Receivables of the Domestic Borrowers.



     “Tranche A-1 Commitments” means, as to each Tranche A-1 Lender, its obligation to make
Tranche A-1 Loans to the Domestic Borrowers pursuant to Section 2.1, in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth opposite such Tranche A-1
Lender’s name on Schedule 1.1 or in the Assignment and Acceptance pursuant to which such Tranche A-1
Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time
in accordance with this Agreement.



     “Tranche A-1 Commitment Fee” has the meaning provided therefor in Section 2.12(a).




     “Tranche A-1 Commitment Fee Rate” means (a) if the average daily Tranche A-1 Loans for the
preceding Fiscal Quarter are greater than or equal to 50% of the Tranche A-1 Commitments, 0.375%
per annum, or (ii) if the average daily Tranche A-1 Loans for the preceding Fiscal Quarter are less
than 50% of the Tranche A-1 Commitments, 0.50% per annum.



     “Tranche A-1 Commitment Percentage” means the Commitment Percentages of the
Tranche
A-1 Lenders with respect to the Tranche A-1 Commitments.



46









 





     “Tranche A-1 Inventory Advance Rate” means, (i) from the First Amendment Effective Date
through and including June 23, 2012, ten percent (10%), (ii) from June 24, 2012 through and including
June 23, 2013, seven and one-half percent (7.5%), and (iii) thereafter, five percent (5%).



     “Tranche A-1 Lenders” means the Lenders having Tranche A-1 Commitments from time to time or
at any time.



     “Tranche A-1 LIBO Loans” shall mean any Tranche A-1 Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Section
2.3.



     “Tranche A-1 Loans” means any Loans at any time made by a Tranche A-1 Lender pursuant to
Section 2.3.



     “Tranche A-1 Loan Cap” means, at any time of determination, the lesser of (a) the Tranche A-1 Commitments and (b) the Tranche A-1 Borrowing Base.



     “Tranche A-1 Note” means a promissory note made by the Domestic Borrowers in favor of a
Tranche A-1 Lender evidencing Tranche A-1 Loans made by such Tranche A-1 Lender, substantially
in the form of Exhibit B-4.



     “Tranche A-1 Wholesale Receivables Advance Rate” means, (i) from the First Amendment Effective
Date through and including June 23, 2012, five percent (5%), (ii) from June 24, 2012 through and
including June 23, 2013, two and one-half percent (2.5%), and (iii) thereafter, 0%.



     “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to
the Adjusted LIBO Rate, the BA Rate, the Domestic Prime Rate, the Canadian Prime Rate or the U.S.
Index Rate.



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



     “UK Acquisition” means Genesco (UK) Limited, a company registered in England and Wales.



     “UK LP” means Genesco Scot LP, a Scottish limited partnership.



     “Unintentional Overadvance” means an Overadvance which, to the Administrative Agent’s
knowledge, did not constitute an Overadvance when made but which has become an Overadvance
resulting from changed circumstances beyond the control of the Agents and the Lenders, including,
without limitation, a reduction in the Appraised Value of property or assets included in the
Domestic Borrowing Base, the Tranche A-1 Borrowing Base or the Canadian Borrowing Base or a
misrepresentation by the Credit Parties.



     “Unused Commitment” shall mean, on any day, (a) the then Total Commitments (other than the
Tranche A-1 Commitments) minus (b) the sum of (i) the principal amount of Loans then outstanding



47









 




(including, but only with respect to the calculation of the Commitment Fee due to the Lender that
is the Swingline Lender, the principal amount of Swingline Loans then
outstanding), and (ii) the
then Letter of Credit Outstandings.




     “Unused
Tranche A-1 Commitment”shall mean, on any day, (a) the then Tranche A-1
Commitments minus (b) the principal amount of Tranche A-1 Loans then outstanding.



     “U.S. Index Rate” means for any day a fluctuating rate per annum equal to the highest
of (a) the Bank of America-Canada Branch dollar base rate; (b) the Federal Funds Effective Rate
for such day, plus 0.50%; and (c) the LIBO Rate for a 30 day interest period as determined on such
day, plus 1.0%.



     “U.S. Index Rate Loan” means a Canadian Loan made in Dollars that bears interest based
on the U.S. Index Rate.



     “Voting Stock” means, with respect to any corporation, the outstanding stock of all
classes (or equivalent interests) which ordinarily, in the absence of contingencies, entitles
holders thereof to vote for the election of directors (or Persons performing similar functions) of
such corporation, even though the right so to vote has been suspended by the happening of such
contingency.



     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.



     1.2 Terms Generally; Interpretation.



          (a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to
have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein shall be construed
as referring to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns or, for natural persons, such Person’s successors,
heirs, executors, administrators and other legal representatives, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein to Sections,
Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to,
this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights, (f) all financial statements and other financial
information provided by the Borrowers and each of the other Credit Parties to the Administrative
Agent or any Lender shall be provided with reference to Dollars, and (g) this Agreement and the
other Loan Documents are the result of negotiation among, and have been reviewed by counsel to,
among others, the Credit Parties and the Agents and are the product of discussions and negotiations
among all parties. Accordingly, this Agreement and the other Loan Documents are not intended to be
construed against the Agents or any of the Lenders merely on account of any such Agent’s or any
Lender’s involvement in the preparation of such documents.




          (b) For purposes of any Collateral located in the Province of Québec or charged by any deed of
hypothec (or any other Loan Document) and for all other purposes pursuant to which the
interpretation or construction of a Loan Document may be subject to the laws of the Province of
Québec or






48









 







a court or tribunal exercising jurisdiction in the Province of Québec, (q) “personal property”
shall be deemed to include “movable property”, (r) “real property” shall be deemed to include
“immovable property”, (s)“tangible property” shall be deemed to include “corporeal property”,
(t)“intangible property” shall be deemed to include “incorporeal property”, (u) “security interest”
and “mortgage” shall be deemed to include a “hypothec”, (v) all references to filing, registering
or recording under the UCC or the PPSA shall be deemed to include publication under the Civil Code
of Québec, (w) all references to “perfection” of or “perfected” Liens shall be deemed to include a
reference to the “opposability” of such Liens to third parties, (x) any “right of offset”, “right of
setoff” or similar expression shall be deemed to include a “right of compensation”, (y) “goods”
shall be deemed to include “corporeal movable property” other than chattel paper, documents of
title, instruments, money and securities, and (z) an “agent” shall be deemed to include a
“mandatary”.




     1.3 Accounting Terms. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in effect on the
Effective Date, on a basis consistent with the financial statements referred to in Section 4.1(g)
of this Agreement, provided that, if the Borrowers request an amendment to any provision hereof to
reflect the effect of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent notifies the Borrowers
that the Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such provision shall have
been amended in accordance herewith. Notwithstanding the foregoing, any obligations of a Person
under a lease (whether existing now or entered into in the future) that is not (or would not be) a
Capital Lease Obligation under GAAP as in effect on the Effective Date, shall not be treated as a
Capital Lease Obligation solely as a result of the adoption of changes in GAAP outlined by the
Financial Accounting Standards Board in its press release dated March 19, 2009.



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



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



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



     2. AMOUNT AND TERMS OF CREDIT



     2.1 Commitments of the Lenders.



          (a) Each Lender severally and not jointly with any other Lender, agrees, upon the terms and
subject to the conditions herein set forth, to extend credit to the Borrowers on a revolving basis,
in the form of Revolving Loans and, with respect to the Lenders which are not Tranche A-1
Lenders,






49









 







participations in Letters of Credit and Swingline Loans and in an amount not to exceed the lesser
of such Lender’s Commitment or such Lender’s Commitment Percentage of the lesser of (x) the
Combined Borrowing Base or (y) the Total Commitments, subject to the following limitations:





          (i) The aggregate outstanding amount of the Credit Extensions plus the Tranche A-1 Loans shall not
at any time exceed Loan Cap.




          (ii) The aggregate outstanding amount of the Domestic Credit Extensions
shall not at any time exceed the Domestic Loan Cap.




          (iii) The aggregate outstanding amount of the Canadian Credit Extensions
shall not at any time exceed the Canadian Loan Cap.




          (iv) The Loans made to and the Letters of Credit issued on behalf of, the Canadian
Borrower by the Canadian Lenders may be either in $ or CD$, at the option of the Canadian
Borrower, as herein set forth.




          (v) No Lender shall be obligated to issue any Letter of Credit, and Letters of Credit
shall be available from the Issuing Bank, subject to the ratable participation of all
Lenders, as set forth in Section 2.6. The aggregate Domestic Letter of Credit Outstandings
shall not at any time exceed the Domestic Letter of Credit Sublimit, and the aggregate
Canadian Letter of Credit Outstandings shall not at any time exceed the Canadian Letter of
Credit Sublimit.




          (vi) Subject to all of the other provisions of this Agreement, Revolving Loans that
are repaid may be reborrowed prior to the Termination Date. No new Credit Extension or
Tranche A-1 Loan, however, shall be made to the Borrowers after the Termination Date.




          (vii) The aggregate outstanding amount of the Tranche A-1 Loans shall not
exceed the Tranche A-1 Loan Cap.




          (viii) The Lead Borrower shall not request, and the Domestic Lenders shall be under no
obligation to fund, any Domestic Loans unless the Domestic Borrowers have borrowed the full
amount of the lesser of the Tranche A-1 Commitments or the Tranche A-1 Borrowing Base (to
the extent that such Tranche A-1 Commitments have not been terminated).



          (b) Each Borrowing by the Domestic Borrowers of Revolving Loans (other than Swingline Loans)
shall be made by the Domestic Lenders pro rata in accordance with their Domestic
Commitments or Tranche A-1 Commitments, as applicable, and each Borrowing by the Canadian Borrower
of Revolving Loans (other than Swingline Loans) shall be made by the Canadian Lenders pro
rata in accordance with their Canadian Commitments. The failure of any Domestic Lender or
Canadian Lender, as applicable, to make any Loan to the Domestic Borrowers or the Canadian
Borrower, as applicable, shall neither relieve any other Domestic Lender or Canadian Lender, as
applicable, of its obligation to fund its Loan to the Domestic Borrowers or the Canadian Borrower,
as applicable, in accordance with the provisions of this Agreement nor increase the obligation of
any such other Domestic Lender or Canadian Lender, as applicable.




          (c) SoOn the First Amendment Effective Date, so long as no Default or Event of Default exists
or would arise therefrom, the Lead Borrower shall have the right to request an increase of the
Domestic Commitments by an amount of no more than $75,000,000, which Domestic Commitments shall,
except as set forth below, be on the same terms and conditions as set forth herein with respect to
the existing Domestic Commitments. After the First Amendment Effective Date, so long as no Default
or Event of






50









 







Default exists or would arise therefrom, the Lead Borrower shall have the right at any time, and
from time to time, to request an increase of the Total Commitments (other than the Tranche A-1
Commitments) by an additional amount of no more than $150,000,00075,000,000 (or, if the Domestic
Commitments have been reduced pursuant to Section 2.15(e) hereof, an amount equal to $75,000,000
plus the amount of such reduction, but in any event in an amount not to exceed $150,000,000 in the
aggregate) (but in no event shall the Canadian Commitments ever exceed $25,000,000 or the Domestic
Commitments ever exceed $450,000,000 or the Total Commitments ever exceed $450,000,000480,000,000), which Commitments shall, except as set forth below, be on the same terms and conditions as set
forth herein with respect to the existing Commitments. At the time of sending such notice after
the First Amendment Effective Date, the Lead Borrower (in consultation with the Administrative
Agent) shall specify the time period within which each Lender is requested to respond (which shall
in no event be less than ten (10) Business Days from the date of delivery of such notice to the
Lenders). Any such request shall be first made to all existing Lenders (other than Tranche A-1
Lenders) on a pro rata basis, provided that only the Canadian Lenders shall be permitted to
participate in any increase of the Canadian Commitments. To the extent that any existing Lenders
decline to increase their Commitments, or decline to increase their Commitments to the amount
requested by the Lead Borrower, the Administrative Agent will promptly notify the Lead Arranger of
such facts. Thereafter, the Lead Arranger, in consultation with the Lead Borrower, will use its
reasonable efforts to arrange for other Persons to become a Lender hereunder and to issue
Commitments in an amount equal to the amount of the increase in the Total Commitments requested by
the Lead Borrower and not accepted by the existing Lenders (each such increase by either means, a
“Commitment Increase,” and each Person issuing, or Lender increasing, its Commitment, an
“Additional Commitment Lender”), provided, however, that (i) no existing Lender shall be obligated to
provide a Commitment Increase as a result of any such request by the Lead Borrower, (ii) any Lender
that does not affirmatively agree to increase its Commitment shall be deemed to have declined to
increase its Commitment and (iii) any Additional Commitment Lender which is not an existing Lender
shall be subject to the approval of the Administrative Agent, the Issuing Bank and the Lead
Borrower (which approval shall not be unreasonably withheld). Each Commitment Increase with respect
to the Domestic Commitments shall be in a minimum amount of $25,000,000 and integral multiples of
$5,000,000 above such amount and with respect to the Canadian Commitments shall be in a minimum
amount of $5,000,000 and integral multiples of $1,000,000 above such amount and the Lead Borrower
may make no more than four (4) requests for a Commitment Increase. No Commitment Increase shall
become effective unless and until each of the following conditions have been satisfied:





          (i) The Lead Borrower shall deliver to the Administrative Agent a certificate as of the Commitment
Increase Date signed by a Financial Officer of the Lead Borrower and/or the Canadian Borrower, as
applicable (A) certifying and attaching the resolutions adopted by the Borrowers approving or
consenting to such increase, and (B) certifying that, before and after giving effect to such
increase, (1) no Default or Event of Default exists, and the representations and warranties
contained in Article 3 and the other Loan Documents are true and correct on and as of the
Commitment Increase Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct as of such earlier
date.




          (ii) The Borrowers, the Administrative Agent, and any Additional
Commitment Lender that is not an existing Lender shall have executed and
delivered a joinder to the Loan Documents in such form as the
Administrative Agent shall reasonably require;




          (iii) The Borrowers shall have paid such fees and other compensation to the Additional
Commitment Lenders as the Lead Borrower and such Additional Commitment Lenders shall agree;




51











 






          (iv) The Borrowers shall have paid such arrangement fees in such amounts, if any,
to the Lead Arranger as the Borrowers and the Lead Arranger may agree;




          (v) If required by the Additional Commitment Lenders, the Borrowers shall deliver to
the Administrative Agent and the Lenders an opinion or opinions, in form and substance
reasonably satisfactory to the Administrative Agent, from counsel to the Borrowers
reasonably satisfactory to the Administrative Agent and dated such date;




          (vi) A Note (to the extent requested by a Lender) will be issued at the Borrowers’
expense, to each such Additional Commitment Lender, to be in conformity with requirements of
Section 2.8 hereof (with appropriate modification) to the extent necessary to reflect the
new Commitment of each Additional Commitment Lender; and




          (vii) The Borrowers and the Additional Commitment Lenders shall have delivered such
other instruments, documents and agreements as the Administrative Agent may reasonably have
requested.



          (d) If the Total Commitments are increased in accordance with this Section, the Administrative
Agent, in consultation with the Lead Borrower, shall determine the effective date (the “Commitment
Increase Date”) and the final allocation of such increase. The Administrative Agent shall promptly
notify each Lender as to the effectiveness of each Commitment Increase, and at such time (i) the
Commitments under, and for all purposes of, this Agreement shall be increased by the aggregate
amount of such Commitment Increases, (ii) Schedule 1.1 shall be deemed modified, without
further action, to reflect the revised Commitments and Commitment Percentages of the Lenders, and
(iii) this Agreement shall be deemed amended, without further action, to the extent necessary to
reflect such increased Commitments.



          (e) In connection with Commitment Increases hereunder, the Lenders and the Borrowers agree
that, notwithstanding anything to the contrary in this Agreement, (i) the Borrowers shall, in
coordination with the Administrative Agent, (x) repay outstanding Revolving Loans of certain
Lenders, and obtain Revolving Loans from certain other Lenders (including the Additional Commitment
Lenders), or (y) take such other actions as reasonably may be required by the Administrative Agent,
in each case to the extent necessary so that all of the Lenders effectively participate in each of
the outstanding Revolving Loans pro rata on the basis of their Commitment Percentages (determined
after giving effect to any increase in the Commitments pursuant to this Section 2.1), and (ii) the
Borrowers shall pay to the Lenders any costs of the type referred to in Section 2.19(b) in
connection with any repayment and/or Revolving Loans required pursuant to preceding clause (i).
Without limiting the obligations of the Borrowers provided for in this Section 2.1, the
Administrative Agent and the Lenders agree that they will use their best efforts to attempt to
minimize the costs of the type referred to in Section 2.19(b) which the Borrowers would otherwise
occur in connection with the implementation of an increase in the Commitments.



     2.2 Reserves; Changes to Reserves.




       (a) The initial Inventory Reserves, Account Reserves and Availability Reserves as of the
Effective Date are the following:




          (i) Shrink (an Inventory Reserve): An amount equal to the one month accrual for Shrink
reflected in the Borrowers’ books and records from time to time.




          (ii) Defective Inventory (an Inventory Reserve) (without duplication for
damaged Inventory which is not deemed “eligible” for inclusion within the calculation
of the
Domestic Borrowing Base, Tranche A-1 Borrowing Base or Canadian Borrowing Base,
as



52









 






applicable): An amount equal to the amount of defective goods reflected in the Borrowers’
books and records from time to time.




          (iii) Taxes (an Availability Reserve): An amount equal to taxes (whether assessed or
estimated) and other governmental charges, including, without limitation, ad valorem and
personal property taxes, provincial sales taxes and GST and HST taxes, which would have a
Lien senior to the Liens of the Collateral Agent or the Canadian Agent, as applicable.




          (iv) Customer Credit Liabilities (an Availability Reserve): An amount equal to 50% of
the amount of gift certificates, gift cards, amounts due to customers, merchandise credits,
and “passport club” liability reflected in the Borrowers’ books and records from time to
time.




          (v) Rent (an Availability Reserve): An amount equal to two month’s gross cash rent for
each location in the States of Pennsylvania, Virginia, Washington and any other state or
province which provides a lien for landlords which may have priority over the Collateral
Agent’s Lien or Canadian Agent’s Lien, as applicable (except for those locations for which
the Agents have received a landlord’s waiver satisfactory in form to the Agents).




          (vi) WEPPA (an Availability Reserve): An amount equal to $278,000 for amounts due to
employees and protected under the Wage Earner Protection Program Act (Canada) which have
priority over the Canadian Agent’s Lien.



          (b) The Administrative Agent shall have the right, at any time and from time to time
after the Closing Date in its Permitted Discretion to establish, modify or eliminate Reserves upon
two Business Days prior notice to the Borrowers, (during which period the Administrative Agent
shall be available to discuss any such proposed Reserve with the Borrowers); provided that
no such prior notice shall be required for (1) changes to any Reserves resulting solely by virtue
of mathematical calculations of the amount of the Reserve in accordance with the methodology of
calculation previously utilized (such as, but not limited to, rent and Customer Credit
Liabilities), or (2) changes to Reserves or establishment of additional Reserves if a Material
Adverse Effect has occurred or it would be reasonably likely that a Material Adverse Effect to the
Lenders would occur were such Reserve not changed or established prior to the expiration of such
two (2) Business Day period, or (3) any changes to Reserves during the continuance of any Event of
Default.



     2.3 Making of Loans.



          (a) Except as set forth in Sections 2.16 and 2.24, (i) Domestic Loans (other than
Swingline Loans) by the Domestic Lenders to the Domestic Borrowers shall be either Domestic Prime
Rate Loans or, Domestic Tranche A-1 Prime Rate Loans, LIBO Loans or Tranche A-1 LIBO Loans
as the Lead Borrower on behalf of the Domestic Borrowers may request subject to and in accordance
with this Section 2.3, (ii) all Swingline Loans shall be only Domestic Prime Rate Loans, and (iii)
Canadian Loans by the Canadian Lenders to the Canadian Borrower shall be either Canadian Prime Rate
Loans or BA Equivalent Loans (if made in Canadian Dollars), or LIBO Loans or U.S. Index Rate Loans
(if made in Dollars). All Loans made pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, be Loans of the same Type. Each Lender may fulfill its Commitment
with respect to any Loan by causing any lending office of such Lender to make such Loan; but any
such use of a lending office shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the terms of the applicable Note. Each Lender shall, subject to its overall policy
considerations, use reasonable efforts (but shall not be obligated) to select a lending office
which will not result in the payment of increased costs by the Borrowers pursuant to Section 2.23.
Subject to the other provisions of this Section 2.3 and the provisions of Section 2.24, Borrowings
of Loans of more than one Type may be incurred at the same time, but no more than ten (10)



53









 




Borrowings of LIBO Loans, Tranche A-1 LIBO Loans and BA Equivalent Loans may be outstanding
at any time.




          (b) The Lead Borrower or Canadian Borrower, as applicable, shall give the Administrative
Agent or the Canadian Agent, as applicable, three (3) Business Days’ prior telephonic notice
(thereafter confirmed in writing) of each LIBO Borrowing and BA Equivalent Loan Borrowing and prior
telephonic notice on the same Business Day of each Borrowing of Domestic Prime Rate Loans,
Domestic Tranche A-1 Prime Rate Loans, Canadian Prime Rate Loans, or U.S. Index Rate Loans,
as applicable. Any such notice, to be effective, must be received by the Administrative Agent or
the Canadian Agent, as applicable, not later than 11:00 a.m., New York time, on the third Business
Day in the case of LIBO Loans, Tranche A-1 LIBO Loans and BA Equivalent Loans prior to,
and, in the case of Domestic Prime Rate Loans, Domestic Tranche A-1 Prime Rate Loans,
Canadian Prime Rate Loans, or U.S. Index Rate Loans, by 11:00 a.m. on the same Business Day of, the
date on which such Borrowing is to be made. Such notice shall be irrevocable and shall specify the
amount of the proposed Borrowing (which shall be in an integral multiple of $100,000, but not less
than $1,000,000 in the case of LIBO Loans and Tranche A-1 LIBO Loans and CD$100,000, but
not less than CD$1,000,000 in the case of BA Equivalent Loans) and the date thereof (which shall be
a Business Day) and shall contain disbursement instructions. Such notice shall specify whether the
Borrowing then being requested is to be a Borrowing of Domestic Prime Rate Loans, Domestic
Tranche A-1 Prime Rate Loans, Canadian Prime Rate Loans, U.S. Index Rate Loans, LIBO Loans,
Tranche A-1 LIBO Loans or BA Equivalent Loans, and, if LIBO Loans, Tranche A-1 LIBO Loans
or BA Equivalent Loans, the Interest Period with respect thereto. If no election of Interest
Period is specified in any such notice for a Borrowing of LIBO Loans, Tranche A-1 LIBO
Loans or BA Equivalent Loans, such notice shall be deemed a request for an Interest Period of
one month. If no election is made as to the Type of Loan, such notice shall be deemed a request for
a Borrowing of Domestic Prime Rate Loans, Domestic Tranche A-1 Prime Rate Loans or Canadian
Prime Rate Loans, as applicable. The Administrative Agent or the Canadian Agent, as applicable,
shall promptly notify each Lender of its proportionate share of such Borrowing, the date of such
Borrowing, the Type of Borrowing being requested and the Interest Period or Interest Periods
applicable thereto, as appropriate. On the borrowing date specified in such notice, each Lender
shall make its share of the Borrowing available at the Administrative Agent’s Office or the
Canadian Agent’s Office, as applicable, no later than 2:00 p.m., New York time, in immediately
available funds. Unless the Administrative Agent or the Canadian Agent, as applicable, shall have
received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent or the Canadian Agent, as applicable, such Lender’s
share of such Borrowing, the Administrative Agent or the Canadian Agent, as applicable, may assume
that such Lender has made such share available on such date in accordance with this Section and
may, in reliance upon such assumption, make available to the applicable Borrowers a corresponding
amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent or the Canadian Agent, as applicable, then the applicable
Lender and the Borrowers severally agree to pay to the Administrative Agent or the Canadian Agent,
as applicable, forthwith on demand such corresponding amount with interest thereon, for each day
from and including the date such amount is made available to the Borrowers to but excluding the
date of payment to the Administrative Agent or the Canadian Agent, as applicable, at (i) in the
case of such Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrowers, the
interest rate applicable to Domestic Prime Rate Loans, Domestic Tranche A-1 Prime Rate
Loans or Canadian Prime Rate Loans, as applicable. If such Lender pays such amount to the
Administrative Agent or the Canadian Agent, as applicable, then such amount shall constitute such
Lender’s Loan included in such Borrowing. Upon receipt of the funds made available by the Lenders
to fund any Borrowing hereunder, the Administrative Agent or the Canadian Agent, as applicable,
shall disburse such funds in the manner specified in the notice of borrowing delivered by the Lead
Borrower or the Canadian Borrower, as applicable, and shall use commercially reasonable efforts to
make the funds so received from the Lenders available to the Domestic Borrowers or the Canadian
Borrower, as applicable, no later than 3:00 p.m., New York time.




54









 





          (c) Notwithstanding anything to the contrary herein contained, all Loans to the Domestic
Borrowers shall be Tranche A-1 Loans until the outstanding principal amount of such Tranche A-1
Loans equal the lesser of the Tranche A-1 Borrowing Base or the then Tranche A-1 Commitments. If
any Tranche A-1 Loan is prepaid in part pursuant to Section 2.19(b), any Loans to the Domestic
Borrowers thereafter requested shall be Tranche A-1 Loans until the maximum principal amount of
Tranche A-1 Loans outstanding equals the lesser of the Tranche A-1 Borrowing Base or Tranche A-1
Commitments.



          (d) (c)The Administrative Agent, without the request of the Lead Borrower or the Canadian
Borrower, may advance any interest, fee, service charge, or other payment to which any Agent or
their Affiliates or any Lender is entitled from any Borrower pursuant hereto or any other Loan
Document and may charge the same to the Loan Account notwithstanding that an Overadvance may result
thereby; provided that in no event shall the Administrative Agent make an Overadvance, if after
giving effect thereto, the principal amount of the Credit Extensions plus the Tranche A-1
Loans (including any Overadvance or proposed Overadvance) would exceed the Total Commitments.
The Administrative Agent shall notify the Lead Borrower of any such advance or charge no later than
one Business Day prior to the making thereof. Such action on the part of the Administrative Agent
shall not constitute a waiver of the Administrative Agent’s or the Canadian Agent’s, as applicable,
rights and each Borrower’s obligations under Section 2.3(a). Any amount which is added to the
principal balance of the Loan Account as provided in this Section 2.3(c) shall bear interest at the
interest rate then and thereafter applicable to Domestic Prime Rate Loans, Domestic Tranche
A-1 Prime Rate Loans or Canadian Prime Rate Loans, as applicable.




     2.4 Overadvances. The Agents and the Lenders have no obligation to make any Loan or to
provide any Letter of Credit if an Overadvance would result. The Administrative Agent may, in its
discretion, make Permitted Overadvances without the consent of the Lenders and each Lender shall be
bound thereby. Any Permitted Overadvances may constitute Swingline Loans. The making of any
Permitted Overadvance is for the benefit of the Borrowers; such Permitted Overadvances constitute
Revolving Loans and Obligations. The making of any such Permitted Overadvances on any one occasion
shall not obligate the Administrative Agent or any Lender to make or permit any Permitted
Overadvances on any other occasion or to permit such Permitted Overadvances to remain outstanding.
Neither the Administrative Agent nor the Canadian Agent shall have any liability for, and no Credit
Party shall have the right to, or shall, bring any claim of any kind whatsoever against the
Administrative Agent or the Canadian Agent with respect to Unintentional Overadvances regardless of
the amount of any such Overadvance(s).



     2.5 Swingline Loans.



          (a) The Swingline Lender is authorized by the Lenders and shall, subject to the provisions of
this Section, make Swingline Loans up to the Swingline Sublimit in the aggregate outstanding at any
time consisting of only Domestic Prime Rate Loans, upon a notice of Borrowing (which may be
telephonic) received by the Administrative Agent and the Swingline Lender (which notice, at the
Swingline Lender’s discretion, may be submitted prior to 1:00 p.m., New York time, on the Business
Day on which such Swingline Loan is requested) provided further that the Swingline Lender
shall not be obligated to make any Swingline Loan at any time when any Lender is at such time a
Deteriorating Lender hereunder, unless the Swingline Lender has entered into satisfactory
arrangements with the Borrowers or such Lender to eliminate the Swingline Lender’s risk with
respect to such Lender. Swingline Loans shall be subject to periodic settlement with the Lenders
under Section 2.7 below; provided, however, that during the months of November and December
of each calendar year the Administrative Agent shall settle Swingline Loans at such times as it
shall determine, in its discretion.



          (b) The Swingline Lender shall, at the Lead Borrower’s request, make Swingline Loans (A) in
reliance upon the Borrowers’ actual or deemed representations under Section 4.2 that the applicable
conditions for borrowing are satisfied and (B) for Permitted Overadvances. If the conditions for



55









 




borrowing under Section 4.2 cannot be fulfilled, the Lead Borrower shall give immediate notice
thereof to the Administrative Agent and the Swingline Lender (a “Noncompliance Notice”) prior to
requesting further Swingline Loans, and the Administrative Agent shall promptly provide each Lender
with a copy of the Noncompliance Notice. If the conditions for borrowing under Section 4.2 cannot
be fulfilled, the Required Lenders may direct the Swingline Lender to, and the Swingline Lender
thereupon shall, cease making Swingline Loans (other than Permitted Overadvances) until such
conditions can be satisfied or are waived in accordance with Section 9.3. Unless the Required
Lenders otherwise direct the Swingline Lender, the Swingline Lender may, but is not obligated to,
continue to make Swingline Loans beginning one Business Day after the Noncompliance Notice is
furnished to the Lenders. Notwithstanding the foregoing, no Swingline Loans shall be made pursuant
to this subsection (b) (other than Permitted Overadvances) if the aggregate Credit Extensions
plus the Tranche A-1 Loans would exceed the limitations set forth in Section 2.1(a)(i) or
(ii).




     2.6 Letters of Credit.



          (a) Upon the terms and subject to the conditions herein set forth, the Lead Borrower on behalf
of the Domestic Borrowers, or the Canadian Borrower, may request the Issuing Bank, at any time and
from time to time after the date hereof and prior to the Termination Date, to issue, and subject to
the terms and conditions contained herein, the Issuing Bank shall issue, for the account of the
relevant Borrower, one or more Letters of Credit; provided that no Letter of Credit shall be issued
if after giving effect to such issuance (i) the aggregate Domestic Letter of Credit Outstandings
would exceed the Domestic Letter of Credit Sublimit, (ii) the aggregate Canadian Letter of Credit
Outstandings would exceed the Canadian Letter of Credit Sublimit, or (iii) the aggregate Credit
Extensions plus the Tranche A-1 Loans would exceed the limitations set forth in Section
2.1(a)(i); and provided, further, that no Letter of Credit shall be issued if the Issuing Bank
shall have received notice from the Administrative Agent, the Canadian Agent or the Required
Lenders that the conditions to such issuance have not been met.



          (b) The Issuing Bank shall not issue any Letter of Credit, if:




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




          (ii) the issuance of such Letter of Credit would violate one or more policies of the
Issuing Bank applicable to letters of credit generally (and the Issuing Bank shall furnish
prompt notice to the Lead Borrower of any such change in policy);




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



56









 






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




          (v) a default of any Lender’s obligations to fund under Section 2.3(b) exists
or any Lender is at such time a Delinquent Lender or Deteriorating Lender hereunder, unless
the Issuing Bank has entered into satisfactory arrangements with the Borrowers or such
Lender to eliminate the Issuing Bank’s risk with respect to such Lender.



          (c) Each Letter of Credit shall expire at or prior to the close of business on the earlier of
(i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of
any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that
is five (5) Business Days prior to the Maturity Date, provided that each Letter of Credit may, upon
the request of the Lead Borrower, include a provision whereby such Letter of Credit shall be
renewed automatically for additional consecutive periods of twelve (12) months or less unless the
Issuing Bank which issued such Letter of Credit notifies the beneficiary thereof at least thirty
(30) days prior to the then-applicable expiration date that such Letter of Credit will not be
renewed (but no Letter of Credit shall expire subsequent to the date that is five (5) Business Days
prior to the Maturity Date unless the Borrowers shall have deposited cash into the Cash Collateral
Account in an amount equal to 102% of such Letter of Credit).



          (d) Drafts drawn under any Letter of Credit shall be reimbursed by the Borrowers in Dollars or
Canadian Dollars, as applicable, on the same Business Day of any such payment thereof by the
Issuing Bank by paying to the Administrative Agent or Canadian Agent, as applicable, an amount
equal to such drawing (together with interest as provided in Section 2.6(e)) not later than 12:00
noon, New York time, on (i) the date that the Lead Borrower shall have received notice of such
drawing, if such notice is received prior to 10:00 a.m., New York time, on such date, or (ii) the
Business Day immediately following the day that the Lead Borrower receives such notice, if such
notice is received after 10:00 a.m., New York time on the day of drawing, provided that the
Lead Borrower or the Canadian Borrower, as applicable, may, subject to the conditions to borrowing
set forth herein, request in accordance with Section 2.3 that such payment be financed with a
Revolving Loan consisting of a Domestic Prime Rate Loan or a Swingline Loan, or a Canadian Prime
Rate Loan or U.S. Index Rate Loan, as applicable, in an equivalent amount and, to the extent so
financed, the applicable Borrowers’ obligation to make such payment shall be discharged and
replaced by the resulting Domestic Prime Rate Loan or a Swingline Loan, a Canadian Prime Rate Loan
or U.S. Index Rate Loan, as applicable. The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit issued by the Issuing Bank. The Issuing Bank shall promptly notify the Administrative Agent
or the Canadian Agent, as applicable, and the Lead Borrower or the Canadian Borrower, as
applicable, by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing
Bank has made or will make payment thereunder (which payment shall not be made until two (2)
Business Days after such notice from the Issuing Bank to the Lead Borrower or the Canadian
Borrower, as applicable), provided that any failure to give or delay in giving such notice shall
not relieve the Borrowers of their obligation to reimburse the Issuing Bank and the Lenders with
respect to any such payment.



          (e) If the Issuing Bank shall make any L/C Disbursement, then, unless the Borrowers shall
reimburse the Issuing Bank in full on the date such payment is made, the unpaid amount thereof
shall bear interest, for each day from and including the date such payment is made to but excluding
the date that the Borrowers reimburse the Issuing Bank therefor, at the rate per annum then
applicable to Domestic Prime Rate Loans, Canadian Prime Rate Loans or U.S. Index Rate Loans, as
applicable, provided that if the Borrowers fail to reimburse the Issuing Bank when such
reimbursement is due pursuant to paragraph (c) of this Section, then Section 2.10 shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except
that interest accrued on and after the date of payment by any Lender



57









 




pursuant to paragraph (g) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.




          (f) Immediately upon the issuance of any Letter of Credit by the Issuing Bank (or the
amendment of a Letter of Credit increasing the amount thereof), and without any further action on
the part of the Issuing Bank, the Issuing Bank shall be deemed to have sold to each Domestic Lender
or Canadian Lender, as applicable, and each such Lender shall be deemed unconditionally and
irrevocably to have purchased from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender’s Domestic Commitment Percentage or
Canadian Commitment Percentage, as applicable, in such Letter of Credit, each drawing thereunder
and the obligations of the Borrowers under this Agreement and the other Loan Documents with respect
thereto. Upon any change in the Commitments pursuant to Section 2.1(c) Section 2.15, and/or 9.6, it
is hereby agreed that with respect to all Letter of Credit Outstandings, there shall be an
automatic adjustment to the participations hereby created to reflect the new Commitment Percentages
of the assigning and assignee Lenders and any new Lenders. Any action taken or omitted by the
Issuing Bank under or in connection with a Letter of Credit issued by the Issuing Bank, if taken or
omitted in the absence of gross negligence, bad faith or willful misconduct, shall not create for
the Issuing Bank any resulting liability to any Lender.



          (g) In the event that the Issuing Bank makes any L/C Disbursement and the Borrowers shall not
have reimbursed such amount in full to the Issuing Bank pursuant to Section 2.6(d) the Issuing Bank
shall promptly notify the Administrative Agent or the Canadian Agent, as applicable, which shall
promptly notify each applicable Lender of such failure, and each such Lender shall promptly and
unconditionally pay to the Administrative Agent for the account of the Issuing Bank at the
Administrative Agent’s Office or the Canadian Agent’s Office, as applicable, the amount of such
Lender’s Domestic Commitment Percentage or Canadian Commitment Percentage, as applicable, of such
unreimbursed payment in dollars and in same day funds. If the Issuing Bank so notifies the
Administrative Agent or the Canadian Agent, as applicable, and the Administrative Agent or the
Canadian Agent, as applicable, so notifies the applicable Lenders prior to 11:00 a.m., New York
time, on any Business Day, each such Lender shall make available to the Issuing Bank such Lender’s
Domestic Commitment Percentage or Canadian Commitment Percentage, as applicable, of the amount of
such payment on such Business Day in same day funds (or if such notice is received by the
applicable Lenders after 11:00 a.m., New York time on the day of receipt, payment shall be made on
the immediately following Business Day). If and to the extent any Lender shall not have so made its
Domestic Commitment Percentage or Canadian Commitment Percentage, as applicable, of the amount of
such payment available to the Issuing Bank, such Lender agrees to pay to the Issuing Bank,
forthwith on demand such amount, together with interest thereon, for each day from such date until
the date such amount is paid to the Administrative Agent or the Canadian Agent, as applicable, for
the account of the Issuing Bank at the Federal Funds Effective Rate or the Bank of Canada Overnight
Rate, as applicable. Each Lender agrees to fund its Domestic Commitment Percentage or Canadian
Commitment Percentage, as applicable, of such unreimbursed payment notwithstanding a failure to
satisfy any applicable lending conditions or the provisions of Sections 2.1 or 2.6, or the
occurrence of the Termination Date. The failure of any Lender to make available to the Issuing Bank
its Domestic Commitment Percentage or Canadian Commitment Percentage, as applicable, of any payment
under any Letter of Credit shall neither relieve any Lender of its obligation hereunder to make
available to the Issuing Bank its Domestic Commitment Percentage or Canadian Commitment Percentage,
as applicable, of any payment under any Letter of Credit on the date required, as specified above,
nor increase the obligation of such other Lender. Whenever any Lender has made payments to the
Issuing Bank in respect of any reimbursement obligation in respect of any Letter of Credit, such
Lender shall be entitled to share ratably, based on its Domestic Commitment Percentage or Canadian
Commitment Percentage, as applicable, in all payments and collections thereafter received on
account of such reimbursement obligation.




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          (h) Whenever any Borrower desires that the Issuing Bank issue a Letter of Credit (or
amend, renew or extend an outstanding Letter of Credit), the Lead Borrower or the Canadian
Borrower, as applicable, shall give to the Issuing Bank and the Administrative Agent or the
Canadian Agent, as applicable, at least two (2) Business Days’ prior written (including
telegraphic, telex, facsimile, cable or other electronic communication) notice (or such shorter
period as may be agreed upon by the Issuing Bank and such Borrower) specifying the date on which
the proposed Letter of Credit is to be issued, amended, renewed or extended (which shall be a
Business Day), the Stated Amount of the Letter of Credit so requested, the expiration date of such
Letter of Credit, the name and address of the beneficiary thereof, and the provisions thereof. If
requested by the Issuing Bank, the applicable Borrower shall also submit a letter of credit
application on the Issuing Bank’s standard form in connection with any request for the issuance,
amendment, renewal or extension of a Letter of Credit.



          (i) The obligations of the Borrowers to reimburse the Issuing Bank for any L/C Disbursement
shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances, including, without limitation: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff, defense or other
right which the Borrowers may have at any time against a beneficiary of any Letter of Credit or
against the Issuing Bank or any of the Lenders, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction; (iii) any draft, demand, certificate
or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(iv) payment by the Issuing Bank of any Letter of Credit issued by the Issuing Bank against
presentation of a demand, draft or certificate or other document which appears on its face to be in
order but in fact does not comply with the terms of such Letter of Credit; (v) any other
circumstance or happening whatsoever, whether or not similar to any of the foregoing, that might,
but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrowers’ obligations hereunder; or (vi) the fact that any Event of
Default shall have occurred and be continuing. None of the Administrative Agent, the Canadian
Agent, the Lenders, the Issuing Bank or any of their Affiliates shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond the control of the
Issuing Bank, provided that the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by
Applicable Law) suffered by the Borrowers that are caused by the Issuing Bank’s failure to exercise
care when determining whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence of gross
negligence, bad faith or willful misconduct on the part of the Issuing Bank (as finally determined
by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in
each such determination. In furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents presented that appear on their face to
be in compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without responsibility for further
investigation, or refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.



          (j) If any Event of Default shall occur and be continuing, on the Business Day that the
Lead Borrower or the Canadian Borrower, as applicable, receives notice from the Administrative
Agent, the Canadian Agent or the Required Lenders demanding the deposit of cash collateral pursuant
to this paragraph, the applicable Borrowers shall deposit in the Cash Collateral Account an amount
in cash equal



59









 




to 102% of the Letter of Credit Outstandings as of such date plus any accrued and unpaid interest
thereon. Each such deposit shall be held by the Collateral Agent or the Canadian Agent, as
applicable, as collateral for the payment and performance of the Obligations or the Canadian
Liabilities, as applicable. The Collateral Agent or the Canadian Agent, as applicable, shall have
exclusive dominion and control, including the exclusive right of withdrawal, over such Cash
Collateral Account. Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the Collateral Agent at the request
of the Lead Borrower or the Canadian Agent at the Canadian Borrower’s request, as applicable, and
at the Borrowers’ risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such Cash Collateral Account
shall be applied by the Collateral Agent or the Canadian Agent, as applicable, to reimburse the
Issuing Bank for payments on account of drawings under Letters of Credit for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers for the applicable Letter of Credit Outstandings at such
time or, if the Loans have
matured or the maturity of the Loans has been accelerated, be applied to satisfy other Obligations
or the Canadian Liabilities.




          (k) The Borrowers, the Administrative Agent, the Canadian Agent and the Lenders agree
that the Existing Letters of Credit shall be deemed Letters of Credit hereunder as if issued by the
Issuing Bank.



          (l) The Issuing Bank, on a daily basis (unless otherwise agreed by the Administrative
Agent), shall provide to the Administrative Agent an accurate report that details the activity with
respect to each Letter of Credit issued by the Issuing Bank (including an indication of the maximum
amount then in effect with respect to such Letter of Credit). The Administrative Agent, on a
quarterly basis, shall provide the Lenders with a summary of the outstanding Letters of Credit in
form and substance customarily provided by the Administrative Agent in transactions of this nature.



          (m) Unless otherwise expressly agreed by the Issuing Bank and the Lead Borrower when a
Letter of Credit is issued, (i) the rules of the ISP shall apply to each Domestic Letter of Credit
or Canadian Letter of Credit that is a Standby Letter of Credit, and (ii) the rules of the Uniform
Customs and Practice for Documentary Credits, as most recently published by the International
Chamber of Commerce at the time of issuance shall apply to each Domestic Letter of Credit or
Canadian Letter of Credit that is a Commercial Letter of Credit.




2.7 Settlements Among Lenders.



          (a) The Swingline Lender may (but shall not be obligated to), at any time, but not less
than weekly, on behalf of the Domestic Borrowers (which hereby authorize the Swingline Lender to
act in their behalf in that regard) request the Administrative Agent to cause the Domestic Lenders
to make a Revolving Loan (which shall be a Domestic Prime Rate Loan) in an amount equal to such
Domestic Lender’s Domestic Commitment Percentage of the outstanding amount of Swingline Loans made
in accordance with Section 2.5, which request may be made regardless of whether the conditions set
forth in Section 4 have been satisfied. Upon such request, each Domestic Lender shall make
available to the Administrative Agent at the Administrative Agent’s Office the proceeds of such
Revolving Loan for the account of the Swingline Lender. If the Swingline Lender requires a
Revolving Loan to be made by the Domestic Lenders and the request therefor is received prior to
12:00 Noon, New York time, on a Business Day, such transfers shall be made in immediately available
funds no later than 3:00 p.m., New York time, that day; and, if the request therefor is received
after 12:00 Noon, New York time, then such transfers shall be made no later than 3:00 p.m., New
York time, on the next Business Day. The obligation of each Domestic Lender to transfer such funds
is irrevocable, unconditional and without recourse to or warranty by the Administrative Agent or
the Swingline Lender. If and to the extent any Domestic Lender shall not have



60









 




so made its transfer to the Administrative Agent, such Domestic Lender agrees to pay to the
Administrative Agent, forthwith on demand, such amount together with interest thereon for each day
from such date until the date such amount is paid to the Administrative Agent at the Federal Funds
Effective Rate.




          (b) The amount of each Lender’s Domestic Commitment Percentage, Tranche A-1 Commitment
Percentage and Canadian Commitment Percentage of outstanding Revolving Loans shall be computed
weekly (or more frequently in the Administrative Agent’s discretion) and shall be adjusted upward
or downward as required to reflect all Revolving Loans and repayments of Revolving Loans received
by the Administrative Agent or the Canadian Agent, as applicable, as of 3:00 p.m., New York time,
on the Business Day specified by the Administrative Agent (such date, the “Settlement Date”).



          (c) The Administrative Agent shall deliver to each of the Lenders promptly after the
Settlement Date a statement of the then current amount of outstanding Revolving Loans for the
period. As reflected on such statement: (x) the Administrative Agent or the Canadian Agent, as
applicable, shall transfer to each Domestic Lender and Canadian Lender its applicable Domestic
Commitment Percentage, Tranche A-1 Commitment Percentage or Canadian Commitment Percentage,
as applicable, of repayments, and (y) each Domestic Lender and Canadian Lender shall transfer to
the Administrative Agent or the Canadian Agent, as applicable, (as provided below), or the
Administrative Agent or the Canadian Agent, as applicable, shall transfer to each Domestic Lender
or Canadian Lender, as applicable, such amounts as are necessary to ensure that, after giving
effect to all such transfers, the amount of Revolving Loans made by each Lender shall be equal to
such Lender’s applicable Commitment Percentage of Revolving Loans outstanding as of such Settlement
Date. If the summary statement requires transfers to be made to the Administrative Agent or the
Canadian Agent, as applicable, by the Domestic Lenders or Canadian Lenders, as applicable, and is
received prior to 12:00 Noon, New York time, on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 p.m., New York time, that day; and, if received
after
12:00 Noon, New York time, then such transfers shall be made no later than 3:00 p.m., New York
time, on the next Business Day. The obligation of each Lender to transfer such funds is
irrevocable, unconditional and without recourse to or warranty by the Administrative Agent or the
Canadian Agent, as applicable. If and to the extent any Lender shall not have so made its transfer
to the Administrative Agent or the Canadian Agent, as applicable, such Lender agrees to pay to the
Administrative Agent or the Canadian Agent, as applicable, forthwith on demand, such amount
together with interest thereon for each day from such date until the date such amount is paid to
the Administrative Agent or the Canadian Agent, as applicable at the Federal Funds Effective Rate
in respect of amounts due in Dollars and the Bank of Canada Overnight Rate in respect of amounts
due in Canadian Dollars.




2.8 Notes; Repayment of Loans.



          (a) The Credit Extensions and the Tranche A-1 Loans of each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. Absent manifest error, the accounts or records maintained
by the Administrative Agent and each Lender shall be presumed to reflect correctly the amount of
the Credit Extensions and the Tranche A-1 Loans made by the Lenders to the Borrowers and
the interest and payments thereon. Any failure so to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the accounts and
records maintained by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent shall control in the
absence of manifest error. Upon the request of any Lender made through the Administrative Agent,
the Loans made by such Lender (including the Swingline Lender, with respect to Swingline Loans)
shall be evidenced by a Note duly executed on behalf of the Borrowers or the Canadian Borrower, as
applicable, dated the Effective Date, in substantially the form attached hereto as Exhibit
B-1, Exhibit B-22, Exhibit B-3 or Exhibit B-3,4, as applicable, payable to the
order of each such



61









 




Lender (or the Swingline Lender, as applicable) in an aggregate principal amount equal to such
Lender’s Domestic Commitment or Canadian Commitment, as applicable (or, in the case of the Note
evidencing the Swingline Loans, $40,000,000).




          (b) Each Lender is hereby authorized by the Borrowers to endorse on a schedule attached to
each Note delivered to such Lender (or on a continuation of such schedule attached to such Note and
made a part thereof), or otherwise to record in such Lender’s internal records, an appropriate
notation evidencing the date and amount of each Loan from such Lender, each payment and prepayment
of principal of any such Loan, each payment of interest on any such Loan and the other information
provided for on such schedule; provided, however, that the failure of any Lender to make such a
notation or any error therein shall not affect the obligation of the Borrowers to repay the Loans
made by such Lender in accordance with the terms of this Agreement and the applicable Notes.



          (c) Upon receipt of an affidavit of a Lender as to the loss, theft, destruction or mutilation
of such Lender’s Note and an indemnity in form and substance reasonably satisfactory to the Lead
Borrower, and upon cancellation of such Note, the Borrowers or the Canadian Borrower, as
applicable, will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same
principal amount thereof and otherwise of like tenor.




2.9 Interest on Loans.



          (a) Subject to Section 2.10, (i) each Domestic Prime Rate Loan shall bear interest (computed
on the basis of the actual number of days elapsed over a year of 365 (or 366, as the case may be)
days), at a rate per annum that shall be equal to the then Base Rate, plus the Applicable Margin
for Domestic Prime Rate Loans, and-(ii(ii) each Domestic Tranche A-1 Prime Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year of 365 (or 366, as
the case may be) days), at a rate per annum that shall be equal to the then Base Rate, plus the
Applicable Margin for Domestic Tranche A-1 Prime Rate Loans, and (iii) each Canadian Prime Rate
Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of
365 (or 366, as the case may be) days), at a rate per annum that shall be equal to the then
Canadian Prime Rate, plus the Applicable Margin for Canadian Prime Rate Loans.



          (b) Subject to Section 2.10, (i) each LIBO Loan shall bear interest (computed on the basis of
the actual number of days elapsed over a year of 360 days) at a rate per annum equal, during each
Interest Period applicable thereto, to the Adjusted LIBO Rate for such Interest Period, plus the
Applicable Margin for LIBO Loans, and-(ii(ii) each Tranche A-1 LIBO Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per
annum equal, during each Interest Period applicable thereto, to the Adjusted LIBO Rate for such
Interest Period, plus the Applicable Margin for Tranche A-1 LIBO Loans, and (iii)
each BA Equivalent Loan shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 365 (or 366, as the case may be) days) at a rate per annum equal,
during each Interest Period applicable thereto, to the BA Rate for such Interest Period, plus the
Applicable Margin for BA Equivalent Loans.



          (c) Subject to Section 2.10, each U.S. Index Rate Loan shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to
the then U.S. Index Rate, plus the Applicable Margin for U.S. Index Rate Loans.



          (d) Accrued interest on all Loans shall be payable in arrears on each Interest Payment Date
applicable thereto, on the Termination Date, after the Termination Date on demand and (with respect
to LIBO Loans, Tranche A-1 LIBO Loans and BA Equivalent Loans) upon any repayment or
prepayment thereof (on the amount prepaid).



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     For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever interest to
be paid hereunder is to be calculated on the basis of a year of 360 days or any other period of
time that is less than a calendar year, the yearly rate of interest to which the rate determined
pursuant to such calculation is equivalent is the rate so determined multiplied by the actual
number of days in the calendar year in which the same is to be ascertained and divided by either
360 or such other period of time, as the case may be. Calculations of interest shall be made using
the nominal rate method of calculation, and will not be calculated using the effective rate method
of calculation or any other basis that gives effect to the principle of deemed reinvestment of
interest.



     2.10 Default Interest. Effective upon the occurrence of any Event of Default and at
all times thereafter while such Event of Default is continuing, at the option of the Administrative
Agent or upon the direction of the Required Lenders, interest shall accrue on all outstanding Loans
(including Swingline Loans) (after as well as before judgment, as and to the extent permitted by
law), and all fees payable under Sections 2.11, 2.12 and 2.13 shall accrue, at a rate per annum
equal to the applicable rate (including the Applicable Margin) otherwise in effect from time to
time plus 2.00% per annum, and such interest shall be payable on demand.



     2.11 Certain Fees. The Borrowers shall pay to the Administrative Agent and the Lead
Arranger, for the account of the Administrative Agent, the Lead Arranger and the Lenders, the fees
set forth in the Fee Letter as and when payment of such fees is due as therein set forth.




2.12 Unused Commitment Fee.



          (a) The Domestic Borrowers shall pay to the Administrative Agent for the account of the
Lenders (other than the Tranche A-1 Lenders) in accordance with their respective Domestic
Commitment Percentages, a commitment fee (the “Commitment Fee”) computed at the Commitment Fee Rate
per annum (on the basis of actual days elapsed in a year of 360 days), of the average daily balance
of the Unused Commitment for each day commencing on and including the Effective Date and ending on
but excluding the Termination Date. The Domestic Borrowers shall pay to the Administrative
Agent for the account of the Tranche A-1 Lenders in accordance with their respective Tranche A-1
Commitment Percentages, a commitment fee (the “Tranche A-1 Commitment Fee”) computed at the Tranche
A-1 Commitment Fee Rate per annum (on the basis of actual days elapsed in a year of 360 days), of
the average daily balance of the Unused Tranche A-1 Commitment for each day commencing on and
including the First Amendment Effective Date and ending on but excluding the Termination Date.



          (b) Upon the occurrence of an Event of Default, at the option of the Administrative Agent or
at the direction of the Required Lenders, the Commitment Fee shall be determined in the manner set
forth in Section 2.10.



          (c) The Commitment Fee accrued in any calendar quarter shall be payable on the first day of
the next calendar quarter, in arrears for the immediately preceding calendar quarter, commencing
April 1, 2011, except that all Commitment Fees so accrued as of the Termination Date shall be
payable on the Termination Date. The Administrative Agent shall pay the Commitment Fee to the
Lenders (including the Tranche A-1 Lenders) based upon their Domestic Commitment
Percentage, Tranche A-1 Commitment Percentage or Canadian Commitment Percentage, as applicable.



     2.13 Letter of Credit Fees. The Borrowers shall pay the Administrative Agent or the
Canadian Agent, as applicable, for the account of the Domestic Lenders (other than the Tranche
A-1 Lenders) or the Canadian
Lenders, as applicable, on first day of each calendar quarter, in arrears for the immediately
preceding calendar quarter, a fee (each, a “Letter of Credit Fee”) equal to the following per annum



63









 




percentages of the Stated Amount of the following categories of Letters of Credit outstanding
during the subject quarter:




          (a) Each Standby Letter of Credit: The then Applicable Margin per annum for LIBO Loans based
upon the average Stated Amount of such Standby Letter of Credit for such period.



          (b) Each Banker’s Acceptance and Commercial Letter of Credit: Fifty percent (50%) of the then
Applicable Margin per annum for LIBO Loans based upon the average Stated Amount of such Banker’s
Acceptance or Commercial Letter of Credit for such period.



          (c) After the occurrence and during the continuance of an Event of Default, at the option of
the Administrative Agent or upon the direction of the Required Lenders, the Letter of Credit Fee
set forth in clauses (a) and (b) above shall be increased by an amount equal to two percent (2%)
per annum.



          (d) The Borrowers shall pay to the Issuing Bank, in addition to the Letter of Credit Fees
otherwise provided for hereunder, fees and charges in connection with the issuance, negotiation,
settlement, amendment and processing of each Letter of Credit issued by the Issuing Bank as are
customarily imposed by the Issuing Bank and agreed to by the Lead Borrower from time to time in
connection with letter of credit transactions.



          (e) All Letter of Credit Fees shall be calculated on the basis of a 360-day year and actual
days elapsed.



     2.14 Nature of Fees. All fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent, for the respective accounts of the Administrative Agent, the
Lead Arranger, the Issuing Bank, and the Lenders, as provided herein. All fees shall be fully
earned on the date when due and shall not be refundable under any circumstances. For greater
certainty, the Canadian Borrower shall not be liable for any fees which form part of the
Obligations unless they are Canadian Liabilities (including as provided in Section 2.12(b), Section
2.11, or Section 9.4).




2.15 Termination or Reduction of Commitments.



          (a) Upon at least three (3) Business Days’ prior written notice to the Administrative Agent,
the Lead Borrower may at any time or from time to time in part permanently reduce the Domestic
Commitments. Each such reduction shall be in the principal amount of $10,000,000 or any integral
multiple of $1,000,000 in excess thereof. Each such reduction shall (i) be applied ratably to the
Domestic Commitments of each Lender and (ii) be irrevocable when given. At the effective time of
each such reduction, the Domestic Borrowers shall pay to the Administrative Agent for application
as provided herein (i) all Commitment Fees accrued on the amount of the Domestic Commitments so
reduced through the date thereof, (ii) any amount by which the Domestic Credit Extensions
outstanding on such date exceed the amount to which the Domestic Commitments are to be reduced
effective on such date, in each case pro rata based on the amount prepaid, and (iii) any Breakage
Costs, if applicable.



          (b) Upon at least three (3) Business Days’ prior written notice to the Administrative Agent
and the Canadian Agent, the Canadian Borrower may at any time or from time to time in part
permanently reduce the Canadian Commitments to an amount not less than CD$5,000,000. Each such
reduction shall be in the principal amount of CD$1,000,000 or any integral multiple of CD$1,000,000
in excess thereof. Each such reduction shall (i) be applied ratably to the Canadian Commitments of
each Canadian Lender and (ii) be irrevocable when given. At the effective time of each such
reduction, the Canadian Borrower shall pay to the Canadian Agent for application as provided herein
(i) any amount by which the Canadian Credit Extensions outstanding on such date exceed the amount
to which the Canadian



64









 




Commitments are to be reduced effective on such date, in each case pro rata based on the amount
prepaid, and (ii) any Breakage Costs, if applicable.




          (c) Upon at least three (3) Business Days’ prior written notice to the Administrative
Agent, the Lead Borrower may reduce or terminate the Tranche A-1 Commitments as long as immediately
after giving effect to such reduction or termination, there are no Domestic Loans outstanding. In
the event that all of the Domestic Commitments are terminated, the Lead Borrower shall contemporaneously therewith
terminate all Tranche A-1 Commitments. Each reduction of the Tranche A-1 Commitments shall be in
the principal amount of $5,000,000 or any integral multiple thereof. The Domestic Borrowers shall
pay to the Administrative Agent for application as provided herein (i) at the effective time of any
such termination (but not any partial reduction), all Tranche A-1 Commitment Fees accrued on the
Tranche A-1 Commitments so terminated, and (ii) at the effective time of any such reduction or
termination, any amount by which the Tranche A-1 Loans to the Domestic Borrowers outstanding on
such date exceed the amount to which the Tranche A-1 Commitments are to be reduced effective on
such date.



          (d) (c) Upon at least three (3) Business Days’ prior written notice to the Administrative
Agent, the Lead Borrower may Upon at least three (3) Business Days’ prior written notice to the
Administrative Agent, the Lead Borrower may at any time terminate the Domestic Commitments,
the Tranche A-1 Commitments and/or the Canadian Commitments. At the effective time of each such
termination specified in such notice, the Domestic Borrowers shall repay to the Administrative
Agent and the Canadian Borrower shall repay the Canadian Agent, in each case for application as
provided herein all Obligations or Canadian Liabilities, as applicable. The Canadian
Commitments and the
Tranche A-1 Commitments shall be automatically terminated upon any
termination of the Domestic Commitments.



     2.16 Alternate Rate of Interest. If prior to the commencement of any Interest Period
for a LIBO Borrowing or a BA Equivalent Loan Borrowing:



          (a) the Administrative Agent determines (which determination shall be presumed correct absent
manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or BA Rate for such Interest Period; or



          (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or
BA Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of
making or maintaining their Loans included in such Borrowing for such Interest Period;



     then the Administrative Agent shall give notice thereof to the Lead Borrower or the Canadian
Borrower, as applicable, and the Lenders by telephone or telecopy as promptly as practicable
thereafter (but in any event, within two (2) Business Days after such determination or advice) and,
until the Administrative Agent notifies the Lead Borrower or the Canadian Borrower, as applicable,
and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any
Borrowing Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a LIBO Borrowing or a BA Equivalent Loan Borrowing shall be ineffective and (ii) if
any Borrowing Request requests a LIBO Borrowing or a BA Equivalent Loan Borrowing, such Borrowing
shall be made as a Borrowing of Domestic Prime Rate Loans, Domestic Tranche A-1 Prime Rate
Loans, U.S. Index Rate Loans, or Canadian Prime Rate Loans, as applicable.



     2.17 Conversion and Continuation of Loans. The Lead Borrower on behalf of the
Borrowers shall have the right at any time,



          (a) on three (3) Business Days’ prior irrevocable notice to the Administrative Agent
(which notice, to be effective, must be received by the Administrative Agent not later than 11:00
a.m., New



65









 




York time, on the third Business Day preceding the date of any conversion), (xw) to convert any
outstanding Borrowings of Domestic Prime Rate Loans (but in no event Swingline Loans) to Borrowings
of LIBO Loans, (x) to convert any outstanding Borrowings of Domestic Tranche A-1 Prime Rate
Loans to Borrowings of Tranche A-1 LIBO Loans, (y) to convert any outstanding Borrowings of
Canadian Prime Rate Loans or U.S. Index Rate Loans to Borrowings of BA Equivalent Loans or LIBO
Loans, as applicable, or
(yz) to continue an outstanding Borrowing of LIBO Loans, Tranche A-1
LIBO Loans or BA Equivalent Loans, as applicable, for an additional Interest Period,




          (b) on irrevocable notice to the Administrative Agent (which notice, to be effective,
must be received by the Administrative Agent not later than 11:00 a.m., New York time, on the same
Business Day of any conversion), to convert any outstanding Borrowings of LIBO Loans to a Borrowing
of Domestic Prime Rate Loans or U.S. Index Rate Loans (or, in the case of the Canadian Borrower,
Borrowings of BA Equivalent Loans to a Borrowing of Canadian Prime Rate Loans), or to convert
any outstanding Borrowings of Tranche A-1 LIBO Loans to a Borrowing of Domestic Tranche A-1 Prime
Rate Loans,




subject to the following:




          (i) no Borrowing of Loans may be converted into, or continued as, LIBO Loans,
Tranche A-1 LIBO Loans or BA Equivalent Loans at any time when an Event of Default has
occurred and is continuing;




          (ii) if less than a full Borrowing of Loans is converted, such conversion shall be made
pro rata among the Domestic Lenders and the Canadian Lenders, as applicable, in accordance
with the respective principal amounts of the Loans comprising such Borrowing held by such
Lenders immediately prior to such conversion;




          (iii) the aggregate principal amount of Loans being converted into or continued as
LIBO Loans or Tranche A-1 LIBO Loans shall be in an integral of $100,000 and at
least $1,000,000, and the aggregate principal amount of Loans being converted into or
continued as BA Equivalent Loans shall be in an integral of CD$100,000 and at least
CD$1,000,000;




          (iv) each Domestic Lender shall effect each conversion by applying the proceeds of its
new LIBO Loan, Tranche A-1 LIBO Loan, Domestic Prime Rate Loan or Domestic
Tranche A-1 Prime Rate Loan, as the case may be, to its Loan being so converted, and
each Canadian Lender shall effect each conversion by applying the proceeds of its new BA
Equivalent Loan or Canadian Prime Rate Loan, as the case may be, to its Loan being so
converted;




          (v) the Interest Period with respect to a Borrowing of LIBO Loans, Tranche A-1 LIBO
Loans or BA Equivalent Loans effected by a conversion or with respect to a Borrowing of
LIBO Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans being continued as LIBO
Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans, respectively, shall commence
on the date of conversion or the expiration of the current Interest Period applicable to
such continued Borrowing, as the case may be;




          (vi) a Borrowing of LIBO Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans
may be converted only on the last day of an Interest Period applicable thereto;




          (vii) each request for a conversion or continuation of a Borrowing of LIBO Loans,
Tranche A-1 LIBO Loans or BA Equivalent Loans which fails to state an applicable
Interest Period shall be deemed to be a request for an Interest Period of one month; and



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          (viii) no more than ten (10) Borrowings of LIBO Loans, Tranche A-1 LIBO
Loans and BA Equivalent Loans may be outstanding at any time.



     If the Lead Borrower does not give notice to convert any Borrowing of Domestic Prime Rate
Loans, Domestic Tranche A-1 Prime Rate Loans or Canadian Prime Rate Loans, or does not give
notice to continue, or does not have the right to continue, any Borrowing as LIBO Loans,
Tranche A-1 LIBO Loans or BA Equivalent Loans, in each case as provided above, such Borrowing
shall automatically be converted to, or continued as, as applicable, a Borrowing of Domestic
Prime Rate Loans, Domestic Tranche A-1 Prime Rate Loans or Canadian Prime Rate Loans, as
applicable, at the expiration of the then current Interest Period. The Administrative Agent shall,
after it receives notice from the Lead Borrower, promptly give each Lender notice of any
conversion, in whole or part, of any Loan made by such Lender.



     2.18 Mandatory Prepayment; Cash Collateral; Commitment Termination. The
outstanding Obligations shall be subject to mandatory prepayment as follows:



          (a) If at any time the amount of the Credit Extensions plus the Tranche A-1 Loans
exceeds the Loan Cap, the Borrowers will immediately (A) prepay the Loans in an amount
necessary to eliminate such excess, and (B) if, after giving effect to the prepayment in full of
all outstanding Loans such excess has not been eliminated, deposit cash into the Cash Collateral
Account in an amount equal to 102% of the Letter of Credit Outstandings.



          (b) If at any time the amount of the Canadian Credit Extensions to the Canadian Borrower
exceeds Canadian Availability, the Canadian Borrower will immediately (A) prepay the Canadian Loans
in an amount necessary to eliminate such excess, and (B) if, after giving effect to the prepayment
in full of all outstanding Canadian Loans such excess has not been eliminated, deposit cash into
the Cash Collateral Account in an amount equal to 102% of the Canadian Letter of Credit
Outstandings.



          (c) If at any time the amount of the Domestic Credit Extensions to the Domestic Borrowers
exceeds Domestic Availability, the Domestic Borrowers will immediately (A) prepay the Domestic
Loans in an amount necessary to eliminate such excess, and (B) if, after giving effect to the
prepayment in full of all outstanding Domestic Loans such excess has not been eliminated, deposit
cash into the applicable Cash Collateral Account in an amount equal to 102% of the Domestic Letter
of Credit Outstandings.



          (d) If at any time the amount of the Tranche A-1 Loans to the Domestic Borrowers exceeds
Tranche A-1 Availability, the Domestic Borrowers will immediately prepay the Tranche A-1 Loans in
an amount necessary to eliminate such excess.



          (e) (d)If at any time following one or more fluctuations in the exchange rate of the
Canadian Dollar against the Dollar, the amount of the Canadian Credit Extensions to the Canadian
Borrower exceeds Canadian Availability, the Canadian Borrower shall (x) if such excess is in an
aggregate amount that is greater than or equal to $500,000 within two (2) Business Days of notice
from the Administrative Agent, (y) if such excess is an aggregate amount that is less than $500,000
and such excess continues to exist in an aggregate amount less than $500,000 for at least five (5)
Business Days, within two (2) Business Days of notice from the Administrative Agent or (z) if an
Event of Default has occurred and is continuing, immediately (i) make the necessary payments or
repayments to reduce such Canadian Liabilities to an amount necessary to eliminate such excess or
(ii) maintain or cause to be maintained with the Administrative Agent deposits as continuing
collateral security for the Obligations of the Canadian Borrower in an amount equal to or greater
than the amount of such excess, such deposits to be maintained in such form and upon such terms as
are acceptable to the Administrative Agent. Without in any way limiting the foregoing provisions,
the Administrative Agent shall, weekly or more frequently in the sole discretion



67









 




of the Administrative Agent, make the necessary exchange rate calculations to determine whether any
such excess exists on such date and advise the Borrowers if such excess exists.




          (f) (e)To the extent required pursuant to Section 2.21, the Revolving Loans shall be
repaid daily in accordance with the provisions of said Section 2.21.



          (g) (f)The Borrowers shall prepay the Loans in an amount equal to the Net Proceeds
received by any Credit Party on account of a Prepayment Event, irrespective of whether a Cash
Dominion Event then exists and is continuing; provided that Net Proceeds from any assets of the
Canadian Credit Parties shall only be applied to the Canadian Liabilities.



          (h) (g)Subject to the foregoing, outstanding Prime Rate Loans and U.S. Index Rate
Loans shall be prepaid before outstanding LIBO Loans, Tranche A-1 LIBO Loans or BA
Equivalent Loans are prepaid. Each partial prepayment of LIBO Loans and Tranche A-1 LIBO
Loans shall be in an integral multiple of $100,000, and each partial prepayment of BA Equivalent
Loans shall be in an integral multiple of CD$100,000. No prepayment of LIBO Loans, Tranche A-1
LIBO Loans or BA Equivalent Loans shall be permitted pursuant to this Section 2.18 other than
on the last day of an Interest Period applicable thereto, unless the Borrowers simultaneously
reimburse the Lenders for all “Breakage Costs” (as defined below) associated therewith. In order to
avoid such Breakage Costs, as long as no Event of Default has occurred and is continuing, at the
request of the Lead Borrower the Administrative Agent or the Canadian Agent, as applicable, shall
hold all amounts required to be applied to LIBO Loans, Tranche A-1 LIBO Loans or BA
Equivalent Loans in the applicable Cash Collateral Account and will apply such funds to the
applicable LIBO Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans, as applicable, at the
end of the then pending Interest Period therefor and such LIBO Loans, Tranche A-1 LIBO
Loans and BA Equivalent Loans shall continue to bear interest at the rate set forth in Section
2.9 until the amounts in the applicable Cash Collateral Account have been so applied (provided that
the foregoing shall in no way limit or restrict the Agents’ rights upon the subsequent occurrence
of an Event of Default). No partial prepayment of a Borrowing of LIBO Loans, Tranche A-1 LIBO
Loans or BA Equivalent Loans shall result in the aggregate principal amount of the LIBO Loans
or Tranche A-1 LIBO Loans remaining outstanding pursuant to such Borrowing being less than
$1,000,000 or the aggregate principal amount of the BA Equivalent Loans remaining outstanding
pursuant to such Borrowing being less than CD$1,000,000 (unless all such outstanding LIBO
Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans are being prepaid in full). Any prepayment
of the Revolving Loans shall not permanently reduce the Commitments.



          (i) (h)All amounts required to be applied to Loans hereunder (other than Swingline Loans)
shall be applied ratably in accordance with each Domestic Lender’s Domestic Commitment
Percentage, or Tranche A-1 Lender’s Tranche A-1 Commitment Percentage, or Canadian Lender’s
Canadian Commitment Percentage, as applicable.



          (j) (i)Upon the Termination Date, the Commitments and the credit facility provided
hereunder shall be terminated in full and the Domestic Borrowers shall pay, in full and in cash,
all outstanding Loans and all other outstanding Obligations owing by them and the Canadian Borrower
shall pay in full and in cash, all outstanding Loans to it and all Canadian Liabilities.



          (k) (j)All Obligations shall be payable to the Administrative Agent or the
Canadian Agent, as applicable, in the currency in which they are denominated.




2.19 Optional Prepayment of Loans; Reimbursement of Lenders.



          (a) The Borrowers shall have the right at any time and from time to time to prepay
outstanding Loans in whole or in part, (x) with respect to LIBO Loans, Tranche A-1 LIBO
Loans and BA



68









 




Equivalent Loans, upon at least two Business Days’ prior written, telex or facsimile notice to the
Administrative Agent prior to 11:00 a.m., New York time, and (y) with respect to Domestic Prime
Rate Loans, Domestic Tranche A-1 Prime Rate Loans, Canadian Prime Rate Loans or U.S. Index
Rate Loans, upon written, telex or facsimile notice to the Administrative Agent, which notice shall
be received prior to 11:00 a.m., New York time on the same Business Day of such prepayment, subject
to the following limitations:





          (i) All prepayments under this Section 2.19 shall be paid to the Administrative Agent
or the Canadian Agent, as applicable, for application, first, to the prepayment of
outstanding Swingline Loans, second, to the prepayment of other outstanding Loans ratably in
accordance with each Lender’s Domestic Commitment Percentage, Tranche A-1 Commitment
Percentage or Canadian Commitment Percentage, as applicable, and third, to the funding
of a cash collateral deposit in the applicable Cash Collateral Account in an amount equal to
102% of all Letter of Credit Outstandings.




          (ii) Subject to the foregoing, outstanding Prime Rate Loans and U.S. Index Rate Loans
shall be prepaid before outstanding LIBO Loans, Tranche A-1 LIBO Loans or BA
Equivalent Loans are prepaid. Each partial prepayment of LIBO Loans and Tranche A-1
LIBO Loans shall be in an integral multiple of $100,000, and each partial prepayment of BA
Equivalent Loans shall be in an integral multiple of CD$100,000. No prepayment of LIBO
Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans shall be permitted pursuant to
this Section 2.19 other than on the last day of an Interest Period applicable thereto,
unless the Borrowers simultaneously reimburse the Lenders for all “Breakage Costs”
(as defined below) associated therewith. No partial prepayment of a Borrowing of LIBO
Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans shall result in the aggregate
principal amount of the LIBO Loans
or Tranche A-1 LIBO Loans remaining outstanding
pursuant to such Borrowing being less than $1,000,000 or the aggregate principal amount of
the BA Equivalent Loans remaining outstanding pursuant to such Borrowing being less than
CD$1,000,000 (unless all such outstanding LIBO
Loans, Tranche A-1 LIBO Loans or BA
Equivalent Loans are being prepaid in full).




          (iii) Each notice of prepayment shall specify the prepayment date, the principal amount
and Type of the Loans to be prepaid and, in the case of LIBO Loans, Tranche A-1 LIBO
Loans or BA Equivalent Loans, the Borrowing or Borrowings pursuant to which such Loans
were made. Each notice of prepayment shall be irrevocable and shall commit the Borrowers to
prepay such Loan by the amount and on the date stated therein. The Administrative Agent
shall, promptly after receiving notice from the Lead Borrower hereunder, notify each Lender
of the principal amount and Type of the Loans held by such Lender which are to be prepaid,
the prepayment date and the manner of application of the prepayment.



          (b) Notwithstanding the provisions of Section 2.19(a) which generally permit voluntary
prepayments of the Revolving Loans, only if all Domestic Loans are repaid in full may the Borrowers
prepay amounts owed with respect to the Tranche A-1 Loans, provided, however, that any such
prepayment shall not reduce or terminate the Tranche A-1 Commitments. In addition, the Borrowers
shall also repay the Tranche A-1 Loans (a) at any time that the outstanding amount of the Tranche
A-1 Loans exceeds the lesser of the Tranche A-1 Commitments and the Tranche A-1 Borrowing Base, and
(b) as required upon any reduction or termination of the Tranche A-1 Commitments in accordance with
the provisions of Section 2.15(c) or Section 2.15(e) hereof.



          (c)
 (b) The Borrowers shall reimburse each Lender on demand for any loss incurred or to
be incurred by it in the reemployment of the funds released (i) resulting from any prepayment (for
any reason whatsoever, including, without limitation, conversion to a Domestic Prime Rate Loan,
Domestic



69









 




Tranche A-1 Prime Rate Loan, a Canadian Prime Rate Loan or a U.S. Index Rate Loan or
acceleration by virtue of, and after, the occurrence of an Event of Default) of any LIBO Loan,
Tranche A-1 LIBO Loan or BA Equivalent Loan required or permitted under this Agreement, if such
Loan is prepaid other than on the last day of the Interest Period for such Loan or (ii) in the
event that after the Lead Borrower delivers a notice of borrowing under Section 2.3 in respect of
LIBO Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans, such Loans are not borrowed on
the first day of the Interest Period specified in such notice of borrowing for any reason. Such
loss shall be the amount as reasonably determined by such Lender as the excess, if any, of (A) the
amount of interest which would have accrued to such Lender on the amount so paid or not borrowed at
a rate of interest equal to the Adjusted LIBO Rate or the BA Rate for such Loan, for the period
from the date of such payment or failure to borrow to the last day (x) in the case of a payment or
refinancing of a LIBO Loan, Tranche A-1 LIBO Loan or a BA Equivalent Loan other than on the
last day of the Interest Period for such Loan, of the then current Interest Period for such Loan or
(y) in the case of such failure to borrow, of the Interest Period for such LIBO Loan, Tranche
A-1 LIBO Loan or BA Equivalent Loan which would have commenced on the date of such failure to
borrow, over (B) in the case of a LIBO Loan or Tranche A-1 LIBO Loan, the amount of
interest which would have accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the London interbank market, or, in the case of a BA
Equivalent Loan, the amount of interest which would have accrued to such Lender on such amount by
placing such amount on deposit for a comparable period with Bank of America-Canada Branch
(collectively, “Breakage Costs”). Any Lender demanding reimbursement for such loss shall deliver to
the Lead Borrower from time to time one or more certificates setting forth the amount of such loss
as determined by such Lender and setting forth in reasonable detail the manner in which such amount
was determined.




          (d) (c)In the event the Borrowers fail to prepay any Loan on the date specified in any
prepayment notice delivered pursuant to Section 2.19(a), the Borrowers on demand by any Lender
shall pay to the Administrative Agent for the account of such Lender any amounts required to
compensate such Lender for any actual loss incurred by such Lender as a result of such failure to
prepay, including, without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit obligations incurred in
anticipation of such prepayment. Any Lender demanding such payment shall deliver to the Lead
Borrower from time to time one or more certificates setting forth the amount of such loss as
determined by such Lender and setting forth in reasonable detail the manner in which such amount
was determined.



          (e) (d)Whenever any partial prepayment of Loans are to be applied to LIBO Loans, Tranche
A-1 LIBO Loans or BA Equivalent Loans, such LIBO Loans, Tranche A-1 LIBO Loans or BA
Equivalent Loans shall be prepaid in the chronological order of their Interest Payment Dates.




2.20 Maintenance of Loan Account; Statements of Account.



          (a) The Administrative Agent and the Canadian Agent, as applicable, shall maintain an account
on its books in the name of the Borrowers (the “Loan Account”) which will reflect (i) all
Loans and other advances made by the Lenders to the Borrowers or for the Borrowers’ account, (ii)
all L/C Disbursements, fees and interest that have become payable as herein set forth, and (iii)
any and all other monetary Obligations that have become payable.



          (b) The Loan Account will be credited with all amounts received by the Administrative Agent
and the Canadian Agent, as applicable, from the Borrowers or otherwise for the Borrowers’ account,
including all amounts received in the Bank of America Concentration Account from the Controlled
Account Banks, and the amounts so credited shall be applied as set forth in Sections 2.22(a), (b)
and (c) or 7.4, as applicable. After the end of each month, the Administrative Agent or the
Canadian Agent, as applicable, shall send to the Lead Borrower or the Canadian Borrower, as
applicable, a statement



70









 




accounting for the charges, loans, advances and other transactions occurring among and between the
Administrative Agent or the Canadian Agent, as applicable, the Lenders and the Borrowers during
that month. The monthly statements shall, absent manifest error, be an account stated, which is
final, conclusive and binding on the Borrowers.





2.21 Cash Receipts.



          (a) The Borrowers shall deliver to the Administrative Agent (i) on the Effective Date and
thereafter annually (or at such times as the Administrative Agent may reasonably request following
the occurrence and during the continuance of a Cash Dominion Event), a list of all present DDAs
maintained by the Borrowers, which list includes, with respect to each depository (A) the name of
that depository; (B) the account number(s)
maintained with such depository; and (C) to the extent known, a contact person at such
depository (the “DDA List”), (ii) upon the occurrence of an Event of Default at the request
of the Administrative Agent, notifications executed on behalf of the Borrowers to each depository
institution identified on the DDA List in form and substance reasonably satisfactory to the
Administrative Agent, of the Administrative Agent’s interest in such DDA as described more fully in
Section 2.21(d) and substantially in the form of Exhibit G (each, a “DDA
Notification”), and (iii) on or prior to the Effective Date and periodically thereafter
notifications (the “Credit Card Notifications”) executed on behalf of the Borrowers with
each of the Borrowers’ major credit card and debit card processors in form and substance reasonably
satisfactory to the Administrative Agent.



          (b) Annexed hereto as Schedule 2.21(b) is a list describing all arrangements to which
any Borrower is a party with respect to the payment to any Borrower of the proceeds of all credit
card and debit card charges for sales by such Borrower.



          (c) Annexed hereto as Schedule 2.21(c) is a list describing all Concentration Accounts
and Investment Accounts maintained by the Borrowers. On or prior to the Effective Date, the
Borrowers shall enter into an Account Control Agreement with the Controlled Account Banks for the
Concentration Accounts and the Investment Accounts, in each case in form and substance reasonably
satisfactory to the Administrative Agent.



          (d) The DDA Notifications and Credit Card Notifications shall require, after the occurrence
and during the continuance of a Cash Dominion Event, the sweep on each Business Day of all
available cash receipts and other proceeds from the sale or disposition of any Collateral,
including, without limitation, the proceeds of all credit card and debit card charges (all such
cash receipts and proceeds, “Cash Receipts”), to (x) a concentration account maintained by
the Collateral Agent at Bank of America (the “Bank of America Concentration Account”), or
(y) a Controlled Account, as the Administrative Agent or the Canadian Agent, as applicable, may
direct.



          (e) The Account Control Agreements shall require, after the occurrence and during the
continuance of a Cash Dominion Event, the sweep on each Business Day of all Cash Receipts to the
Bank of America Concentration Account or to such other account as the Administrative Agent may
direct, and with respect to the Canadian Borrower, to a Concentration Account established by the
Canadian Borrower or as the Canadian Agent may otherwise direct. Notwithstanding any provision of
this Agreement or any other Loan Document to the contrary, the Administrative Agent or the Canadian
Agent, as applicable, shall not send a notice of exclusive control regarding or otherwise exercise
control over (i) any DDA subject to an Account Control Agreement unless a Cash Dominion Event shall
have occurred and be continuing and will withdraw such notice of exclusive control and relinquish
such control at such time as a Cash Dominion Event is no longer in effect, if requested in writing,
by the Lead Borrower, or (ii) any Excluded DDA.



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          (f) If at any time after the occurrence and during the continuance of a Cash Dominion Event,
any cash or cash equivalents owned by the Borrowers are deposited to any account (other than an
Excluded DDA or a DDA for which a DDA Notification has been delivered), or held or invested in any
manner, otherwise than in a Controlled Account that is subject to a Account Control Agreement as
required herein, then the Administrative Agent may require the Borrowers to have all funds held in
such account transferred to the Bank of America Concentration Account or such other Controlled
Account as the Administrative Agent may direct, and with respect to the Canadian Borrower, to a
Concentration Account established by the Canadian Borrower or as the Canadian Agent may otherwise
direct.



          (g) The Borrowers may close DDAs or Controlled Accounts and/or open new DDAs or Controlled
Accounts, subject to the execution and delivery to the Administrative Agent or the Canadian Agent,
as applicable, of appropriate DDA Notifications or Account Control Agreements consistent with the
provisions of this Section 2.21. Unless consented to in writing by the Administrative Agent or the
Canadian Agent, as applicable, the Borrowers may not enter into any agreements with additional
credit card processors unless contemporaneously therewith, a Credit Card Notification is executed
and delivered to the Administrative Agent or the Canadian Agent, as applicable.



          (h) The Bank of America Concentration Account and the Concentration Accounts established by
the Canadian Borrower are and shall remain under the sole dominion and control of the Collateral
Agent or the Canadian Agent, as applicable. Each Borrower acknowledges and agrees that, subject to
the provisions of subparagraph (i) below, (i) such Borrower has no right of withdrawal from the
Bank of America Concentration Account and the Concentration Accounts established by the Canadian
Borrower, (ii) the funds on deposit in the Bank of America Concentration Account shall continue to
be collateral security for all of the Obligations (including
the Canadian Liabilities), (iii) the funds on deposit in the Concentration Accounts
established by the Canadian Borrower shall continue to be collateral security for all of the
Canadian Liabilities, and (iv) the funds on deposit in the Bank of America Concentration Account
shall be applied as provided in Sections 2.22(a) or 7.4, as applicable.



          (i) So long as no Cash Dominion Event has occurred and is continuing, the Borrowers may
direct, and shall have sole control over, the manner of disposition of its funds in the DDAs and
the Controlled Accounts.



          (j) After the occurrence and during the continuation of a Cash Dominion Event, the
Borrowers shall cause the ACH or wire transfer to, upon the Administrative Agent’s or the Canadian
Agent’s, as applicable, instruction, any Controlled Account, no less frequently than daily (unless
the Commitments have been terminated hereunder and the Obligations have been paid in full) of the
then current contents of each such DDA (other than any Excluded DDA), each such transfer to be net
of any minimum balance, not to exceed with respect to any DDA (other than any Excluded DDA) $2,500,
as may be required to be maintained in the subject DDA by the bank at which such DDA is maintained,
and, in connection with each such transfer, the Borrowers shall also provide the Administrative
Agent with an accounting of the contents of each DDA (other than any Excluded DDA).



          (k) After the occurrence and during the continuation of a Cash Dominion Event, whether or
not any Obligations are then outstanding, the Borrowers shall cause the ACH or wire transfer, upon
the Administrative Agent’s or the Canadian Agent’s, as applicable, instruction, to the Bank of
America Concentration Account of the then current entire ledger balance of each Controlled Account,
net of such minimum balance, not to exceed $10,000, as may be required to be maintained in the
subject Controlled Account by the bank at which such Controlled Account is maintained; provided
that amounts in Controlled Accounts established by the Canadian Borrower shall be delivered
only to a concentration account at Bank of America-Canada Branch or as the Canadian Agent may
otherwise direct.



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          (l) In the event that, notwithstanding the provisions of this Section 2.21, after the
occurrence of a Cash Dominion Event, the Borrowers receive or otherwise have dominion and control
of any such proceeds or collections (other than proceeds deposited in any Excluded DDA), such
proceeds and collections shall be held in trust by the Borrowers for the Administrative Agent or
the Canadian Agent, as applicable, and shall not be commingled with any of the Borrowers’ other
funds or deposited in any account of Borrower other than as instructed by the Administrative Agent
or the Canadian Agent, as applicable.



          (m) After the occurrence and during the continuation of a Cash Dominion Event, the
Borrowers shall deliver to the Administrative Agent on each anniversary of the Effective Date (or
at such other times as the Administrative Agent may reasonably request), a list of all Account
Debtors, which list includes, with respect to each Account Debtor (i) the name, address, and
telephone number of that Account Debtor; (ii) the account/reference numbers for such Account
Debtor; and (iii) to the extent known, a contact person at such Account Debtor (the “Account
Debtor List”).




2.22 Application of Payments.



          (a) As long as the time for payment of the Obligations has not been accelerated, all
amounts received in the Bank of America Concentration Account from any source (other than proceeds
received from the Canadian Borrower or its assets), including the Controlled Account Banks
following the occurrence and during the continuance of a Cash Dominion Event, and other amounts
received by the Administrative Agent, shall be applied, on the day of receipt, in the following
order: first, to pay any fees and expense reimbursements and indemnification then due and
payable to the Administrative Agent, the Issuing Bank (other than on account of Canadian Letters of
Credit), and the Collateral Agent; second, to pay interest then due and payable on Credit
Extensions (other than Tranche A-1 Loans) to the Domestic Borrowers; third, to
repay any outstanding Swingline Loans; fourth, to repay any outstanding Revolving Loans
that are Domestic Prime Rate Loans (other than Tranche A-1 Loans) and any outstanding
reimbursement obligations under Letters of Credit and Banker’s Acceptances other than Canadian
Letters of Credit or Banker’s Acceptances arising from Canadian Letters of Credit; fifth,
to repay any outstanding Revolving Loans that are LIBO Loans and all Breakage Costs due in respect
of such repayment pursuant to Section 2.19(b) or, at the Lead Borrower’s option, to fund a cash
collateral deposit to the Cash Collateral Account sufficient to pay, and with direction to pay, all
such outstanding LIBO Loans on the last day of the then-pending Interest Period therefor from such
Cash Collateral Account (in each case, other than Tranche A-1 Loans and Canadian Loans);
sixth, if an Event of Default exists, to fund a cash collateral deposit in the Cash
Collateral Account in an amount equal to 102% of all Letter of Credit Outstandings other than
Canadian Letter of Credit Outstandings; seventh, to pay interest then due and payable
on Tranche A-1 Loans to the Domestic Borrowers; eighth, to repay any
outstanding Tranche A-1 Loans that are Prime Rate Loans; ninth, to repay any outstanding
Tranche A-1 LIBO Loans and all Breakage Costs due in respect of such repayment pursuant to Section
2.19(b) or, at the Lead Borrower’s option, to fund a cash collateral deposit to the Cash Collateral
Account sufficient to pay, and with direction to pay, all such outstanding Tranche A-1 LIBO Loans
on the last day of the then-pending Interest Period therefor from such Cash Collateral Account;
tenth, to pay fees and expense reimbursements and indemnification then due and payable to the
Canadian Agent and the Issuing Bank issuing Canadian Letters of Credit (other than fees, expense
reimbursements and indemnification payable in connection with Other Canadian Liabilities of the
Canadian Borrower); eightheleventh, to pay interest due and payable on Credit Extensions to
the Canadian Borrower; ninthtwelfth, to repay pro rata outstanding Revolving Loans that are
Canadian Prime Rate Loans or U.S. Index Rate Loans and all outstanding reimbursement obligations
under Canadian Letters of Credit; tenththirteenth, to repay outstanding Revolving Loans
that are BA Equivalent Loans and all Breakage Costs due in respect of such repayment pursuant to
Section 2.19(b) or, at the Canadian Borrower’s option, to fund a cash collateral deposit to the GCO
Canada Cash Collateral Account sufficient to pay, and with direction to pay, all such outstanding
BA Equivalent Loans on the last day of the then-pending Interest Period therefor from such GCO
Canada Cash Collateral Account; eleventhfourteenth, if an Event of Default exists, to fund



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a cash collateral deposit in the GCO Canada Cash Collateral Account in an amount equal to 102% of
all Canadian Letter of Credit Outstandings; twelfthfifteenth, to pay all other Obligations
and all Other Domestic Liabilities of the Domestic Borrowers and all Other Canadian Liabilities of
the Canadian Borrower that are then outstanding and then due and payable. If all amounts set forth
in clauses first through and including twelfthfifteenth above are paid, any excess
amounts shall be deposited in a separate cash collateral account, and shall be released to the Lead
Borrower on the day of receipt. So long as no Event of Default has occurred and is continuing, the
Administrative Agent shall release the funds held in the Cash Collateral Account pursuant to
clauses fifth, ninth and tenththirteenth above to the Borrowers upon the Lead
Borrower’s request.




          (b) As long as the time for payment of the Obligations has not been accelerated, all amounts
received in the Concentration Accounts established by the Canadian Borrower constituting proceeds
from the Canadian Borrower or its assets, and other amounts received by the Canadian Agent, shall
be applied, on the day of receipt, in the following order: first, to pay any fees and
expense reimbursements and indemnification then due and payable to the Canadian Agent and the
Issuing Bank (on account of Canadian Letters of Credit); second, to pay interest then due
and payable on Credit Extensions to the Canadian Borrower; third, to repay pro rata
outstanding Revolving Loans that are Canadian Prime Rate Loans or U.S. Index Rate Loans and all
outstanding reimbursement obligations under Canadian Letters of Credit; fifth, to repay
outstanding Revolving Loans that are LIBO Loans or BA Equivalent Loans made to the Canadian
Borrower and all Breakage Costs due in respect of such repayment pursuant to Section 2.19(b) or, at
the Canadian Borrower’s option, to fund a cash collateral deposit to the GCO Canada Cash Collateral
Account sufficient to pay, and with direction to pay, all such outstanding LIBO Loans or BA
Equivalent Loans on the last day of the then-pending Interest Period therefor from such GCO Canada
Cash Collateral Account; sixth, if an Event of Default exists, to fund a cash collateral
deposit in the GCO Canada Cash Collateral Account in an amount equal to 102% of all Canadian Letter
of Credit Outstandings; seventh, to pay all other Canadian Liabilities that are then
outstanding and then due and payable. If all amounts set forth in clauses first through and
including seventh above are paid, any excess amounts shall be deposited in a separate cash
collateral account, and shall be released to the Canadian Borrower on the day of receipt. So long
as no Event of Default has occurred and is continuing, the Administrative Agent shall release the
funds held in the GCO Canada Cash Collateral Account pursuant to clause fifth above to the
Canadian Borrowers upon the Canadian Borrower’s request.



          (c) All credits against the Obligations shall be effective on the day of receipt thereof, and
shall be conditioned upon final payment to the Administrative Agent of the items giving rise to
such credits. If any item deposited to the Bank of America Concentration Account and credited to
the Loan Account is dishonored or returned unpaid for any reason, whether or not such return is
rightful or timely, the Administrative Agent shall have the right to reverse such credit and charge
the amount of such item to the Loan Account and the Borrowers shall indemnify the Administrative
Agent, the Collateral Agent, the Issuing Bank and the Lenders against all claims and losses
resulting from such dishonor or return.




2.23 Increased Costs.




(a) If any Change in Law shall:




          (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by,
any Lender or any
holding company of any Lender (except any such reserve requirement already reflected in
the Adjusted LIBO Rate) or the Issuing Bank; or



74









 






          (ii) impose on any Lender or the Issuing Bank or the London interbank market any
other condition affecting this Agreement or LIBO Loans, Tranche A-1 LIBO Loans or BA
Equivalent Loans made by such Lender or any Letter of Credit or participation therein;


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBO Loan, Tranche A-1 LIBO Loan or BA Equivalent Loan (or of maintaining
its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum
received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest
or otherwise) other than Taxes, which shall be governed by Section 2.26 hereof, then, as long as
the Borrowers are treated in the same manner as all similarly situated customers, the Borrowers
will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts
as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.




          (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or the
Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if
any, as a consequence of this Agreement or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below
that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s or the
Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company
with respect to capital adequacy), then, as long as the Borrowers are treated in the same manner as
all similarly situated customers, the Borrowers will pay to such Lender or the Issuing Bank, as the
case may be, from time to time, such additional amount or amounts as will compensate such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.



          (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section and setting forth in reasonable detail the
manner in which such amount or amounts were determined shall be delivered to the Lead Borrower and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the Issuing Bank,
as the case may be, the amount shown as due on any such certificate within ten (10) Business Days
after receipt thereof.



          (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section within ninety (90) days of the effective date of the relevant Change in
Law shall constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such
compensation.




2.24 Change in Legality.



          (a) Notwithstanding anything to the contrary contained elsewhere in this Agreement, if
(x) any Change in Law shall make it unlawful for a Lender to make or maintain a LIBO Loan,
Tranche A-1 LIBO Loan or BA Equivalent Loan or to give effect to its obligations as
contemplated hereby with respect to a LIBO Loan, Tranche A-1 LIBO Loan or BA Equivalent
Loan or (y) at any time any Lender determines that the making or continuance of any of its LIBO
Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans has become impracticable as a result
of a contingency occurring after the date hereof which adversely affects the London interbank
market or other relevant markets for the BA Rate or the position of such Lender in the London
interbank market or such other market, then, by written notice to the Lead Borrower, such Lender
may (i) declare that LIBO Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans will not
thereafter be made by such Lender hereunder, whereupon any request by the Borrowers for a LIBO
Borrowing or BA Equivalent Loan Borrowing shall, as to such Lender only, be deemed a request for




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a Domestic Prime Rate Loan, Domestic Tranche A-1 Prime Rate Loan, a Canadian Prime
Rate Loan or a U.S. Index Rate Loan, as applicable, unless such declaration shall be subsequently
withdrawn; and (ii) require that all outstanding LIBO Loans, Tranche A-1 LIBO Loans or BA
Equivalent Loans made by it be converted to Prime Rate Loans or U.S. Index Rate Loans, as
applicable, in which event all such LIBO Loans, Tranche A-1 LIBO Loans or BA Equivalent
Loans shall be automatically converted to Prime Rate Loans or U.S. Index Rate Loans, as applicable,
as of the effective dates of such notice as provided in paragraph (b) below. In the event any
Lender shall exercise its rights under clause (i) or (ii) of this paragraph (a), all payments and
prepayments of principal which would otherwise have been applied to repay the LIBO Loans,
Tranche A-1 LIBO Loans or BA Equivalent Loans that would have been made by such Lender or the
converted LIBO Loans, Tranche A-1 LIBO Loans or BA Equivalent Loans of such Lender shall
instead be applied to repay the Prime Rate Loans or U.S. Index Rate Loans, as applicable, made by
such Lender in lieu of, or resulting from the conversion of, such LIBO Loans, Tranche A-1
LIBO Loans or BA Equivalent Loans.




          (b) For purposes of this Section 2.24, a notice to the Lead Borrower by any Lender
pursuant to paragraph (a) above shall be effective, if any LIBO Loans, Tranche A-1 LIBO
Loans or BA Equivalent Loans shall then be outstanding, on the last day of each then-current
Interest Period; and otherwise such notice shall be effective on the date of receipt by the Lead
Borrower.



     2.25
Payments; Sharing of Setoff.



          (a) The Borrowers shall make each payment required to be made by it hereunder or under any
other Loan Document (whether of principal, interest, fees or reimbursement of drawings under
Letters of Credit, or of amounts payable under Sections 2.19(b), 2.23, 2.26 or 9.4, or otherwise)
prior to 2:00 p.m., New York time, on the date when due, in immediately available funds, without
setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of
the Administrative Agent or the Canadian Agent, as applicable, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent’s Office or the Canadian Agent’s Office, as applicable,
except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.19(b), 2.23, 2.26 or 9.4 shall be made
directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be
made to the Persons specified therein. The Administrative Agent or Canadian Agent, as applicable,
shall distribute any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under any Loan Document
(other than payments with respect to LIBO Borrowings or BA Equivalent Loan Borrowings) shall be due
on a day that is not a Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, if any payment due with respect to LIBO Borrowings or BA Equivalent Loan
Borrowings shall be due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, unless that succeeding Business Day is in the next calendar
month, in which event, the date of such payment shall be on the last Business Day of the subject
calendar month, and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments under each Loan Document shall be made in
the currency specified therein.



          (b) If at any time insufficient funds are received by and available to the Administrative
Agent or the Canadian Agent, as applicable, to pay fully all amounts of principal, unreimbursed
drawings under Letters of Credit, interest and fees then due hereunder, such funds shall be applied
ratably among the parties entitled thereto in accordance with the provisions of Sections 2.22(a)
and 2.22(b) hereof.



          (c) If any Domestic Lender or Canadian Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its
Loans or



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participations in drawings under Letters of Credit or Swingline Loans resulting in such Domestic
Lender’s or Canadian Lender’s receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in drawings under Letters of Credit and Swingline Loans and accrued
interest thereon than the proportion received by any other Lender, then the Domestic Lender or
Canadian Lender receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in drawings under Letters of Credit and Swingline
Loans of other Domestic Lenders or Canadian Lenders, as applicable, to the extent necessary so that
the benefit of all such payments shall be shared by the Domestic Lenders or Canadian Lenders, as
applicable, ratably in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in drawings under Letters of Credit and Swingline Loans,
provided that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the provisions of
this paragraph shall not be construed to apply to any payment made by the Borrowers pursuant to and
in accordance with the express terms of this Agreement or any payment obtained by a Domestic Lender
or Canadian Lender as consideration for the assignment of or sale of a participation in any of its
Loans or participations in drawings under Letters of Credit to any assignee or participant, other
than to the Borrowers or any Affiliate thereof (as to which the provisions of this paragraph shall
apply). The Borrowers consent to the foregoing and agree, to the extent they may effectively do so
under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrowers rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the Borrowers in the amount
of such participation. Notwithstanding the foregoing, any amounts of the Canadian Borrower so
offset shall be applied solely to the Canadian Liabilities and any adjustments with respect thereto
shall be made solely amongst Lenders having a Canadian Commitment.




          (d) Unless the Administrative Agent shall have received notice from the Lead Borrower prior to
the date on which any payment is due to the Administrative Agent for the account of the Lenders or
the Issuing Bank hereunder that the Borrowers will not make such payment, the Administrative Agent
may assume that the Borrowers have made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the applicable Lenders or the Issuing Bank, as the
case may be, the amount due. In such event, if the Borrowers have not in fact made such payment,
then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing
Bank with interest thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective
Rate n the case of payments made in Dollars and the Bank of Canada Overnight Rate in the case of
payments made in Canadian Dollars.



          (e) Without limiting the provisions of Section 8.14, if any Lender shall fail to make any
payment required to be made by it pursuant to this Agreement, then the Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under this Agreement until all such unsatisfied obligations are fully paid.



     2.26 Taxes.



          (a) Any and all payments by or on account of any obligation of the Borrowers hereunder or
under any other Loan Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes except as required in accordance with Applicable Law. If the
Borrowers shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section) the Agents, any
Lender or the Issuing Bank (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been



77









 




made, (ii) the Borrowers shall make such deductions, and (iii) the Borrowers shall pay the full
amount deducted to the relevant Governmental Authority in accordance with Applicable Law.




          (b) In addition, the Borrowers shall pay any Other Taxes to the relevant Governmental
Authority in accordance with Applicable Law.



          (c) The Borrowers shall indemnify the Agents, each Lender and the Issuing Bank, and the
Canadian Borrower shall indemnify the Canadian Agent, each Canadian Lender and the Issuing Bank in
respect of any Canadian Letter of Credit within ten (10) Business Days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by such Agent or Lender
or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and
any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether
or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment or liability
delivered to the Borrowers by a Lender or the Issuing Bank, or by any Agent on its own behalf or on
behalf of a Lender or the Issuing Bank setting forth in reasonable detail the manner in which such
amount was determined, shall be conclusive absent manifest error.



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



          (e) Any Foreign Lender other than a Canadian Lender that is entitled to an exemption from or
reduction in withholding tax shall deliver to the Lead Borrower and the Administrative Agent two
copies of either United States Internal Revenue Service Form W-8BEN or Form W-8ECI, or any
subsequent versions thereof or successors thereto, or, in the case of a Foreign Lender’s claiming
exemption from or reduction in U.S. Federal withholding tax under Section 871(h) or 881(c) of the
Code with respect to payments of “portfolio interest”, a Form W-8BEN, or any subsequent versions
thereof or successors thereto (and, if such Foreign Lender delivers a Form W-8BEN, a certificate
representing that such Foreign Lender is not a bank for purposes of Section 881(c) of the Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrowers and is not a controlled foreign corporation related to the Borrowers (within the meaning
of Section 864(d)(4) of the Code)), properly completed and duly executed by such Foreign Lender
claiming complete exemption from or reduced rate of, United States federal withholding tax on
payments by the Borrowers under this Agreement and the other Loan Documents, or in the case of a
Foreign Lender claiming exemption for “portfolio interest” certifying that it is not a foreign
corporation, partnership, estate or trust. Such forms shall be delivered by each Foreign Lender
other than a Canadian Lender on or before the date it becomes a party to this Agreement (or, in the
case of a transferee that is a participation holder, on or before the date such participation
holder becomes a transferee hereunder) and on or before the date, if any, such Foreign Lender
changes its applicable lending office by designating a different lending office (a “New Lending
Office”). In addition, each Foreign Lender shall deliver such forms promptly upon the obsolescence
or invalidity of any form previously delivered by such Foreign Lender. Notwithstanding any other
provision of this Section 2.26(e), a Foreign Lender shall not be required to deliver any form
pursuant to this 2.26(e) that such Foreign Lender is not legally able to deliver.



          (f) The Borrowers shall not be required to indemnify any Foreign Lender or to pay any
additional amounts to any Foreign Lender in respect of United States federal withholding tax
pursuant to paragraph (a) or (c) above to the extent that the obligation to pay such additional
amounts would not have



78









 




arisen but for a failure by such Foreign Lender to comply with the provisions of paragraph (e)
above. Should a Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrowers shall, at such Lender’s expense, take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.




     2.27 Security Interests in Collateral. To secure their Obligations under this
Agreement and the other Loan Documents, each Credit Party shall grant, and the Lead Borrower shall
cause each Domestic Credit Party to grant, to the Collateral Agent, for its benefit and the ratable
benefit of the other Secured Parties, and shall cause each Canadian Credit Party to grant, to the
Collateral Agent, for its benefit and the ratable benefit of the other Canadian Secured Parties, a
first-priority security interest in, and hypothec of, all of the Collateral pursuant hereto and to
the Security Documents; provided that the Collateral granted by the Canadian Borrower shall
secure only the Canadian Liabilities.



     2.28 Mitigation Obligations; Replacement of Lenders.



          (a) If any Lender requests compensation under Section 2.23, or if the Borrowers are required
to pay any additional amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.26, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable
judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Sections 2.23 or 2.26, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender. The Borrowers (in the case of the Canadian Borrower, only in respect of any
Canadian Lender) hereby agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment; provided, however, that the Borrowers shall not
be liable for such costs and expenses of a Lender requesting compensation if (i) such Lender
becomes a party to this Agreement after the Effective Date and (ii) any relevant Change in Law
occurred prior to the date such Lender becomes a party hereto.



          (b) If any Lender requests compensation under Section 2.23, or if the Borrowers are required
to pay any additional amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.26, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.6), all its interests,
rights and obligations under this Agreement to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment), provided that (i)
except in the case of an assignment to another Lender, the Borrowers shall have received the prior
written consent of the Administrative Agent, the Issuing Bank and the Swingline Lender and the
Canadian Agent only in the case of a Canadian Lender, which consent shall not unreasonably be
withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in unreimbursed drawings under Letters of Credit and
Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.23 or payments required to be
made pursuant to Section 2.26, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrowers to require such assignment and delegation cease to
apply.



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     3. REPRESENTATIONS AND WARRANTIES



     Each Borrower represents and warrants to the Agents and the Lenders that:



     3.1 Organization; Powers. Each of the Credit Parties and each Material Foreign
Subsidiary is, duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and each such Person has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is
qualified to do business in, and is in good standing in, every jurisdiction where such
qualification is required.



     3.2 Authorization; Enforceability. The transactions contemplated hereby and by the
other Loan Documents to be entered into by each of the Credit Parties are within such Person’s
corporate powers and have been duly authorized by all necessary corporate, and, if required,
stockholder action. This Agreement has been duly executed and delivered by each of the Borrowers
and constitutes, and each other Loan Document to which any of the Credit Parties is a party, when
executed and delivered by such Credit Party, will constitute, a legal, valid and binding obligation
of such Credit Party (as the case may be), enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.



     3.3 Governmental Approvals; No Conflicts. The transactions to be entered into
contemplated by the Loan Documents (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except (i) for such as have been
obtained or made and are in full force and effect, (ii) for those for which a failure to obtain
same could not be reasonably be expected to have a Material Adverse Effect, and (iii) for filings
and recordings necessary to perfect Liens created under the Loan Documents, (b) will not violate
any Applicable Law or regulation or the charter, by laws or other organizational documents of any
Borrower, any of the other Credit Parties, or any Material Foreign Subsidiary or any order of any
Governmental Authority, except for such violations as could not reasonably be expected to have a
Material Adverse Effect, (c) will not violate or result in a default under any indenture, agreement
or other instrument binding upon any Borrower, any of the other Credit Parties, or any Material
Foreign Subsidiary, or their respective assets, except for such violations or defaults as could not
reasonably be expected to have a Material Adverse Effect, or give rise to a right thereunder to
require any material payment to be made by any Borrower, any of the other Credit Parties, or any
Material Foreign Subsidiary and (d) will not result in the creation or imposition of any Lien on
any material asset of any Borrower, any of the other Credit Parties, or any Material Foreign
Subsidiary, except Liens created under the Loan Documents or otherwise permitted hereby or thereby.




3.4 Financial Condition.



          (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii)
fairly
present the financial condition of the Borrower Consolidated Group as of the date thereof and
their results of operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein.



          (b) The unaudited Consolidated and consolidating balance sheet of the Borrower Consolidated
Group dated October 30, 2010, and the related Consolidated and consolidating statements of income
or operations, shareholders’ equity and cash flows for the Fiscal Quarter ended on that date (i)
were prepared in accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the
Borrower




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Consolidated Group as of the date thereof and their results of operations for the period
covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to
normal year-end audit adjustments.




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




     3.5 Properties.



          (a) Each of the Credit Parties has good title to, or valid leasehold interests in, all of such
Person’s real and personal property material to its business, except for defects which could not
reasonably be expected to have a Material Adverse Effect.



          (b) Schedule 3.5(b)(i) sets forth the address (including county) of all Real Estate
that is owned by each of the Credit Parties as of the Effective Date, together with a list of the
holders of any mortgage or other Lien thereon. Schedule 3.5(b)(ii) sets forth the address
of all Real Estate (including retail store locations) that is leased by each of the Credit Parties
as of the Effective Date. Each of such leases is in full force and effect and no Credit Party is in
default of the terms thereof, except for such defaults which would not reasonably be expected to
have a Material Adverse Effect.



          (c) Schedule 6.1 sets forth a complete and accurate list of all Indebtedness of each
Credit Party on the Effective Date, showing the amount, obligor or issuer and maturity thereof.



          (d) Schedule 6.2 sets forth a complete and accurate list of all Liens on the property
or assets of each Credit Party as of the Effective Date, showing as of the Effective Date the
lienholder thereof, the principal amount of the obligations secured thereby and the property or
assets of such Credit Party subject thereto. The property of each Credit Party is subject to no
Liens, other than Permitted Encumbrances.



          (e) Schedule 6.4 sets forth a complete and accurate list of all Investments held by
any Credit Party on the Effective Date, showing the amount, obligor or issuer and maturity, if any,
thereof.



     3.6 Litigation and Environmental Matters.



          (a) There are no actions, suits, investigations, or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of any of the Credit Parties,
threatened against or affecting any such Person or any Material Foreign Subsidiary (i) as to which
there is a reasonable possibility of an adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than those set forth on Schedule 3.6) or (ii) that involve any of the Loan
Documents.



          (b) Except for the matters set forth on Schedule 3.6, and except as could not
reasonably be expected to have a Material Adverse Effect, none of the Credit Parties nor any
Material Foreign Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received written notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.



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          (c) Since the Effective Date, there has been no change in the status of the matters set forth
on Schedule 3.6 that, individually or in the aggregate, has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect.



     3.7 Compliance with Laws and Agreements. Except as set forth in Schedule 3.7, each of
the Credit Parties is in compliance with all laws, regulations and orders of any Governmental
Authority applicable to such Person or its property and all indentures, material agreements and
other instruments binding upon it or its property, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No
Default has occurred and is continuing.



     3.8 Investment Company or Holding Company Status. None of the Credit Parties is an (a)
“investment company” as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a “holding company,” an “affiliate” of a “holding company” or a “subsidiary company” of a
“holding company,” as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 2005, as amended.



     3.9 Taxes. Except as set forth in Schedule 3.9, each of the Credit Parties and each
Material Foreign Subsidiary has timely filed or caused to be filed all tax returns and reports
required to have been filed and has paid or caused to be paid prior to delinquency all taxes
required to have been paid by it, except (a) taxes that are being contested in good faith by
appropriate proceedings, for which such Person has set aside on its books adequate reserves, and as
to which no Lien (other than an inchoate Lien) secures such obligation, and which contest
effectively suspends the collection of the contested obligation and the enforcement of any Lien
securing such obligation, or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.



     3.10 ERISA/Canadian Pension Plan.



          (a) Except as set forth in Schedule 3.10, none of the Credit Parties nor any Material Foreign
Subsidiary is party to a Plan. No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events for which liability is reasonably expected to
occur, could reasonably be expected to result in a Material Adverse Effect. Except as set forth in
Schedule 3.10, the present value of all accumulated benefit obligations under each Plan and each
Canadian Pension Plan (based on, inter alia, the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the fair market value of the assets of such Plan or
Canadian Pension Plan. Schedule 3.10 sets forth the amount of underfunding on such basis for all
Plans and Canadian Pension Plans as of the date of the most recent financial statements, and
nothing is reasonably expected to occur that could increase the amount of such underfunding to an
amount that, in either case, could reasonably be expected to result in a Material Adverse Effect.



          (b) The Canadian Borrower and its Subsidiaries are in compliance with the requirements of the
Pension Benefits Act (Ontario) or similar legislation of another Canadian province or territory and
the Income Tax Act (Canada), except where the failure to so comply would not reasonably be expected
to have a Material Adverse Effect. No fact or situation that may reasonably be expected to result
in a Material Adverse Effect exists in connection with any Canadian Pension Plan. No Termination
Event has occurred. No lien has arisen, choate or inchoate, in respect of the Canadian Borrower or
its Subsidiaries or their property in connection with any Canadian Pension Plan (save for
contribution amounts not yet due).



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     3.11 Interdependence of Credit Parties.



          (a) The business of each of the Credit Parties shall benefit from the successful performance
of the business of each of the other Credit Parties, and the Credit Parties as a whole.



          (b) Each of the Credit Parties has cooperated to the extent necessary and shall continue to
cooperate with each of the other Credit Parties to the extent necessary in the development and
conduct of each of the other Credit Parties’ business, and shall to the extent necessary share and
participate in the formulation of methods of operation, distribution, leasing, inventory control,
and other similar business matters essential to each of the Credit Parties’ respective businesses.



          (c) The failure of any of the Credit Parties to cooperate with all of the other Credit Parties
in the conduct of their respective businesses could have an adverse impact on the business of each
of the other Credit Parties, and the failure of any of the Credit Parties to associate or cooperate
with all of the other Credit Parties could impair the goodwill of such other Credit Parties and the
Credit Parties as a whole.



          (d) Each of the Credit Parties (other than the Canadian Credit Parties) is undertaking joint
and several liability for the Domestic Obligations on the terms and conditions set forth herein and
is undertaking joint and several liability for the Canadian Liabilities on the terms and conditions
set forth in the Effective Date Guaranty and represents and warrants that the financial
accommodations being provided hereby are for the mutual benefit, directly and indirectly, of each
of the Credit Parties.



     3.12 Disclosure. The Borrowers have disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which any of the Credit Parties or any Material
Foreign Subsidiary is subject, and all other matters known to any such Person, that, individually
or in the aggregate, in each case, could reasonably be
expected to result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of any of the Credit Parties or any
Material Foreign Subsidiary to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished) contains any material misstatement of
fact or omits to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided that with respect to
projected financial information and other forward-looking information, the Borrowers represent only
that such information was prepared in good faith on the basis of assumptions believed to be
reasonable at the time.



     3.13 Subsidiaries. On and as of the Effective Date, the authorized capital stock or
other equity interests, and the number of issued and outstanding shares of capital stock or other
equity interests of the Borrowers and each other member of the Borrower Consolidated Group is as
described in Schedule 3.13 and, as to Subsidiaries, Schedule 3.13 indicates whether such Subsidiary
is a Material Subsidiary, and, if not a Material Subsidiary, whether such Subsidiary is active or
inactive. All such outstanding shares of capital stock or other equity interests of the Borrowers,
each of the other Credit Parties and each Material Foreign Subsidiary have been duly and validly
issued in material compliance with all legal requirements relating to the authorization and
issuance of shares of capital stock or other equity interests, and (except in the case of the
options for shares of the common stock of the Lead Borrower described on Schedule 3.13) are fully
paid and non-assessable. Except as set forth on Schedule 3.13, as of the Effective Date,
none of the Credit Parties is party to any joint venture, general or limited partnership, or
limited liability company, agreements or any other business ventures or entities.



     3.14 Insurance. Schedule 3.14 sets forth a description of all insurance maintained by
or on behalf of the Credit Parties and each Material Foreign Subsidiary as of the Effective Date.
Each of such



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policies is in full force and effect. As of the Effective Date, all premiums in respect of such
insurance that are due and payable have been paid.




     3.15 Labor Matters. There are no strikes, lockouts or slowdowns against any of the
Credit Parties or any Material Foreign Subsidiary pending or, to the knowledge of the Borrowers,
threatened, that could reasonably be expected to result in a Material Adverse Effect. The hours
worked by and payments made to employees of the Credit Parties or any Material Foreign Subsidiary
have not been in violation of the Fair Labor Standards Act, if applicable, or any other applicable
federal, state, local or foreign law dealing with such matters to the extent that any such
violations could reasonably be expected to have a Material Adverse Effect. All material payments
due from any of the Credit Parties or any Material Foreign Subsidiary, or for which any material
claim may be made against any such Person, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the books of such Credit
Party or such Material Foreign Subsidiary. The consummation of the transactions contemplated by the
Loan Documents will not give rise to any right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which any of the Credit Parties or any
Material Foreign Subsidiary is bound.



     3.16 Certain Transactions. Except as set forth on Schedule 3.16, none of the officers,
partners, or directors of any of the Credit Parties is presently a party to any transaction, and,
to the knowledge of the executive officers of each of the Credit Parties, none of the employees of
any of the Credit Parties is presently a party to any material transaction, with any of the other
Credit Parties or any Affiliate (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, partner, director or such employee or, to the knowledge of the
executive officers of the Borrowers, any corporation, partnership, trust or other entity in which
any officer, partner, director, or any such employee or natural person related to such officer,
partner, director or employee or other Person in which such officer, partner, director or employee
has a direct or indirect beneficial interest, has a substantial direct or indirect beneficial
interest or is an officer, director, trustee or partner.



     3.17 Restrictions on the Credit Parties. None of the Credit Parties nor any Material
Foreign Subsidiary is a party to or bound by any contract, agreement or instrument, or subject to
any charter or other corporate restriction, that has or could reasonably be expected to have a
Material Adverse Effect.



     3.18 Security Documents.



     The Security Documents create in favor of the Collateral Agent, for the ratable benefit of the
Domestic Secured Parties or the Canadian Secured Parties, as applicable, a legal, valid and
enforceable security interest in the
Collateral, and the Security Documents constitute, or will upon the filing of financing
statements and the obtaining of “control”, in each case with respect to the relevant Collateral as
required under the applicable Uniform Commercial Code or PPSA, the creation of a fully perfected
first priority Lien on, and security interest in, all right, title and interest of the Borrowers
and each Guarantor thereunder in such Collateral, in each case prior and superior in right to any
other Person (other than Permitted Encumbrances having priority under Applicable Law), except as
permitted hereunder or under any other Loan Document.



     3.19 Federal Reserve Regulations.



          (a) None of the Credit Parties is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.



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          (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, to buy or carry Margin Stock or
to extend credit to others for the purpose of buying or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose or for any other purpose, in any case that
entails a violation of, or that is not permitted by the provisions of the Regulations of the Board,
including Regulation U or X and the Credit Parties agree to comply with the Administrative Agent’s,
and the Lenders’, requests for information relating to any transactions involving Margin Stock to
the extent relevant to comply with such regulations.



     3.20 Solvency. Before and after giving effect to each Credit Extension and each
Tranche A-1 Loan, (a) the Credit Parties, taken as a whole, are and will be Solvent, and (b)
the Credit Parties and the Material Foreign Subsidiaries, taken as a whole, are and will be
Solvent. No transfer of property is being made by any Borrower and no obligation is being incurred
by any Borrower in connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of
any Borrower.



     3.21 Franchises, Patents, Copyrights, Etc. Except as otherwise set forth on Schedule
3.21 hereto, each of the Credit Parties owns, or is licensed to use, all franchises, patents,
copyrights, trademarks, tradenames, service marks, licenses and permits, and rights in respect of
the foregoing, adequate for the conduct of its business as substantially now conducted, and to its
knowledge, without conflict with any rights of any other Person (and, in each case, free of any
Lien that is not a Permitted Encumbrance), except to the extent that a failure to do so would not
reasonably be expected to have a Material Adverse Effect.



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



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



     3.24 Intellectual Property; Licenses, Etc. The Credit Parties own, or possess the right
to use, all of the Intellectual Property, licenses, permits and other authorizations that are
reasonably necessary for the operation of their respective businesses, without conflict with the
rights of any other Person, except as would not be reasonably expected to have a Material Adverse
Effect.



     4. CONDITIONS.



     4.1 Effective Date. The obligation of the Lenders to make the initial Loans and
of the Issuing Bank to issue the initial Letters of Credit is subject to the following conditions
precedent:



          (a) The Agents (or their counsel) shall have received from each party hereto either (i) a
counterpart of this Agreement and all other Loan Documents (including, without limitation, the
Security Documents) to be delivered on or before the Effective Date, signed on behalf of such party
or (ii) written evidence satisfactory to the Agents and the Lead Arranger (which may include
telecopy transmission or electronic transmission of a pdf formatted copy of a signed signature page
of this Agreement) that such party has signed a counterpart of this Agreement and all other Loan
Documents to be delivered on or before the Effective Date.



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          (b) The Agents shall have received a favorable written opinion (addressed to each Agent and
the Lenders on the Effective Date and dated the Effective Date) of (i) Bass Berry & Sims PLC,
counsel for the Credit Parties, (ii) Hodgson Russ LLP, (iii) Larkin Hoffman Daly & Lindgren Ltd.,
(iv) McCarthy Tétrault LLP, and (v) applicable local counsel, each in form satisfactory to the
Administrative Agent, covering such matters relating to the Credit Parties, the Loan Documents or
the transactions contemplated thereby as the Required Lenders shall reasonably request. The
Borrowers hereby request such counsel to deliver such opinions.



          (c) The Agents shall have received such documents and certificates as the Agents or their
counsel may reasonably request relating to the organization, existence and good standing of each of
the Credit Parties, the authorization of the transactions contemplated by the Loan Documents and
any other legal matters relating to the Credit Parties, the Loan Documents or the transactions
contemplated thereby, all in form and substance reasonably satisfactory to the Agents and their
counsel.



          (d) The Agents shall have received a Borrowing Base Certificate dated the Effective Date,
relating to the Fiscal Month ended on December 25, 2010, and executed by a Financial Officer of the
Lead Borrower.



          (e) The Agents shall have received a certificate from a Financial Officer of the Lead
Borrower, together with such other evidence reasonably requested by the Agents, in each case
reasonably satisfactory in form and substance to the Agents, certifying that as of the Effective
Date (i) the Credit Parties, on a Consolidated basis, are Solvent, (ii) there has been no event or
circumstance since the date of the Audited Financial Statements that has had or could be reasonably
expected to have, either individually or in the aggregate, a Material Adverse Effect, and (iii) the
representations and warranties made by the Borrowers in the Loan Documents are true and correct in
all material respects and that no event has occurred (or failed to occur) which is or which, solely
with the giving of notice or passage of time (or both) would be a Default or an Event of Default.



          (f) All necessary consents and approvals to the transactions contemplated hereby shall have
been obtained and shall be reasonably satisfactory to the Agents, including, without limitation,
consents from all requisite material Governmental Authorities and, except as would not reasonably
be expected to have or result in a Material Adverse Effect, all third parties shall have approved
or consented to the transactions contemplated hereby, to the extent required, all applicable
waiting periods shall have expired and there shall be no material governmental or judicial action,
actual or threatened, that would reasonably be expected to materially restrain, prevent or impose
burdensome conditions on the transactions contemplated hereby.



          (g) The Administrative Agent shall be reasonably satisfied that any financial statements
delivered to it and the Lenders fairly present the business and financial condition of the Borrower
Consolidated Group (subject, in the case of interim financial statements, to year-end adjustments
and the absence of footnotes) and that there has been no Material Adverse Effect since January 30,
2010.



          (h) Except as set forth on Schedule 3.6, there shall not be pending any litigation or
other proceeding, the result of which could reasonably be expected to have a Material Adverse
Effect.



          (i) There shall not have occurred any event of default, nor shall any event exist which is, or
solely with the passage of time, the giving of notice or both, would be an event of default under
any Material Indebtedness.



          (j) The Collateral Agent shall have received results of searches from such jurisdictions
as may be reasonably required by the Collateral Agent or other evidence reasonably



86









 





satisfactory to the Collateral Agent (in each case dated as of a date reasonably satisfactory to
the Collateral Agent) indicating the absence of Liens on the Collateral, including, without
limitation, receivables from credit card processors and check processors, except for Permitted
Encumbrances and Liens for which termination statements, estoppel certificates and releases
reasonably satisfactory to the Collateral Agent are being tendered on the Effective Date.




          (k) The Collateral Agent and the Canadian Agent shall have received all documents and
instruments, including Uniform Commercial Code and PPSA financing statements, and certified
statements issued by the Québec Register of Personal and Movable Real Rights, required by law or
reasonably requested by the Collateral Agent and the Canadian Agent to be filed, registered or
recorded to create or perfect the first priority Liens intended to be created under the Loan
Documents and, to the extent required by the Collateral Agent and the
Canadian Agent, all such documents and instruments shall have been so filed, registered or
recorded to the satisfaction of the Collateral Agent and the Canadian Agent.



          (l) The Collateral Agent and the Canadian Agent, as applicable, shall have received
Account Control Agreements, the Credit Card Notifications, Collateral Control Agreements, and other
similar third party agreements required to be delivered hereunder on or before the Effective Date.



          (m) The Agents shall have received the results of a commercial financial examination and
Inventory appraisal, in each case by a third party auditor or appraiser acceptable to the Agents,
which results shall be satisfactory to the Agents.



          (n) All fees due at or immediately after the Effective Date and all reasonable costs and
expenses incurred by the Agents in connection with the establishment of the credit facility
contemplated hereby (including the reasonable fees and expenses of counsel to the Agents) shall
have been paid in full.



          (o) The consummation of the transactions contemplated hereby shall not (a) violate any
Applicable Law, or (b) conflict with, or result in a default or event of default under, any
material agreement of Borrowers or any other Credit Party, taken as a whole (and the Agents and the
Lenders shall receive a satisfactory opinion of Borrowers’ counsel to that effect). No event shall
exist which is, or solely with the passage of time, the giving of notice or both, would be an event
of default under any agreement of any of the Credit Parties if such event of default could
reasonably be expected to have a Material Adverse
Effect.



          (p) There shall be no Default or Event of Default on the Effective Date.




          (q) The Collateral Agent shall have received, and be satisfied with, evidence of the
Borrowers’ insurance, together with such endorsements as are required by the Loan Documents.



          (r) The Agents shall have received all of the items set forth on the Closing Agenda
attached hereto as Exhibit F.



          (s) The Administrative Agent and the Lenders shall have received and be satisfied with
(a) a detailed forecast for the period commencing with the Fiscal Year beginning [February 1, 2012]
and ending on the Maturity Date, which shall include an Excess Availability model, Consolidated
income statement, balance sheet, and statement of cash flow, prepared on an annual basis, each
prepared in conformity with GAAP and consistent with the Borrowers’ then current practices and (b)
such other information (financial or otherwise) reasonably requested by the Administrative Agent.



          (t) The Borrowers shall have Excess Availability on the Effective Date, after giving
effect to any Credit Extensions made on the Effective Date, of not less than $100,000,000.



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



          (v) There shall have been delivered to the Administrative Agent such additional
instruments and documents as the Agents or counsel to the Agents reasonably may require or request.



     The Administrative Agent shall notify the Lead Borrower and the Lenders of the Effective Date,
and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of
the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived pursuant to
Section 9.3) at or prior to 5:00 p.m., New York time, on January 14, 2011 (and, in the event such
conditions are not so satisfied or waived, this Agreement shall terminate at such time).



     4.2 Conditions Precedent to Each Loan and Each Letter of Credit. In addition to
those conditions described in Section 4.1, the obligation of the Lenders to make each Loan and of
the applicable Issuing Bank to issue each Letter of Credit subsequent to the Effective Date is
subject to the following conditions precedent:



          (a) Notice. The Administrative Agent shall have received a notice with respect to such
Borrowing or issuance, as the case may be, as required by Section 2.3.



          (b) Representations and Warranties. All representations and warranties contained in
this Agreement and the other Loan Documents or otherwise made in writing in connection herewith or
therewith shall be true and correct in all material respects on and as of the date of each
Borrowing or the issuance of each Letter of Credit hereunder with the same effect as if made on and
as of such date, (i) other than representations and warranties that relate solely to an earlier
date and (ii) in the case of any representation and warranty qualified by materiality, they shall
be true and correct in all respects.



          (c) No Default. On the date of each Borrowing hereunder and the issuance of each
Letter of Credit, no Default or Event of Default shall have occurred and be continuing.



          (d) Borrowing Base Certificate. The Administrative Agent shall have received the most
recently required Borrowing Base Certificate, with each such Borrowing Base Certificate including
schedules as required by the Administrative Agent.



     The request by the Borrowers for, and the acceptance by the Borrowers of, each extension of
credit hereunder shall be deemed to be a representation and warranty by the Borrowers that the
conditions specified in this Section 4.2 have been satisfied at that time and that after giving
effect to such extension of credit the Borrowers shall continue to be in compliance with
Section 2.1(a). The conditions set forth in this Section 4.2 are for the sole benefit of
the Administrative Agent and the Lenders and may be waived by the Administrative Agent in whole or
in part without prejudice to the Administrative Agent or any Lender.



     5. AFFIRMATIVE COVENANTS.



     Until the Commitments have expired or have been terminated and the principal of and interest
on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit
shall have expired or have been terminated and all L/C Disbursements shall have been reimbursed,
each of the Credit Parties covenants and agrees with the Agents and the Lenders that:



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     5.1 Financial Statements and Other Information. The Borrowers will furnish to the
Administrative Agent:



          (a) within ninety (90) days after the end of each Fiscal Year of the Lead Borrower, a
Consolidated balance sheet and the related Consolidated statements of income, stockholders’ equity
and cash flows as of the end of and for such year, setting forth in each case in comparative form
the figures for the previous Fiscal Year, all audited and reported on by Ernst & Young or another
independent public accountant of recognized national standing (without a “going concern” or like
qualification or exception and without a qualification or exception as to the scope of such audit)
to the effect that as of the date(s) thereof and for the period(s) covered thereby, such
Consolidated financial statements present fairly in all material respects the financial condition
and results of operations of the Lead Borrower on a Consolidated basis in accordance with GAAP
consistently applied;



          (b) within forty-five (45) days after the end of each Fiscal Quarter of the Lead Borrower, a
Consolidated balance sheet and the related Consolidated statements of income, stockholders’ equity
and cash flows, as of the end of and for such Fiscal Quarter and the elapsed portion of the Fiscal
Year, with comparative results to the same fiscal periods of the prior Fiscal Year, all certified
by a Financial Officer of the Lead Borrower as presenting in all material respects the financial
condition and results of operations of the Lead Borrower on a Consolidated basis in accordance with
GAAP consistently applied, subject to normal year end audit adjustments and the absence of
footnotes,



          (c) during the continuance of Cash Dominion Event, within fifteen (15) days after the end of
each Fiscal Month, a Consolidated
and consolidating balance sheet and related Consolidated
and consolidating statements of income, stockholders’ equity and cash flows for the Lead
Borrower and its Subsidiaries as of the end of and for such Fiscal Month and the elapsed
portion of the Fiscal Year, with comparative results to the same fiscal periods of the prior Fiscal
Year, all certified by a Financial Officer of the Lead Borrower as presenting in all material
respects the financial condition and results of operations of the Lead Borrower and its
Subsidiaries on a Consolidated and consolidating basis in accordance with GAAP
consistently applied, subject to normal year end audit adjustments and the absence of footnotes;



          (d) concurrently with any delivery of financial statements under clause (a), (b), or, if
applicable, (c) above, a certificate of a Financial Officer of the Lead Borrower in the form of
Exhibit E hereto (i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, and (ii) only if a Covenant
Compliance Event shall then be in existence, setting forth reasonably detailed calculations with
respect to the Fixed Charge Coverage Ratio for such period, and (iii) stating whether any change in
GAAP or in the application thereof has occurred since the date of the Lead Borrower’s financial
statements referred to in Section 3.4 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;



          (e) within sixty (60) days after the commencement of each Fiscal Year of the Lead Borrower, a
detailed Consolidated budget by quarter for such Fiscal Year (including a projected Consolidated
balance sheet and related statements of projected Consolidated operations and cash flow as of the
end of and for such Fiscal Year), provided that such Consolidated budget shall be prepared
on a month-by-month basis for any budget submitted after a Cash Dominion Event has occurred and
while such Cash Dominion Event continues;



          (f) within ten (10) Business Days after the end of each Fiscal Month, a certificate in the
form of Exhibit D (a “Borrowing Base Certificate”) showing the Domestic Borrowing Base,
Tranche A-1 Borrowing Base and Canadian Borrowing Base as of the close of business on the last
day of the immediately preceding month, each such Borrowing Base Certificate to be certified as
true and correct on



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behalf of the Borrowers by a Financial Officer of the Lead Borrower, provided, however, if
an Accelerated Borrowing Base Delivery Event has occurred and is continuing, the Administrative
Agent may require that Borrowers furnish such Borrowing Base Certificate (showing the Domestic
Borrowing Base, Tranche A-1 Borrowing Base and Canadian Borrowing Base as of the close of
business on the last day of the immediately preceding week) weekly on Wednesday of each week;




          (g) within thirty (30) days of the end of each Fiscal Quarter, the Lead Borrower will notify
the Administrative Agent of the opening or closing of any of Borrower’s stores in Pennsylvania,
Virginia or Washington;



          (h) promptly after the same become publicly available, copies of all periodic reports filed by
the Lead Borrower with the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission;



          (i) the financial and collateral reports described on Schedule 5.1(i) hereto, at the
times set forth in such Schedule;



          (j) No later than five (5) days prior the anticipated consummation of a Permitted
Acquisition, (A) copies of the then draft purchase and sale agreements or other material
acquisition documents to be executed in connection with the Permitted Acquisition (and furnish the
final executed documentation promptly after consummation of such Permitted Acquisition), and (B)
with respect to any Permitted Acquisition for aggregate consideration of equal to or greater than
$25,000,000 (excluding consideration consisting of capital stock or other equity interests of the
Borrower), (i) copies of the most recent audited (if any), and if later, unaudited financial
statements of the Person which is the subject of the Permitted Acquisition, and (ii) an unaudited
pro forma Consolidated balance sheet and income statement of the Lead Borrower as of the end of the
most recently completed Fiscal Quarter but prepared as though the Permitted Acquisition had
occurred on such date and related pro forma calculations of average Excess Availability for the
subsequent four Fiscal Quarters period;



          (k) notice of any (i) sale or other disposition of assets of any Borrower permitted under
Section 6.5(d) hereof promptly following the date of consummation such sale or disposition or (ii)
incurrence of any Indebtedness permitted under Section 6.1(d) or (e) promptly following the
incurrence of such Indebtedness;



          (l) promptly upon receipt thereof, copies of all reports submitted to the Lead Borrower
or any of the other Credit Parties by independent certified public accountants in connection with
each annual, interim or special audit of the books of the Credit Parties made by such accountants,
including any management letter commenting on the Borrowers’ internal controls submitted by such
accountants to management in connection with their annual audit; and



          (m) promptly following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Lead Borrower or any of the other
Credit Parties, or compliance with the terms of any Loan Document, as the Agents or any Lender,
acting through the Administrative Agent, may reasonably request.


Documents required to be delivered pursuant to Sections 5.1(a), (b), (c) and (f) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which
the Lead Borrower posts such documents, or provides a link thereto on the Lead Borrower’s website
on the Internet at the website address; or (ii) on which such documents are posted on the Lead
Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent) or when the






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Administrative Agent receives an electronic copy; provided that: (i) the Lead Borrower
shall deliver paper copies of such documents to the Administrative Agent or any Lender that
requests the Lead Borrower to deliver such paper copies until a written request to cease delivering
paper copies is given by the Administrative Agent or such Lender and (ii) the Lead Borrower shall
notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting
of any such documents and provide to the Administrative Agent by electronic mail electronic
versions (i.e., soft copies) of such documents. The Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents referred to above, and in
any event shall have no responsibility to monitor compliance by the Credit Parties with any such
request for delivery, and each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.




     The Credit Parties hereby acknowledge that (a) the Administrative Agent and/or the Lead
Arranger will make available to the Lenders and the Issuing Bank materials and/or information
provided by or on behalf of the Credit Parties hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”) and (b) certain of the Lenders may be “public-side” Lenders
(i.e., Lenders that do not wish to receive material non-public information with respect to
the Credit Parties or their securities) (each, a “Public Lender”). The Credit Parties
hereby agree that they will use commercially reasonable efforts to identify that portion of the
Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower
Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower
Materials “PUBLIC,” the Credit Parties shall be deemed to have authorized the Administrative Agent,
the Lead Arranger, the Issuing Bank and the Lenders to treat such Borrower Materials as not
containing any material non-public information (although it may be sensitive and proprietary) with
respect to the Credit Parties or their securities for purposes of United States Federal and state
securities laws; (y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor”; and (z) the Administrative Agent
and the Lead Arranger shall be entitled to treat any Borrower Materials that are not marked
“PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public
Investor.”



     5.2 Notices of Material Events. The Borrowers will, and the Lead Borrower will cause
each of the other Credit Parties to, furnish to the Administrative Agent (which in turn shall
furnish to the Issuing Bank, the Collateral Agent and each Lender) prompt written notice of the
following:



          (a) the occurrence of any Default;




          (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator
or Governmental Authority against or affecting any of the Credit Parties that, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;




          (c) the occurrence of any ERISA Event or Termination Event that, alone or together with any
other ERISA Events or Termination Events that have occurred, could reasonably be expected to result
in a Material Adverse Effect;




          (d) any other development that results in, or could reasonably be expected to result in, a
Material Adverse Effect;




          
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          (e) any change in the Lead Borrower’s chief executive officer or chief financial
officer;




          (f) any collective bargaining agreement or other material labor contract to which any of the
Credit Parties becomes a party, or the application for the certification of a collective bargaining
agent;




          (g) the filing of any Lien for unpaid taxes in an aggregate amount in excess of $1,000,000
against any of the Credit Parties;




          (h) the discharge by any of the Credit Parties of its present independent accountants or any
withdrawal or resignation by such independent accountants; and




          (i) any material change in accounting policies or financial reporting practices by any Credit
Party or any Subsidiary thereof.




     Each notice delivered under this Section shall be accompanied by a statement of a Financial
Officer or other executive officer of the Lead Borrower setting forth the details of the event or
development requiring such notice and, if applicable, any action taken or proposed to be taken with
respect thereto.



     5.3 Information Regarding Collateral.



          (a) The Lead Borrower will furnish to the Agents, unless indicated otherwise herein, thirty
(30) days’ prior written notice of any change (i) in any Credit Party’s corporate or legal name or
in any trade name used to identify it in the conduct of its business or in the ownership of its
properties, (ii) within the time period specified in Section 5.1(b) hereof for the delivery of
financial statements, in the location of any Credit Party’s chief executive office, its principal
place of business or any office in which it maintains books or records relating to Accounts, (iii)
in any Credit Party’s organizational structure or (iv) in any Credit Party’s jurisdiction of
incorporation or formation, Federal Taxpayer Identification Number or organizational identification
number assigned to it by its state of organization.



          (b) Prior to opening any DDA (other than a store-level DDA or Excluded DDA) into which any
amount is deposited that would result in the aggregate balance in all Post Effective DDAs exceeding
$500,000, the Borrowers will give written notice of the opening of such account to the
Administrative Agent. At the option of the Administrative Agent, the applicable Borrower shall
enter into a Account Control Agreement with the financial institution at which such DDA is opened,
which Account Control Agreement shall be in form and substance reasonably satisfactory to the
Administrative Agent.



     5.4 Existence; Conduct of Business. Except to the extent that a failure to do so could
not reasonably be expected to have a Material Adverse Effect, the Lead Borrower will, and will
cause each of the other Credit Parties and each Material Foreign Subsidiary to, do or cause to be
done all things necessary to comply with its respective charter, certificate of incorporation,
and/or other organizational documents, as applicable, and by-laws and/or other instruments which
deal with corporate governance, and to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business, provided that the foregoing
shall not prohibit any merger, amalgamation, consolidation, liquidation or dissolution permitted
under Section 6.3 or any sale, lease, transfer or other disposition permitted by Section 6.5.



     5.5 Payment of Obligations. Each Borrower will, and the Lead Borrower will cause each
other Credit Party and each Material Foreign Subsidiary to, pay its Indebtedness and other
obligations, including tax liabilities, before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith by appropriate
actions, (b) such Borrower, such other



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Credit Party, or such Material Foreign Subsidiary has set aside on its books adequate reserves with
respect thereto to the extent required by and in accordance with GAAP, (c) such contest effectively
suspends collection of the contested obligation, (d) no Lien (other than an inchoate Lien) secures
such obligation and (e) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect. Nothing contained herein shall be deemed to limit
the rights of the Administrative Agent under Section 2.2(b).




     5.6 Maintenance of Properties. The Lead Borrower will, and will cause each of the
other Credit Parties and each Material Foreign Subsidiary to, keep and maintain all property
material to the conduct of its business in good working order and condition, ordinary wear and tear
excepted and with the exception of asset dispositions permitted hereunder.



     5.7 Insurance.



          (a) The Lead Borrower will, and will cause each of the Credit Parties and each Material
Foreign Subsidiary to, (i) maintain insurance with financially sound and reputable insurers
reasonably acceptable to the Agents (or, to the extent consistent with prudent business practice, a
program of self-insurance consistent with
current practices) on such of its property and in at least such amounts and against at least
such risks as is customary with companies in the same or similar businesses operating in the same
or similar locations, including public liability insurance against claims for personal injury or
death occurring upon, in or about or in connection with the use of any properties owned, occupied
or controlled by it (including the insurance required pursuant to the Security Documents); (ii)
maintain such other insurance as may be required by law; and (iii) furnish to the Agents, upon
written request, full information as to the insurance carried. The Agents shall not, by the fact of
approving, disapproving, accepting, obtaining or failing to obtain any such insurance, incur
liability for the form or legal sufficiency of insurance contracts, solvency of insurance companies
or payment of lawsuits, and each Borrower hereby expressly assumes full responsibility therefor and
liability, if any, thereunder. The Lead Borrower shall, and shall cause each of the other Credit
Parties and each Material Foreign Subsidiary to, furnish to the Agents certificates or other
evidence satisfactory to the Agents of compliance with the foregoing insurance provisions.



          (b) Fire and extended coverage or “all-risk” policies maintained with respect to any
Collateral shall be endorsed or otherwise amended to include (i) a non-contributing mortgage clause
(regarding improvements to real property) and a lenders’ loss payable clause (regarding personal
property), in form and substance reasonably satisfactory to the Lead Borrower and the Agents, which
endorsements or amendments shall provide that the insurer shall pay all proceeds otherwise payable
to the Borrowers under the policies directly to the Agents, (ii) a provision to the effect that
none of the Borrowers, the Administrative Agent, the Collateral Agent, or any other party shall be
a coinsurer and (iii) such other provisions as the Agents may reasonably require from time to time
to protect the interests of the Lenders. Commercial general liability policies shall be endorsed to
name the Agents as additional insureds. Business interruption policies, if any, shall name the
Agents as an additional loss payee and shall be endorsed or amended to include (i) a provision
that, from and after the Effective Date, the insurer shall pay all proceeds in excess of $5,000,000
otherwise payable to the Borrowers under the policies directly to the Administrative Agent or the
Collateral Agent, provided, however, that the Agents hereby agree that prior to the
occurrence a Cash Dominion Event, the Agents shall remit all proceeds received by Agents under the
policies to Borrowers, provided further that after the occurrence and during the continuance of a
Cash Dominion Event, the Agents shall apply any proceeds received in accordance with Sections 2.22
or 7.4 hereof, as applicable, (ii) a provision to the effect that none of the Borrowers, the Agents
or any other party shall be a co-insurer and (iii) such other provisions as the Agents may
reasonably require from time to time to protect the interests of the Lenders. Each such policy
referred to in this paragraph also shall provide that it shall not be canceled, modified or not
renewed except upon not less than 30 days’ prior written notice thereof by the insurer to the
Agents (giving the Agents the right to cure defaults in the payment of



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premiums). The Borrowers shall, and the Lead Borrower shall cause each Material Foreign Subsidiary
to, deliver to the Agents, prior to the cancellation, modification or nonrenewal of any such policy
of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Agents) together with evidence satisfactory to the Agents of payment of
the premium therefor.




     5.8 Casualty and Condemnation. Each Borrower will furnish to the Agents and the
Lenders prompt written notice of any casualty or other insured damage to any material portion of
the Collateral or the commencement of any action or proceeding for the taking of any material
portion of the Collateral or any material part thereof or material interest therein under power of
eminent domain or by condemnation or similar proceeding.



     5.9 Books and Records; Inspection and Audit Rights.



          (a) Each Borrower will, and the Lead Borrower will cause each of the other Credit Parties and
each Material Foreign Subsidiary to, keep proper books of record and account in which full, true
and correct entries in all material respects are made of all dealings and transactions in relation
to its business and activities. Each Borrower will permit any representatives designated by any
Agent on its own behalf or on behalf of the Lenders, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.



          (b) Each Borrower will, and the Lead Borrower will cause each of the other Credit Parties and
each Material Foreign Subsidiary to, from time to time upon the reasonable request and reasonable
prior notice of the Collateral Agent or the Required Lenders through the Administrative Agent,
permit any Agent or professionals (including consultants, accountants, lawyers and appraisers)
retained by the Agents to conduct appraisals, commercial finance examinations and other evaluations
as they deem necessary or appropriate, including, without limitation, of (i) the Borrowers’
practices in the computation of the Domestic Borrowing Base, Tranche A-1
Borrowing Base or Canadian Borrowing Base, as applicable and (ii) the assets included
in the Domestic Borrowing Base, Tranche A-1 Borrowing Base or Canadian Borrowing Base, as
applicable and related financial information such as, but not limited to, sales, gross margins,
payables, accruals and reserves, and pay the reasonable fees and expenses of the Agents or such
professionals with respect to such evaluations and appraisals, provided that (1) so long as
Excess Availability, at any time tested, is greater than or equal to forty percent (40%) of the
Loan Cap, no more than one such Inventory appraisal and one commercial finance examination shall be
required during any twelve month period following the Effective Date, and (2) so long as Excess
Availability, at any time tested, is less than forty percent (40%) of the Loan Cap but greater than
or equal to fifteen percent (15%) of the Loan Cap, no more than two such Inventory appraisals and
two commercial finance examinations shall be required during any twelve month period following the
Effective Date, and (3) so long as Excess Availability, at any time tested, is less than fifteen
percent (15%) of the Loan Cap, no more than three such Inventory appraisals and three commercial
finance examinations shall be required during any twelve month period following the Effective Date,
all of the foregoing appraisals and commercial finance examinations at the expense of the Borrowers
and (4) following the occurrence and during the continuance of any Event of Default, the
Administrative Agent may undertake such additional appraisals and commercial finance examinations
as it deems appropriate, each at Borrowers’ expense. Notwithstanding the foregoing, the
Administrative Agent may undertake up to one additional commercial finance examination and up to
one additional appraisal in any twelve month period as it deems appropriate, each at the expense of
the Lenders.



          (c) The Borrowers and each Material Foreign Subsidiary shall, at all times, retain Ernst &
Young or other independent certified public accountants of national standing, and instruct such
accountants to cooperate with, and be available to, the Administrative Agent or its representatives
to discuss the Borrowers’ and each Material Foreign Subsidiary’s financial performance, financial
condition,



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operating results, controls and such other matters within the scope of the retention of such
accountants as may be raised by the Administrative Agent.




     5.10 Fiscal Year. Each of the Borrowers, each of the other Credit Parties and each
Material Foreign Subsidiary shall have a Fiscal Year ending on the Saturday closest to January 31
of each year and shall notify the Administrative Agent of any change in such Fiscal Year.



     5.11 Physical Inventories.



          (a) The Collateral Agent, at the expense of the Borrowers, may participate in and/or observe
each physical count and/or inventory of so much of the Collateral as consists of Inventory which is
undertaken on behalf of the Borrowers so long as such participation does not disrupt the normal
inventory schedule or process, provided that such participation shall be limited to once in
any twelve month period after the Effective Date (unless a Cash Dominion Event shall have occurred
and be continuing).



          (b) The Borrowers, at their own expense, shall cause not less than one physical inventory of
the Borrowers’ inventory to be undertaken in each twelve (12) month period during which this
Agreement is in effect, conducted by the Borrowers and using practices consistent with practices in
effect on the date hereof.



          (c) At the Administrative Agent’s request, the Borrowers, within forty-five (45) days
following the completion of such inventory, shall provide the Collateral Agent with a
reconciliation of the results of each such inventory (as well as of any other physical inventory
undertaken by the Borrowers). The Borrowers shall promptly post the results of each such inventory
to the Borrowers’ stock ledger and general ledger, as applicable.



          (d) If and so long as there are any Loans outstanding, the Collateral Agent, in its
discretion, if any Event of Default exists, may cause such additional inventories to be taken as
the Collateral Agent determines (each, at the expense of the Borrowers). The Collateral Agent shall
use its best efforts to schedule any such inventories so as to not unreasonably disrupt the
operation of the Borrowers’ business.



     5.12 Compliance with Laws. Each Borrower will, and the Lead Borrower will cause each
other Credit Party and each Material Foreign Subsidiary to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect.



     5.13 Use of Proceeds and Letters of Credit. The proceeds of Loans made hereunder and
Letters of Credit issued hereunder will be used only (a) for Restricted Payments, Permitted
Investments under Section 6.4(e)(i) hereof and Permitted Acquisitions, (b) to finance the
acquisition of working capital assets of the Borrowers and the Subsidiaries, including the purchase
of inventory and equipment, in each case in the ordinary course of business, (c) to finance Capital
Expenditures of the Borrowers and the Subsidiaries, (d) for refinancing of the Indebtedness under
the Existing Credit Agreement, (e) to pay transaction costs in connection with this Agreement and
the other Loan Documents, and (f) for general corporate purposes, including without limitation the
issuance of Letters of Credit, all to the extent permitted herein. No part of the proceeds of any
Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X.



     5.14 Additional Subsidiaries.




          (a) If any additional Material Domestic Subsidiary of any Borrower is formed or acquired
after the Effective Date, or if any Subsidiary of any Borrower that is not a Material Domestic




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Subsidiary on the Effective Date becomes a Material Domestic Subsidiary following the
Effective Date, the Lead Borrower will promptly notify the Agents and the Lenders thereof and (i)
if a Material Domestic Subsidiary of which a Borrower owns directly or indirectly, at least 80% of
the Voting Stock or ownership interest, as applicable, the Borrowers will cause such Material
Domestic Subsidiary to become a Borrower or Guarantor hereunder, as the Administrative Agent may
request, and under each applicable Security Document in the manner provided therein, within thirty
(30) days after such Material Domestic Subsidiary is formed or acquired, and (A) execute and
deliver to the Administrative Agent a Joinder Agreement, (B) deliver to the Administrative Agent
documents of the types referred to in clauses (b), (c), (k), (l), (m), (n) and (r) of Section 4.1,
together with such other documents as the Administrative Agent may request in its Permitted
Discretion and (C) promptly take such actions to create and perfect Liens on such Material Domestic
Subsidiary’s assets to secure the Obligations as the Administrative Agent shall reasonably request
and (ii) if any shares of capital stock or other equity interests or Indebtedness of such Material
Domestic Subsidiary (whether or not wholly-owned) are owned by or on behalf of any Borrower, the
Borrowers will cause such shares and any promissory notes evidencing such Indebtedness to be
pledged within thirty (30) Days after such Material Domestic Subsidiary is formed or acquired or
becomes a Material Domestic Subsidiary.




          (b) If any additional Material Foreign Subsidiary of any Borrower is formed or acquired
after the Effective Date or if a Foreign Subsidiary becomes a Material Foreign Subsidiary, the Lead
Borrower will notify the Agents and the Lenders thereof and the Borrowers shall cause 65% of the
outstanding shares of Voting Stock of such Material Foreign Subsidiary (or such lesser percentage
as is owned by any such Borrower or as may be necessary to avoid any adverse tax consequences) to
be pledged within sixty (60) days after such Material Foreign Subsidiary is formed or acquired or
such Subsidiary becomes a Material Foreign Subsidiary. In addition, if any such Material Foreign
Subsidiary is a Canadian Subsidiary of the Canadian Borrower, the Borrowers will cause such
Canadian Subsidiary to become a guarantor of the Canadian Liabilities hereunder, as the
Administrative Agent may request, and under each applicable Canadian Security Document in the
manner provided therein, within thirty (30) days after such Canadian Subsidiary is formed or
acquired, and (A) execute and deliver to the Canadian Agent a Joinder Agreement, (B) deliver to the
Canadian Agent documents of the types referred to in clauses (b), (c), (k), (l), (m), (n) and (r)
of Section 4.1, together with such other documents as the Administrative Agent may request in its
Permitted Discretion and (C) promptly take such actions to create and perfect Liens on such
Canadian Subsidiary’s assets to secure the Canadian Liabilities as the Administrative Agent shall
reasonably request.




     5.15 Further Assurances. Each Borrower will, and the Lead Borrower will cause each of
the other Credit Parties and each Material Foreign Subsidiary to execute any and all further
documents, financing statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements and other documents), that may be
required under any Applicable Law, or which any Agent or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve,
protect or perfect the Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Borrowers, provided however, that
a Material Foreign Subsidiary will not be required to take any of the foregoing actions if and to
the extent such action would cause an adverse tax consequence. The Borrowers also agree to provide
to the Agents, from time to time upon request, evidence reasonably satisfactory to the Agents as to
the perfection and priority of the Liens created or intended to be created by the Security
Documents.



     5.16 Compliance with Terms of Leaseholds



     The Borrowers shall perform all obligations in respect of all Leases of real property to which
any Credit Party is a party and keep such Leases in full force and effect, except (a) for store



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closures in the ordinary course of business or (b) where the failure to do so would not reasonably
be expected to have a Material Adverse Effect.




     5.17 Environmental Laws.



     Each of the Credit Parties shall (a) conduct its operations and keep and maintain its Real
Estate in material compliance with all Environmental Laws; (b) obtain and renew all environmental
permits necessary for its
operations and properties; and (c) implement any and all investigation, remediation, removal
and response actions that are appropriate or necessary to comply in all material respects with
Environmental Laws pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or release of any Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate.



     6. NEGATIVE COVENANTS.



     Until the Commitments have expired or have been terminated and the principal of and interest
on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have
expired or have been terminated and all L/C Disbursements shall have been reimbursed, each Borrower
covenants and agrees with the Agents and the Lenders that:



     6.1 Indebtedness. The Borrowers will not, nor will the Lead Borrower permit any of the
other Credit Parties to, create, incur, assume or permit to exist any
Indebtedness of such
Credit Parties, except:



          (a) Indebtedness created under the Loan Documents;




          (b) Indebtedness set forth in Schedule 6.1 and Permitted Refinancings
thereof;




          (c) Indebtedness of any
Borrower or Subsidiary to any other Borrower or Subsidiary,
provided, however, that the aggregate amount of Indebtedness incurred pursuant to
this paragraph (c) that is owed to any Borrower by Subsidiaries that are not Borrowers or
Guarantors, when combined with the amount of Investments in such Subsidiaries set forth in Section
6.4(e), shall not at any time exceed $10,000,000 in the aggregate from and after the Effective
Date, and further provided that with respect to each incurrence of Indebtedness pursuant to this
paragraph (c), (A) no Default or Event of Default has occurred and is continuing or would result
from the incurrence of such Indebtedness, and (B) the Pro Forma Availability Condition is
satisfied;Credit Party to any other Credit Party;




          (d) Indebtedness of the Credit Parties incurred to finance the acquisition of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with
the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition
thereof, and Permitted Refinancings thereof, provided that the aggregate principal amount
of Indebtedness permitted by this clause (d) shall not exceed $30,000,000 at any time outstanding;




          (e) Indebtedness incurred to finance any Real Estate owned by any of the Credit Parties or
incurred in connection with any sale-leaseback transaction, provided that if any Inventory
of any Credit Party is or is to be located at or on such Real Estate, the Collateral Agent shall
have received a mortgagee waiver from the lender of any such Indebtedness relating to such Real
Estate so financed in form and substance reasonably satisfactory to the Collateral Agent;




          (f) Indebtedness under Hedging Agreements, other than those entered into for speculative
purposes, entered into in the ordinary course of business;




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          (g) Contingent liabilities under surety bonds or similar instruments incurred in the ordinary
course of business in connection with the construction or improvement of stores;




          (h) (i) Guarantees by the Lead Borrower of the Schuh Seller Notes and the Schuh Earnout,
provided that such Guarantees shall not be secured by a Lien on any assets of the Credit Parties,
and (ii) other Guarantees by any of the Credit Parties of Indebtedness of any of the other
Credit Parties, provided that such Indebtedness is otherwise permitted by this Section 6.1;




          (i) Indebtedness of any Person that becomes a SubsidiaryCredit Party after the
Effective Date, provided that (i) such Indebtedness exists at the time such Person becomes
a SubsidiaryCredit Party and is not created in contemplation of or in connection with such
Person becoming a SubsidiaryCredit Party and (ii) the aggregate outstanding principal
amount of Indebtedness permitted by this subsection (i) shall
not, without duplication, exceed
$50,000,000 at any time;




          (j) financed insurance premiums not past due;




          (k) Permitted Senior Debt; and




          (l)
(k) other
unsecured Indebtedness in an aggregate principal amount, together with
any Indebtedness incurred under clause (k) above, not
exceeding $100,000,000250,000,000
at any time outstanding.




     6.2
Liens. The Borrowers will not, nor will the Lead Borrower permit any of the other
Credit Parties to, create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except:



          (a) Liens created under the Loan Documents;




          (b) Permitted Encumbrances;




          (c) any Lien on any property or asset of any Borrower or any of the other Credit Parties set
forth in Schedule 6.2, provided that (i) such Lien shall not apply to any other
property or asset of such Person and (ii) such Lien shall secure only those obligations that it
secures as of the Effective Date, and Permitted Refinancings thereof;




          (d) Liens on fixed or capital assets acquired by any Borrower or by any of the other Credit
Parties, provided that (i) such Liens secure Indebtedness permitted by Section 6.1(d), (ii)
such Liens and the Indebtedness secured thereby are incurred on or prior to or within 45 days after
such acquisition or the completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring such fixed or capital assets, (iv)
such Liens shall not apply to any other property or assets of the Borrowers or of any of the other
Credit Parties, and (v) at the Collateral Agent’s option with respect to material Liens which arise
after the Effective Date, the Credit Parties shall have used commercially reasonable efforts to
ensure that the Collateral Agent shall have entered into an intercreditor agreement with the holder
of such Lien on terms reasonably satisfactory to the Collateral Agent to allow, among other things,
the Collateral Agent to exercise rights and remedies as a secured party with respect to the
Collateral;




          (e) Liens to secure Indebtedness permitted by Section 6.1(e), provided that such Liens
shall not apply to any property or assets of the Borrowers other than the Real Estate so financed
or which is the subject of a sale-leaseback transaction, provided that if any Inventory of
any Credit Party is or is to be




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located at or on such Real Estate, the Collateral Agent shall have received a mortgagee waiver from
the lender of any such Indebtedness relating to such Real Estate so financed in form and substance
reasonably satisfactory to the Collateral Agent; and




          (f) Security interests existing on any property or assets (other than Inventory, Accounts, and
the Proceeds thereof) prior to the acquisition thereof by any of the Credit Parties or existing on
any property or assets (other than Inventory, Accounts, and the Proceeds thereof) of any Person
that becomes a SubsidiaryCredit Party after the Effective Date prior to the time such
Person becomes a SubsidiaryCredit Party, provided that (i) such security interests secure
Indebtedness permitted by Section 6.1(i), (ii) such security interests are not created in
contemplation of or in connection with such acquisition or such Person becoming a
SubsidiaryCredit Party, as applicable, (iii) such security interests shall not apply to any
other property or assets of any Borrower or any SubsidiaryCredit Party and (iv) such
security interests shall secure only the Indebtedness that such security interests secure on the
date of such acquisition or the date such Person becomes a SubsidiaryCredit Party, as
applicable, and any Permitted Refinancings thereof; and




          (g) Liens on assets other than Inventory, Accounts and cash Proceeds thereof securing
Indebtedness permitted pursuant to Section 6.1 up to an aggregate amount not to exceed $5,000,000
that are not otherwise contemplated by this Section 6.2.6.2; and




          (h) Liens to secure Permitted Senior Debt as described in the definition
thereof.




     6.3 Fundamental Changes. (a) The Borrowers shall not, nor shall the Lead Borrower
permit any of the other Credit Parties or any Material Foreign
Subsidiary to, liquidate, merge,
amalgamate or consolidate into or with any other Person or enter into or undertake any plan or
agreement of liquidation, merger, amalgamation, or consolidation with
any other Person, provided
that (i) a Borrower may merge or amalgamate with another company in connection with a Permitted
Acquisition if such Borrower is the surviving company, (ii) any
wholly-owned Subsidiary may merge,
amalgamate, or consolidate into or with a Borrower or any other wholly-owned Subsidiary of a
Borrower if no Default or Event of Default has occurred and is continuing or would result from such
merger or amalgamation and if a Borrower is the surviving company in
any merger, amalgamation, or
consolidation to which it is a party, (iii) a Subsidiary may
merge, amalgamate or consolidate into or with another
entity in connection with a Permitted Acquisition if, upon
consummation of such merger,
amalgamation, or consolidation, the surviving entity shall be a direct or indirect wholly-owned
Subsidiary and, if the surviving entity is a Material Domestic
Subsidiary, such Material Domestic
Subsidiary becomes a party to the Security Documents, (iv) any Domestic Subsidiary may merge or
consolidate into or with any other Domestic Subsidiary, and, if the surviving entity is a Material
Domestic Subsidiary, such Material Domestic Subsidiary becomes a party to the Security Documents
(v) any Foreign Subsidiary may merge into or amalgamate with any other Foreign Subsidiary and (vi)
any Subsidiary (other than a Borrower) may liquidate or dissolve if the Lead Borrower determines in
good faith that such liquidation is in the best interests of the Borrowers and would not have a
Material Adverse Effect.



          (b) The
Lead Borrower shall not, and shall not permit any of the other Credit Parties to,
engage to any material extent in any business other than businesses of the type conducted by the
Credit Parties on the date of execution of this Agreement, reasonable extensions thereof and
businesses reasonably related or complementary thereto, except that the Borrowers or any of the
other Credit Parties may withdraw from any business activity which such Person’s board of directors
reasonably deems unprofitable or unsound, provided that promptly after such withdrawal, the
Lead Borrower shall provide the Administrative Agent with written notice thereof.




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     6.4 Investments, Loans, Advances, Guarantees and Acquisitions. The Borrowers
shall not, nor shall the Lead Borrower permit any of the other Credit Parties to, purchase, hold or
acquire (including pursuant to any merger or amalgamation with any Person that was not a wholly
owned Subsidiary prior to such merger or amalgamation) any capital stock or other equity interests,
evidences of indebtedness or other securities (including any option, warrant or other right to
acquire any of the foregoing) of, make or permit to exist any loans or advances to, guarantee any
obligations of, or make or permit to exist any investment or any other interest in, any other
Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any
assets of any other Person constituting a business unit (each of the foregoing, an “Investment”),
except for:



          (a) Permitted Acquisitions;




          (b) Permitted Investments;




          (c) Investments existing on the Effective Date and set forth on Schedule
6.4;




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




          (e) (i) Investments in UK LP and UK Acquisition on the First Amendment Effective Date in
an amount not to exceed 76,000,000 Pounds Sterling in connection with the Schuh Acquisition, (ii)
Investments in UK LP and UK Acquisition to make payments on account of the Schuh Seller Notes as
long as after giving effect thereto the Payment Conditions are then satisfied, provided that for
purposes of this clause (e)(ii) only, Excess Availability required under clause (b) of the
definition of “Payment Conditions” shall be 30% of the Loan Cap for the periods set forth therein
(and not 50% of the Loan Cap), (iii) Investments in UK LP and UK Acquisition to make payments on
account of the Schuh Earnout as long as after giving effect thereto the Payment Conditions are then
satisfied, and (iv) other Investments in Subsidiaries, provided, however, that the
aggregate amount of Investments pursuant to this paragraph (e)(iv) in (x) Subsidiaries that
are not Borrowers or Guarantors, including the amount of Indebtedness due from such Subsidiaries
set forth in Section 6.1(c), may not at any time exceed $10,000,000 (other than UK LP and UK
Acquisition) may not at any time exceed $10,000,000 from time to time in the aggregate from and
after the First Amendment Effective Date, and (y) UK LP and UK Acquisition may not at any time
exceed $50,000,000 in the aggregate from and after the Effective DateFirst Amendment
Effective Date (provided that such Investments shall not exceed $10,000,000 from time to time in
any Fiscal Year unless the Payment Conditions have been satisfied), and further provided
that, in each case set forth in clauses (i) through (iv) hereof, no Default or Event of
Default has occurred and is continuing or would result from such Investment;




          (f) loans or advances to employees for the purpose of travel, entertainment or relocation in
the ordinary course of business and consistent with past practices, not exceeding $1,000,000 in the
aggregate at any time outstanding; provided, that no such advances to any single employee
shall exceed $500,000 in the aggregate;




          (g) Investments by a Foreign Subsidiary in another Foreign
Subsidiary;Reserved;




          (h) Investments consisting of amounts potentially due from a seller of assets in a Permitted
Acquisition that (i) relate to customary post-closing adjustments with respect to accounts
receivable, accounts payable and similar items typically subject to post-closing adjustments in
similar transactions, and (ii) are outstanding for a period of one hundred eighty (180) days or
less following the closing of such Permitted Acquisition;




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          (i) the Borrowers and their respective SubsidiariesCredit Parties may make and
own loans or advances to the trustee of various employee incentive and stock purchase plans of the
Credit Parties, not to exceed $500,000 in the aggregate at any one time outstanding;




          (j) the Borrowers and their respective SubsidiariesCredit Parties may engage in
transactions permitted by Section 6.3;




          (k) except while a Cash Dominion Event is in existence, the Borrowers and their
respective SubsidiariesCredit Parties may make other Investments (including acquisitions of
stock or assets of another Person other than Acquisitions) not to exceed in the aggregate
$10,000,000 in any Fiscal Year of Borrower;




          (l) Investments by the Borrowers and their respective SubsidiariesCredit Parties
in the form of Hedging Agreements entered into in the ordinary course of business and not for
speculative purposes;




          (m) Guarantees by the Borrowers and their respective SubsidiariesCredit Parties
with respect to the lease of property (whether real or personal) by such Person as lessee that is
not a Capital Lease Obligation; and




          (n) Guarantees constituting Indebtedness permitted by Section 6.1.




     6.5 Asset Sales. The Borrowers will not, nor will the Lead Borrower permit any of
the other Credit Parties to, sell, transfer, lease or otherwise dispose of any asset, including any
capital stock or other equity interests except:



          (a) (i) sales of Inventory in each case in the ordinary course of business, or (ii) used
or surplus equipment, or (iii) Permitted Investments;




          (b) sales, transfers and dispositions among the Credit Parties;




          (c) sales or other transfers of assets pursuant to store closures provided that in any
Fiscal Year, Borrowers shall not close more than ten percent (10%) of the total number of
Borrowers’ stores open at the beginning of such Fiscal Year;




          (d) other sales, transfers, or dispositions of assets not in the ordinary course of business
and not pursuant to store closures; provided that (y) no Default or Event of Default then
exists or would arise therefrom, and (z) in the event that the aggregate amount of any such sale,
transfer or disposition exceeds $15,000,000, the Pro Forma Availability Condition shall be
satisfied after giving effect to such sale, transfer or disposition.




          (e) sales or issuances by the Lead Borrower of any of its capital stock or other equity
interests that do not result in a Change in Control;




          (f) sales or issuances of capital stock or other equity interests to any Borrower;




          (g) the sale of any Real Property provided that (i) the consideration for such sale is not
less than the fair value of such Real Property and (ii) a Credit Party in connection with such sale
enters into a lease of such Real Property on terms reasonably acceptable to the Administrative
Agent; and




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          (h) the sale, transfer or disposition of accounts receivable in connection with the
compromise, settlement or collection thereof.



provided that all sales, transfers, leases and other dispositions of Inventory and the
proceeds thereof shall be made for cash consideration or on customary terms, and
further provided that that all sales, transfers, leases and other dispositions permitted by clauses
(a)(i), (a)(ii), (c) and (d) above shall be made at arm’s length and for fair value; and
further provided that the authority granted hereunder may be terminated in whole or in part
by the Agents upon the occurrence and during the continuance of any Event of Default.




     6.6 Restrictive Agreements. The Borrowers will not, nor will the Lead Borrower permit
any of the other Credit Parties to, directly or indirectly, enter into, incur or permit to exist
any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of any of the Credit Parties to create, incur or permit to exist any Lien upon any of its
property or assets or (b) the ability of any of the Credit Parties to pay dividends or other
distributions with respect to any shares of its capital stock or other equity interests or to make
or repay loans or advances to the Borrowers or any of the other Credit Parties or to guarantee
Indebtedness of the Borrowers or any of the other Credit Parties, provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by any Loan Document, (ii) the
foregoing restrictions shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided that such restrictions
and conditions apply only to the Subsidiary that is to be sold and such sale is permitted
hereunder, (iii) clause (a) of the foregoing shall not apply to restrictions or conditions imposed
by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Indebtedness and (iv) clause (a)
of the foregoing shall not apply to customary provisions in leases restricting the assignment or
subleasing thereof.



     6.7 Restricted Payments; Certain Payments of Indebtedness. The Borrowers will not, nor
will the Lead Borrower permit any of the other Credit Parties to declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment unless after giving effect thereto the
Payment Conditions are then satisfied  or any payments on the Guarantees set forth in Section
6.1(h)(i), except that the Borrowers shall be permitted to:



          (a) make Restricted Payments consisting of cash dividends on preferred stock of the Credit
Parties in an amount not to exceed $500,000 in any Fiscal Year so long as no Event of Default has
occurred and is continuing;




          (b) make Restricted Payments to any other Credit Party;




          (c) make Restricted Payments as long as after giving effect thereto the Payment Conditions
are then satisfied;




          (d) (b) pay regularly scheduled interest and principal payments as and when due on a
non-accelerated basis and prior to maturity in respect of any Indebtedness permitted under Section
6.1 at such times as no Event of Default is in existence or would arise as a result of such
payment;




          (e) make, directly or indirectly, any payments on the Guarantees set forth in Section
6.1(h)(i) as long as after giving effect thereto the Payment Conditions are then satisfied;
provided that for purposes of payments on the Guarantee with respect to the Schuh Seller Notes
pursuant to this clause (d) only, Excess Availability required under clause (b) of the definition
of “Payment Conditions” shall be 30% of the Loan Cap for the periods set forth therein (and not 50%
of the Loan Cap); and




          (f) (c) Permitted Refinancings of Indebtedness.




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     6.8 Transactions with Affiliates. The Borrowers will not, nor will the Lead Borrower
permit any other Credit Party to at any time sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage
in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary
course of business that are at prices and on terms and conditions not less favorable to the
Borrowers than could be obtained on an arm’s-length basis from unrelated third parties, and (b)
transactions between or among the Borrowers and one or more Subsidiaries, not involving any other
Affiliate, that would not otherwise violate the provisions of the Loan Documents.



     6.9 Additional Subsidiaries. The Borrowers will not, nor will the Lead Borrower permit
any of the other Credit Parties to, create any additional Subsidiary unless no Default or Event of
Default would arise therefrom and the requirements of Section 5.14 are satisfied to the extent
applicable.



     6.10 Amendment of Material Documents. The Borrowers will not, nor will the Lead
Borrower permit any other Credit Party or any Material Foreign Subsidiary to, amend, modify or
waive any of its rights under (a) its certificate of incorporation, by-laws or other organizational
documents to the extent that such amendment, modification or waiver would result in a Material
Adverse Effect, or (b) any Material Indebtedness, in each case to the extent that such amendment,
modification or waiver would result in a Default or Event of Default under any of the Loan
Documents or would result in a Material Adverse Effect.



     6.11 Fixed Charge Coverage Ratio. After the occurrence and during the continuance of a
Covenant Compliance Event, the Borrowers shall not permit the Fixed Charge Coverage Ratio to be
less than 1.0:1.0 tested at the end of each Applicable Fiscal Period.



     6.12 Environmental Laws. The Borrowers shall not, nor will the Lead Borrower permit
any other Credit Party or any Material Foreign Subsidiary to (a) fail to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, or (b) become subject to any Environmental Liability, in each
case which is reasonably likely to have a Material Adverse Effect.



     6.13 Fiscal Year. The Borrowers shall not change their Fiscal Year without the prior
written consent of the Administrative Agent, which consent shall not be unreasonably withheld.



     7. EVENTS OF DEFAULT.



     7.1 Events of Default. If any of the following events (each, an “Event of
Default”) shall occur:



          (a) the Borrowers shall fail to pay any principal of any Loan or any reimbursement obligation
in respect of any L/C Disbursement when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or otherwise;




          (b) the Borrowers shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in clause (a) of this Section) payable under this Agreement or
any other Loan Document, within three (3) Business Days after the same shall become due and
payable;




          (c) any representation or warranty made or deemed made by or on behalf of any Borrower or any
other Credit Party in or in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, or in any certificate or financial statement (including, without
limitation, any Borrowing Base Certificate) furnished pursuant to or in connection with any Loan




103









 







Document or any amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made;




          (d) the Borrowers shall fail to observe or perform any covenant, condition or agreement
contained in Sections 2.21, 5.1(f), 5.2(a), 5.3(b), 5.4, 5.7, 5.13, or in Section 6 (other than
Section 6.12);




          (e) the Borrowers shall fail to observe or perform any covenant, condition or agreement
contained in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(d), 5.1(e), 5.1(i), 5.2(b)-(i), 5.9, or 5.14
within three (3) Business Days after notice from the Administrative Agent to the Lead Borrower that
the Borrowers have failed to observe or perform such covenant, condition or agreement;




          (f) any Borrower or any of the other Credit Parties shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other than those specified in
clause (a), (b), (c), (d) or (e) of this Section), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to the Lead Borrower;




          (g) any Borrower or any of the other Credit Parties shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material Indebtedness when and as
the same shall become due and payable (after giving effect to the expiration of any grace or cure
period set forth therein);




          (h) any Borrower, any of the other Credit Parties, or any Material Foreign Subsidiary shall
fail to perform any covenant or condition contained in any contract or agreement to which it is
party as and when such performance is required (after giving effect to the expiration of any grace
or cure period set forth therein) if such failure could reasonably be expected to have a Material
Adverse Effect;




          (i) any event or condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits the holder or holders of any such Material
Indebtedness or any trustee or agent on its or their behalf to cause any such Material Indebtedness
to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity;




          (j) an involuntary proceeding shall be commenced or an involuntary petition or proposal
shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Borrower,
any of the other Credit Parties or any Material Foreign Subsidiary or its debts, or of a
substantial part of its assets, under any Debtor Relief Law now or hereafter in effect or (ii) the
appointment of a receiver, interim receiver, trustee, custodian, monitor, administrator,
sequestrator, conservator or similar official for any Borrower, any of the other Credit Parties or
any Material Foreign Subsidiary or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered and continue unstayed and in effect for 60 days;




          (k) any Borrower, any of the other Credit Parties or any Material Foreign Subsidiary
shall (i) voluntarily commence any proceeding or file any petition or proposal seeking liquidation,
reorganization or other relief under any Debtor Relief Law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (j) of this Section, (iii) apply for or consent to the appointment of
a receiver, interim receiver, trustee, custodian, monitor, administrator, sequestrator, conservator
or similar official for any Borrower, any of the other Credit Parties or any Material Foreign
Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a




104









 







general assignment for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;




          (l) any Borrower, any of the other Credit Parties or any Material Foreign Subsidiary
shall become unable, or admit in writing its inability or fail generally to pay its debts as they
become due;




          (m) one or more uninsured final judgments for the payment of money in an aggregate amount
in excess of $25,000,000 shall be rendered against any Borrower, any of the other Credit Parties or
any Material Foreign Subsidiary or any combination thereof or any one or more non-monetary
judgments that have, or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and, in each case, the same shall remain undischarged for a period of 45
consecutive days during which execution shall not be effectively stayed, or any action shall be
successfully legally taken by a judgment creditor to attach or levy upon any material assets of any
Borrower, any of the other Credit Parties or any Material Foreign Subsidiary to enforce any such
judgment;




          (n) any challenge is asserted by or on behalf of any Borrower or any of the other Credit
Parties to the validity of any Loan Document or the applicability or enforceability of any Loan
Document strictly in accordance with the subject Loan Document’s terms or which seeks to void,
avoid, limit, or otherwise adversely affect any security interest created by or in any Loan
Document or any payment made pursuant thereto;




          (o) any challenge is asserted by or on behalf of any other Person to the validity of any
Loan Document or the applicability or enforceability of any Loan Document strictly in accordance
with the subject Loan Document’s terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment made pursuant
thereto, in each case, as to which an order or judgment has been entered adverse to the Agents and
the Lenders.




          (p) any Lien purported to be created under any Security Document shall be asserted by any
Borrower or any of the other Credit Parties not to be a valid and perfected Lien on any Collateral,
with the priority required by the applicable Security Document, except as a result of the sale or
other disposition of the applicable Collateral in a transaction permitted under the Loan Documents;




          (q) a Change in Control shall occur;




          (r) an ERISA Event or Termination Event shall have occurred that when taken together
with all other ERISA Events and Termination Events that have occurred, could reasonably be expected
to result in a Material Adverse Effect;




          (s) the occurrence of any uninsured loss to any material portion of the
Collateral;




          (t) any director, Financial Officer or other senior officer of the Borrower Consolidated
Group is criminally indicted or convicted of a felony for fraud or dishonesty in connection with
the Borrower Consolidated
Group’s business, unless such director, Financial Officer or senior officer promptly resigns
or is promptly removed or replaced;




          (u) the imposition of any stay or other order against any Borrower, any of the other
Credit Parties or any Material Foreign Subsidiary, the effect of which (i) is to restrain in any
material way the conduct by the Credit Parties, taken as a whole, and the Credit Parties and the
Material Foreign Subsidiaries, taken as a whole, of their business in the ordinary course and (ii)
would have a Material Adverse Effect;





105











 






          (v) except as otherwise permitted hereunder, the determination by the Borrower
Consolidated Group, whether by vote of its board of directors or otherwise to: terminate the
operation of their business in the ordinary course, to liquidate all or substantially all of the
Borrower Consolidated Group’s’ assets or store locations, or to employ an agent or other third
party to conduct any so-called store closing, store liquidation or “Going-Out-Of-Business” sales
for all or substantially all of the Borrower Consolidated Group’s’ store locations; or




          (w) the termination or attempted termination of the Effective Date Guaranty or any Facility Guaranty except
as expressly permitted hereunder or under any other Loan Document.



then, and in every such event (other than an event with respect to each Borrower, any of the other Credit Parties or any Material
Foreign Subsidiary described in clause (j) or (k) of this Section), and at any time
thereafter during the continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Lead Borrower, take either or both of the following
actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately and no Lender shall thereafter be obligated to make any Loans, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,in which case any
principal not so declared to be due and payable may thereafter be declared to be due and payable),
and thereupon the principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall
become due and payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrowers; and (iii) require the Borrowers to furnish
cash collateral in an amount equal to 102% of the Letter of Credit Outstandings, and in case of any
event with respect to any Borrower described in clause (j) or (k) of this Section, the Commitments
shall automatically terminate and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrowers.




     7.2 When Continuing. For all purposes under this Agreement, each Default and Event of Default
that has occurred shall be deemed to be continuing at all times thereafter unless it either (a) is cured or
corrected to the reasonable written satisfaction of the Lenders in accordance with Section 9.3, or
(b) is waived in writing by the Lenders in accordance with Section 9.3.



     7.3 Remedies on Default. In case any one or more of the Events of Default shall have occurred
and be continuing, and whether or not the maturity of the Loans shall have been accelerated
pursuant hereto, the Administrative Agent may proceed to protect and enforce its rights and remedies
under this Agreement, the Notes or any of the other Loan Documents by suit in equity, action at law
or other appropriate proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument pursuant to which the
Obligations are evidenced, and, if such amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or equitable right of the Agents or the
Lenders. No remedy herein is intended to be exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other provision of law.



     7.4 Application of Proceeds.



          (a) After the exercise of remedies provided for in Section 7.3 or upon the acceleration of the
time for payment of the Obligations following an Event of Default (or after the Loans have
automatically become immediately due and payable and the Letter of Credit Outstandings have
automatically been required to be Cash Collateralized as set forth in Section 7.1), any amounts
received






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from any Domestic Credit Party, from the liquidation of any Collateral of any Domestic Credit Party,
or on account of the Obligations (other than the Canadian Liabilities), shall be applied by the
Administrative Agent against the Obligations in the following order:





     First, to payment of that
portion of the Obligations (excluding the Other Domestic Liabilities and the Canadian
Liabilities) constituting fees, indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under Section 9.4) payable
to the Administrative Agent, in its capacity as such;




     Second, to payment of that portion of the
Obligations (excluding the Other Domestic Liabilities and the Canadian Liabilities) constituting
indemnities, expenses, and other amounts (other than principal, interest and fees) then currently
payable to the Domestic Lenders and the Issuing Bank (on account of Domestic Letters of Credit)
(including fees, charges and disbursements of counsel to the respective Domestic Lenders and the
Issuing Bank on account of Domestic Letters of Credit), ratably among them in proportion to the
amounts described in this clause Second payable to them;




     Third, to the extent not previously
reimbursed by the Domestic Lenders, to payment to the Domestic Lenders of that portion of the
Obligations constituting principal and accrued and unpaid interest on any Permitted Overadvances,
ratably among the Domestic Lenders in proportion to the amounts described in this clause Third
payable to them;




     Fourth, to the extent that Swingline Loans made to the Domestic Borrowers have
not been refinanced by a Domestic Loan, payment to the Swingline Lender of that portion of the
Obligations constituting accrued and unpaid interest on the Swingline Loans made to the Domestic
Borrowers;




     Fifth,
to the extent that Swingline Loans made to the Domestic Borrowers have not been
refinanced by a Domestic Loan, payment to the Swingline Lender of that portion of the Obligations
constituting unpaid principal on the Swingline Loans made to the Domestic Borrowers;




     Sixth, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Domestic
Loans and other Obligations (other than the Tranche A-1 Loans and the Canadian Liabilities), and
fees (including Letter of Credit Fees, other than any fees due on account of any Canadian Letter of
Credit), ratably among the Domestic Lenders and the Issuing Bank in proportion to the respective
amounts described in this clause Sixth payable to them;




     Seventh,
to payment of that portion of the Obligations constituting unpaid principal of the Domestic Loans (other than the Tranche A-1 Loans), ratably among the Domestic Lenders and the Issuing Bank in proportion to the respective amounts
described in this clause Seventh held by them;




     Eighth, to the Administrative Agent for the account of the Issuing Bank, to Cash Collateralize the aggregate undrawn amount of Domestic Letters of
Credit;




     Ninth, to payment of that portion of the Obligations constituting accrued and unpaid
interest on the Tranche A-1 Loans, ratably among the Domestic Lenders in proportion to the
respective amounts described in this clause Ninth payable to them;




     Tenth, to payment of that portion of the Obligations constituting unpaid principal of the Tranche A-1 Loans, ratably among
the Domestic Lenders in proportion to the respective amounts described in this clause Tenth held by
them;



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     Eleventh, to the Collateral Agent to be held by the Collateral Agent, for the ratable benefit
of the Canadian Lenders as cash collateral for payment of that portion of the Canadian Liabilities
(excluding the Other Canadian Liabilities) constituting fees, indemnities, expenses and other
amounts (including fees, charges and disbursements of counsel to the Canadian Agent and amounts
payable under Section 9.4) payable to the Canadian Agent, in its capacity as such;




     TenthTwelfth, to the Collateral Agent to be held by the Collateral Agent, for the ratable benefit of the Canadian
Lenders and the Issuing Bank as cash collateral to payment of that portion of the Canadian
Liabilities (excluding the Other Canadian Liabilities) constituting indemnities, expenses, and other
amounts (other than principal, interest and fees) payable to the Canadian Lenders and the Issuing
Bank (on account of Canadian Letters of Credit) (including fees, charges and disbursements of
counsel to the respective Canadian Lenders and the Issuing Bank on account of Canadian Letters of
Credit) and amounts payable under Section 9.4), ratably among them in proportion to the amounts
described in this clause TenthTwelfth payable to them;




     EleventhThirteenth, to the extent not previously reimbursed by the Canadian Lenders, to the Collateral Agent to be held by the Collateral
Agent, for the ratable benefit of the Canadian Lenders as cash collateral to payment to the Canadian
Lenders of that portion of the Canadian Liabilities constituting principal and accrued and unpaid
interest on any Permitted Overadvances, ratably among the Canadian Lenders in proportion to the
amounts described in this clause EleventhThirteenth payable to them;




     TwelfthFourteenth, to the Collateral Agent to be held by the Collateral Agent, for the ratable benefit of the Canadian Lenders
and the Issuing Bank as cash collateral to payment of that portion of the Canadian Liabilities
constituting accrued and unpaid interest on the Canadian Loans and
other Canadian Liabilities, and
fees (including Letter of Credit Fees not paid pursuant to clause Sixth above), ratably among the
Canadian Lenders and the Issuing Bank in proportion to the respective amounts described in this
clause TwelfthFourteenth payable to them;




     ThirteenthFifteenth, to the Collateral Agent to be held by the Collateral Agent, for the ratable benefit of the Canadian Lenders and the Issuing Bank as
cash collateral to payment of that portion of the Canadian Liabilities constituting unpaid principal
of the Canadian Loans, ratably among the Canadian Lenders and the Issuing Bank in proportion to the
respective amounts described in this clause ThirteenthFifteenth held by them;




     FourteenthSixteenth, to the Collateral Agent to be held by the Collateral Agent, for the ratable benefit of the
Canadian Lenders and the Issuing Bank, to Cash Collateralize the aggregate undrawn amount of
Canadian Letters of Credit;




     FifteenthSeventeenth,
to payment of all other Obligations (including
without limitation the cash collateralization of unliquidated indemnification obligations for which
a claim has been made, but excluding any Other Domestic Liabilities and Other Canadian
Liabilities, ratably among the Lenders in proportion to the respective amounts described in this
clause FifteenthSeventeenth held by them;




     SixteenthEighteenth, to payment of that portion of the
Obligations arising from Cash Management Services to the extent secured under the Security
Documents, ratably among the Lenders in proportion to the respective amounts described in this
clause SixteenthEighteenth held by them;



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




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


Amounts used to Cash Collateralize the aggregate undrawn amount of Domestic Letters of Credit
pursuant to clause Eighth above shall be applied to satisfy drawings under such Domestic Letters of
Credit as they occur. If any amount remains on deposit as cash collateral after all Domestic
Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied
to the other Obligations, if any, in the order set forth above.




          (b) After the exercise of remedies provided for in Section 7.3 or upon the acceleration of the
time for payment of the Obligations following an Event of Default (or after the Loans have
automatically become immediately due and payable and the Letter of Credit Outstandings have
automatically been required to be Cash Collateralized as set forth in Section 7.1), any amounts
received from any Canadian Credit Party, from the liquidation of any Collateral of any Canadian
Credit Party, or on account of the Canadian Liabilities, shall be applied by the Canadian Agent
against the Canadian Liabilities in the following order:





     First, to payment of that portion of the
Canadian Liabilities (excluding the Other Canadian Liabilities)
constituting fees, indemnities, expenses and other amounts (including
fees, charges and disbursements of counsel to the Canadian
Agent and amounts payable under Section 9.4 payable to the Canadian Agent, in its capacity as such;




     Second, to payment of that portion of the Canadian Liabilities (excluding the Other Canadian
Liabilities) constituting indemnities, expenses, and other amounts (other than principal, interest
and fees) payable to the Canadian Lenders and the Issuing Bank (on account of Canadian Letters of
Credit) (including fees, charges and disbursements of counsel to the respective Domestic Lenders and
the Issuing Bank on account of Canadian Letters of Credit) and amounts payable under Section 9.4),
ratably among them in proportion to the amounts described in this clause Second payable to them;




     Third, to the extent not previously reimbursed by the Canadian Lenders, to the Canadian Agent to be
applied to that portion of the Canadian Liabilities constituting principal and accrued and unpaid
interest on any Permitted Overadvances, ratably among the Canadian Lenders in proportion to the
amounts described in this clause Third payable to them;




     Fourth, to payment of that portion of the
Canadian Liabilities constituting accrued and unpaid interest on the Canadian Loans and other
Canadian Liabilities, and fees (including Letter of Credit Fees due on account of Canadian Letters
of Credit), ratably among the Canadian Lenders and the Issuing Bank in proportion to the respective
amounts described in this clause Fourth payable to them;




     Fifth,
to payment of that portion of the
Canadian Liabilities constituting unpaid principal of the Canadian Loans, ratably among the Canadian
Lenders and the Issuing Bank in proportion to the respective amounts described in this clause
Fifth held by them;




     Sixth,
to the Collateral Agent for the account of the Issuing Bank, to Cash
Collateralize the aggregate undrawn amount of Canadian Letters of Credit;



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     Seventh,
to payment of all other Canadian Liabilities(including without
limitation the
cash collateralization of unliquidated indemnification obligations, but excluding any Other
Canadian Liabilities), ratably among the Canadian Lenders in proportion to the respective
amounts described in this clause Seventh held by them;



     Eighth, to payment of that portion of the Canadian Liabilities arising from Cash Management Services to the extent secured
under the Security Documents, ratably among the Canadian Lenders in proportion to the
respective amounts described in this clause Eighth held by them;




     
Ninth, to payment of all other Canadian Liabilities arising from Bank Products to the extent secured under the
Security Documents, ratably among the Canadian Lenders in proportion to the respective
amounts described in this clause Ninth held by them; and




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




     Amounts used to Cash Collateralize the aggregate undrawn amount of Canadian Letters of
Credit pursuant to clause Sixth above shall be applied to satisfy drawings under such
Canadian Letters of Credit as they occur. If any amount remains on deposit as Cash
Collateral after all Canadian Letters of Credit have either been fully drawn or expired, such
remaining amount shall be applied to the other Canadian Liabilities, if any, in the order
set forth above.



     8. THE AGENTS.



     8.1 Administration by Administrative Agent. Each Lender, the Collateral Agent, the Canadian
Agent and the Issuing Bank hereby irrevocably designate Bank of America as Administrative Agent
under this Agreement and the other Loan Documents. The general administration of the Loan Documents
shall be by the Administrative Agent. The Lenders, the Collateral Agent, the Canadian Agent and the
Issuing Bank each hereby irrevocably authorize the Administrative Agent (i) to enter into the Loan
Documents to which it is a party and (ii) at its discretion, to take
or refrain from taking such actions
as agent on its behalf and to exercise or refrain from exercising such powers under the Loan
Documents and the Notes as are delegated by the terms hereof or thereof, as appropriate, together
with all powers reasonably incidental thereto. The Administrative Agent shall have no duties or
responsibilities except as set forth in this Agreement and the remaining Loan Documents, nor shall
it have any fiduciary relationship with any Lender, Canadian Agent, or the Issuing Bank and no
implied covenants, responsibilities, duties, obligations, or
liabilities shall be read into the Loan
Documents or otherwise exist against the Administrative Agent.



     Each of the Lenders (in its capacity as a Lender), the Swingline Lender and the Issuing
Bank hereby irrevocably appoints Bank of America Canada-Branch as Canadian Agent.



     8.2 The Collateral Agent.



          (a) Each Lender, the Administrative Agent and the Issuing Bank hereby irrevocably (i) designate
Bank of America as Collateral Agent under this Agreement and the other Loan Documents, (ii)
authorize the Collateral Agent to enter into the Security Documents and the other Loan Documents to
which it is a party and to perform its duties and obligations thereunder, together with all powers
reasonably incidental thereto, (iii) agree and consent to all of the provisions of the Security
Documents and (iv)






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acknowledge and agree that, notwithstanding any provisions of the Loan Documents to the contrary,
the Collateral Agent will not obtain a perfected security interest in the Borrowers’
Intellectual Property applied for or registered in jurisdictions outside of the United States or
Canada as of the Effective Date. All Collateral shall be held or administered by the Collateral
Agent (or its duly-appointed agent) for its benefit and for the
ratable benefit of the other Secured
Parties. Any proceeds received by the Collateral Agent from the foreclosure, sale, lease or other
disposition of any of the Collateral and any other proceeds received pursuant to the terms of the
Security Documents or the other Loan Documents shall be paid over to the Administrative Agent for
application as provided in Sections 2.18, 2.22, or 7.4, as applicable. The Collateral Agent shall
have no duties or responsibilities except as set forth in this Agreement and the remaining Loan
Documents, nor shall it have any fiduciary relationship with any Lender, and no implied covenants,
responsibilities, duties, obligations, or liabilities shall be read
into the Loan Documents or
otherwise exist against the Collateral Agent.




          (b) Without limiting the generality of the foregoing Section 8.2(a),for the purposes of
creating a solidarité active in accordance with article 1541 of the Civil Code of Québec between
each Secured Party that is owed any Canadian Liabilities, taken individually, on the one hand, and
the Collateral Agent, on the other hand, each Canadian Credit Party and each such Secured Party
acknowledge and agree with the Collateral Agent that such Secured Party and the Collateral Agent
are hereby conferred the legal status of solidary creditors of the Canadian Credit Parties in
respect of all Canadian Liabilities, present and future, owed by any Canadian Credit Party to each
such Secured Party and the Collateral Agent (collectively, for the purposes of this paragraph, the
“solidary claim”). Accordingly, but subject (for the
avoidance of doubt) to article 1542 of the
Civil Code of Québec, the Canadian Credit Parties are irrevocably bound towards the Collateral Agent
and each such Secured Party in respect of the entire solidary claim of the Collateral Agent and
such Secured Party. As a result of the foregoing, the Canadian Credit Parties confirm and agree
that subject to Section 8.2(a), above, the rights of the Collateral Agent and each of the Secured
Parties who are owed Canadian Liabilities from time to time a party
to this Agreement or any of the
other Loan Documents by way of assignment or otherwise are solidary and, as regards the Canadian
Liabilities owing from time to time to each such Secured Party, each of the Collateral Agent and
such Secured Party is entitled, when permitted pursuant to
Section 8.2, to: (i) demand payment of
all outstanding amounts from time to time in respect of the Canadian Liabilities; (ii) exact the
whole performance of such Canadian Liabilities from the Canadian Credit Parties; (iii) benefit from
the Collateral Agent’s Liens in the Collateral in respect of such Canadian Liabilities; (iv) give a
full acquittance of such Canadian Liabilities (each Secured Party that is owed Canadian Liabilities
hereby agreeing to be bound by any such acquittance); and (v) exercise all rights and recourses
under the Loan Documents with respect to those Canadian Liabilities. The Canadian Liabilities of
the Canadian Credit Parties will be secured by the Collateral Agent’s Liens in the Collateral and
the Collateral Agent and the Secured Parties who are owed Canadian Liabilities will have a solidary
interest therein.




     8.3 Sharing of Excess Payments. Each of the Lenders, the Agents and the Issuing Bank agrees
that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim
against the Borrowers, including, but not limited to, a secured claim under Section 506 of the
Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim and
received by such Lender, any Agent or the Issuing Bank under any applicable bankruptcy, insolvency
or other similar law, or otherwise, obtain payment in respect of the Obligations owed it (an “excess
payment”) as a result of which such Lender, such Agent or the Issuing Bank has received payment of
any Loans or other Obligations outstanding to it in excess of the amount that it would have
received if all payments at any time applied to the Loans and other Obligations had been applied in
the order of priority set forth in Section 7.4, then such Lender, such Agent or the Issuing Bank
shall promptly purchase at par (and shall be deemed to have thereupon purchased) from the other
Lenders, such Agent and the Issuing Bank, as applicable, a participation in the Loans and
Obligations outstanding to such other Persons, in an amount determined by the Administrative Agent
in good faith as the amount necessary to ensure that the economic benefit of such excess payment is



111









 





reallocated in such manner as to cause such excess payment and all other payments at any time
applied to the Loans and other Obligations to be effectively applied in the order of priority set
forth in Section 7.4 pro rata in proportion to the respective Commitment Percentages; provided, that
if any such excess payment is thereafter recovered or otherwise set aside such purchase of
participations shall be correspondingly rescinded (without interest) and, provided further, that,
without limiting the provisions of Section 8.16, to the extent that any excess payment arises
solely from the proceeds of the assets of the Canadian Credit Parties, such excess shall be
reallocated solely amongst the Canadian Lenders. The Borrowers expressly consent to the foregoing
arrangements and agree that any Lender, any Agent or the Issuing Bank holding (or deemed to be
holding) a participation in any Loan or other Obligation may exercise any and all rights of
banker’s lien, setoff or counterclaim with respect to any and all moneys owing by such Borrower to
such Lender, such Agent or the Issuing Bank as fully as if such Lender, Agent or the Issuing Bank
held a Note and was the original obligee thereon, in the amount of such participation.




     8.4
Agreement of Applicable Lenders. Upon any occasion requiring or permitting an approval,
consent, waiver, election or other action on the part of the Applicable Lenders, action shall be
taken by the Agents for and on behalf or for the benefit of all Lenders upon the direction of the
Applicable Lenders, and any such action shall be binding on all Lenders. No amendment,
modification, consent, or waiver shall be effective except in accordance with the provisions of
Section 9.3.



     Upon the occurrence of an Event of Default, the Agents shall take such action with respect
thereto as may be reasonably directed by the Applicable Lenders;
provided that unless and until the
Agents shall have received such directions, the Agents may (but shall not be obligated to) take
such action as they shall deem advisable in the best interests of the
Lenders. In no event shall the
Agents be required to comply with any such directions to the extent that the Agents believe that
the Agents’ compliance with such directions would be unlawful.



     8.5
Liability of Agents.



          (a) Each of the Agents, when acting on behalf of the Lenders and the Issuing Bank, may
execute any of its respective duties under this Agreement by or through any of its respective
officers, agents and employees, and none of the Agents nor their respective directors, officers,
agents or employees shall be liable to the Lenders or the Issuing Bank or any of them for any action
taken or omitted to be taken in good faith, or be responsible to the Lenders or the Issuing Bank or
to any of them for the consequences of any oversight or error of judgment, or for any loss, except
to the extent of any liability imposed by law by reason of such Agent’s own gross negligence or
willful misconduct. The Agents and their respective directors, officers, agents and employees shall
in no event be liable to the Lenders or the Issuing Bank or to any of them for any action taken or
omitted to be taken by them pursuant to instructions received by them from the Applicable Lenders
or in reliance upon the advice of counsel selected by it. Without limiting the foregoing, none of
the Agents, nor any of their respective directors, officers, employees, or agents (A) shall be
responsible to any Lender or the Issuing Bank for the due execution,
validity, genuineness,
effectiveness, sufficiency, or enforceability of, or for any recital, statement, warranty or
representation in, this Agreement, any Loan Document or any related agreement, document or order, or
(B) shall be required to ascertain or to make any inquiry concerning the performance or observance
by any Borrower of any of the terms, conditions, covenants, or agreements of this Agreement or any
of the Loan Documents, or (C) shall be responsible to any Lender or the Issuing Bank for the state
or condition of any properties of the Borrowers or any other obligor hereunder constituting
Collateral for the Obligations of the Borrowers hereunder, or any information contained in the
books or records of the Borrowers; or (D) shall be responsible to any Lender or the Issuing Bank
for the validity, enforceability, collectibility, effectiveness or genuineness of this Agreement or
any other Loan Document or any other certificate, document or instrument furnished in connection
therewith; or (E) shall be responsible to any Lender or the Issuing Bank for the validity, priority






112









 







or perfection of any lien securing or purporting to secure the Obligations or the value or
sufficiency of any of the Collateral.




          (b) The Agents may execute any of their duties under this Agreement or any other Loan Document
by or through their agents or attorneys-in-fact,and shall be entitled to the advice of counsel
concerning all matters pertaining to their rights and duties hereunder or under the Loan Documents.
The Agents shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by them with reasonable care.




          (c) None of the Agents nor any of their respective directors, officers, employees, or agents
shall have any responsibility to the Borrowers on account of the failure or delay in performance or
breach by any Lender (other than by any Agent in its capacity as a Lender) or the Issuing Bank of
any of their respective obligations under this Agreement or the Notes or any of the Loan Documents
or in connection herewith or therewith.




          (d) The Agents shall be entitled to rely, and shall be fully protected in relying, upon any
notice, consent, certificate, affidavit, or other document or writing believed by them to be
genuine and correct and to have been signed, sent or made by the proper person or persons, and upon
the advice and statements of legal counsel (including, without, limitation, counsel to the
Borrowers), independent accountants and other experts selected by the Agents. The Agents shall be
fully justified in failing or refusing to take any action under this Agreement or any other Loan
Document unless they shall first receive such advice or concurrence of the Applicable Lenders as they
deem appropriate or they shall first be indemnified to their satisfaction by the Lenders against
any and all liability and expense which may be incurred by them by reason of the taking or failing
to take any such action.




     8.6 Notice of Default. The Agents shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Agents have actual knowledge of the same
or has received notice from a Lender or the Lead Borrower referring
to this Agreement, describing
such Default or Event of Default and stating that such notice is a “notice of default”. In the
event that the Agents obtain such actual knowledge or receive such a notice, the Agents shall give
prompt notice there of to each of the Lenders. The Agents shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required Lenders. Unless
and until the Agents shall have received such direction,the Agents
may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to any such Default or Event of
Default as they shall deem advisable in the best interest of the Lenders.



     8.7 Lenders’ Credit Decisions. Each Lender acknowledges that it has, independently and
without reliance upon the Agents or any other Lender, and based on
the financial statements prepared
by the Borrowers and such other documents and information as it has deemed appropriate, made its
own credit analysis and investigation into the business, assets, operations, property, and
financial and other condition of the Borrowers and has made its own decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently
and without reliance upon the Agents 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
determining whether or not conditions precedent to closing any Loan hereunder have been
satisfied and in taking or not taking any action under this Agreement and the other Loan Documents.



     8.8
Reimbursement and Indemnification. Each Lender agrees (i) to reimburse (x) each Agent for
such Lender’s Commitment Percentage of any expenses and fees incurred by such Agent for the benefit
of the Lenders or the Issuing Bank under this Agreement, the Notes and any of the Loan Documents,
including, without limitation, counsel fees and compensation of agents and employees paid for
services



113









 





rendered on behalf of the Lenders or the Issuing Bank, and any other expense incurred in connection
with the operations or enforcement thereof not reimbursed by the Borrowers and (y) each Agent for
such Lender’s Commitment Percentage of any expenses of such Agent incurred for the benefit of the
Lenders or the Issuing Bank that the Borrowers have agreed to reimburse pursuant to Section 9.4 and
have failed to so reimburse and (ii) to indemnify and hold harmless the Agents and any of their
directors, officers, employees, or agents, on demand, in the amount of such Lender’s Commitment
Percentage, 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 it or any of them
in any way relating to or
arising out of this Agreement, the Notes or any of the Loan Documents or any action taken or omitted
by it or any of them under this Agreement, the Notes or any of the Loan Documents to the extent not
reimbursed by the Borrowers (except such as shall result from their respective gross negligence or
willful misconduct). The provisions of this Section 8.8 shall survive the repayment of the
Obligations and the termination of the Commitments.




     8.9 Rights of Agents. It is understood and agreed that Bank of America shall have the same
rights and powers hereunder (including the right to give such instructions) as the other Lenders
and may exercise such rights and powers, as well as its rights and powers under other agreements and
instruments to which it is or may be party, and engage in other transactions with the Borrowers, as
though it were not the Administrative Agent or the Collateral Agent, respectively, of the Lenders
under this Agreement. Without limiting the foregoing, the Agents and their Affiliates may accept
deposits from, lend money to, and generally engage in any kind of commercial or investment
banking, trust, advisory or other business with the Borrowers and their Subsidiaries and Affiliates
as if it were not the Agent hereunder.



     8.10 Notice of Transfer. The Agents may deem and treat a Lender party to this Agreement as the
owner of such Lender’s portion of the Loans for all purposes, unless and until, and except to the
extent, an Assignment and Acceptance shall have become effective as set forth in Section 9.6(b).



     8.11 Successor Agent. Any Agent may resign at any time by giving five (5) Business Days’
written notice thereof to the Lenders, the Issuing Bank, the other Agents and the Lead Borrower.
Upon any such resignation of any Agent, the Required Lenders shall have the right to appoint a
successor Agent, which so long as there is no Default or Event of
Default then in existence shall be
reasonably satisfactory to the Lead Borrower (whose consent shall not be unreasonably withheld or
delayed). If no successor Agent shall have been so appointed by the
Required Lenders and shall have
accepted such appointment, within 30 days after the retiring Agent’s giving of notice of
resignation, the retiring Agent may, on behalf of the Lenders, the other Agents and the Issuing
Bank, appoint a successor Agent which shall be a commercial bank (or affiliate thereof) organized
under the laws of the United States of America or of any State thereof  and having a combined
capital and surplus of a least $500,000,000 which, so long as there is no Default or Event of
Default, shall be reasonably satisfactory to the Lead Borrower (whose consent shall not be
unreasonably withheld or delayed). Upon the acceptance of any appointment as Agent by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. After any retiring Agent’s resignation hereunder
as such Agent, the provisions of this Section 8 shall inure to
its benefit as to any actions taken or
omitted to be taken by it while it was such Agent under this Agreement.



     8.12 Reports and Financial Statements. Promptly after receipt thereof from the Borrowers, the
Administrative Agent shall remit to each Lender and the Collateral Agent copies of all financial
statements required to be delivered by the Borrowers hereunder (or by making such financial
statements available to the Lenders and the Collateral Agent electronically) and all commercial
finance examinations and appraisals of the Collateral received by the Administrative Agent.



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     8.13 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding
under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or any other judicial proceeding relative to any Credit Party, the
Administrative Agent (irrespective of whether the principal of any Loan or Letter of Credit
Outstandings shall then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on the Credit Parties)
shall be entitled and empowered, by intervention in such proceeding or otherwise:



          (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the
Loans, Letter of Credit Outstandings and all other Obligations that are owing and unpaid and to
file such other documents as may be necessary or advisable in order to have the claims of the
Lenders, the Issuing Bank, the Administrative Agent and the other
Secured Parties (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the
Issuing Bank, the Administrative Agent, such Secured Parties and their respective agents and
counsel and all other amounts due the Lenders, the Issuing Bank, the Administrative Agent and such
Secured Parties) allowed in such judicial proceeding; and




          (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;



and any
custodian, receiver, assignee, trustee, liquidator,sequestrator or other similar official in any such
judicial proceeding is hereby authorized by each Lender, the Issuing Bank and each other Secured
Party to make such payments to the Administrative Agent and, if the Administrative Agent shall
consent to the making of such payments directly to the Lenders, the Issuing Bank, and the other
Secured Parties, to pay to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and
any other amounts due the Administrative Agent under this Agreement.




     Nothing
contained herein shall be deemed to authorize the Administrative Agent to authorize
or consent to or accept or adopt on behalf of any Lender, the Issuing Bank or any other Secured
Party any plan of reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender, the Issuing Bank or any other Secured Party or to authorize the
Administrative Agent to vote in respect of the claim of any Lender, the Issuing Bank or any other
Secured Party in any such proceeding.



     8.14 Delinquent Lender.



          (a) If for any reason any Lender shall fail or refuse to abide by its obligations under this
Agreement, including without limitation its obligation to make available to Administrative Agent
its Commitment Percentage of any Revolving Loans, expenses or setoff or purchase its pro rata share
of a participation interest in the Swingline Loans (a “Delinquent Lender”) and such failure is not
cured within one (1) Business Day of receipt from the Administrative Agent of written notice
thereof,then, in addition to the rights and remedies that may be available to the Agents, the other
Lenders, the Borrowers or any other party at law or in equity, and
not in limitation thereof, (i) such
Delinquent Lender’s right to participate in the administration of, or decision-making rights related
to, the Loans, this Agreement or the other Loan Documents shall be suspended during the pendency of
such failure or refusal (provided that no Delinquent Lender’s Commitment may be increased without
its consent), (ii) a Delinquent Lender shall be deemed to have
assigned any and all payments due to
it from the Borrowers, whether on account of outstanding Loans, interest, fees or otherwise, to the
remaining non-delinquent Lenders for application to, and reduction of, their proportionate shares
of all outstanding Loans until, as a result of application of such assigned






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payments the Lenders’ respective Commitment Percentages of all outstanding Loans shall have
returned to those in effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency, and (iii) at the option of the Administrative Agent, any
amount payable to such Delinquent Lender hereunder (whether on account of principal, interest, fees
or otherwise) shall, in lieu of being distributed to such Delinquent Lender, be retained by the
Administrative Agent as cash collateral for future funding obligations of the Delinquent Lender in
respect of any Loan or existing or future participating interest in any Swingline Loan or Letter of
Credit. The Delinquent Lender’s decision-making and participation rights and rights to payments as
set forth in clauses (i) and (ii) hereinabove shall be restored only upon the payment by the
Delinquent Lender of its Commitment Percentage of any Loans, any participation obligation, or
expenses as to which it is delinquent, together with interest thereon at the rate set forth in
Section 2.10 hereof from the date when originally due until the date upon which any such amounts
are actually paid.




          (b) The non-delinquent Lenders shall also have the right, but not the obligation, in
their respective, sole and absolute discretion, to acquire for no cash consideration, (pro rata,
based on the respective Commitments of those Lenders electing to exercise such right) the
Delinquent Lender’s Commitment to fund future Loans (the “Delinquent Lender’s Future
Commitment”). Upon any such purchase of the Commitment Percentage of any Delinquent Lender’s
Future Commitment, the Delinquent Lender’s share in future Loans and its rights under the Loan
Documents with respect thereto shall terminate on the date of purchase, and the Delinquent Lender
shall promptly execute all documents reasonably requested to surrender and transfer such interest,
including, if so requested, an Assignment and Acceptance. Each Delinquent Lender shall indemnify
the Agents and each non-delinquent Lender from and against any and all loss, damage or expenses,
including but not limited to reasonable attorneys’ fees and funds advanced by any Agent or by any
non-delinquent Lender, on account of a Delinquent Lender’s failure to timely fund its pro rata
share of a Loan or to otherwise perform its obligations under the Loan Documents.




     8.15 Agency for Perfection.



     Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Liens for
the benefit of the Agents and the Lenders, in assets which, in accordance with Article 9 of the
UCC, the PPSA or any other Law of the United States or any other jurisdiction can be perfected only
by possession or control. Should any Lender (other than the Agents) obtain possession or control of
any such Collateral, such Lender shall notify the Agents thereof, and, promptly upon the Collateral
Agent’s request therefor shall deliver such Collateral to the Collateral Agent or otherwise deal
with such Collateral in accordance with the Collateral Agent’s instructions.



     8.16 Risk Participation.



          (a) Upon the earlier of Substantial Liquidation or the Determination Date, if all Canadian
Liabilities have not been repaid in full (other than the Other Canadian Liabilities of the Canadian
Borrower and its Subsidiaries), then the Domestic Lenders shall purchase (by way of a
participation) from the Canadian Lenders (on the date of Substantial Liquidation or the
Determination Date, as applicable) such portion of the Canadian Liabilities (other than Other
Canadian Liabilities relating to the Canadian Borrower and its Subsidiaries) so that each Lender
shall, after giving effect to any such purchases, hold its Liquidation Percentage of all
outstanding Canadian Liabilities and all other Obligations.




          (b) Upon the earlier of Substantial Liquidation or the Determination Date, if all
Obligations of the Domestic Borrowers (excluding those Obligations relating to the Canadian
Liabilities or the Other Domestic Liabilities of the Domestic Borrowers) have not been repaid in
full, then the Canadian Lenders shall purchase from the Domestic Lenders (on the date of
Substantial Liquidation or the




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Determination Date, as applicable) such portion of such Obligations so that each Lender shall,
after giving effect to any such purchases, hold its Liquidation Percentage of all outstanding
Obligations of the Domestic Borrowers and the Canadian Liabilities.




          (c) All purchases of Obligations under this Section 8.16 shall be at par, for cash, with
no premium, discount or reduction.




          (d) No Lender shall be responsible for any default of any other Lender in respect of any
other Lender’s obligations under this Section 8.16, nor shall the obligations of any Lender
hereunder be increased as a result of such default of any other Lender. Each Lender shall be obligated to the extent
provided herein regardless of the failure of any other Lender to fulfill its obligations hereunder.




          (e) Each Lender shall execute such instruments, documents and agreements and do such other
actions as may be necessary or proper in order to carry out more fully the provisions and purposes
of this Section 8.16 and the purchase of Obligations or the Canadian Liabilities, as applicable, as
provided herein.




          (f) The obligations of each Lender under this Section 8.16 are irrevocable and
unconditional and shall not be subject to any qualification or exception whatsoever including,
without limitation, lack of validity or enforceability of this Agreement or any of the Loan
Documents or the existence of any claim, setoff, defense or other right which any Credit Party may
have at any time against any of the Lenders.




     No fees required to be paid on any assignment pursuant to Section 9.6(b) of this Agreement
shall be payable in connection with any assignment under this Section 8.16.



     8.17 Co-Syndication Agents and Documentation Agent. Neither the Co-Syndication
Agents, Documentation Agent, nor the Lead Arranger or Bookrunners in their capacity as such, shall
have any obligation, responsibility or required performance hereunder and shall not become liable
in any manner to any party hereto. No party shall have any obligation or liability, or owe any
performance, hereunder, to the Co-Syndication Agents or Documentation Agent, each in their capacity
as such.



     9. MISCELLANEOUS.



     9.1 Notices. Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications provided for herein shall
be in writing and shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:



          (a) if to any Borrower, to it at Genesco Inc. Genesco Park, Suite 488, 1415 Murfreesboro
Road, P.O. Box 731, Nashville, TN 37202-0731 Attention Jim Gulmi, Chief Financial Officer (Telecopy
No. (615) 367-7421), with a copy to Bass, Berry & Sims PLC, 315 Deaderick Street, Suite 2700,
Nashville, TN 37238, Attention: Jennifer H. Noonan (Telecopy No. (615) 742-2765);




          (b) if to the Administrative Agent or the Collateral Agent, to Bank of America, N.A., 100
Federal Street, Boston, Massachusetts 02110, Attention of Matthew Potter (Telecopy No. (617)
434-4313), with a copy to Riemer & Braunstein, LLP, Three Center Plaza, Boston, Massachusetts
02108, Attention: David S. Berman, Esquire (Telecopy No. (617) 880-3456);




          (c) if to any other Lender, to it at its address (or telecopy number) specified in its
Administrative Questionnaire.




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     Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.



     Notices and other communications to the Agents, the Lenders and the Issuing Bank hereunder may
be delivered or furnished by electronic communication (including e-mail and Internet or intranet
websites). Without limiting the foregoing, such notices and other communications shall be deemed to
have been delivered when the Lead Borrower provides notice to the Administrative Agent by e-mail
that such materials are posted on the website of the Securities and Exchange Commission at
www.sec.gov or on another website accessible to the Administrative Agent. The Borrowers
agree that the Administrative Agent may make such materials, as well as any other written
information, documents, instruments and other material relating to the Borrowers or any of their
Subsidiaries or any other materials or matters relating to this Agreement or any of the
transactions contemplated hereby, available to the Lenders by posting such notices on Intralinks or
a substantially similar electronic system. The foregoing shall not apply to notices to any Lender
or the Issuing Bank pursuant to Section 2 if such Lender or the Issuing Bank, as applicable, has
notified the Administrative Agent that it is incapable of receiving notices under such Article by
electronic communication.



     9.2 The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR
THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM
FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER
MATERIALS OR THE PLATFORM. In no event shall the Agents or any of their Related Parties
(collectively, the “Agent Parties”) have any liability to any Credit Party, any Lender, the
Issuing Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the Credit Parties’ or the Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the extent that such
losses, claims, damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Agent Party; provided, however, that in no event shall
any Agent Party have any liability to any Credit Party, any Lender, the Issuing Bank or any other
Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct
or actual damages).



     9.3 Waivers; Amendments.



          (a) No failure or delay by the Agents, the Issuing Bank or any Lender in exercising any
right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of the Agents, the
Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision
of any Loan Document or consent to any departure by Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or issuance




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of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the
Agents, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the
time.




          (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof
may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement
or agreements in writing entered into by the Borrowers and the Required Lenders or, in the case of
any other Loan Document, pursuant to an agreement or agreements in writing entered into by the
Agents and the Borrowers that are parties thereto, in each case with the consent of the Required
Lenders, provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of any Loan or L/C
Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without
the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment
of the principal amount of any Loan or L/C Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of the Commitments or the Maturity Date, without the written consent
of each Lender affected thereby, (iv) change Sections 2.18, 2.21, 2.22, 7.4 or Section 5.4 of the
Security Agreement, without the written consent of each Lender, (v) change any of the provisions of
this Section 9.3 or the definition of the term “Required Lenders”, “Required Supermajority Lenders”
or any other provision of any Loan Document specifying the number or percentage of Lenders required
to waive, amend or modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (vi) release any Borrower or any Guarantor
from its obligations under any Loan Document, or limit its liability in respect of such Loan
Document, without the written consent of each Lender, (vii) except for sales described in Section
6.5 or as permitted in the Security Documents, release all or substantially all of the Collateral
from the Liens of the Security Documents, without the written consent of each Lender, (viii) change
the advance rates contained in the definitions of “Canadian
Borrowing
Base”or, “Domestic
Borrowing Base” or “Tranche A-1
 Borrowing Base” if as a result thereof the amounts
available to be borrowed by the Borrowers would be increased, without the written consent of each
Lender, (ix) increase the Permitted Overadvance, without the written consent of each Lender, (x)
subordinate the Obligations hereunder, or the Liens granted hereunder or under the other Loan
Documents, to any other Indebtedness or Lien, as the case may be without the prior written consent
of each Lender, (xi) except as provided in clause (viii) hereof, change the definitions of
“Canadian Borrowing Base”, “Domestic Borrowing
Base”, “Tranche A-1 Borrowing Base”
or “Combined Borrowing Base” or any component definition thereof if as a result thereof the amounts
available to be borrowed by the Borrowers would be increased, without the written consent of the
Required Supermajority Lenders provided that the foregoing shall not limit the discretion
of the Administrative Agent to change, establish or eliminate any Reserves,
or (xii) change Section 5.9(b) to reduce the number of appraisals and commercial finance
examinations permitted thereby, without the written consent of each Lender, and provided
further that no such agreement shall amend, modify or otherwise affect the rights or duties of
the Agents or the Issuing Bank without the prior written consent of the affected Agent or the
Issuing Bank, as the case may be.




          (c) Notwithstanding anything to the contrary contained in this Section 9.3, in the event
that the Borrowers request that this Agreement or any other Loan Document be modified, amended or
waived in a manner which would require the consent of the Lenders pursuant to Section 9.3(b) and
such amendment is approved by the Required Lenders, but not by the requisite percentage of the
Lenders, the Borrowers and the Required Lenders shall be permitted to amend this Agreement without
the consent of the Lender or Lenders which did not agree to the modification or amendment requested
by the Borrowers (such Lender or Lenders, collectively the “Minority Lenders”) to provide
for (w) the termination of the Commitment of each of the Minority Lenders, (x) the addition to this
Agreement of one or more other financial institutions, or an increase in the Commitment of one or
more of the Required Lenders, so that the aggregate Commitments after giving effect to such
amendment shall be in the same amount as the aggregate Commitments immediately before giving effect
to such amendment, (y) if any Loans are outstanding at the




119









 







time of such amendment, the making of such additional Loans by such new or increasing Lender or
Lenders, as the case may be, as may be necessary to repay in full the outstanding Loans (including
principal, interest, and fees) of the Minority Lenders immediately before giving effect to such
amendment and (z) such other modifications to this Agreement or the Loan Documents as may be
appropriate and incidental to the foregoing.




          (d) No notice to or demand on any Borrower shall entitle any Borrower to any other or further
notice or demand in the same, similar or other circumstances. Each holder of a Note shall be bound
by any amendment, modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or consent and any
consent by a Lender, or any holder of a Note, shall bind any Person subsequently acquiring a Note,
whether or not a Note is so marked. No amendment to this Agreement shall be effective against the
Borrowers unless signed by the Borrowers.




     9.4 Expenses; Indemnity; Damage Waiver.



          (a) Except as otherwise limited herein, the Borrowers shall jointly and severally pay (i)
all reasonable out-of-pocket expenses incurred by the Agents and their Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Agents, outside consultants for each
of them, appraisers, and for commercial finance examinations, in connection with the arrangement of
the credit facilities provided for herein, the preparation and administration of the Loan Documents
or any amendments, modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all
reasonable out-of-pocket expenses incurred by the Agents, the Issuing Bank or any Lender, including
the reasonable fees, charges and disbursements of any counsel and any outside consultants for the
Agents, the Issuing Bank or any Lender, for appraisers, commercial finance examinations, and
environmental site assessments, in connection with the enforcement or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or in connection with
the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of
Credit; provided that the Lenders who are not the Agents or the Issuing Bank shall be
entitled to reimbursement for no more than one counsel representing all such Lenders (absent a
conflict of interest in which case the Lenders may engage and be reimbursed for such additional
counsel as are required in connection with such conflict).




          (b) The Borrowers shall jointly and severally indemnify the Agents, the Issuing Bank and
each Lender, and each Related Party of any of the foregoing Persons (each such Person being called
an “Indemnitee”), against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan
Document or any other agreement or instrument contemplated hereby, the performance by the parties
to the Loan Documents of their respective obligations thereunder or the consummation of the
transactions contemplated by the Loan Documents or any other transactions contemplated hereby, (ii)
any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the
Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii)
any actual or alleged presence or release of Hazardous Materials on or
from any property currently or formerly owned or operated by any Borrower or any other Credit
Party, or any Environmental Liability related in any way to Borrower or any other Credit Party, or
(iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether brought by any Credit Party





120









 







or any other Person, whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related
expenses resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or
any Affiliate of such Indemnitee (or of any officer, director, employee, advisor or agent of such
Indemnitee or any such Indemnitee’s Affiliates). In connection with any indemnified claim
hereunder, the Indemnitee shall be entitled to select its own counsel and the Borrowers shall
promptly pay the reasonable fees and expenses of such counsel.




          (c) To the extent that any Borrower fails to pay any amount required to be paid by it to
the Agents or the Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to the Agents or the Issuing Bank, as the case may be, such Lender’s Commitment
Percentage of such unpaid amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by or asserted
against the Agents or the Issuing Bank.




          (d) To the extent permitted by Applicable Law, no party hereto shall assert, and each
party hereby waives, any claim against any Borrower or Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the transactions contemplated by the Loan Documents, any Loan or
Letter of Credit or the use of the proceeds thereof.




          (e) All amounts due under this Section shall be payable promptly after written demand therefor.




     9.5 Designation of Lead Borrower as Borrowers’ Agent.



          (a) Each Domestic Borrower hereby irrevocably designates and appoints the Lead Borrower as
that Domestic Borrower’s agent to obtain Loans and Letters of Credit hereunder, the proceeds of
which shall be available to each Domestic Borrower for those uses as those set forth herein. As the
disclosed principal for its agent, each Domestic Borrower shall be obligated to the Agents and each
Lender on account of Loans so made and Letters of Credit so issued hereunder as if made directly by
the Lenders to that Domestic Borrower, notwithstanding the manner by which such Loans and Letters
of Credit are recorded on the books and records of the Lead Borrower and of any Domestic Borrower.




          (b) Each Borrower recognizes that credit available to it hereunder is in excess of and on
better terms than it otherwise could obtain on and for its own account and that one of the reasons
therefor is its joining in the credit facility contemplated herein with all other Borrowers.
Consequently, each Borrower hereby assumes, guarantees, and agrees to discharge all Obligations of
all other Borrowers as if the Borrower so assuming and guarantying were each other Borrower;
provided that the Canadian Borrower shall be liable only for the Canadian Liabilities.




          (c) The Lead Borrower shall act as a conduit for each Domestic Borrower (including itself,
as a “Domestic Borrower”) on whose behalf the Lead Borrower has requested a Loan. The Lead Borrower
shall cause the transfer of the proceeds of each Loan to the (those) Domestic Borrower(s) on whose
behalf such Loan was obtained. Neither the Agents nor any Lender shall have any obligation to see
to the application of such proceeds.




          (d) Each of the Borrowers shall remain jointly and severally liable to the Agents and the
Lenders for the payment and performance of all Obligations (which payment and performance shall
continue to be secured by all Collateral granted by each of the Borrowers) notwithstanding any
determination by the Administrative Agent to cease making Loans or causing Letters of Credit to be
issued




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to or for the benefit of any Borrower; provided that the Canadian Borrower shall be liable
only for the Canadian Liabilities and the Collateral granted by the Canadian Borrower shall secure
only the Canadian Liabilities.




          (e) The authority of the Lead Borrower to request Loans on behalf of, and to bind, the
Domestic Borrowers, shall continue unless and until the Administrative Agent acts as provided in
subparagraph (c), above, or the Administrative Agent actually receives





          (i) written notice of: (i) the termination of such authority, and (ii) the
subsequent appointment of a successor Lead Borrower, which notice is signed by the
respective Presidents of each Domestic Borrower (other than the President of the Lead
Borrower being replaced) then eligible for borrowing under this Agreement; and




          (ii) written notice from such successive Lead Borrower (i) accepting such
appointment; (ii) acknowledging that such removal and appointment has been effected by the
respective Presidents of such Domestic Borrowers eligible for borrowing under this
Agreement; and (iii) acknowledging that from and after the date of such appointment, the
newly appointed Lead Borrower shall be bound by the terms hereof, and that as used herein,
the term “Lead Borrower” shall mean and include the newly appointed Lead Borrower.



     9.6 Successors and Assigns.



          (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that no Borrower may assign
or otherwise transfer any of its rights or obligations hereunder without the prior written consent
of each Lender (and any such attempted assignment or transfer without such consent shall be null
and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent
expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Bank and the
Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.




          (b) Any Lender may assign to one or more Eligible Assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it), provided that (i) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an Approved Fund, each of the Lead Borrower (but only if no Event of
Default then exists), the Agents and the Issuing Bank must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case
of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund or an assignment of
the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless the Administrative Agent otherwise
consents, (iii) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500. The assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire. Subject to acceptance and recording
thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the




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assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Section 9.4). Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and obligations in accordance
with paragraph (e) of this Section.




          (c) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall
maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to
it and a register for the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans and L/C Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register shall be
conclusive absent manifest error and the Borrowers, the Administrative Agent, the Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Lead Borrower, the Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior notice.




          (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an
assigning Lender and an assignee, the processing and recordation fee referred to in paragraph (b)
of this Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this paragraph.




          (e) Any Lender may, without the consent of the Borrowers, the Agents, and the Issuing
Bank, sell participations to one or more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it), provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations and (iii) the
Borrowers, the Agents, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation in the
Commitments, the Loans and the Letters of Credit Outstandings shall provide that such Lender shall
retain the sole right to enforce the Loan Documents and to approve any amendment, modification or
waiver of any provision of the Loan Documents, provided that such agreement or instrument
may provide that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section 9.3(b) that affects
such Participant. Subject to paragraph (f) of this Section and Section 2.28, the Borrowers agree
that each Participant shall be entitled to the benefits (and subject to the obligations) of
Sections 2.23, 2.25, and 2.26 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 9.10 as though it were a Lender,
provided such Participant agrees to be subject to Section 2.25(c) as though it were a
Lender.




          (f) A Participant shall not be entitled to receive any greater payment under Section 2.23
or 2.26 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Lead Borrower’s prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.26 unless (i) the Lead
Borrower is notified of the participation sold to




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such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with
Section 2.26(e) as though it were a Lender required to comply with that Section and (ii) such
Participant is eligible for exemption from the withholding tax referred to therein, following
compliance with Section 2.26(e).




          (g) Any Lender may at any time pledge or assign a security interest in all or any portion
of its rights under this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest, provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.




     9.7 Survival. All covenants, agreements, representations and warranties made by
the Borrowers in the Loan Documents and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the execution and delivery of
the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of
any investigation made by any such other party or on its behalf and notwithstanding that the
Agents, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and shall continue in full
force and effect as long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated. The provisions of
Sections 2.23, 2.26, and 9.4 and Section 8 shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans,
the expiration or termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.



     9.8 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement, the other Loan Documents and any separate letter agreements with respect to fees
payable to the Agents constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall
become effective when it shall have been executed by the Agents and the Lenders and when the
Administrative Agent shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.



     9.9 Severability. Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other jurisdiction.



     9.10 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of the Borrowers against
any of and all the obligations of the Borrowers now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender



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shall have made any demand under this Agreement and although such obligations may be unmatured and
regardless of the adequacy of the Collateral. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) that such Lender may have.




     9.11 Governing Law; Jurisdiction; Consent to Service of Process.



          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.




          (b) The Borrowers agree that any suit for the enforcement of this Agreement or any other
Loan Document may be brought in any court of the State of New York sitting in the Borough of
Manhattan or any federal court sitting therein as the Administrative Agent may elect in its sole
discretion and consent to the non-exclusive jurisdiction of such courts. The Borrowers hereby waive
any objection which they may now or hereafter have to the venue of any such suit or any such court
or that such suit is brought in an inconvenient forum. The Borrowers agree that any action
commenced by any Borrower asserting any claim or counterclaim arising under or in connection with
this Agreement or any other Loan Document shall be brought solely in a court of the State of New
York sitting in the Borough of Manhattan or any federal court sitting therein as the Administrative
Agent may elect in its sole discretion and consent to the exclusive jurisdiction of such courts
with respect to any such action. Nothing in this agreement or in any other Loan Document shall
affect any right that any Secured Party may otherwise have to bring any action or proceeding
relating to this agreement or any other Loan Document against any Credit Party or its properties in
the courts of any jurisdiction.




          (c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.1. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.




     9.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION.



     9.13 Headings. Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and shall not affect the construction
of, or be taken into consideration in interpreting, this Agreement.



     9.14 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if
at any time the interest rate applicable to any Loan, together with all fees, charges and other
amounts that are treated as interest on such Loan or otherwise regulated under Applicable Law
(collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance
with Applicable Law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have



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been payable in respect of such Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to such Lender in respect of other
Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.




     9.15 Additional Waivers.



          (a) The Obligations are joint and several obligations of each Borrower, provided
that the Canadian Credit Parties shall be liable only for the Canadian Liabilities. To the fullest
extent permitted by Applicable Law, the obligations of Borrower hereunder shall not be affected by
(i) the failure of any Agent or any other Secured Party to assert any claim or demand or to enforce
or exercise any right or remedy against any other Borrower under the provisions of this Agreement,
any other Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or
any release from any of the terms or provisions of, this Agreement, any other Loan Document, or any
other agreement, with respect to any other Borrower of the Obligations under this Agreement, or
(iii) the failure to perfect any security interest in, or the release of, any of the security held
by or on behalf of the Collateral Agent or any other Secured Party.




          (b) To the fullest extent permitted by Applicable Law, the obligations of each Borrower
hereunder shall not be subject to any reduction, limitation, impairment or termination for any
reason (other than the payment in full in cash of the Obligations), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to
any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Borrower hereunder shall not be discharged or
impaired or otherwise affected by the failure of any Agent or any other Secured Party to assert any
claim or demand or to enforce any remedy under this Agreement, any other Loan Document or any other
agreement, by any waiver or modification of any provision of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Obligations, or by any other act or
omission that may or might in any manner or to any extent vary the risk of any Borrower or that
would otherwise operate as a discharge of any Borrower as a matter of law or equity (other than the
payment in full in cash of all the Obligations).




          (c) To the fullest extent permitted by Applicable Law, each Borrower waives any defense
based on or arising out of any defense of any other Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause of the liability of
any other Borrower, other than the payment in full in cash of all the Obligations. The Collateral
Agent and the other Secured Parties may, at their election, foreclose on any security held by one
or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Borrower, or exercise any other right or remedy available to them
against any other Borrower, without affecting or impairing in any way the liability of any Borrower
hereunder except to the extent that all the Obligations have been paid in full in cash. Pursuant to
Applicable Law, each Borrower waives any defense arising out of any such election even though such
election operates, pursuant to Applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Borrower against any other Borrower,
as the case may be, or any security.




          (d) Upon payment by any Borrower of any Obligations, all rights of such Borrower against
any other Borrower arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of
payment to the prior payment in full in cash of all the Obligations. In addition, any indebtedness
of any Borrower now




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or hereafter held by any other Borrower is hereby subordinated in right of payment to the prior
payment in full of the Obligations. Until the Obligations are paid in full, none of the Borrowers
will demand, sue for, or otherwise attempt to collect any such indebtedness. If any amount shall
erroneously be paid to any Borrower on account of (a) such subrogation, contribution,
reimbursement, indemnity or similar right or (b) any such indebtedness of any Borrower, such amount
shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the
Collateral Agent to be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.




     9.16 Confidentiality. Each of the Lenders agrees that it will use its best efforts
not to disclose without the prior consent of the Borrowers (other than to its employees, auditors,
counsel or other professional advisors, to Affiliates or to another Lender if the Lender or such
Lender’s holding or parent company in its sole discretion determines that any such party should
have access to such information, which party shall be informed of the confidential nature thereof)
any information with respect to any Borrower which is furnished pursuant to this Agreement provided
that any Lender may disclose any such information (a) as has become generally available to the
public, (b) as may be required or appropriate in any report, statement or testimony submitted to
any municipal, state or federal regulatory body having or claiming to have jurisdiction over such
Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors, (c) as may be
required or appropriate in response to any summons or subpoena or in connection with any
litigation, provided that if the Lender is able to do so prior to complying with the summons or
subpoena,
such Lender shall provide the Borrowers with prompt notice of such requested disclosure so
that the Borrowers may seek a protective order or other appropriate remedy (nothing contained
herein however shall result in such Lender’s non-compliance with Applicable Law), (d) in order to
comply with any law, order, regulation or ruling applicable to such Lender, (e) in connection with
the enforcement of remedies under this Agreement and the other Loan Documents, and (f) to any
prospective transferee in connection with any contemplated transfer of any of the Loans or Notes or
any interest therein by such Lender provided that such prospective transferee agrees to be bound by
the provisions of this Section. The Borrowers hereby agree that the failure of a Lender to comply
with the provisions of this Section 9.16 shall not relieve the Borrowers of any of their
obligations to such Lender under this Agreement and the other Loan Documents.



     9.17 Release of Collateral and Guaranty Obligations.



          (a) Notwithstanding anything to the contrary contained herein or in any other Loan
Document, upon request of the Lead Borrower in connection with any disposition of property
permitted by the Loan Documents, the Collateral Agent shall (without notice to or vote or consent
of any Lender, or any Affiliate of any Lender that may be a party to any Hedging Agreement) take
such actions as shall be required to release its security interest in any Collateral being disposed
of in such disposition, and to release any guarantee obligations of a Person being disposed of in
such disposition, to the extent necessary to permit consummation of such disposition in accordance
with this Agreement and the other Loan Documents; provided that the Lead Borrower shall
have delivered to the Administrative Agent, at least five (5) Business Days prior to the date of
the proposed release, a written request for release identifying the relevant Collateral being
disposed of in such disposition and the terms of such disposition in reasonable detail, together
with a certification, in form and substance reasonably acceptable to the Collateral Agent, by the
Lead Borrower stating that such transaction is in compliance with this Agreement and the other Loan
Documents, together with copies of such supporting documentation as the Collateral Agent may
reasonably request, and the Collateral Agent otherwise has determined, in its Permitted Discretion,
that such transaction is in compliance with this Agreement and the other Loan Documents.




          (b) Notwithstanding anything to the contrary contained herein or any other Loan Document,
when all Obligations (excluding Obligations in respect of Hedging Agreements but including any
contingent or indemnity obligations that the Administrative Agent reasonably believes are likely to




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arise or be asserted) have been indefeasibly paid in full in cash, all Commitments have irrevocably
terminated or expired and no Letter of Credit shall be outstanding (or cash collateralized as
provided herein), upon request of the Lead Borrower, the Collateral Agent shall (without notice to
or vote or consent of any Lender, or any Affiliate of any Lender that is a party to any Hedging
Agreement) take such actions as shall be required to release its security interest in all
Collateral, and to release all guarantee obligations provided for in any Loan Document. In
connection with the termination of this Agreement and the release and termination of the security
interests in the Collateral, the Agents may require such indemnities and collateral security as
they shall reasonably deem necessary or appropriate to protect the Secured Parties against (x) loss
on account of credits previously applied to the Obligations that may subsequently be reversed or
revoked, (y) any obligations that may thereafter arise with respect Bank Products and Cash
Management Services, and (z) any contingent indemnification or expense reimbursement Obligations
under Section 9.4 hereof (i) for which a claim has been asserted or has arisen and, (ii) if the
Credit Parties are the subject of a proceeding under any Debtor Relief Law, that the Administrative
Agent reasonably believes are likely to arise or be asserted thereafter.




     9.18 Amendment and Restatement. Effective as of the date hereof, each Borrower
hereby agrees to become a borrower, debtor and obligor under, and to bind itself to, the Existing
Financing Agreements to which Borrowers are bound generally (in each case, as modified and restated
hereby), and, in such capacity, to assume and bind itself to all Obligations of Borrowers
thereunder (as modified and restated hereby). The terms, conditions, agreements, covenants,
representations and warranties set forth in and relating to the Existing Credit Agreement are
hereby amended, restated, replaced and superseded in their entirety by the terms, conditions,
agreements, covenants, representations and warranties set forth in this Agreement. This Agreement
does not extinguish the obligations, including, without limitation, obligations for the payment of
money, outstanding under the Existing Credit Agreement or discharge or release the obligations or
the liens or priority of any mortgage, pledge, security agreement or any other security therefor,
which shall continue, as modified and restated hereby, without interruption and in full force and
effect. Nothing herein contained shall be construed as a substitution or novation of the
obligations outstanding under the Existing Credit Agreement or instruments securing the same, which
shall remain in full force and effect, except in each case as amended, restated, replaced and
superseded hereby or by instruments executed in connection herewith. Nothing expressed or implied
in this Agreement shall be construed as a release or
other discharge of any Borrower or guarantor from any of their obligations or liabilities
under the Existing Financing Agreements or any of the security agreements, pledge agreements,
mortgages, guaranties or other loan documents executed in connection therewith, except in each case
as amended, restated, replaced and superseded hereby or by instruments executed in connection
herewith. Each Borrower hereby confirms and agrees that (i) the Existing Credit Agreement and each
Existing Financing Agreement to which it is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, in each case as amended, restated,
replaced and superseded hereby or by instruments executed in connection herewith, except that on
and after the Effective Date all references in any such Existing Financing Agreement to “the
Agreement”, “thereto”, “thereof” “thereunder” or words of like import referring to the Existing
Credit Agreement shall mean the Existing Credit Agreement as amended, restated, replaced and
superseded by this Agreement; and (ii) to the extent that any such Existing Financing Agreement
purports to assign or pledge to the Collateral Agent for the benefit of the Lenders a security
interest in or lien on, any collateral as security for the Obligations of any Borrower from time to
time existing in respect of the Existing Credit Agreement, such pledge, assignment or grant of the
security interest or lien is hereby ratified and confirmed in all respects in favor of Collateral
Agent for the benefit of Lenders, which shall remain in full force and effect, except as amended,
restated, replaced and superseded hereby or by instruments executed in connection herewith.



     9.19 Commitments. Effective as of the date hereof, the Administrative Agent shall
reallocate the Commitments and Loans of the Lenders hereunder and shall notify the Lenders of any
payment required



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to be made so that the Commitments and Loans of the Lenders are in accordance with Schedule 1.1.
Upon receipt of such notice, each Lender shall make the payments specified therein, if any.




     9.20 Judgment Currency



          (a) If, for the purposes of obtaining judgment in any court in any jurisdiction with
respect to this Agreement or any other Loan Document, it becomes necessary to convert into a
particular currency (the “Judgment Currency”) any amount due under this Agreement or under
any other Loan Document in any currency other than the Judgment Currency (the “Currency
Due”), then conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which judgment is given. For this purpose “rate of exchange” means the rate at
which the applicable Agent is able, on the relevant date, to purchase the Currency Due with the
Judgment Currency in accordance with its normal practice for the applicable currency conversion in
the wholesale market. In the event that there is a change in the rate of exchange prevailing
between the conversion date and the date of actual payment of the amount due, the Credit Parties
will pay such additional amount (if any, but in any event not a lesser amount) as may be necessary
to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange
prevailing on the date of payment, will produce the amount of Currency Due which could have been
purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the
rate of exchange prevailing on the conversion date. If the amount of the Currency Due which the
applicable Agent is so able to purchase is less than the amount of the Currency Due originally due
to it, the applicable Credit Party shall indemnify and save the Agents, the Issuing Bank and the
Lenders harmless from and against all loss or damage arising as a result of such deficiency. This
indemnity shall constitute an obligation separate and independent from the other obligations
contained in this Agreement and the other Loan Documents, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted by any Agent from
time to time and shall continue in full force and effect notwithstanding any judgment or order for
a liquidated sum in respect of an amount due under this Agreement or any other Loan Document or
under any judgment or order.




     9.21 USA Patriot Act Notice. Each Lender and the Administrative Agent (for itself
and not on behalf of any Lender) hereby notifies the Credit Parties that pursuant to the
requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56, signed into law October
26, 2001) (the “Act”), it is required to obtain, verify and record information that identifies the
Credit Parties, which information includes the name and address of each Credit Party and other
information that will allow such Lender or the Administrative Agent, as applicable, to identify
such Credit Party in accordance with the Act.



     9.22 Foreign Asset Control Regulations. Neither of the advance of the Loans nor the use
of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as
amended) (the “Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
(the “Foreign Assets Control Regulations”) or any enabling legislation or executive order
relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a)
Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
“Executive Order”) and (b) the Act). Furthermore, none of the Borrowers or their Affiliates
(a) is or will become a “blocked person” as described in the Executive Order, the Trading With the
Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage in any dealings
or transactions, or be otherwise associated, with any such “blocked person” or in any manner
violative of any such order.



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     9.23 Canadian Anti-Money Laundering Legislation.



          (a) Each Credit Party acknowledges that, pursuant to the Proceeds of Crime Act and other
applicable anti-money laundering, anti-terrorist financing, government sanction and “know your
client” laws (collectively, including any guidelines or orders thereunder, “AML Legislation”), the
Lenders may be required to obtain, verify and record information regarding the Credit Parties and
their respective directors, authorized signing officers, direct or indirect shareholders or other
Persons in control of the Credit Parties, and the transactions contemplated hereby. Each Credit
Party shall promptly provide all such information, including supporting documentation and other
evidence, as may be reasonably requested by any Lender or any prospective assignee or participant
of a Lender, the Issuing Bank or any Agent, in order to comply with any applicable AML Legislation,
whether now or hereafter in existence.




          (b) If the Administrative Agent or Canadian Agent has ascertained the identity of any
Credit Party or any authorized signatories of the Credit Parties for the purposes of applicable AML
Legislation, then the Administrative Agent or Canadian Agent:





          (i) shall be deemed to have done so as an agent for each Lender, and this Agreement
shall constitute a “written agreement” in such regard between each Lender and the
Administrative Agent and/or Canadian Agent within the meaning of the applicable AML
Legislation; and




          (ii) shall provide to each Lender copies of all information obtained in such regard
without any representation or warranty as to its accuracy or completeness.



     Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each
of the Lenders agrees that neither the Administrative Agent nor any other Agent has any obligation
to ascertain the identity of the Credit Parties or any authorized signatories of the Credit Parties
on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains
from any Credit Party or any such authorized signatory in doing so.



     9.24 No Advisory or Fiduciary Responsibility. In connection with all aspects of each
transaction contemplated hereby, the Credit Parties each acknowledge and agree that: (i) the credit
facility provided for hereunder and any related arranging or other services in connection therewith
(including in connection with any amendment, waiver or other modification hereof or of any other
Loan Document) are an arm’s-length commercial transaction between the Credit Parties, on the one
hand, and the Secured Parties, on the other hand, and each of the Credit Parties is capable of
evaluating and understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver
or other modification hereof or thereof); (ii) in connection with the process leading to such
transaction, the each Secured Party is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary, for the Credit Parties or any of their respective
Affiliates, stockholders, creditors or employees or any other Person; (iii) none of the Secured
Parties has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the
Credit Parties with respect to any of the transactions contemplated hereby or the process leading
thereto, including with respect to any amendment, waiver or other modification hereof or of any
other Loan Document (irrespective of whether any of the Secured Parties has advised or is currently
advising any Credit Party or any of its Affiliates on other matters) and none of the Secured
Parties has any obligation to any Credit Party or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth herein and in the
other Loan Documents; (iv) the Secured Parties and their respective Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the Credit Parties and
their



130









 




respective Affiliates, and none of the Secured Parties has any obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Secured Parties
have not provided and will not provide any legal, accounting, regulatory or tax advice with respect
to any of the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and each of the Credit Parties has consulted its
own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. Each of
the Credit Parties hereby waives and releases, to the fullest extent permitted by law, any claims
that it may have against each of the Secured Parties with respect to any breach or alleged breach
of agency or fiduciary duty.




     9.25 Limitation of Canadian Borrower Liability.



     Notwithstanding anything to the contrary herein contained, the liability of the Canadian
Borrower hereunder and under any other Loan Documents shall be limited to the Canadian Liabilities
and the Canadian Borrower shall have no liability whatsoever under the Loan Documents with respect
to any other Obligations of the Domestic Borrowers or the other Domestic Credit Parties.



     9.26 Language.



     The parties herein have expressly requested that this Agreement and all related documents be
drawn up in the English language. A la demande expresse des parties
aux présentes, cette convention
et tout document y afférent ont été rédigés en langue anglaise.



[balance of page left intentionally blank; signature pages follow]




131











 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above written.



	 	 	 	 	 
	 	DOMESTIC BORROWERS:



GENESCO INC. as

Lead Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	GENESCO BRANDS, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HAT WORLD CORPORATION

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HAT WORLD, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	FLAGG BROS. OF PUERTO RICO, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	KEUKA FOOTWEAR, INC.

as a Domestic Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CANADIAN
BORROWER:



GCO CANADA INC.

as Canadian Borrower

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[SIGNATURE PAGES TO FOLLOW]



 









 





	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Administrative Agent, Collateral Agent, an Issuing Bank and a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	Christine HutchinsonMatthew Potter	 
	 	 	Title:

Address:



Attn:


Telephone:

Telecopy:
	DirectorVice President

100 Federal Street, 9th Floor

Boston, Massachusetts 02110

    Ms. Christine HutchinsonMr. Matthew Potter

 (617) 434-23852041

 (617) [      ] 	 
	 




[SIGNATURE PAGES TO FOLLOW]



 









 






	 	 	 	 	 
	 	BANK OF AMERICA, N.A. (ACTING THROUGH ITS

CANADA BRANCH),

as Canadian Agent and a Canadian Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:

Address: 1



Attn:

Telephone:

Telecopy:
 	
                                                       [             ] 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	OTHER LENDERS

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: