Exhibit
10.18


CREDIT
      AGREEMENT
              
              dated
      as of
              
              November
      25, 2009
              
              among
              
              THE
      DRESS BARN, INC.
              
              The
      Borrowing Subsidiaries parties hereto,
              
              The
      Lenders party hereto
              
              and
              
              JPMORGAN
      CHASE BANK, N.A.,
              as
      Administrative Agent
              ___________________________
              
              J.P.
      MORGAN SECURITIES INC. and
              BANC
      OF AMERICA SECURITIES LLC
              as
      Joint Bookrunners and Joint Lead Arrangers,
              
              BANK
      OF AMERICA, N.A.,
              as
      Syndication Agent, and
              
              U.S.
      BANK NATIONAL ASSOCIATION,
              as
      Documentation Agent


i




TABLE OF
CONTENTS




PageARTICLE
      IDefinitionsSECTION
      1.01.
                          Defined
      Terms
                          1SECTION
      1.02.
                          Classification
      of Loans and Borrowings
                          36SECTION
      1.03.
                          Terms
      Generally
                          37SECTION
      1.04.
                          Accounting
      Terms; GAAP
                          37ARTICLE
      IIThe
      CreditsSECTION
      2.01.
                          Commitments
                          37SECTION
      2.02.
                          Loans
      and Borrowings
                          38SECTION
      2.03.
                          Requests
      for Revolving Borrowings
                          38SECTION
      2.04.
                          Protective
      Advances
                          39SECTION
      2.05.
                          Swingline
      Loans and Overadvances
                          40SECTION
      2.06.
                          Letters
      of Credit
                          41SECTION
      2.07.
                          Funding
      of Borrowings
                          46SECTION
      2.08.
                          Interest
      Elections
                          47SECTION
      2.09.
                          Termination
      and Reduction of Commitments; Increase in Revolving
      Commitments
                          48SECTION
      2.10.
                          Repayment
      and Amortization of Loans; Evidence of Debt
                          50SECTION
      2.11.
                          Prepayment
      of Loans
                          51SECTION
      2.12.
                          Fees
                          52SECTION
      2.13.
                          Interest
                          54SECTION
      2.14.
                          Alternate
      Rate of Interest
                          54SECTION
      2.15.
                          Increased
      Costs
                          55SECTION
      2.16.
                          Break
      Funding Payments
                          56SECTION
      2.17.
                          Taxes
                          57SECTION
      2.18.
                          Payments
      Generally; Allocation of Proceeds; Sharing of Set-offs
                          59SECTION
      2.19.
                          Mitigation
      Obligations; Replacement of Lenders
                          62SECTION
      2.20.
                          Defaulting
      Lenders
                          63SECTION
      2.21.
                          Returned
      Payments
                          64SECTION
      2.22.
                          Borrowing
      Subsidiaries
                          64


ii





ARTICLE
      IIIRepresentations
      and WarrantiesSECTION
      3.01.
                Organization;
      Powers
                65SECTION
      3.02.
                Authorization;
      Enforceability; Benefit to Loan Parties
                65SECTION
      3.03.
                Governmental
      Approvals; No Conflicts
                66SECTION
      3.04.
                Financial
      Condition; No Material Adverse Change
                66SECTION
      3.05.
                Properties
                67SECTION
      3.06.
                Litigation
      and Environmental Matters
                67SECTION
      3.07.
                Compliance
      with Laws and Agreements
                68SECTION
      3.08.
                Investment
      Company Status
                68SECTION
      3.09.
                Taxes
                68SECTION
      3.10.
                ERISA;
      Margin Regulations
                68SECTION
      3.11.
                Disclosure
                69SECTION
      3.12.
                Subsidiaries
                69SECTION
      3.13.
                Insurance
                69SECTION
      3.14.
                Labor
      Matters
                69SECTION
      3.15.
                Solvency
                70SECTION
      3.16.
                Collateral
      Matters
                70SECTION
      3.17.
                Use
      of Proceeds
                70SECTION
      3.18.
                Credit
      Card Arrangements
                70ARTICLE
      IVConditionsSECTION
      4.01.
                Effective
      Date
                71SECTION
      4.02.
                Each
      Credit Event
                75ARTICLE
      VAffirmative
      CovenantsSECTION
      5.01.
                Financial
      Statements; Borrowing Base and Other Information
                76SECTION
      5.02.
                Notices
      of Material Events
                79SECTION
      5.03.
                Information
      Regarding Collateral
                80SECTION
      5.04.
                Existence;
      Conduct of Business
                81SECTION
      5.05.
                Payment
      of Obligations
                81SECTION
      5.06.
                Maintenance
      of Properties
                81SECTION
      5.07.
                Insurance
                81SECTION
      5.08.
                Casualty
                81SECTION
      5.09.
                Books
      and Records; Inspection Rights
                81SECTION
      5.10.
                Compliance
      with Laws
                82SECTION
      5.11.
                Use
      of Proceeds
                82


iii





SECTION
      5.12.
                      Appraisals
                      82SECTION
      5.13.
                      Field
      Examinations
                      83SECTION
      5.14.
                      Depository
      Banks
                      83SECTION
      5.15.
                      Additional
      Subsidiaries
                      83SECTION
      5.16.
                      Further
      Assurances
                      83SECTION
      5.17.
                      Credit
      Card Notification Agreements
                      84SECTION
      5.18.
                      Post
      Closing Requirements
                      84ARTICLE
      VINegative
      CovenantsSECTION
      6.01.
                      Indebtedness;
      Certain Equity Securities
                      85SECTION
      6.02.
                      Liens
                      86SECTION
      6.03.
                      Fundamental
      Changes; Restrictions on Dunnigan
                      87SECTION
      6.04.
                      Investments,
      Loans, Advances, Guarantees and Acquisitions
                      87SECTION
      6.05.
                      Asset
      Sales
                      89SECTION
      6.06.
                      Sale
      and Leaseback Transactions
                      90SECTION
      6.07.
                      Swap
      Agreements
                      90SECTION
      6.08.
                      Restricted
      Payments; Certain Payments of Indebtedness
                      91SECTION
      6.09.
                      Transactions
      with Affiliates
                      92SECTION
      6.10.
                      Restrictive
      Agreements
                      92SECTION
      6.11.
                      Amendment
      of Material Documents
                      92SECTION
      6.12.
                      Fixed
      Charge Coverage Ratio
                      93SECTION
      6.13.
                      Minimum
      Liquidity
                      93SECTION
      6.14.
                      Changes
      in Fiscal Periods
                      93ARTICLE
      VIIEvents
      of DefaultARTICLE
      VIIIThe
      Administrative AgentARTICLE
      IXMiscellaneousSECTION
      9.01.
                      Notices
                      99SECTION
      9.02.
                      Waivers;
      Amendments
                      100SECTION
      9.03.
                      Expenses;
      Indemnity; Damage Waiver
                      102


iv





SECTION
      9.04.
                Successors
      and Assigns
                104SECTION
      9.05.
                Survival
                108SECTION
      9.06.
                Counterparts;
      Integration; Effectiveness
                108SECTION
      9.07.
                Severability
                108SECTION
      9.08.
                Right
      of Setoff
                109SECTION
      9.09.
                Governing
      Law; Jurisdiction; Consent to Service of Process
                109SECTION
      9.10.
                WAIVER
      OF JURY TRIAL
                110SECTION
      9.11.
                Headings
                110SECTION
      9.12.
                Confidentiality
                110SECTION
      9.13.
                Several
      Obligations; Nonreliance; Violation of Law
                111SECTION
      9.14.
                USA
      PATRIOT Act
                111SECTION
      9.15.
                Appointment
      for Perfection
                111SECTION
      9.16.
                Interest
      Rate Limitation
                112ARTICLE
      XLoan
      GuaranteeSECTION
      10.01.
                Guarantee
                112SECTION
      10.02.
                Guarantee
      of Payment
                112SECTION
      10.03.
                No
      Discharge or Diminishment of Loan Guarantee
                114SECTION
      10.04.
                Defenses
      Waived
                113SECTION
      10.05.
                Rights
      of Subrogation
                114SECTION
      10.06.
                Reinstatement;
      Stay of Acceleration
                114SECTION
      10.07.
                Information
                114SECTION
      10.08.
                Taxes
                114SECTION
      10.09.
                Maximum
      Liability
                115SECTION
      10.10.
                Contribution
                115SECTION
      10.11.
                Liability
      Cumulative
                116ARTICLE
      XIThe
      Borrower RepresentativeSECTION
      11.01.
                Appointment;
      Nature of Relationship
                116SECTION
      11.02.
                Powers
                116SECTION
      11.03.
                Employment
      of Agents
                116SECTION
      11.04.
                Notices
                117SECTION
      11.05.
                Successor
      Borrower Representative
                117SECTION
      11.06.
                Execution
      of Loan Documents; Borrowing Base Certificate
                117SECTION
      11.07.
                Reporting
                117


v




SCHEDULES:




Schedule
2.01 – Commitment Schedule


Schedule
2.06 – Existing Letters of Credit


Schedule
3.05 – Real Properties


Schedule
3.06 – Disclosed Matters


Schedule
3.12 – Subsidiaries


Schedule
3.13 – Insurance


Schedule
3.18 – Credit Card Arrangements


Schedule
6.01 – Existing Indebtedness


Schedule
6.02 – Existing Liens


Schedule
6.04 – Existing Investments


Schedule
6.10 – Existing Restrictions




EXHIBITS:




Exhibit A
– Form of Assignment and Assumption


Exhibit B
– Form of Opinion of Loan Parties’ Counsel


Exhibit C
– Form of Borrowing Base Certificate


Exhibit D
– Form of Compliance Certificate


Exhibit E
– Joinder Agreement


Exhibit F
– Perfection Certificate


vi


CREDIT
AGREEMENT dated as of November 25, 2009, among THE DRESS BARN, INC., a
Connecticut corporation, the Borrowing Subsidiaries, the other Loan Parties
party hereto, the Lenders party hereto, and JPMORGAN CHASE BANK, N.A., as
Administrative Agent.




The
parties hereto agree as follows:




ARTICLE
I




Definitions




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




“ABR”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, bears interest at a rate determined by reference to
the Alternate Base Rate.




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




“Account Debtor” means
any Person obligated on an Account.




“Acquired Company”
means Tween Brands, Inc., a Delaware corporation.




“Acquired Entity” has
the meaning assigned to such term in Section 6.04.




“Acquisition” means
the Company’s acquisition of all the issued and outstanding equity interests of
the Acquired Company pursuant to the Acquisition Agreement.




“Acquisition
Agreement” means the Agreement and Plan of Merger dated June 24, 2009,
among the Company, Thailand Acquisition Corp., a Delaware corporation and wholly
owned Subsidiary of the Company, and the Acquired Company.




“Adjusted LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period or for
any ABR Borrowing, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for the applicable Interest
Period multiplied by (b) the Statutory Reserve Rate.




“Administrative Agent”
means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the
Lenders hereunder.




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


1


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




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




“Alternate Base Rate”
means, for any day, a rate per annum equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Federal Funds Effective Rate in effect
on such day plus � of 1% per annum and (c) the Adjusted LIBO Rate for a one
month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1% per annum; provided that, for
the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the
rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or
substitute page) at approximately 11:00 a.m. London time on such day (without
any rounding).  Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate,
respectively.




“Amended Acquired Company
Credit Agreement” means the Existing Acquired Company Credit Agreement,
as amended and restated as contemplated by Section 4.01(g).




“Applicable
Percentage” means, with respect to any Lender, with respect to Revolving
Loans, LC Exposure, Swingline Loans, Protective Advances or Overadvances, a percentage
equal to a fraction the numerator of which is such Lender’s Revolving Commitment
and the denominator of which is the aggregate amount of the Revolving
Commitments of all the Lenders (if the Revolving Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments at or
prior to the time of determination); provided that for
purposes of Section 2.20 when a Defaulting Lender shall exist, any such
Defaulting Lender’s Revolving Commitment shall be disregarded in the
calculation.




“Applicable Rate”
means, for any day, with respect to any ABR Loan or Eurodollar Revolving Loan,
as the case may be, the applicable rate per annum set forth in the table below
under the caption “ABR Spread” or “Eurodollar Spread”, as the case may be, based
upon Average Availability for the most recently ended fiscal quarter of the
Company; provided that at all
times prior to the date corresponding to the Effective Date in the sixth month
after the month in which the Effective Date occurs (or, if there is no
corresponding date in such sixth month, the last day of such sixth month), the
“Applicable Rate” shall be the applicable rate per annum set forth below for
Category 1:




Average Availability
                      
                      ABR Spread
                      
                      
                      Eurodollar
                        SpreadCategory
      1
                        ≥$120,000,000
                      
                      
                      2.50
                      %
                      
                      
                      3.50
                      %Category
      2
                        >$60,000,000
      but
                        <$120,000,000
                      
                      
                      2.75
                      %
                      
                      
                      3.75
                      %Category
      3
                        ≤
      $60,000,000
                      
                      
                      3.00
                      %
                      
                      
                      4.00
                      %


2




For
purposes of the foregoing, the Applicable Rate shall be determined as of the end
of each fiscal quarter of the Company based upon the Borrowing Base Certificates
that are delivered from time to time pursuant to Section 5.01(g), with any
changes to the
Applicable  Rate  resulting  from  a  change  in
Average Availability to be
effective  on  the  first day of the first month
following delivery of such Borrowing Base
Certificate.  Notwithstanding the foregoing provisions of this
definition, if the Borrower shall fail to deliver any Borrowing Base Certificate
by the time required under Section 5.01(g), then the Applicable Rate shall be
determined by reference to Category 3 in the table above from and including the
day next following the date on which such Borrowing Base Certificate shall have
been due to but excluding the sixth day after the date on which such Borrowing
Base Certificate shall have been delivered.





“Applicable Share” has
the meaning assigned to such term in Section 10.10.




“Approved Fund” has
the meaning assigned to such term in Section 9.04.




“Arrangers” means,
individually and collectively as the context may require, J.P. Morgan Securities
Inc. and Banc of America Securities LLC, in their capacities as Joint
Bookrunners and Joint Lead Arrangers for the credit facilities established
hereby.




“Assignment and
Assumption” means an assignment and assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required by
Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A
or any other form approved by the Administrative Agent.




“Availability” means,
at any time, an amount equal to (a) the lesser of (i) the aggregate Revolving
Commitments and (ii) the Borrowing Base minus
(b) the Credit Exposure of all Lenders.




“Availability Period”
means the period from and including the Effective Date to but excluding the
earlier of the Maturity Date and the date of termination of the
Commitments.




“Average Availability”
means, with respect to any fiscal quarter of the Company, (a) the sum of
Availability for each day during such fiscal quarter divided by (b) the number
of days in such fiscal quarter.


3


“Banking Services”
means each and any of the following bank services provided to any Loan Party by
any Lender or any of its Affiliates: (a) credit cards for commercial customers
(including, without limitation, “commercial credit cards” and purchasing cards),
(b) stored value cards and (c) treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network
services).




“Banking Services
Obligations” of the Loan Parties means any and all obligations of the
Loan Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.




“Banking Services
Reserves” mean all Reserves which the Administrative Agent from time to
time establishes in its Permitted Discretion for Banking Services then provided
or Banking Services Obligations outstanding.




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




“Borrower” or “Borrowers” means,
individually or collectively, the Company and the Borrowing
Subsidiaries.




“Borrower
Representative” means the Company, in its capacity as contractual
representative of the Borrowers pursuant to Article XI.




“Borrowing” means (a)
Revolving Loans of the same Type, made, converted or continued on the same date
and, in the case of Eurodollar Loans, as to which a single Interest Period is in
effect, (b) a Swingline Loan, (c) a Protective Advance and (d) an
Overadvance.




“Borrowing Base”
means, at any time, an amount equal to the sum of (a) 90% of the Borrowers’
Eligible Credit Card Accounts Receivable at such time, plus
(b) the lesser of (i) 75% of the Borrowers’ Eligible Inventory, valued at the
lower of cost, determined on a first-in-first-out basis, or market value at such
time and (ii) the product of 85% multiplied by the Net Orderly
Liquidation Value percentage identified in the most recent inventory appraisal
ordered by the Administrative Agent multiplied bythe Borrowers’
Eligible Inventory, valued at the lower of cost, determined on a
first-in-first-out basis, or market value, minus
(c) Reserves.  The Administrative Agent may, in its Permitted
Discretion and with not fewer than four Business Days’ prior written notice to
the Company, reduce the advance rates set forth above, adjust Reserves or reduce
one or more of the other elements used in computing the Borrowing
Base.  The Borrowing Base at any time shall be determined by reference
to the most recent Borrowing Base Certificate delivered to the Administrative
Agent pursuant to Section 5.01(g); provided that if any
Borrowing Base Certificate delivered under Section 5.01(g) shall prove to
have been materially inaccurate (regardless of whether any Commitments are in
effect or any amounts are outstanding hereunder when such inaccuracy is
discovered), and such inaccuracy shall have resulted in the payment of any
interest or fees at rates lower than those that were in fact applicable for any
period (based on the actual Borrowing Base), the Borrower shall pay to the
Administrative Agent, for distribution to the Lenders (or former Lenders) as
their interests may appear, the accrued interest or fees that should have been
paid but were not paid as a result of such inaccuracy.


4


“Borrowing Base
Certificate” means a certificate, signed and certified as accurate and
complete by a Financial Officer of the Borrower Representative, in substantially
the form of Exhibit
C or another form which is acceptable to the Administrative Agent in its
Permitted Discretion.




“Borrowing Request”
means a request by the Borrower Representative for a Revolving Borrowing in
accordance with Section 2.03.




“Borrowing Subsidiary”
means, until such time as it ceases to be a Borrowing Subsidiary pursuant to
Section 2.22, each Subsidiary listed as a Borrower on the signature pages hereto
and any other wholly owned Subsidiary designated as a Borrowing Subsidiary
pursuant to Section 2.22.




“Business Day” means
any day that is not a Saturday, Sunday or other day on which commercial banks in
New York City are authorized or required by law to remain closed; provided that, when
used in connection with a Eurodollar 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.




“Capital Expenditures”
means, for any period, (a) the additions to property, plant and equipment and
other capital expenditures of the Company and its Subsidiaries that are (or
would be) set forth in a consolidated statement of cash flows of the Company for
such period prepared in accordance with GAAP and (b) Capital Lease Obligations
or Synthetic Lease Obligations incurred by the Company and its consolidated
Subsidiaries during such period.




“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.




“CFC” means each
Person that is a “controlled foreign corporation” within the meaning of Section
957(a) of the Code.


5


“Change in Control”
means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) other than the Permitted
Investors, of Equity Interests representing more than 30% of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests
of the Company and the percentage of the aggregate ordinary voting power
represented by Equity Interests owned by such Person or group then exceeds the
percentage of the aggregate ordinary voting power represented by Equity
Interests owned by the Permitted Investors; (b) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Company by
Persons who were neither (i) nominated by the board of directors of the
Company nor (ii) appointed by directors so nominated; or (c) the occurrence
of a “change of control”, as defined in the Convertible Note Documents or any
other agreement or instrument governing Material Indebtedness.




“Change in Law” means
(a) the adoption of any law, rule or regulation after the date of this
Agreement, (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 (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or such 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.




“Charges” has the
meaning assigned to such term in Section 9.16.




“Class”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are Revolving Loans, Swingline Loans, Protective
Advances or Overadvances.




“Code” means the
Internal Revenue Code of 1986, as amended from time to time.




“Collateral” means any
and all property owned, leased or operated by a Person covered by the Collateral
Documents (which shall not include any real property or interests therein) and
any and all other property of any Loan Party, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of the Administrative Agent in accordance with the terms of the
Collateral Documents, on behalf of itself and the Lender Parties, to secure the
Secured Obligations.




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




“Collateral and Guarantee
Requirement” means, at any time, the requirement that:




(a)  each
Loan Party shall be an initial party to and a Loan Guarantor under this
Agreement or shall have executed and delivered to the Administrative Agent a
Joinder Agreement pursuant to which it shall have become a party to and a Loan
Guarantor under this Agreement;




(b)  the
Administrative Agent shall have received from each Loan Party either (i) a
counterpart of the Security Agreement, duly executed and delivered on behalf of
such Loan Party, or (ii) in the case of any Subsidiary that becomes a Loan Party
after the Effective Date, instruments in the form or forms specified in the
Security Agreement under which such Loan Party becomes a party to the Security
Agreement, duly executed and delivered on behalf of such Loan
Party;


6


(c)  the
Administrative Agent shall have received all such Collateral Access Agreements,
Deposit Account Control Agreements and other Collateral Documents required to be
provided to it under the Security Agreement, duly executed by the parties
thereto, including copies of Credit Card Notification Agreements distributed to
each of the Borrowers’ credit card processors;




(d)  all
Equity Interests owned by or on behalf of any Loan Party shall have been pledged
pursuant to, and to the extent required by, the Security Agreement and, in the
case of Equity Interests in any Foreign Subsidiary, a Foreign Pledge Agreement
(provided that
the Loan Parties shall not be required to pledge Equity Interests in Foreign
Subsidiaries that are not Eligible Foreign Subsidiaries, and provided further that the Loan
Parties shall not be required to pledge more than 65% of the outstanding Equity
Interests entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) of any such Eligible Foreign Subsidiary), and the Administrative
Agent shall have received certificates or other instruments representing all
such certificated Equity Interests, together with undated stock powers or other
instruments of transfer with respect thereto endorsed in blank, and shall be
satisfied that actions sufficient to give it “control” within the meaning of
Article 9 of the UCC have been taken with respect to all such uncertificated
Equity Interests;




(e)  all
Indebtedness (other than any Indebtedness in principal amount not greater than
$2,500,000, but including all Indebtedness under the Existing Acquired Company
Credit Agreement if such Indebtedness shall have been purchased by the Company
and such credit agreement amended as contemplated by Section 4.01(g)) that is
owing to any Loan Party shall be evidenced by a promissory note and shall have
been pledged pursuant to the Security Agreement and the Administrative Agent
shall have received all such promissory notes, together with undated instruments
of transfer with respect thereto endorsed in blank;




(f)  all
documents and instruments, including Uniform Commercial Code financing
statements, required by law or reasonably requested by the Administrative Agent
to be filed, registered or recorded to perfect the Liens intended to be created
by the Collateral Documents with the priority required by the Collateral
Documents shall have been filed, registered or recorded or delivered to the
Administrative Agent for filing, registration or recording; and




(g)  each
Loan Party shall have obtained all material consents and approvals required in
connection with the execution and delivery of all Collateral Documents to which
it is a party, the performance of its obligations thereunder and the granting by
it of the Liens thereunder.


7


Notwithstanding
the foregoing, any Loan Party formed or acquired after the Effective Date shall
not be required to comply with the foregoing requirements prior to the time
specified in Section 5.15.  The foregoing definition shall not require
the creation or perfection of pledges of or security interests in, or the
obtaining of legal opinions or other deliverables with respect to, particular
assets of the Loan Parties if and for so long as the Administrative Agent, in
consultation with the Company, determines that the cost of creating or
perfecting such pledges or security interests in such assets or obtaining legal
opinions or other deliverables in respect of such assets shall be excessive in
view of the benefits to be obtained by the Lenders therefrom. The Administrative
Agent may grant extensions of time for the creation and perfection of security
interests in or the obtaining of legal opinions or other deliverables with
respect to particular assets (including extensions beyond the Effective Date or
in connection with assets acquired, or Subsidiaries formed or acquired, after
the Effective Date) where it determines that such actions cannot be accomplished
without undue effort or expense by the time or times at which they would
otherwise be required to be accomplished by this Agreement or the Collateral
Documents.




“Collateral Documents”
means, individually and collectively as the context may require, the Security
Agreement, each Collateral Access Agreement, each Credit Card Notification
Agreement, each Deposit Account Control Agreement and each other document
granting a Lien upon any assets of any Loan Party (other than real property or
any interests therein) as security for payment of the Secured
Obligations.




“Commercial LC
Exposure” means, at any time, the sum of (a) the aggregate undrawn amount
of all outstanding Commercial Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements relating to Commercial Letters of
Credit that have not yet been reimbursed by or on behalf of the Borrowers at
such time.  The Commercial LC Exposure of any Lender at any time shall
be its Applicable Percentage of the total Commercial LC Exposure at such
time.




“Commercial Letter of
Credit” means a letter of credit that is (a) designated as a Commercial
Letter of Credit by the Borrower Representative at the time of, or prior to, the
issuance thereof, (b) issued to provide for the payment of the purchase price
for goods or services purchased by a Borrower or a Subsidiary and (c) intended
to be drawn when such purchase price is due and payable and not merely upon the
occurrence of a default or other contingency.




“Commitment” means,
with respect to each Lender, the sum of such Lender’s Revolving Commitment
together with the commitment of such Lender to acquire participations in
Overadvances and Protective Advances hereunder.  The initial amount of
each Lender’s Commitment is set forth on the Commitment Schedule,
or in the Assignment and Assumption or amendment pursuant to which such Lender
shall have assumed its Commitment, as applicable.




“Commitment Schedule”
means Schedule
2.01.




“Company” means The
Dress Barn, Inc., a Connecticut corporation.


8


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




“Consolidated Cash Interest
Expense” means, for any period, the excess of (a) the sum of (i) the cash
interest expense (including (x) imputed interest expense in respect of Capital
Lease Obligations and Synthetic Lease Obligations, (y) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing and (z) net costs under Swap Agreements entered
into to hedge interest rates to the extent such net costs are allocable to such
period in accordance with GAAP) of the Company and the Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP, (ii) any
interest accrued during such period in respect of Indebtedness of the Company or
any Subsidiary that is required to be capitalized rather than included in
consolidated interest expense for such period in accordance with GAAP, plus
(iii) any cash payments made during such period in respect of obligations
referred to in clause (b)(iii) below that were amortized or accrued in a
previous period, minus (b) the sum of (i) interest income of the Company and the
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, (ii) to the extent included in such consolidated interest expense for
such period, non-cash amounts attributable to amortization of financing costs
paid in a previous period, plus (iii) to the extent included in such
consolidated interest expense for such period, non-cash amounts attributable to
amortization of debt discounts or accrued interest payable in kind for such
period.




“Consolidated EBITDA”
means, for any period, Consolidated Net Income for such period plus (a) without
duplication and to the extent deducted in determining such Consolidated Net
Income, the sum of (i) consolidated interest expense for such period, (ii)
consolidated income tax expense for such period, (iii) all amounts attributable
to depreciation and amortization for such period, (iv) any non-cash
extraordinary charges for such period, (v) any non-cash compensation charges,
including arising from restricted stock and stock-option grants, for such
period, (vi) any other non-cash charges (other than the write-down of current
assets) for such period, (vii) fees and expenses paid in connection with the
consummation of the Transactions and cash extraordinary charges in an aggregate
amount for all such fees, expenses and charges not to exceed $40,000,000 (of
which not more than $10,000,000 may be paid or accrued in periods after the
Company’s fiscal year ending July 31, 2010) and (viii) charges attributable to
the integration of the business of the Acquired Company with the business of the
Company that are paid or otherwise accounted for prior to December 31, 2011, in
an amount not to exceed $2,000,000 in any period or $4,000,000 in the aggregate
for all periods, and minus (b) without duplication (i) to the extent not
deducted in determining such Consolidated Net Income, all cash payments made
during such period on account of non-cash charges that were or would have been
added to Consolidated Net Income pursuant to clauses (a)(iv), (a)(v) or (a)(vi)
above in such period or in a previous period and (ii) to the extent
included in determining such Consolidated Net Income, any extraordinary gains
and all non-cash items of income (other than normal accruals in the ordinary
course of business) for such period, all determined on a consolidated basis in
accordance with GAAP.


9


“Consolidated EBITDAR”
means, for any period, Consolidated EBITDA for such period plus, without
duplication and to the extent deducted in determining such Consolidated EBITDA,
Consolidated Rental Expense for such period, all as determined on a consolidated
basis in accordance with GAAP.




“Consolidated Fixed
Charges” means, for any period, the sum, without duplication, of (a)
Consolidated Cash Interest Expense, (b) Consolidated Rental Expense, (c)
mandatory prepayments and scheduled principal payments on, and cash payments
upon the conversion of, Indebtedness made during such period, (d) expense for
taxes paidin cash,
(e) Restricted Payments paid in cash, (f) Capital Lease Obligation payments and
(g) mandatory cash contributions to any Plan, all calculated for the Company and
its Subsidiaries on a consolidated basis.




“Consolidated Net
Income” means, for any period, the net income or loss of the Company and
the Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP; provided that there
shall be excluded (a) the income of any Person (other than the Company) in which
any other Person (other than the Company or any Subsidiary or any director
holding qualifying shares in compliance with applicable law) owns an Equity
Interest, except to the extent of the amount of dividends or other distributions
actually paid to the Company or any of the Subsidiaries during such period, (or,
so long as the declaration or payment of dividends or other distributions by
such first Person is not at the time restricted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, statute, rule or
regulation applicable to such Person, to the extent cash equal to such income
(or the Company’s or any Subsidiary’s ratable portion thereof) is readily
procurable by the Company or such Subsidiary from such Person by causing such
Person to dividend or otherwise distribute such income (or such portion) to the
Company or such Subsidiary) and (b) the income or loss of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with
the Company or any Subsidiary or the date that such Person’s assets are acquired
by the Company or any Subsidiary.




“Consolidated Rental
Expense” means, for any period, the aggregate minimum rental expense of
the Company and the Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP, in respect of all rental obligations under
operating leases.




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




“Convertible Notes”
means the Company’s 2.50% Convertible Senior Notes due 2024, in an initial
aggregate principal amount of $115,000,000.




“Convertible Note
Documents” means the indenture under which the Convertible Notes are
issued and all other instruments, agreements and other documents evidencing or
governing the Convertible Notes or providing for any other right in respect
thereof.


10


“Convertible Notes Conversion
Date” means any day on which the holders of the Convertible Notes have
the right to convert the Convertible Notes under the applicable Convertible
Notes Documents.




“Covenant Period”
means any period (a) commencing on any date when Availability shall have been
less than the greater of (i) 15% of the aggregate Revolving Commitments then in
effect and (ii) $25,000,000 for three consecutive Business Days and (b) ending
on the first day thereafter when Availability shall have been greater than 17.5%
of the aggregate Revolving Commitments then in effect for 30 consecutive
days.




“Credit Card Accounts
Receivable” means (a) any receivables due to any Borrower from a credit
card issuer or credit card processor in connection with purchases of Inventory
of such Borrower on (i) credit cards issued by Visa, MasterCard, American
Express, Discover and any other credit card issuers or providers that are
reasonably acceptable to the Administrative Agent or (ii) private label credit
cards of any Borrower issued through the Company’s credit card program with
Alliance Data Systems under non-recourse arrangements substantially similar to
those in effect on the date hereof, and (b) debit cards and mall cards issued by
issuers or providers that are reasonably acceptable to the Administrative Agent,
in each case which have been earned by performance by such Borrower but not yet
paid to such Borrower by the credit card issuer or the credit card processor, as
applicable.




“Credit Card Notification
Agreements” means each Credit Card Notification Agreement, in form and
substance reasonably satisfactory to the Administrative Agent, executed by the
Borrowers and delivered to the Borrowers’ credit card providers, as the same may
be amended, restated or otherwise modified from time to time.




“Credit Exposure”
means, as to any Lender at any time, the sum of the outstanding principal amount
of such Lender’s Revolving Loans, its LC Exposure, its Swingline Exposure and
its Applicable Percentage of the aggregate principal amount of Protective
Advances and Overadvances outstanding at such time.




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


11




“Defaulting Lender”
means any Lender, as determined by the Administrative Agent, that has (a) failed
to fund any portion of its Loans or participations in Letters of Credit or
Swingline Loans within three Business Days of the date required to be funded by
it hereunder, (b) notified any Borrower, the Administrative Agent, any Issuing
Bank, the Swingline Lender or any Lender in writing that it does not intend to
comply with any of its funding obligations under this Agreement or has made a
public statement to the effect that it does not intend to comply with its
funding obligations under this Agreement or under other agreements in which it
commits to extend credit, (c) failed, within three Business Days after request
by the Administrative Agent, to confirm that it will comply with the terms of
this Agreement relating to its obligations to fund prospective Loans and
participations in then outstanding Letters of Credit and Swingline Loans, (d)
otherwise failed to pay over to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within three Business Days of
the date when due, unless the subject of a good faith dispute, or (e) (i) become
or is insolvent or has a parent company that has become or is insolvent or (ii)
become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment.


“Deposit Account Control
Agreement” has the meaning assigned to such term in the Security
Agreement.




“Disclosed Matters”
means the actions, suits and proceedings and the environmental matters disclosed
in Schedule 3.06.




“Disqualified Stock”
means any capital stock which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event, (a) matures (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part, or requires the payment of
any cash dividend or any other scheduled payment constituting a return of
capital, in each case at any time on or prior to the first anniversary of the
Maturity Date, or (b) is convertible into or exchangeable (unless at the sole
option of the issuer thereof) for (i) cash, (ii) debt securities or (iii) any
capital stock referred to in (a) above, in each case at any time prior to the
first anniversary of the Maturity Date.




“Distribution Center”
means the distribution and office facility owned by Dunnigan and located at 22
Hemion Road and 30 Dunnigan Drive, Suffern, New York 10901.




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




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




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


12


“Dominion Period”
means any period (a) during which any Default under paragraph (a) of Article VII
or any Event of Default has occurred and is continuing or (b) during a Reduced
Availability Period; provided that if all
applicable circumstances described in clauses (a) and (b) shall cease to exist,
the Borrower Representative may, not more than twice during each period of 12
consecutive months, request that the Administrative Agent discontinue the
applicable Dominion Period, and the Administrative Agent will promptly comply
with such request and will provide notification of such discontinuance to the
Borrowers’ credit card processors.




“Dunnigan” means
Dunnigan Realty, LLC, a wholly owned Subsidiary that was formed solely to
purchase, own and operate the Distribution Center.




“Effective Date” means
the date on which the conditions specified in Section 4.01 are satisfied
(or waived in accordance with Section 9.02).




“Eligible Credit Card
Accounts Receivable” means, at any time, the Credit Card Accounts
Receivable of a Borrower which the Administrative Agent determines in its
Permitted Discretion are eligible as the basis for the (i) extension of
Revolving Loans and Swingline Loans and (ii) the issuance of Letters of
Credit.  Without limiting the Administrative Agent’s discretion
provided herein, Eligible Credit Card Accounts Receivable shall not include any
Credit Card Account Receivable:




(a)  which
is not earned or does not represent the bona fide amount due to a Borrower from
a credit card processor and/or credit card issuer that originated in the
ordinary course of business of the applicable Borrower;




(b)  which
is not owned by a Borrower or to which a Borrower does not have good or
marketable title;




(c)  in
which the payee of such Credit Card Account Receivable is a Person other than a
Borrower;




(d)  which
does not constitute an “Account” (as defined in the UCC);




(e)  which
has been outstanding for more than five Business Days (or, in the case of
American Express and for so long as that certain discount rate arrangement
between American Express and the Company shall be in effect, 15 Business Days)
from the date of sale;




(f)  with
respect to which the applicable credit card issuer or credit card processor has
(i) applied for, suffered, or consented to the appointment of any receiver,
interim receiver, custodian, trustee, monitor, administrator, sequestrator or
liquidator of its assets, (ii) has had possession of all or a material part of
its property taken by any receiver, interim receiver, custodian, trustee,
monitor, administrator, sequestrator or liquidator, (iii) filed, or had filed
against it (but only so long as any such involuntary filing has not been stayed
or vacated), any request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or
voluntary or involuntary case under any state, provincial, territorial or
federal bankruptcy laws, (iv) has admitted in writing its inability, or is
generally unable to, pay its debts as they become due, (v) become insolvent or
(vi) ceased operation of its business;


13


(g)  which
is not a valid, legally enforceable obligation of the applicable credit card
issuer or credit card processor with respect thereto;




(h)  which
is not subject to a properly perfected first priority security interest in favor
of the Administrative Agent (for the benefit of the Lender
Parties);




(i)  which
is subject to any Lien other than (i) a Lien in favor of the Administrative
Agent (for the benefit of the Lender Parties) and (ii) any Permitted
Encumbrances contemplated by the applicable processor agreements and for which
appropriate Reserves (as determined by the Administrative Agent in its Permitted
Discretion) have been established;




(j)  with
respect to which any (i) covenant has been breached or (ii) representation or
warranty is not true in all material respects, in each case to the extent
contained in this Agreement, the Security Agreement or in the credit card
agreements relating to such Credit Card Account Receivable; provided that each
such representation and warranty shall be true and correct in all respects to
the extent already qualified by a materiality standard;




(k)  which
is subject to risk of set-off, recoupment, non-collection or not being processed
due to unpaid and/or accrued credit card processor fee balances, to the extent
of the lesser of the balance of the applicable Credit Card Accounts Receivable
or the unpaid credit card processor fees;




(l)  which
is evidenced by “chattel paper” or an “instrument” of any kind unless such
“chattel paper” or “instrument” is in the possession of the Administrative
Agent, and to the extent necessary or appropriate, endorsed to the
Administrative Agent;




(m)  which
the Administrative Agent in its Permitted Discretion determines may not be paid
by reason of the applicable credit card processor’s or credit card issuer’s
inability to pay;




(n)  which
represents a deposit or partial payment in connection with the purchase of
Inventory of such Borrower;




(o)  which
is not subject to a Credit Card Notification Agreement; or




(p)  which
does not meet such other usual and customary eligibility criteria for Credit
Card Accounts Receivable in the Borrowers’ industry generally as the
Administrative Agent in its Permitted Discretion may determine from time to
time; provided,
however, that
the Administrative Agent shall not add any additional eligibility criteria (or
amend any then-existing eligibility criteria to make the same more restrictive)
without giving at least four Business Days’ prior notice to the
Company.


14


In the
event that a Financial Officer has actual knowledge that any credit card issuer
or processor with respect to Eligible Credit Card Accounts Receivable ceases to
comply with the requirements of clause (f), such Borrower or the Borrower
Representative shall notify the Administrative Agent thereof promptly, and in
any event not later than the time of submission to the Administrative Agent of
the next Borrowing Base Certificate.  In determining the amount of an
Eligible Credit Card Account Receivable, the face amount of a Credit Card
Account Receivable may, in the Administrative Agent’s Permitted Discretion, be
reduced by, without duplication, to the extent not reflected in such face
amount, (i) the amount of all customary fees and expenses in connection with any
credit card arrangements and (ii) the aggregate amount of all cash received in
respect thereof but not yet applied by the applicable Borrower to reduce the
amount of such Credit Card Account Receivable.




In the
event that a Credit Card Account Receivable which was previously an Eligible
Credit Card Account Receivable ceases to be an Eligible Credit Card Account
Receivable hereunder (other than by reason of clause (m) or (p)), such Borrower
or the Borrower Representative shall notify the Administrative Agent thereof on
and at the time of submission to the Administrative Agent of the next Borrowing
Base Certificate.  In determining the amount of an Eligible Credit
Card Account Receivable, the face amount of a Credit Card Account Receivable
may, in the Administrative Agent’s Permitted Discretion, be reduced by, without
duplication, to the extent not reflected in such face amount, (i) the amount of
all accrued and actual discounts, claims, credits or credits pending,
promotional program allowances, price adjustments, finance charges or other
allowances (including any amount that such Borrower may be obligated to rebate
to an Account Debtor pursuant to the terms of any agreement or understanding
(written or oral)) applicable to such Credit Card Account Receivable and (ii)
the aggregate amount of all cash received in respect of such Credit Card Account
Receivable but not yet applied by such Borrower to reduce the amount of such
Credit Card Account Receivable.  Standards of eligibility may be made
more restrictive from time to time solely by the Administrative Agent in the
exercise of its Permitted Discretion, with any such changes to be effective four
Business Days after delivery of notice thereof to the Borrower Representative
and the Lenders.




“Eligible Foreign
Subsidiary” means a Foreign Subsidiary that is (x) a first-tier CFC owned
directly by any Borrower or any Domestic Subsidiary that is a “U.S. person”, as
defined under the Code, or (y) described in clause (ii) of the definition of
Foreign Subsidiary.




“Eligible Inventory”
means, at any time, the Inventory of a Borrower which the Administrative Agent
determines in its Permitted Discretion is eligible as the basis for the (i)
extension of Revolving Loans and Swingline Loans and (ii) the issuance of
Letters of Credit.  Without limiting the Administrative Agent’s
discretion provided herein, Eligible Inventory shall not include any
Inventory:


15


(a)  which
is not subject to a first priority perfected Lien in favor of the Administrative
Agent (for the benefit of the Lender Parties);




(b)  which
is subject to any Lien other than (i) a Lien in favor of the Administrative
Agent (for the benefit of the Lender Parties) and (ii) a Permitted Encumbrance
which does not have priority over the Lien in favor of the Administrative Agent
(for the benefit of the Lender Parties);




(c)  which
is determined by the Administrative Agent in its Permitted Discretion to be
unmerchantable, defective, damaged or unfit for sale (as such terms are
customarily used in the Borrowers’ industry), or not salable at prices
approximating at least the cost of such Inventory in the ordinary course of
business or unacceptable due to age, type, category and/or quantity, in each
case, consistent with the usage of such terms in the most recent inventory
appraisal received by the Administrative Agent as contemplated
hereby;




(d)  with
respect to which any covenant, representation, or warranty contained in this
Agreement or the Security Agreement has been breached or is not true or which
does not conform in all material respects to all standards imposed by any
applicable Governmental Authority;




(e)  in
which any Person other than such Borrower shall (i) have any direct or indirect
ownership, interest or title to such Inventory or (ii) be indicated on any
purchase order or invoice with respect to such Inventory as having or purporting
to have an interest therein;




(f)  which
is not finished goods or which constitutes packaging and shipping material,
samples, prototypes, displays or display items, bill-and-hold goods, goods that
are returned or marked for return, repossessed goods, goods held on consignment,
or goods which are not of a type held for sale in the ordinary course of
business (for the avoidance of doubt, sales in the ordinary course of business
includes clearance sales);




(g)  which
is not located in the US or is in transit with a common carrier from vendors and
suppliers; provided, that up to
$20,000,000 of such Inventory in transit shall be included as eligible pursuant
to this paragraph (g) subject to the right of the Administrative Agent, in its
Permitted Discretion and upon not less than four Business Days’ notice, to
exclude such Inventory if it determines that its ability to realize on such
Inventory and the proceeds thereof upon the exercise of remedies would be
uncertain; and provided further, that up to
an additional $35,000,000 of such Inventory in transit may be included as
eligible pursuant to this paragraph (g) so long as (i) the Administrative Agent
shall have received (1) access, during normal business hours and at other times
reasonably requested by the Administrative Agent and upon reasonable prior
notice, to a true and correct copy of the bill of lading and other shipping
documents for such Inventory, (2) evidence of satisfactory casualty insurance
naming the Administrative Agent as loss payee and otherwise covering such risks
as the Administrative Agent may reasonably request, (3) confirmation that the
applicable Borrower has paid for the goods (unless the Borrower’s payment
obligations are covered by a documentary Letter of Credit issued under this
Agreement) and (4) if the bill of lading is (A) non-negotiable, a duly executed
Collateral Access Agreement or other bailee agreement reasonably satisfactory to
the Administrative Agent from the applicable customs broker for such Inventory,
or (B) negotiable, confirmation that the bill is issued in the name of the
Borrower and consigned to the order of the Administrative Agent, and a
reasonably acceptable agreement has been executed with such Borrower’s customs
broker, in which the customs broker agrees that it holds the negotiable bill as
agent for the Administrative Agent and will follow instructions of the
Administrative Agent with respect to the disposition thereof and of the goods,
(ii) the common carrier is not an Affiliate of the applicable vendor or supplier
and (iii) the customs broker is not an Affiliate of any
Borrower;


16


(h)  which
is located in any location leased by the applicable Borrower (other than any
retail store of such Borrower located in a jurisdiction that does not provide
for a common law or statutory landlord’s lien on the personal property of
tenants that would be prior or superior to that of the Administrative Agent)
unless (i) the lessor has delivered to the Administrative Agent a Collateral
Access Agreement or (ii) a Rent Reserve has been established by the
Administrative Agent in its Permitted Discretion;




(i)  which
is located in any third party warehouse or is in the possession of a bailee
(other than a third party processor) and is not evidenced by a Document (other
than bills of lading to the extent permitted pursuant to paragraph (h) above),
unless (i) such warehouseman or bailee has delivered to the Administrative Agent
a Collateral Access Agreement and such other documentation as the Administrative
Agent may require or (ii) an appropriate Reserve has been established by the
Administrative Agent in its Permitted Discretion; provided that up to
$7,500,000 at any one time of such Inventory described in this paragraph and not
meeting the requirements of the preceding clauses (i) and (ii) may be included
as Eligible Inventory to the extent such Inventory is being held for not more
than 60 days in a warehouse pending delivery to a store upon the initial opening
thereof (including the initial opening after the renovation or remodeling of a
store);




(j)  which
is being processed offsite at a third party location or outside processor, or is
in-transit to or from said third party location or outside
processor;




(k)  which
is the subject of a consignment by such Borrower as consignor;




(l) which
contains or bears any intellectual property rights licensed to such Borrower
unless the Administrative Agent is satisfied that it may sell or otherwise
dispose of such Inventory without (i) infringing the rights of such licensor,
(ii) violating any contract with such licensor, or (iii) incurring any liability
with respect to payment of royalties other than royalties incurred pursuant to
sale of such Inventory under the current licensing agreement;


17


(m)  which
is not reflected in a current perpetual inventory report of such Borrower
(unless such Inventory is reflected in a report to the Administrative Agent as
“in transit” Inventory);




(n)  for
which reclamation rights have been asserted by the seller; or




(o)  which
does not meet such other eligibility criteria for Inventory as the
Administrative Agent in its Permitted Discretion may determine from time to
time; provided,
however, that
the Administrative Agent shall not add any additional eligibility criteria (or
amend any then-existing eligibility criteria to make the same more restrictive)
without giving at least four Business Days’ prior notice to the
Company;




provided that in
determining the value of the Eligible Inventory, such value shall be reduced by,
without duplication, any amounts representing (a) Vendor Rebates; (b) costs
included in Inventory relating to advertising; (c) to the extent determined by
the Administrative Agent in its Permitted Discretion to be appropriate, the
shrink reserve; (d) the unreconciled discrepancy between the general inventory
ledger and the perpetual Inventory ledger, to the extent the general Inventory
ledger reflects less Inventory than the perpetual Inventory ledger; and (e) a
reserve for Inventory which is designated or demanded to be returned to or
retained by the applicable vendor or which is recognized as damaged or off
quality by the applicable Borrower.




In the
event that a Financial Officer has actual knowledge that Inventory at any
location having a fair market value of $5,000,000 or more which was previously
Eligible Inventory ceases to be Eligible Inventory hereunder (other than by
reason of clause (c) or (o)), such Borrower or the Borrower Representative shall
promptly notify the Administrative Agent thereof; provided that the
Borrowers shall not be required to deliver an updated Borrowing Base Certificate
until such time as submission to the Administrative Agent of the next Borrowing
Base Certificate is required hereunder; provided further that the Administrative
Agent may, in its reasonable discretion, upon receipt of such notice as set
forth above, adjust Availability to reflect such change in Eligible
Inventory.




“Eligible Successor
Agent” means a bank or financial institution that is organized under the
laws of the United States or any State or district thereof with an office in New
York, New York which has a combined capital surplus of at least
$200,000,000.




“Enhanced Reporting
Period” means any period (a) commencing at any time when Availability
shall be less than 20% of the total Revolving Commitments then in effect and (b)
ending when Availability shall have been greater than 22.5% of the total
Revolving Commitments then in effect for a period of 30 consecutive
days.


18


“Environmental Laws”
means all applicable federal, state, and local laws (including common law),
regulations, rules, ordinances, codes, decrees, judgments, directives, orders
(including consent orders), and binding agreements with any Governmental
Authority in each case, relating to pollution or protection of the environment,
natural resources, human health and safety, or the presence, Release of, or
exposure to, Hazardous Materials, or the generation, manufacture, processing,
distribution, use, treatment, storage, transport, recycling or handling of, or
the arrangement for such activities with respect to, Hazardous
Materials.




“Environmental
Liability” means any liability, claim, action, suit, agreement, judgment
or order arising under or relating to any Environmental Law for any damages,
injunctive relief, losses, fines, penalties, fees, expenses (including
reasonable fees and expenses of attorneys and consultants) or costs, whether
contingent or otherwise, including those arising from or relating to:
(a) compliance or non-compliance with any Environmental Law or permit,
license or approval issued thereunder, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the Release of any
Hazardous Materials or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.




“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity
interest.




“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to
time.




“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with a
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.




“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 any
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 any
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 any Borrower or any of its
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by any
Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from any Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability (or that could reasonably be
expected to result in 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.


19


“Eurodollar”, when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.




“Event of Default” has
the meaning assigned to such term in Article VII.




“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, any Issuing Bank or
any other recipient of any payment to be made by or on account of any obligation
of any Borrower hereunder, (a) income or franchise Taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits Taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction described in clause (a)
above and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by a Borrower under Section 2.19(b)), any withholding Tax that is
imposed by the United States of America and would apply to 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 2.17(f), 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 2.17(a).




“Existing Acquired Company
Credit Agreement” means the Credit Agreement dated as of September 12,
2007, as amended, among the Acquired Company, the lenders party thereto and Bank
of America, N.A., as administrative agent and collateral agent for such
lenders.




“Existing Credit
Agreement” means the Credit Agreement dated as of December 21, 2005, as
amended, among the Company, the lenders party thereto and JPMCB, as
administrative agent and collateral agent for such lenders.




“Existing Letters of
Credit” means the letters of credit referred to on Schedule 2.06 hereto
originally issued under the Existing Credit Agreement and the Existing Acquired
Company Credit Agreement.




“Existing Mortgage”
means the Mortgage, Assignment of Leases and Rents and Security Agreement dated
as of June 24, 2003, given by Dunnigan, as assignor, to John Hancock Life
Insurance Company, as assignee, in the principal amount of $34,000,000, covering
the Distribution Center and securing the Existing Mortgage Loan.




“Existing Mortgage
Loan” means the mortgage loan in the initial principal amount of
$34,000,000 made by John Hancock Life Insurance Company to Dunnigan, the
proceeds of which were used by Dunnigan to finance the purchase of the
Distribution Center, which loan matures in July 2023.


20


“Federal Funds Effective
Rate” means, for any day, 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.




“Financial Officer”
means the chief financial officer, principal accounting officer, treasurer or
controller of a Borrower.




“Fixed Charge Coverage
Ratio” means, for any period, the ratio of (a) (i) Consolidated EBITDAR
for such period minus (ii) Capital Expenditures for such period, to (b)
Consolidated Fixed Charges for such period.  In the event that the
Company or any Subsidiary shall have completed an acquisition (including a
Permitted Acquisition) or disposition of any material Person, division or
business unit since the beginning of the relevant period, the Fixed Charge
Coverage Ratio shall be determined for such period on a pro forma basis as if
such acquisition or disposition, and any related incurrence or repayment of
Indebtedness, had occurred at the beginning of such period.




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




“Foreign Pledge
Agreement” means a pledge or charge agreement granting a Lien on Equity
Interests in a Foreign Subsidiary to secure the Secured Obligations, governed by
the law of the jurisdiction of organization of such Foreign Subsidiary and in
form and substance reasonably satisfactory to the Administrative
Agent.




“Foreign Subsidiary”
means a Subsidiary that (i) is organized under the laws of a jurisdiction other
than the United States or any State thereof or the District of Columbia, or (ii)
substantially all the assets of which consist of Equity Interests of
Subsidiaries defined in clause (i).




“Funding Accounts” has
the meaning assigned to such term in Section 4.01(h).




“GAAP” means generally
accepted accounting principles in the United States of America.




21




“Gift Card Reserve”
means, at any time, the sum of (a) 50% of the aggregate remaining amount at such
time of outstanding gift certificates and gift cards sold by the Borrowers
entitling the holder thereof to use all or a portion of the certificate or gift
card to pay all or a portion of the purchase price of Inventory and (b) 100% of
the aggregate amount at such time of outstanding customer deposits and
merchandise credits entitling the holder thereof to use all or a portion of such
deposit or credit to pay all or a portion of the purchase price of
Inventory.




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




“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 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 to purchase (or to
advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness 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 Indebtedness or (d) as an account party in respect
of any letter of credit or letter of guaranty issued to support such
Indebtedness; provided, that the
term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.




“Guaranteed
Obligations” has the meaning assigned to such term in Section
10.01.




“Hazardous Materials”
means any chemical, material, substance or waste that is prohibited, limited or
regulated by or pursuant to any applicable Environmental Law, including, without
limitation, any petroleum products or byproducts and all other hydrocarbons,
coal ash, radon gas, asbestos-containing materials, urea formaldehyde foam
insulation, polychlorinated biphenyls, chlorofluorocarbons and all other
ozone-depleting substances or mold.




“Indebtedness” of any
Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (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, (d) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (e) all obligations of such Person in respect of the deferred
purchase price of property or services (excluding trade accounts payable
incurred in the ordinary course of business), (f) 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 (but only to the extent of the lesser of (x) the amount of such
Indebtedness and (y) the fair market value of such property, if such
Indebtedness has not been assumed), (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations and Synthetic
Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers’ acceptances.  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 by contract, as a matter of law or otherwise 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.


22


“Indemnified Taxes”
means Taxes other than Excluded Taxes.




“Indemnitee” has the
meaning assigned to such term in Section 9.03(b).




“Information
Materials” means the information package prepared for Lenders relating to
the Borrowers and the Transactions and dated August 2009 and all other written
materials relating to the Borrowers and the Transactions provided to the Lenders
subsequent to the posting of such information package in connection with the
syndication of the Revolving Commitments.




“Interest Election
Request” means a request by the Borrower Representative to convert or
continue a Revolving Borrowing in accordance with
Section 2.08.




“Interest Payment
Date” means (a) with respect to any ABR Loan (other than a Swingline
Loan), the first Business Day of each calendar quarterand the Maturity Date,
(b) with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months’
duration, each day prior to the end of such Interest Period that is three, six
or nine months’ after the first day of such Interest Period, and the Maturity
Date, and (c) with respect to any Swingline Loan, Protective Advance or
Overadvance, the day that such Loan is required to be repaid and the Maturity
Date.




“Interest Period”
means with respect to any Eurodollar 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 (or, with the consent
of each Lender, nine or twelve months) thereafter, as the Borrower
Representative may elect; provided, that (i) 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, in the case
of a Eurodollar Borrowing only, 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 (ii) 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 of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of
a Revolving Borrowing, thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.




23


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




“Issuing Bank” means
(a) each of JPMCB and Bank of America, N.A., in its capacity as an issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.06(i), and (b) solely with respect to any Existing Letter of
Credit, any Lender that shall have issued such Letter of Credit.  An
Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing
Bank” shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.




“JPMCB” means JPMorgan
Chase Bank, N.A., a national banking association, in its individual capacity,
and its successors.




“Joinder Agreement”
has the meaning assigned to such term in Section 5.15.




“Jule” means Jule,
Inc., a Subsidiary of the Company.




“LC Collateral
Account” has the meaning assigned to such term in Section
2.06(j).




“LC Disbursement”
means a payment made by an Issuing Bank pursuant to a Letter of
Credit.




“LC Exposure” means,
at any time, the sum of the Commercial LC Exposure and the Standby LC
Exposure.  The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.




“Lender Parties”
means, individually and collectively as the context may require, the
Administrative Agent, the Lenders and the Issuing Banks.




“Lenders” means the
Persons listed on the Commitment Schedule
and any other Person that shall have become a party hereto pursuant to an
Assignment and Assumption or an amendment referred to in Section 2.09(f), other
than any such Person that shall have ceased to be a party hereto pursuant to an
Assignment and Assumption.  Unless the context otherwise requires, the
term “Lenders” includes the Swingline Lender.




“Letter of Credit”
means each Existing Letter of Credit and any letter of credit issued pursuant to
this Agreement.




24


“LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page
of such Service, or any successor to or substitute for such Service, providing
rate quotations comparable to those currently provided on such page of such
Service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits with a maturity comparable to such Interest
Period.  In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with
respect to such Eurodollar Borrowing for such Interest Period shall be the rate
at which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.




“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.




“Liquidity” means, on
any date of determination, the sum of (a) the aggregate amount of
unrestricted cash, unrestricted cash equivalents and unrestricted short-term
investments of the Loan Parties and (b) Availability.




“Loan Documents” means
this Agreement, any promissory notes issued pursuant to this Agreement, any
Letter of Credit applications, the Collateral Documents, the Loan Guarantee, and
all other agreements, instruments, documents and certificates identified in
Section 4.01 executed and delivered to, or in favor of, the Administrative Agent
or any Lender Party and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, letter of credit agreements and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Loan Party, or any employee of any Loan Party, and delivered to
the Administrative Agent or any Lender Party in connection with the Agreement or
the transactions contemplated thereby.  Any reference in this
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to this Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.




“Loan Guarantee” means
Article X of
this Agreement.




“Loan Guarantor” means
each Loan Party.




25


“Loan Parties” means
the Borrowers, the Borrowers’ Domestic Subsidiaries (other than Dunnigan and
Jule) and any other Person who becomes a party to this Agreement pursuant to a
Joinder Agreement and their successors and assigns.




“Loans” means the
loans and advances made by the Lenders pursuant to this Agreement, including
Swingline Loans, Overadvances and Protective Advances.




“Material Adverse
Change” means any event, development or circumstance that constitutes,
has resulted in or could reasonably be expected to result in a Material Adverse
Effect.




“Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
operations, properties, condition, (financial or otherwise), results of
operations or liabilities (including contingent liabilities) of the Company and
the Subsidiaries taken as a whole, (b) the ability of any Borrower to
perform any of its material obligations under the Loan Documents to which it is
a party, (c) the Collateral, or the Administrative Agent’s Liens (on behalf of
itself and the Lender Parties) on the Collateral or the priority of such Liens
(with materiality to be determined for purposes of this clause (c) in terms of
the Collateral taken as a whole, and not in terms of any individual item of
Collateral), or (d) the rights of or benefits available to the
Administrative Agent, the Issuing Banks or the Lenders under the Loan Documents
(other than, in the case of this clause (d) only, a material adverse effect
caused by any improper action or omission of any Issuing Bank or Lender or the
Administrative Agent).




“Material
Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Company and the Subsidiaries in an aggregate principal amount
exceeding $20,000,000.  For purposes of determining Material
Indebtedness, the “obligations” of the Company or any Subsidiary in respect of
any Swap Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Company or such Subsidiary would be
required to pay if such Swap Agreement were terminated at such
time.




“Maturity Date” means
November 25, 2013, or any earlier date on which the Commitments are reduced
to zero or otherwise terminated pursuant to the terms hereof.




“Maximum Liability”
has the meaning assigned to such term in Section 10.09.




“Maximum Rate” has the
meaning assigned to such term in Section 9.16.




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




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




26


“Net Orderly Liquidation
Value” means, with respect to Inventory of any Person, the orderly
liquidation value thereof, as determined on a basis consistent in all material
respects with the inventory appraisals referred to in Section 4.01(q) (with such
adjustments as shall be deemed appropriate to reflect events or changes in
circumstances after the dates of such appraisals) by an appraiser acceptable to
the Administrative Agent, net of all costs of liquidation thereof.




“Net Proceeds” means,
with respect to any event, (a) the cash proceeds received in respect of
such event including (i) any cash received in respect of any non-cash
proceeds (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but excluding any interest payments), but
only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, net of (b) the sum of
(i) all customary fees and out-of-pocket expenses paid to third parties
(other than Affiliates of the Company) in connection with such event (including
fees and out-of-pocket expenses attributable to claiming such proceeds),
(ii) in the case of a sale, transfer or other disposition of an asset
(including pursuant to a sale and leaseback transaction or a casualty or a
condemnation or similar proceeding), the amount of all payments required to be
made as a result of such event to repay Indebtedness (other than Loans) secured
by such asset or otherwise subject to mandatory prepayment as a result of such
event and (iii) the amount of all taxes paid (or reasonably estimated to be
payable) and the amount of any reserves established to fund contingent
liabilities reasonably estimated to be payable, in each case during the year
that such event occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good faith by a
Financial Officer), including any such reserves established in respect of
indemnification, pension and other post-employment benefit liabilities, workers
compensation liabilities, liabilities associated with retiree benefits or
benefits related to environmental matters.




“Non-Consenting
Lender” has the meaning assigned to such term in Section
9.02(d).




“Non-Paying Guarantor”
has the meaning assigned to such term in Section 10.10.




“Obligated Party” has
the meaning assigned to such term in Section 10.02.




“Obligations” means
all unpaid principal of and accrued and unpaid interest on the Loans, all LC
Exposure, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Loan Parties to the Lenders or to any
Lender, the Administrative Agent, any Issuing Bank or any indemnified party
arising under the Loan Documents, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, fees, costs, expenses and
indemnities that accrue after the commencement by or against any Loan Party or
any Affiliate thereof of any proceeding under any bankruptcy or insolvency laws
naming such Person as the debtor in such proceeding, regardless of whether such
interest, fees costs, expenses and indemnities are allowed claims in such
proceeding.




27


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




“Overadvance” has the
meaning assigned to such term in Section 2.05(b).




“Participant” has the
meaning set forth in Section 9.04.




“Participant Register”
has the meaning set forth in Section 9.04.




“Patriot Act” means
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub.L.
No. 107-56 (Signed into law October 26, 2001)).




“Paying Guarantor” has
the meaning assigned to such term in Section 10.10.




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




“Perfection
Certificate” means a certificate in the form of Exhibit F or any
other form approved by the Administrative Agent.




“Permitted
Acquisition” has the meaning assigned to such term in
Section 6.04(h).




“Permitted Discretion”
means a determination made in good faith and in the exercise of reasonable (from
the perspective of a secured asset-based lender) business judgment.




“Permitted
Encumbrances” means:




(a)  Liens
imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.04;




(b)  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 30 days or are being contested in
compliance with Section 5.04;




(c)  pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;


28


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




(e)  judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;




(f)  easements,
zoning restrictions, rights-of-way and similar encumbrances and exceptions to
title on real property imposed by law or arising in the ordinary course of
business or in the ordinary operation of such real property that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of any
Borrower or any Subsidiary or the ordinary operation of such real
property;




(g)
customary rights of setoff upon deposits of cash in favor of banks and other
depository institutions and Liens of a collecting bank arising under the Uniform
Commercial Code in respect of payment items in the course of
collection;




(h) Liens
arising from precautionary Uniform Commercial Code financing statements
regarding operating leases or consignments;




(i) Liens
arising under the Uniform Commercial Code in favor of custom and forwarding
agents and similar Persons in respect of imported goods and merchandise in the
custody of such Persons; and




(j)
setoff or credit balances of any Borrower or any Subsidiary with credit card
issuers to secure obligations of any Borrower or such Subsidiary, as the case
may be, to any such credit card issuers incurred in the ordinary course of
business as a result of fees and chargebacks;




provided that the
term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.




“Permitted
Investments” means:




(a)  direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from the
date of acquisition thereof;




(b)  investments
in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s;


29


(c)  investments
in certificates of deposit, banker’s acceptances and time deposits maturing
within one year from the date of acquisition thereof issued or guaranteed by or
placed with, 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 which has a combined capital and surplus
and undivided profits of not less than $500,000,000;




(d)  fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c)
above;




(e)  money
market funds that (i) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are
rated AAA by S&P or Aaa by Moody’s and (iii) have portfolio assets of at
least $5,000,000,000;




(f)  marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof and rated,
at the time of the acquisition thereof, at least A by S&P or Moody’s;
and




(g)  investments
in unconsolidated entities that do not constitute subsidiaries of the Borrower;
provided that
the sum of all such investments shall not exceed $35,000,000 in the
aggregate.




“Permitted Investors”
means David Jaffe (or any member of his family that is actively involved in the
management of the Borrower), Armand Correia, Reid Hackney, Lisa Rhodes and
George Goldfarb.




“Permitted Tax
Distribution” means any payment, dividend or distribution by any Loan
Party to the Company in order to pay consolidated or combined federal, state or
local Taxes which payment by the Company is not in excess of the tax liabilities
that would have been payable by the Company and its Subsidiaries on a
stand-alone basis.




“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 any 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.




“Post-Closing Letter
Agreement” means that certain Post-Closing Letter Agreement, dated as of
the date hereof, between the Company and the Administrative Agent, as the same
may be amended, restated or otherwise modified from time to
time.


30


“Prepayment Event”
means:




(a)  any
sale, transfer or other disposition (including pursuant to a sale and leaseback
transaction) of any property or asset of any Loan Party (other than (i) any such
disposition that, together with all related dispositions,  results in
Net Proceeds of less than $5,000,000 and (ii) dispositions described in
Section 6.05(a), (b) or (d)); or




(b)  any
casualty or other insured damage to, or any taking under power of eminent domain
or by condemnation or similar proceeding of, any property or asset of any Loan
Party (other than any such event that results in Net Proceeds of less than
$5,000,000); or




(c)  the
issuance or sale by the Company of any Equity Interests, or the receipt by the
Company of any capital contribution; or




(d)  the
incurrence by any Loan Party of any Indebtedness, other than Indebtedness
permitted under Section 6.01.




“Prime Rate” means the
rate of interest per annum publicly announced from time to time by JPMCB as its
prime rate at its offices at 270 Park Avenue in New York City or any successor
executive office; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being
effective.




“Pro Forma Basis”
means, with respect to compliance with any test or covenant hereunder,
compliance with such covenant or test after giving effect to any proposed
Permitted Acquisition (which term, solely for purposes of this definition, shall
include the Acquisition) or any Restricted Payment or payment in respect of
Indebtedness (collectively, “Pro Forma Events”)
(including pro forma adjustments arising out of events which are directly
attributable to the proposed Pro Forma Event, are factually supportable and are
expected to have a continuing impact, in each case as reasonably determined by
the Company and as certified by a Financial Officer of the Company and approved
by the Administrative Agent) using, for purposes of determining such compliance,
the historical financial statements of any entities or assets so acquired or to
be acquired and the consolidated financial statements of the Company and its
Subsidiaries which shall be reformulated as if such Pro Forma Event, and all
other Pro Forma Event that have been consummated during the period, and any
Indebtedness or other liabilities incurred in connection with any such Pro Forma
Event had been consummated and incurred at the beginning of such
period.




“Pro Forma Compliance”
means, at any date of determination, that the Borrowers shall be in compliance
with the covenant set forth in Section 6.12 for the most recently completed
period of four consecutive fiscal quarters for which financial statements shall
have been delivered to the Administrative Agent pursuant to Section 5.01,
calculated on a Pro Forma Basis in respect of the event giving rise to such
determination.


31


“Protective Advance”
has the meaning assigned to such term in Section 2.04.




“Qualified Capital
Stock” of any Person means any capital stock of such Person that is not
Disqualified Stock.




“Reduced Availability
Period” means any period (a) commencing (i) at any time when Availability
shall be less than 17.5% of the total Revolving Commitments then in effect or
(ii) at any time when Availability shall have been less than 20% of the total
Revolving Commitments then in effect for three consecutive Business Days and (b)
ending when Availability shall have been greater than 22.5% of the total
Revolving Commitments then in effect for a period of 60 consecutive
days.




“Register” has the
meaning set forth in Section 9.04.




“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” means any
actual release, spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into or through the
environment or within or upon any building, structure, facility or
fixture.




“Rent Reserve” with
respect to any leased store, warehouse distribution center, regional
distribution center or depot where any Inventory subject to Liens arising by
operation of law is located, a reserve equal to two months’ rent at such store,
warehouse distribution center, regional distribution center or
depot.




“Report” means reports
prepared by the Administrative Agent or another Person showing the results of
appraisals, field examinations or audits pertaining to the Borrowers’ assets
from information furnished by or on behalf of the Borrowers, after the
Administrative Agent has exercised its rights of inspection pursuant to this
Agreement, which Reports may be distributed to the Lenders by the Administrative
Agent.




“Required Lenders”
means, at any time, Lenders having Credit Exposure and unused Commitments
representing more than 50% of the sum of the total Credit Exposure and unused
Commitments at such time.




“Requirement of Law”
means, as to any Person, the Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is
subject.


32


“Reserves” means any
and all reserves which the Administrative Agent deems necessary, in its
Permitted Discretion, to maintain (including, without limitation, reserves for
accrued and unpaid interest on the Secured Obligations, Rent Reserves, Gift Card
Reserves, Banking Services Reserves and reserves for consignee’s, warehousemen’s
and bailee’s charges, reserves for dilution of Accounts, reserves for Inventory
shrinkage, reserves for customs charges and shipping charges related to any
Inventory in transit, reserves for Swap Obligations, reserves for contingent
liabilities of any Loan Party, reserves for uninsured losses of any Loan Party,
reserves for uninsured, underinsured, un-indemnified or under-indemnified
liabilities or potential liabilities with respect to any litigation and reserves
for taxes, fees, assessments, and other governmental charges) with respect to
the Collateral or any Loan Party.




“Restricted Payment”
means (a) any dividend or other distribution (whether in cash, securities or
other property) with respect to any Equity Interests in the Company or any
Subsidiary, or any payment (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
Equity Interests in the Company or any option, warrant or other right to acquire
any such Equity Interests in the Company and (b) any redemption or repurchase
for cash of the Convertible Notes.




“Revolving Commitment”
means, with respect to each Lender, the commitment of such Lender to make
Revolving Loans and to acquire participations in Letters of Credit, Protective
Advances, Overadvances and Swingline Loans hereunder, expressed as an amount
representing the maximum possible aggregate amount of such Lender’s Credit
Exposure hereunder, as such commitment may be reduced or increased from time to
time pursuant to (a) Section 2.09 and (b) assignments by or to such Lender
pursuant to Section 9.04.  The initial amount of each Lender’s
Revolving Commitment is set forth on the Commitment Schedule,
or in the Assignment and Assumption or amendment pursuant to which such Lender
shall have assumed its Revolving Commitment, as applicable.  The
initial aggregate amount of the Lenders’ Revolving Commitments is
$200,000,000.




“Revolving Loan” means
a Loan made pursuant to Sections 2.01 and 2.02(a).




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




“Secured Obligations”
means all Obligations, together with all (i) Banking Services Obligations and
(ii) Swap Obligations owing to one or more Lenders or their respective
Affiliates; provided that at or
prior to the time that any transaction relating to such Swap Obligation is
executed, the Lender party thereto (if other than JPMCB) shall have delivered
written notice to the Administrative Agent that such a transaction has been
entered into and that it constitutes a Secured Obligation entitled to the
benefits of the Collateral Documents.




“Security Agreement”
means that certain Pledge and Security Agreement, dated as of the date hereof,
between the Loan Parties and the Administrative Agent, for the benefit of the
Lender Parties, and any other pledge or security agreement entered into, after
the date of this Agreement by any other Loan Party (as required by this
Agreement or any other Loan Document), or any other Person, as the same may be
amended, restated or otherwise modified from time to time.


33


“Settlement” has the
meaning assigned to such term in Section 2.05(d).





“Settlement Date” has
the meaning assigned to such term in Section 2.05(d).





“Standby LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Standby Letters of Credit at such time plus (b) the aggregate amount
of all LC Disbursements relating to Standby Letters of Credit that have not yet
been reimbursed by or on behalf of the Borrowers at such time.  The
Standby LC Exposure of any Lender at any time shall be its Applicable Percentage
of the total Standby LC Exposure at such time.




“Standby Letter of
Credit” means all Letters for Credit other than Commercial Letters of
Credit.




“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.  Eurodollar 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.




“Subordinated
Indebtedness” of a Person means any Indebtedness of such Person the
payment of which is subordinated to payment of the Secured
Obligations.




“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, 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 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 or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.


34


“Subsidiary” means any
direct or indirect subsidiary of the Company or a Loan Party, as
applicable.




“Swap Agreement” means
any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions; provided that no
phantom stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrowers or the Subsidiaries shall be a Swap Agreement.




“Swap Obligations” of
a Person means any and all obligations of such Person, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor), under (a) any and all Swap Agreements, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any Swap
Agreement transaction.




“Swingline Exposure”
means, at any time, the sum of the aggregate principal amount of all outstanding
Swingline Loans at such time.  The Swingline Exposure of any Lender at
any time shall be its Applicable Percentage of the total Swingline Exposure at
such time.




“Swingline Lender”
means JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans
hereunder, and its successors and assigns in such capacity.




“Swingline Loan” has
the meaning assigned to such term in Section 2.05(a).




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




“Synthetic Lease”
means, as to any Person, any lease (including leases that may be terminated by
the lessee at any time) of any property (whether real, personal or mixed) (a)
that is accounted for as an operating lease under GAAP and (b) in respect of
which the lessee retains or obtains ownership of the property so leased for US
federal income tax purposes, other than any such lease under which such person
is the lessor.




“Synthetic Lease
Obligations” means, as to any Person, an amount equal to the sum of (a)
the obligations of such person to pay rent or other amounts under any Synthetic
Lease which are attributable to principal and, without duplication, (b) the
amount of any purchase price payment under any Synthetic Lease assuming the
lessee exercises the option to purchase the leased property at the end of the
lease term.




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


35


“Transactions” means
the (a) execution, delivery and performance by the Loan Parties of this
Agreement, the borrowing of the Loans, the use of the proceeds thereof and the
issuance of Letters of Credit hereunder, (b) the creation and perfection of the
security interests provided for in the Collateral Documents, (c) the
consummation of the Acquisition, (d) the termination of and repayment of all
outstanding obligations under the Existing Credit Agreement, (e) the termination
of and repayment of all outstanding obligations under the Existing Acquired
Company Credit Agreement (or the purchase by the Company of all loans
outstanding thereunder and the amendment of such credit agreement as
contemplated by Section 4.01(g)), and (f) the payment of all fees and expenses
in connection with the foregoing.




“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 or the Alternate Base Rate.




“UCC” means the
Uniform Commercial Code as in effect from time to time in the State of New York
or any other state the laws of which are required to be applied in connection
with the perfection of security interests created by the Collateral
Documents.




“Unliquidated
Obligations” means, at any time, any Secured Obligations (or portion
thereof) that are contingent in nature or unliquidated at such time, including
any Secured Obligation that is: (i) an obligation to reimburse a bank for
drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.




“Vendor Rebates” means
credits earned from vendors for volume purchases that reduce net inventory costs
for the Borrowers.




“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.




SECTION
1.02.  Classification of Loans and
Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar
Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”).  Borrowings also may be classified and referred to
by Class (e.g.,
a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar
Revolving Borrowing”).


36


SECTION
1.03.  Terms
Generally.  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, (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 Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (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.




SECTION
1.04.  Accounting Terms;
GAAP.  Except as otherwise expressly provided herein, all terms
of an accounting or financial nature shall be construed in accordance with GAAP,
as in effect from time to time; provided that, if the
Borrower Representative notifies the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate 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
Borrower Representative 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
notice shall have been withdrawn or such provision amended in accordance
herewith; provided that the
Borrower Representative, on the one hand, and the Administrative Agent and
Lenders, on the other hand, agree to negotiate in good faith with respect to any
proposed amendment to eliminate or adjust for the effect of any such change in
GAAP.




ARTICLE
II




The
Credits




SECTION
2.01.  Commitments.  Subject
to the terms and conditions set forth herein, each Lender, severally and not
jointly, agrees to make Revolving Loans to the Borrowers from time to time
during the Availability Period in an aggregate principal amount that will not
result in (i) such Lender’s Credit Exposure exceeding such Lender’s Revolving
Commitment or (ii) the total Credit Exposures exceeding the lesser of (x)
the aggregate Revolving Commitments or (y) the Borrowing Base, subject to the
Administrative Agent’s authority, in its sole discretion, to make Protective
Advances and Overadvances pursuant to the terms of Section 2.04 and
2.05.  Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Revolving Loans.




37


SECTION
2.02.  Loans
and Borrowings.  (a)  Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class.  Any Protective
Advance and any Swingline Loan shall be made in accordance with the procedures
set forth in Section 2.04 and 2.05.




(b)Subject to
Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower Representative may request in
accordance herewith; provided that all
Borrowings made on the Effective Date must be made as ABR Borrowings but may be
converted into Eurodollar Borrowings in accordance with Section 2.08. Each
Swingline Loan shall be an ABR Loan.  Each Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrowers to
repay such Loan in accordance with the terms of this Agreement.




(c)At the
commencement of each Interest Period for any Eurodollar Revolving Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000.




(d)Notwithstanding
any other provision of this Agreement, the Borrower Representative shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.




SECTION
2.03.  Requests for Revolving
Borrowings.  To request a Revolving Borrowing, the Borrower
Representative shall notify the Administrative Agent of such request either in
writing (delivered by hand or facsimile) in a form approved by the
Administrative Agent and signed by the Borrower Representative or by telephone
(a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York
time, three Business Days before the date of the proposed Borrowing or
(b) in the case of an ABR Borrowing, not later than 1:00 p.m., New York
time, on the date of the proposed Borrowing; provided that any
such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e) may be given not later than
12:00 noon, New York time, on the date of the proposed
Borrowing.  Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower Representative.  Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.01:




(i)the name of the applicable
Borrower;




(ii)the aggregate amount of the
requested Borrowing and the manner in which the proceeds of such Borrowing are
to be disbursed (which shall be consistent with Section 2.07);




(iii)the date of such
Borrowing, which shall be a Business Day;


38


(iv)whether such Borrowing is
to be an ABR Borrowing or a Eurodollar Borrowing; and




(v)in the case of a Eurodollar
Borrowing, the initial Interest Period to be applicable thereto, which shall be
a period contemplated by the definition of the term “Interest
Period.”




If no
election as to the Type of Revolving Borrowing is specified, then the requested
Revolving Borrowing shall be an ABR Borrowing.  If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the applicable Borrower(s) shall be deemed to have selected an Interest Period
of one month’s duration.  Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender’s Loan to be
made as part of the requested Borrowing.




SECTION
2.04.  Protective
Advances.  (a)   Subject to the limitations set
forth below, the Administrative Agent is authorized by the Borrowers and the
Lenders, from time to time in the Administrative Agent’s sole discretion (but
shall have absolutely no obligation), to make Loans to the Borrowers, on behalf
of all Lenders, which the Administrative Agent, in its Permitted Discretion,
deems necessary or desirable (i) to preserve or protect the Collateral or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (iii) to pay any other amounts
required to be paid by the Borrowers pursuant to the terms of this Agreement,
including payments of reimbursable expenses (including costs, fees, and expenses
as described in Section 9.03) and other sums payable under the Loan Documents
which have not been paid by the Borrowers after written demand therefor (any of
such Loans are herein referred to as “Protective
Advances”); provided that, the
aggregate amount of Protective Advances outstanding at any time shall not at any
time exceed (i) $10,000,000 in the aggregate or, (ii) together with any
Overadvances outstanding at any time pursuant to Section 2.05, $15,000,000
in the aggregate; provided further
that, the aggregate Credit Exposure shall not exceed the aggregate Revolving
Commitments.  Protective Advances may be made even if the conditions
precedent set forth in Section 4.02 have not been satisfied.  The
Protective Advances shall be secured by the Liens in favor of the Administrative
Agent in and to the Collateral and shall constitute Obligations
hereunder.  All Protective Advances shall be ABR
Borrowings.  The Administrative Agent’s authorization to make
Protective Advances may be revoked at any time by the Required
Lenders.  Any such revocation must be in writing and shall become
effective prospectively upon the Administrative Agent’s receipt
thereof.  At any time that there is sufficient Availability and the
conditions precedent set forth in Section 4.02 have been satisfied, the
Administrative Agent may request the Lenders to make Revolving Loans to repay a
Protective Advance.  At any other time the Administrative Agent may
require the Lenders to fund their risk participations described in Section
2.04(b).


39


(b)Upon the making
of a Protective Advance by the Administrative Agent(whether before or after
the occurrence of a Default), each Lender shall be deemed, without further
action by any party hereto, to have unconditionally and irrevocably purchased
from the Administrative Agent without recourse or warranty, an undivided
interest and participation in such Protective Advance in proportion to its
Applicable Percentage.  From and after the date, if any, on which any
Lender is required to fund its participation in any Protective Advance purchased
hereunder, the Administrative Agent shall promptly distribute to such Lender,
such Lender’s Applicable Percentage of all payments of principal and interest
and all proceeds of Collateral received by the Administrative Agent in respect
of such Protective Advance.




SECTION
2.05.  Swingline Loans and
Overadvances.  (a)   The Administrative Agent,
the Swingline Lender and the Lenders agree that in order to facilitate the
administration of this Agreement and the other Loan Documents, promptly after
the Borrower Representative requests an ABR Borrowing, the Swingline Lender may,
in its discretion, elect to have the terms of this Section 2.05(a) apply to such
Borrowing Request by advancing, on behalf of the Lenders and in the amount
requested, same day funds to the Borrowers, on the applicable Borrowing date to
the Funding Account(s) (each such Loan made solely by the Swingline Lender
pursuant to this Section 2.05(a) is referred to in this Agreement as a “Swingline Loan”),
with settlement among them as to the Swingline Loans to take place on a periodic
basis as set forth in Section 2.05(d).  Each Swingline Loan shall be
subject to all the terms and conditions applicable to other ABR Loans funded by
the Lenders, except that all payments thereon shall be payable to the Swingline
Lender solely for its own account.  The aggregate amount of Swingline
Loans outstanding at any time shall not exceed $20,000,000.   The
Swingline Lender shall not make any Swingline Loan if the requested
Swingline Loan exceeds Availability (before giving effect to such Swingline
Loan).  All Swingline Loans shall be ABR Borrowings.




(b)Any provision of
this Agreement to the contrary notwithstanding, at the request of the Borrower
Representative, the Administrative Agent may in its sole discretion (but with
absolutely no obligation), make Revolving Loans to the Borrowers, on behalf of
the Lenders, in amounts that exceed Availability (any such excess Revolving
Loans are herein referred to collectively as “Overadvances”); provided that no
Overadvance shall result in a Default due to Borrowers’ failure to comply with
Section 2.01 for so long as such Overadvance remains outstanding in accordance
with the terms of this paragraph, but solely with respect to the amount of such
Overadvance.  In addition, Overadvances may be made even if the
condition precedent set forth in Section 4.02(c) has not been
satisfied.  All Overadvances shall constitute ABR
Borrowings.  The authority of the Administrative Agent to make
Overadvances is limited to an aggregate amount not to exceed
(i) $10,000,000 at any time outstanding or, (ii) together with all
Protective Advances outstanding at any time pursuant to Section 2.04,
$15,000,000 at any time outstanding. No Overadvance may remain outstanding for
more than sixty days and no Overadvance shall cause any Lender’s Credit Exposure
to exceed its Revolving Commitment; provided that the
Required Lenders may at any time revoke the Administrative Agent’s authorization
to make Overadvances.  Any such revocation must be in writing and
shall become effective prospectively upon the Administrative Agent’s receipt
thereof.


40


(c)Upon the making
of a Swingline Loan or an Overadvance (whether before or after the occurrence of
a Default and regardless of whether a Settlement has been requested with respect
to such Swingline Loan or Overadvance), each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably
purchased from the Swingline Lender or the Administrative Agent, as the case may
be, without recourse or warranty, an undivided interest and participation in
such Swingline Loan or Overadvance in proportion to its Applicable Percentage of
the aggregate Revolving Commitments.  The Swingline Lender or the
Administrative Agent may, at any time, require the Lenders to fund their
participations.  From and after the date, if any, on which any Lender
is required to fund its participation in any Swingline Loan or Overadvance
purchased hereunder, the Administrative Agent shall promptly distribute to such
Lender its Applicable Percentage of all payments of principal and interest and
all proceeds of Collateral received by the Administrative Agent in respect of
such Loan.




(d)The
Administrative Agent, on behalf of the Swingline Lender, shall request
settlement (a “Settlement”) with the
Lenders on at least a weekly basis or on any earlier date that the
Administrative Agent elects, by notifying the Lenders of such requested
Settlement by facsimile, telephone, or e-mail no later than 1:00 p.m. New York
time on the date of such requested Settlement (the “Settlement
Date”).  Each Lender (other than the Swingline Lender, in the
case of the Swingline Loans) shall transfer the amount of such Lender’s
Applicable Percentage of the outstanding principal amount of the applicable Loan
with respect to which Settlement is requested to the Administrative Agent, to
such account of the Administrative Agent as the Administrative Agent may
designate, not later than 3:00 p.m., New York time, on such Settlement
Date.  Settlements may occur during the existence of a Default and
whether or not the applicable conditions precedent set forth in Section 4.02
have then been satisfied.  Such amounts transferred to the
Administrative Agent shall be applied against the amounts of the Swingline
Lender’s Swingline Loans and, together with Swingline Lender’s Applicable
Percentage of such Swingline Loan, shall constitute Revolving Loans of such
Lenders, respectively.  If any such amount is not transferred to the
Administrative Agent by any Lender on such Settlement Date, the Swingline Lender
shall be entitled to recover such amount on demand from such Lender together
with interest thereon as specified in Section 2.07.




SECTION
2.06.  Letters of
Credit.  (a)    General.  Subject
to the terms and conditions set forth herein, the Borrower Representative may
request the issuance of Letters of Credit for its own account or for the account
of another Borrower, in a form reasonably acceptable to the Administrative Agent
and the Issuing Banks, at any time and from time to time during the Availability
Period.  In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrowers to, or
entered into by the Borrowers with, an Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall
control.


41


(b)Notice of Issuance,
Amendment, Renewal, Extension; Certain Conditions.  To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower Representative shall hand deliver or
facsimile (or transmit by electronic communication, if arrangements for doing so
have been approved by the applicable Issuing Bank) to the applicable Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this
Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit.  If requested by an
Issuing Bank, the applicable Borrower also shall submit a letter of credit
application on such Issuing Bank’s standard form in connection with any request
for a Letter of Credit.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrowers shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed $150,000,000, (ii) the Standby LC
Exposure shall not exceed $25,000,000, and (iii) the total Credit Exposures
shall not exceed the lesser of (x) the aggregate Revolving Commitments or (y)
the Borrowing Base.




(c)Expiration
Date.  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 Business Days prior to the Maturity Date; provided that a
Letter of Credit may expire at a later date if the applicable Borrower shall
have deposited cash collateral in an LC Collateral Account pursuant to Section
2.06(j) in an amount equal to 103% of the undrawn face amount of such Letter of
Credit.  Any Letter of Credit may provide by its terms that it may be
automatically extended for additional successive one year periods on terms
reasonably acceptable to the applicable Issuing Bank.  Any Letter of
Credit providing for automatic extension shall be extended upon the then current
expiration date without any further action by any Person unless the applicable
Issuing Bank shall have given notice to the applicable beneficiary (with a copy
to the applicable Borrower) of the election by such Issuing Bank not to extend
such Letter of Credit, such notice to be given not fewer than 30 days prior to
the then current expiration date of such Letter of Credit; provided that no
Letter of Credit may be extended automatically or otherwise beyond the date that
is five Business Days prior to the Maturity Date (other than in accordance with
this clause (c)).




(d)Participations.  By
the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of the
applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each
Lender, and each Lender hereby acquires from such Issuing Bank, a participation
in such Letter of Credit equal to such Lender’s Applicable Percentage of the
aggregate amount available to be drawn under such Letter of
Credit.  In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of such Issuing Bank, such Lender’s Applicable Percentage
of each LC Disbursement made by such Issuing Bank and not reimbursed by the
Borrowers on the date due as provided in paragraph (e) of this Section, or of
any reimbursement payment required to be refunded to the Borrowers for any
reason.  Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.


42


(e)Reimbursement.  If
an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit,
the Borrowers shall, following notice of such LC Disbursement to the Borrower
Representative, reimburse such LC Disbursement by paying to the Administrative
Agent an amount equal to such LC Disbursement not later than 1:00 p.m., New York
time, on the date that such LC Disbursement is made, if the Borrower
Representative shall have received notice of such LC Disbursement prior to 10:00
a.m., New York time, on such date, or, if such notice has not been received by
the Borrower Representative prior to such time on such date, then not later than
1:00 p.m., New York time, on (i) the Business Day that the Borrower
Representative receives such notice, if such notice is received prior to 10:00
a.m., New York time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower Representative receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that the
Borrowers may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 or 2.05 that such payment be financed with an
ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrowers’ obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan.  If the Borrowers fail to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrowers in respect thereof and such Lender’s
Applicable Percentage thereof.  Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrowers, in the same manner as
provided in Section 2.07 with respect to Loans made by such Lender (and
Section 2.07 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), and the Administrative Agent shall promptly
pay to such Issuing Bank the amounts so received by it from the
Lenders.  Promptly following receipt by the Administrative Agent of
any payment from the Borrowers pursuant to this paragraph, the Administrative
Agent shall distribute such payment to the applicable Issuing Bank or, to the
extent that Lenders have made payments pursuant to this paragraph to reimburse
such Issuing Bank, then to such Lenders and such Issuing Bank as their interests
may appear.  Any payment made by a Lender pursuant to this paragraph
to reimburse an Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans or a Swingline Loan as contemplated above) shall not
constitute a Loan and shall not relieve the Borrowers of their obligation to
reimburse such LC Disbursement.


43


(f)Obligations
Absolute.  The Borrowers’ joint and several obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
any Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not substantially comply with the terms of such Letter
of Credit, or (iv) any other event or circumstance 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.  None of the
Administrative Agent, the Lenders or the Issuing Banks, or any of their Related
Parties, 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 Banks; provided that the
foregoing shall not be construed to excuse any 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 any Borrower that are caused by
any 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 or wilful misconduct on the part of an Issuing Bank (as finally
determined by a court of competent jurisdiction), such 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 which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, an
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, 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.




(g)Disbursement
Procedures.  Each Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit.  Each Issuing Bank shall promptly
notify the Administrative Agent and the applicable Borrower by telephone
(confirmed by facsimile) of such demand for payment and whether such Issuing
Bank has made or will make an LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrowers
of their obligation to reimburse such Issuing Bank and the Lenders with respect
to any such LC Disbursement.


44


(h)Interim
Interest.  If any Issuing Bank shall make any LC Disbursement,
then, unless the Borrowers shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrowers reimburse such LC Disbursement, at
the rate per annum then applicable to ABR Revolving Loans; provided that, if the
Borrowers fail to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.13(d) shall
apply.  Interest accrued pursuant to this paragraph shall be for the
account of the applicable Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to paragraph (e) of this
Section to reimburse the Issuing Bank shall be for the account of such Lender to
the extent of such payment.




(i)Replacement of the Issuing
Banks.  Any Issuing Bank may be replaced at any time by written
agreement among the Borrower Representative, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank.  The
Administrative Agent shall notify the Lenders of any such replacement of an
Issuing Bank.  At the time any such replacement shall become
effective, the Borrowers shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.12(b).  From and after
the effective date of any such replacement, (i) the successor Issuing Bank shall
have all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein
to the term “Issuing Bank” shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require.  After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of
Credit.




(j)Cash
Collateralization.  If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower Representative receives notice
from the Administrative Agent or the Required Lenders demanding the deposit of
cash collateral pursuant to this paragraph, the Borrowers shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders (the “LC Collateral
Account”), an amount in cash equal to 103% of the LC Exposure as of such
date plus accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to any Borrower described in clause (h) or (i) of
Article VII.  Such deposit shall be held by the Administrative
Agent as collateral for the payment and performance of the Secured
Obligations.  The Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account and
the Borrowers hereby grant the Administrative Agent a security interest in the
LC 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 Administrative Agent 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 account shall be applied by the Administrative Agent to reimburse the
applicable Issuing Bank for LC Disbursements 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 LC Exposure at such
time or, if the maturity of the Loans has been accelerated, be applied to
satisfy other Secured Obligations.  If the Borrowers are required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrowers within three Business Days after all Events of
Default have been cured or waived.  If any Borrower is required to
provide an amount of cash collateral hereunder pursuant to Section 2.11(b),
such amount (to the extent not applied as aforesaid) shall be returned to such
Borrower as and to the extent that, after giving effect to such return, the
Borrowers would remain in compliance with Section 2.11(b) and no Event of
Default shall have occurred and be continuing.


45


(k)Existing Letters of
Credit.  On the Effective Date, each Existing Letter of Credit
shall, automatically and without further action, be deemed to be a Letter of
Credit that has been issued hereunder as of the Effective Date for all purposes
hereof and of the other Loan Documents, and no issuance or similar fees (as
distinguished from ongoing participation or fronting fees) will be required in
connection with the Existing Letters of Credit.  Without limiting the
foregoing (i) each such Existing Letter of Credit shall be included in the
calculation of the LC Exposure, (ii) all liabilities of the Borrowers and the
other Loan Parties with respect to such Existing Letters of Credit shall
constitute Obligations and (iii) each Lender shall have reimbursement
obligations with respect to such Existing Letters of Credit as provided in this
Section 2.06.  Notwithstanding any other provision contained in this
Section 2.06, no Existing Letter of Credit that has not been issued by an
Issuing Bank referred to in clause (a) of the definition of such term may be
renewed or extended.




SECTION
2.07.  Funding of
Borrowings.  (a)   Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., New York time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders in an amount equal to such Lender’s Applicable Percentage of the
requested Borrowing; provided that,
Swingline Loans shall be made as provided in Section 2.05.  The
Administrative Agent will make such Loans available to the Borrower
Representative by promptly crediting the amounts so received, in like funds, to
the Funding Account(s); provided that ABR
Revolving Loans made to finance the reimbursement of (i) an LC Disbursement as
provided in Section 2.06(e) shall be remitted by the Administrative Agent to the
applicable Issuing Bank and (ii) a Protective Advance or an Overadvance shall be
retained by the Administrative Agent.


46


(b)Unless the
Administrative Agent 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 such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the applicable Borrower 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, then the
applicable Lender and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
applicable Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrowers, the interest rate applicable to ABR Loans, but without prejudice to
any claim the Borrowers may have against such Lender.  If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender’s Loan included in such Borrowing.




SECTION
2.08.  Interest
Elections.  (a)   Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request.  Thereafter,
the Borrower Representative may elect to convert such Borrowing to a different
Type or to continue such Borrowing and, in the case of a Eurodollar Revolving
Borrowing, may elect Interest Periods therefor, all as provided in this
Section.  The Borrower Representative may elect different options with
respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.  This Section shall not apply to
Swingline Borrowings, Overadvances or Protective Advances, which may not be
converted or continued.




(b)To make an
election pursuant to this Section, the Borrower Representative shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrowers were requesting a
Revolving Borrowing of the Type resulting from such election to be made on the
effective date of such election.  Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower Representative.




(c)Each telephonic
and written Interest Election Request shall specify the following information in
compliance with Section 2.02:




(i)the Borrower and the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);




(ii)the effective date of the
election made pursuant to such Interest Election Request, which shall be a
Business Day;


47


(iii)whether the resulting
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and




(iv)if the resulting Borrowing
is a Eurodollar Borrowing, the Interest Period to be applicable thereto after
giving effect to such election, which shall be a period contemplated by the
definition of the term “Interest Period”.




If any
such Interest Election Request requests a Eurodollar Borrowing but does not
specify an Interest Period, then the Borrowers shall be deemed to have selected
an Interest Period of one month’s duration.




(d)Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender’s portion of
each resulting Borrowing.




(e)If the Borrower
Representative fails to deliver a timely Interest Election Request with respect
to a Eurodollar Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower Representative, then, so long as
an Event of Default is continuing (i) no outstanding Revolving Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end
of the Interest Period applicable thereto.




SECTION
2.09. Termination and
Reduction of Commitments; Increase in Revolving Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity
Date.




(b)The Borrowers may
at any time terminate the Commitments upon (i) the payment in full of all
outstanding Loans, together with accrued and unpaid interest thereon and on any
LC Disbursements, (ii) the cancellation and return of all outstanding Letters of
Credit (or alternatively, with respect to each such Letter of Credit, the
furnishing to the Administrative Agent of a cash deposit (or at the discretion
of the Administrative Agent a back up Standby Letter of Credit reasonably
satisfactory to the Administrative Agent) equal to 103% of the portion of the LC
Exposure attributable to such Letter of Credit as of such date), (iii) the
payment in full of all accrued and unpaid fees and (iv) the payment in full of
all reimbursable expenses and other Obligations together with accrued and unpaid
interest thereon.




(c)The Borrowers may
from time to time reduce the Revolving Commitments; provided that (i)
each reduction of the Revolving Commitments shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the
Borrowers shall not reduce the Revolving Commitments if, after giving effect to
any concurrent prepayment of the Revolving Loans in accordance with Section
2.11, the sum of the Credit Exposures would exceed the lesser of the total
Revolving Commitments and the Borrowing Base.


48


(d)The Borrower
Representative shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) or (c) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof.  Promptly following receipt of any notice, the Administrative
Agent shall advise the Lenders of the contents thereof.  Each notice
delivered by the Borrower Representative pursuant to this Section shall be
irrevocable; provided that a
notice of termination of the Commitments delivered by the Borrower
Representative may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower Representative (by notice to the Administrative Agent on or prior to
specified effective date) if such condition is not satisfied.  Any
termination or reduction of the Commitments shall be permanent.  Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.




(e)The Borrowers
shall have the right to increase the aggregate Revolving Commitments by
obtaining additional Revolving Commitments, either from one or more of the
Lenders or from one or more other lending institutions; provided that (i) no
Lender hereunder shall have any obligation to provide any such requested
increase, (ii) any such request for an increase shall be in a minimum amount of
$10,000,000, (iii) the aggregate amount of all additional Revolving Credit
Commitments obtained under this paragraph shall not exceed $50,000,000,
(iv) the Administrative Agent shall have approved the identity of any such
new Lender, such approval not to be unreasonably withheld, conditioned or
delayed, (v) any such new Lender shall assume all the rights and obligations of
a “Lender” hereunder, and (vi) the procedure described in Section 2.09(f) shall
have been satisfied.




(f)Any amendment
hereto for such an increase or addition shall be in form and substance
satisfactory to the Administrative Agent and shall only require the written
signatures of the Administrative Agent, the Borrowers and the Lender(s) being
added or increasing their Commitments, subject only to the approval of all
Lenders if any such increase would cause the aggregate amount of all additional
Revolving Credit Commitments obtained under paragraph (e) of this Section to
exceed $50,000,000.  As a condition precedent to such an increase, the
Borrower Representative shall deliver to the Administrative Agent (i) a
certificate of each Loan Party signed by an authorized officer of such Loan
Party (A) certifying and attaching the resolutions adopted by such Loan Party
approving or consenting to such increase, and (B) in the case of the Borrowers,
certifying that, before and after giving effect to such increase, (x) the
representations and warranties contained in Article III and the other Loan
Documents are true and correct in all material respects, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they are true and correct as of such earlier date, and (y) no
Default exists and (ii) an opinion of counsel to the Loan Parties as to the
power and authority of the Loan Parties to effect such increase and such other
customary and related matters as the Administrative Agent may reasonably
request.


49


(g)Within a
reasonable time after the effective date of any increase, the Administrative
Agent shall, and is hereby authorized and directed to, revise the Commitment Schedule
to reflect such increase and shall distribute such revised Commitment Schedule
to each of the Lenders and the Borrowers, whereupon such revised Commitment Schedule
shall replace the old Commitment Schedule
and become part of this Agreement.  On the Business Day following any
such increase, all outstanding ABR Advances shall be reallocated among the
Lenders (including any newly added Lenders) in accordance with the Lenders’
respective revised Applicable Percentages.  Eurodollar Advances shall
be reallocated among the Lenders at the expiration of the applicable Interest
Periods in effect at the time of any such increase.




SECTION
2.10.  Repayment and
Amortization of Loans; Evidence of Debt.  (a)  The
Borrowers hereby unconditionally promise to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan on the Maturity Date and (ii) to the Administrative Agent the
then unpaid amount of each Protective Advance and Overadvance on the earlier of
the Maturity Date and demand by the Administrative Agent therefor.




(b)On each Business
Day during any Dominion Period,  the Administrative Agent shall apply
all funds credited to a Concentration Account on such Business Day or the
immediately preceding Business Day (at the discretion of the Administrative
Agent, whether or not immediately available) first to prepay any
Protective Advances and Overadvance that may be outstanding and second to prepay the
Revolving Loans (including Swingline Loans) and to cash collateralize
outstanding LC Exposure.




(c)Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrowers to such Lender resulting from each Loan made
by such Lender, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.




(d)The
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.




(e)The entries made
in the accounts maintained pursuant to paragraph (c) or (d) of this Section
shall be primafacie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrowers
to repay the Loans in accordance with the terms of this
Agreement.


50


(f)Any Lender may
request that Loans made by it be evidenced by a promissory note.  In
such event, the Borrowers shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by the
Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).




SECTION
2.11.  Prepayment of
Loans.  (a)  The Borrowers shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with paragraph (e) of this
Section.




(b)Except for
Protective Advances permitted under Section 2.04 and Overadvances permitted
under Section 2.05, in the event and on such occasion that the total Credit
Exposure exceeds the lesser of (A) the aggregate Revolving Commitments and (B)
the Borrowing Base, the Borrowers shall prepay the Revolving Loans, LC Exposure
and/or Swingline Loans in an aggregate amount equal to such excess.




(c)In the event and
on each occasion that any Net Proceeds are received by or on behalf of any Loan
Party in respect of any Prepayment Event, the Borrowers shall, immediately after
such Net Proceeds are received by any Loan Party, prepay the Obligations as set
forth in paragraph (d) below in an aggregate amount equal to 100% of such Net
Proceeds.




(d)All prepayments
pursuant to paragraph (c) of this Section shall be applied, first to prepay any
Protective Advances and Overadvances that may be outstanding, pro rata, and
second to
prepay the Revolving Loans (including Swingline Loans) without a corresponding
reduction in the Revolving Commitment, and third, if a Dominion
Period shall be in effect, to cash collateralize outstanding LC
Exposure.




(e)The Borrower
Representative shall notify the Administrative Agent (and, in the case of
prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by
facsimile) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York time, three
Business Days before the date of prepayment or (ii) in the case of prepayment of
an ABR Revolving Borrowing, not later than 11:00 a.m., New York time, on the
date of prepayment.  Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09.  Promptly following receipt of any
such notice relating to a Revolving Borrowing, the Administrative Agent shall
advise the Lenders of the contents thereof.  Each partial prepayment
of any Revolving Borrowing shall be in an amount that would be permitted in the
case of an advance of a Revolving Borrowing of the same Type as provided in
Section 2.02.  Each prepayment of a Revolving Borrowing shall be
applied ratably to the Revolving Loans included in the prepaid
Borrowing.  Prepayments shall be accompanied by accrued interest to
the extent required by Section 2.13.


51


(f)Amounts to be
applied pursuant to this Section 2.11 to prepay any Eurodollar Borrowing shall
be deposited in a Breakage Prepayment Account (as defined below) if the
applicable Borrower so requests in order to avoid the incurrence of costs under
Section 2.16.  On the last day of the Interest Period of such
Eurodollar Borrowing, the Administrative Agent shall apply any cash on deposit
in such Breakage Prepayment Account to amounts due in respect of such Eurodollar
Borrowing until all amounts due in respect thereof have been satisfied (with any
remaining funds being returned to the Borrower Representative) or until all the
allocable cash on deposit has been exhausted.  For purposes of this
paragraph (f), the term “Breakage Prepayment
Account” shall mean an account established by the Borrower Representative
with the Administrative Agent and over which the Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal for
application in accordance with this paragraph (f).  The Administrative
Agent will, at the request of the Borrower Representative, invest amounts on
deposit in a Breakage Prepayment Account in short-term, cash equivalent
investments selected by the Administrative Agent in consultation with the
Borrower Representative that mature on or prior to the last day of the Interest
Period of the applicable Eurodollar Borrowing; provided, however, that the
Administrative Agent shall have no obligation to invest amounts on deposit in a
Breakage Prepayment Account if a Default or an Event of Default shall have
occurred and be continuing.  The Borrowers shall indemnify the
Administrative Agent for any losses relating to the investments made at the
request or direction of the Borrower Representative so that the amount available
to prepay amounts due in respect of the applicable Eurodollar Borrowing on the
last day of the applicable Interest Period is not less than the amount that
would have been available had no investments been made pursuant
thereto.  Other than any interest earned on such investments (which
shall be for the account of the Borrowers, to the extent not necessary for the
prepayment of Eurodollar Borrowings in accordance with this Section), the
Breakage Prepayment Account shall not bear interest.  Interest or
profits, if any, on such investments in the Breakage Prepayment Account shall be
deposited in the Breakage Prepayment Account and reinvested and disbursed as
specified above.  If the maturity of the Loans and all amounts due
hereunder has been accelerated pursuant to Article VII, the Administrative Agent
may, in its sole discretion, apply all amounts on deposit in the Breakage
Prepayment Account to satisfy any of the Obligations (and the Borrowers have
pursuant to the Security Agreement or another Collateral Document granted to the
Administrative Agent a security interest in the Breakage Prepayment Account to
secure such Obligations).




SECTION
2.12.  Fees.  (a)  The
Borrowers agree to pay to the Administrative Agent for the account of each
Lender a commitment fee, which shall accrue for each day on the amount of the
unused Revolving Commitment of such Lender on such day at a rate equal to 0.50%
per annum.  Accrued commitment fees shall be payable in arrears on the
first Business Day of each January, April, July and October, commencing on the
first such date to occur after the Effective Date, and on the date on which the
Revolving Commitments terminate.  All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed.  For purposes of computing commitment fees,
the Revolving Commitment of a Lender shall be deemed to be used to the extent of
the outstanding Revolving Loans and LC Exposure of such Lender (and the
Swingline Exposure and participations in Protective Advances and Overadvances of
such Lender shall be disregarded for such purpose).


52


(b)The Borrowers
agree to pay (i) to the Administrative Agent for the account of each Lender a
participation fee with respect to its participations in Letters of Credit, which
shall accrue at a rate equal to (A) in the case of Standby Letters of Credit,
the Applicable Rate used to determine the interest rate applicable to Eurodollar
Revolving Loans and (B) in the case of Commercial Letters of Credit, 50% of such
Applicable Rate, in each case on the average daily amount of such Lender’s LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender’s Revolving Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, and
(ii) to each Issuing Bank a fronting fee, which shall accrue at the rate or
rates per annum separately agreed upon between the Company and such Issuing
Bank, on the average daily amount of the LC Exposure attributable to Letters of
Credit issued by such Issuing Bank (excluding any portion thereof attributable
to unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date of termination of the
Revolving Commitments and the date on which there ceases to be any LC Exposure,
as well as such Issuing Bank’s standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder.  Participation fees and fronting fees accrued
through and including the last day of each calendar month shall be payable on
the first Business Day of the next succeeding month, commencing on the first
such date to occur after the Effective Date; provided that all
such fees shall be payable on the date on which the Revolving Commitments
terminate and any such fees accruing after the date on which the Commitments
terminate shall be payable on demand.  Any other fees payable to the
Issuing Banks pursuant to this paragraph shall be payable within 10 days after
demand.  All participation fees and fronting fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed.




(c)The Borrowers
agree to pay to the Administrative Agent, for its own account, fees in the
amounts and payable at the times separately agreed upon between the Company and
the Administrative Agent.




(d)All fees payable
hereunder shall be paid on the dates due, in immediately available funds, to the
Administrative Agent (or to the applicable Issuing Bank, in the case of fees
payable to it) for distribution, in the case of commitment fees and
participation fees, to the Lenders.  Fees paid shall not be refundable
under any circumstances (absent manifest error in the amount
paid).


53


SECTION
2.13.  Interest.  (a)  The
Loans comprising each ABR Borrowing (including each Swingline Loan) shall
bear interest at the Alternate Base Rate plus the Applicable Rate.




(b)The Loans
comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Rate.




(c)Each Protective
Advance and Overadvance shall bear interest at the Alternate Base Rate plus the
Applicable Rate for ABR Revolving Loans plus 2% per annum.




(d)Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrowers hereunder is not paid when due (after giving
effect to any applicable grace period), whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to (i) in the case of overdue
principal of any Loan, 2% per annum plus the rate otherwise applicable to such
Loan as provided in the preceding paragraphs of this Section or (ii) in the
case of any other amount, 2% per annum plus the rate applicable to ABR Revolving
Loans as provided in paragraph (a) of this Section.




(e)Accrued interest
on each Loan (for ABR Loans, accrued through the last day of the prior calendar
quarter) shall be payable in arrears on each Interest Payment Date for such Loan
and upon termination of the Commitments; provided that (i)
interest accrued pursuant to paragraph (d) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Loan (other than
a prepayment of an ABR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.




(f)All interest
hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the
Alternate Base Rate is based on the Prime Rate shall be computed on the basis of
a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).  The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.




SECTION
2.14.  Alternate Rate of
Interest.  If prior to the commencement of any Interest Period
for a Eurodollar Borrowing:




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


54


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




then the
Administrative Agent shall give notice thereof to the Borrower Representative
and the Lenders by telephone or facsimile as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower Representative and the
Lenders that the circumstances giving rise to such notice no longer exist (which
notification shall be made promptly after the Administrative Agent obtains
knowledge of the cessation of such circumstances), (i) any Interest Election
Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing.




SECTION
2.15.  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
(except any such reserve requirement reflected in the Adjusted LIBO Rate) or any
Issuing Bank; or




(ii)impose on any Lender or any
Issuing Bank or the London interbank market any other condition affecting this
Agreement or Eurodollar 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 Eurodollar Loan (or of maintaining its obligation to
make any such Loan) or to increase the cost to such Lender or such 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 such Issuing Bank
hereunder (whether of principal, interest or otherwise), then the Borrowers will
pay to such Lender or such Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or such Issuing Bank, as the
case may be, for such additional costs incurred or reduction
suffered.




(b)If any Lender or
any 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 such Issuing Bank’s capital or on the capital of such Lender’s or
such 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 such Issuing Bank, to a level below
that which such Lender or such Issuing Bank or such Lender’s or such Issuing
Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or such Issuing Bank’s policies and the
policies of such Lender’s or such Issuing Bank’s holding company with respect to
capital adequacy), then from time to time the Borrowers will pay to such Lender
or such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank or such Lender’s or such
Issuing Bank’s holding company for any such reduction suffered.


55


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




(d)Failure or delay
on the part of any Lender or any Issuing Bank to demand compensation pursuant to
this Section shall not constitute a waiver of such Lender’s or such Issuing
Bank’s right to demand such compensation; provided that the
Borrowers shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or such Issuing Bank, as the
case may be, notifies the Borrower Representative of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or such Issuing
Bank’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof.




SECTION
2.16.  Break
Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(e) and is revoked in accordance therewith), or (d) the assignment of
any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower Representative pursuant to
Section 2.19, then, in any such event (but subject to Section 2.11(f)), the
Borrowers shall compensate each Lender for the loss, cost and expense
attributable to such event.  In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate that such Lender would bid were it
to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market.  A
certificate of any Lender setting forth and explaining in reasonable detail any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower Representative and shall be
conclusive absent manifest error.  The Borrowers shall pay such Lender
the amount shown as due on any such certificate within 30 days after receipt
thereof.


56


SECTION
2.17.  Taxes.  (a)  Any
and all payments by or on account of any obligation of the Borrowers hereunder
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that 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 Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrowers shall
make such deductions and (iii) the Borrowers shall 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 jointly and severally indemnify the Administrative Agent, each Lender and
each Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or such Issuing Bank, as the case may be, in connection with any
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and any 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 setting forth
and explaining in reasonable detail the amount of such payment or liability
delivered to the Borrower Representative by a Lender or an Issuing Bank, or by
the Administrative Agent on its own behalf or on behalf of a Lender or an
Issuing Bank, shall be conclusive absent manifest error.




(d)Each Lender and
each Issuing Bank shall indemnify the Borrowers and the Administrative Agent,
within 10 days after written demand therefor, against any and all Taxes and any
and all related losses, claims, liabilities, penalties, interest and reasonable
expenses (including the fees, charges and disbursements of any counsel for the
Borrowers or the Administrative Agent) incurred by or asserted against the
Borrowers or the Administrative Agent by any Governmental Authority as a result
of the failure by such Lender or such Issuing Bank, as the case may be, to
deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any
documentation required to be delivered to the Borrowers or the Administrative
Agent pursuant to paragraph (f) of this Section.  Each Lender and each
Issuing Bank hereby authorizes the Administrative Agent to set off and apply any
and all amounts at any time owing to such Lender or such Issuing Bank, as the
case may be, under this Agreement or any other Loan Document against any amount
due to the Administrative Agent under this paragraph (d).




57


(e)As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrowers to a Governmental Authority, the Borrower Representative 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.




(f)Any Foreign
Lender that is entitled to an exemption from or reduction of withholding Tax
under the law of the United States of America, or any treaty to which the United
States of America is a party, with respect to payments under this Agreement or
any other Loan Document shall deliver to the Borrower Representative (with a
copy to the Administrative Agent), on or prior to the date of this Agreement
(or, in the case of any Lender that becomes a party to this Agreement pursuant
to an Assignment and Assumption, on or prior to the effective date of such
Assignment and Assumption), either (a) two properly executed originals of Form
W-8ECI or Form W-8BEN (or any successor forms) prescribed by the Internal
Revenue Service or other documents satisfactory to the Borrower Representative
and the Administrative Agent, as the case may be, certifying (i) that all
payments to be made to such Foreign Lender under the Loan Documents are exempt
from United States withholding Taxes because such payments are effectively
connected with the conduct by such Lender of a trade or business within the
United States and are included in such Lender’s gross income or (ii) that all
payments to be made to such Foreign Lender under the Loan Documents are
completely exempt from Taxes or are subject to such Taxes at a reduced rate by
an applicable Tax treaty, or (b)(i) a certificate executed by such Lender
certifying that such Lender is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code and that such Lender qualifies for the portfolio
interest exemption under Section 881(c) of the Code, and (ii) two properly
executed originals of Internal Revenue Service Form W-8BEN (or any successor
form), in each case, certifying such Lender’s entitlement to an exemption from
United States withholding Tax with respect to payments of interest to be made
hereunder or under this Agreement or any other Loan Document.  In the
case of a Foreign Lender claiming the benefits of an income tax treaty to which
the United States is a party, the Internal Revenue Service Form W-8BEN shall (i)
with respect to payments of interest under the Loan Documents, establish an
exemption from U.S. federal withholding Tax pursuant to the “interest” article
of such tax treaty and (ii) with respect to any other applicable payments under
the Loan Documents, establish an exemption from U.S. federal withholding Tax
pursuant to the “business profits” or “other income” article of such tax
treaty.  Each Lender that is not a Foreign Lender shall deliver to the
Borrower Representative (with a copy to the Administrative Agent) two properly
executed originals of Internal Revenue Service Form W-9 (or any successor form).
Each such Lender agrees (but only to the extent it is legally entitled to do so)
to provide the Borrower Representative (with a copy to the Administrative Agent)
with new forms prescribed by the Internal Revenue Service upon the expiration or
obsolescence of any previously delivered form, after the occurrence of any event
requiring a change in the most recent forms delivered by it to the Borrower
Representative and the Administrative Agent, or at any other time reasonably
requested by Borrower Representative.




58


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




(h)Each Lender shall
severally indemnify the Administrative Agent, within 10 days after written
demand therefor, for the full amount of any Excluded Taxes attributable to such
Lender that are paid or payable by the Administrative Agent in connection with
any Loan Document and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Excluded Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate
setting forth and explaining in reasonable detail the amount of such payment or
liability delivered to a Lender by the Administrative agent shall be conclusive
absent manifest error.




SECTION
2.18.  Payments Generally;
Allocation of Proceeds; Sharing of
Set-offs.  (a)  The Borrowers shall make each payment
required to be made by them hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 3:00 p.m., New York time, on the date when
due, in immediately available funds, without set-off or
counterclaim.  Any amounts received after such time on any date may,
in the discretion of the Administrative Agent, 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
at its offices at 10 South Dearborn Street, 22nd Floor,
Chicago, Illinois, except payments to be made directly to an Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto.  The Administrative Agent 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
hereunder 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, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension.  All payments hereunder shall be made in
dollars.


59




(b)Any proceeds of
Collateral received by the Administrative Agent (i) not constituting (A) a
specific payment of principal, interest, fees or other sum payable under the
Loan Documents (which shall be applied as specified by the Borrowers), (B) a
mandatory prepayment (which shall be applied in accordance with Section 2.11),
(C) amounts to be applied from a Concentration Account during any Dominion
Period (which shall be applied in accordance with Section 2.10(b)) or, (D) so
long as no Event of Default shall have occurred and be continuing, amounts which
are received into any Concentration Account (which shall be deposited to the
Borrowers’ Funding Account in accordance with the Security Agreement) or (ii)
after an Event of Default has occurred and is continuing and the Administrative
Agent so elects or the Required Lenders so direct, shall be applied ratably
first, to pay
any fees, indemnities, or expense reimbursements then due to the Administrative
Agent and the Issuing Banks from the Borrowers (other than in connection with
Banking Services or Swap Obligations), second, to pay any
fees or expense reimbursements then due to the Lenders from the Borrowers (other
than in connection with Banking Services or Swap Obligations), third, to pay
interest due in respect of the Protective Advances and Overadvances, fourth, to pay the
principal of the Protective Advances and Overadvances, fifth, to pay
interest then due and payable on the Loans (other than the Protective Advances
and Overadvances) ratably, sixth, to prepay
principal on the Loans (other than the Protective Advances and Overadvances) and
unreimbursed LC Disbursements ratably, seventh, to pay an
amount to the Administrative Agent equal to 103% of the aggregate undrawn face
amount of all outstanding Letters of Credit and the aggregate amount of any
unpaid LC Disbursements, to be held as cash collateral for such Obligations,
eighth, to
payment of any amounts owing with respect to Banking Services and Swap
Obligations, ninth, to the payment
of any other Secured Obligations due to the Administrative Agent or any Lender,
and tenth, any
excess to be returned to Borrower Representative.Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the
Borrower Representative, or unless a Default is in existence, neither the
Administrative Agent nor any Lender shall apply any payment which it receives to
any Eurodollar Loan, except (a) on the expiration date of the Interest Period
applicable to such Eurodollar Loan or (b) in the event, and only to the extent,
that there are no outstanding ABR Loans and, in any such event, the Borrowers
shall pay the break funding payment required in accordance with Section
2.16.




(c)At the election
of the Administrative Agent, all payments of principal, interest, LC
Disbursements, fees, reimbursable expenses (including, without limitation, all
reimbursements of fees and expenses pursuant to Section 9.03) and other sums
payable under the Loan Documents may be paid from the proceeds of Borrowings
made hereunder whether made following a request by the Borrower Representative
pursuant to Section 2.03 or a deemed request as provided in this Section or may
be deducted from any deposit account of any Borrower maintained with the
Administrative Agent.  Each Borrower hereby irrevocably authorizes (i)
the Administrative Agent to make a Borrowing for the purpose of paying each
payment of principal, interest, fees or any other amount due under the Loan
Documents and agrees that all such amounts charged shall constitute Loans
(including Swingline Loans and Overadvances, but such a Borrowing may only
constitute a Protective Advance if it is to reimburse costs, fees and expenses
pursuant to Section 9.03) and that all such Borrowings shall be deemed to have
been requested pursuant to Sections 2.03, 2.04 or 2.05, as applicable and (ii)
the Administrative Agent to charge any deposit account of any Borrower (other
than, so long as no Dominion Period is in effect or no Event of Default shall
have occurred or be continuing, any (A) retail operating store deposit account
that is not a concentration or cash sweep account, (B) payroll account or (C)
medical or insurance reimbursement account) maintained with the Administrative
Agent for each payment of principal, interest, fees or any other amount due
under the Loan Documents.


60




(d)If any Lender
shall, by exercising any right of set-off or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of its Loans or
participations in LC Disbursements resulting in such Lender receiving payment of
a greater proportion of the aggregate amount of its Loans and participations in
LC Disbursements and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Loans and participations
in LC Disbursements of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with
the aggregate amount of principal of and accrued interest on their respective
Loans and participations in LC Disbursements; 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 Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply).  Each Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against such Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Borrower in the amount of such
participation.




(e)Unless the
Administrative Agent shall have received notice from the Borrower Representative
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or the Issuing Banks hereunder that the Borrowers
will not make such payment, the Administrative Agent may assume that the
Borrowers have made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders or the Issuing Banks,
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 Issuing Banks,
as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or 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 greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.


61




(f)If any Lender
shall fail to make any payment required to be made by it hereunder, then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations hereunder until all such unsatisfied obligations are fully paid
and/or (ii) hold any such amounts in a segregated account as cash collateral
for, and apply any such amounts to, any future funding obligations of such
Lender hereunder; application of amounts pursuant to (i) and (ii) above shall be
made in such order as may be determined by the Administrative Agent in its
discretion.




SECTION
2.19.  Mitigation Obligations;
Replacement of Lenders.  (a)  If any Lender requests
compensation under Section 2.15, 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 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.15 or 2.17, 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 hereby
agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment).




(b)If any Lender
requests compensation under Section 2.15, 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 2.17, or if any Lender becomes a
Defaulting Lender, then the Borrowers may, at their sole expense and effort,
upon notice to such Lender and the Administrative Agent by the Borrower
Representative, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04),
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) the
Borrowers shall have received the prior written consent of the Administrative
Agent and the Issuing Banks, 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 LC Disbursements 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 2.15 or payments required to be made
pursuant to Section 2.17, 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.


62




SECTION
2.20.  Defaulting
Lenders.  Notwithstanding any provision of this Agreement to
the contrary, if any Lender becomes a Defaulting Lender, then the following
provisions shall apply for so long as such Lender is a Defaulting
Lender:




(a)fees shall cease
to accrue on the unfunded portion of the Revolving Commitment of such Defaulting
Lender pursuant to Section 2.12(a);




(b)the Commitment
and Revolving Credit Exposure of such Defaulting Lender shall not be included in
determining whether all Lenders or the Required Lenders have taken or may take
any action hereunder (including any consent to any amendment or waiver pursuant
to Section 9.02); provided that any
waiver, amendment or modification requiring the consent of all Lenders or each
affected Lender which affects such Defaulting Lender differently than other
affected Lenders shall require the consent of such Defaulting
Lender;




(c)if any Swingline
Exposure or LC Exposure exists at the time a Lender becomes a Defaulting Lender,
then:




(i)all or any part of such
Swingline Exposure and LC Exposure shall be reallocated among the non-Defaulting
Lenders in accordance with their respective Applicable Percentages, but only to
the extent (A) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures
plus such Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed
the total of all non-Defaulting Lenders’ Revolving Commitments and (B) the
conditions set forth in Section 4.02 are satisfied at such time;
and




(ii)if the reallocation
described in clause (i) above cannot, or can only partially, be effected, the
Borrowers shall within one Business Day following notice by the Administrative
Agent, without prejudice to any rights or remedies of the Borrowers against such
Defaulting Lender, (A) first, prepay such Swingline Exposure and (B) second,
cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to
any partial reallocation pursuant to clause (i) above) in accordance with the
procedures set forth in Section 2.06(j) for so long as such LC Exposure is
outstanding;




(iii)if the Borrowers cash
collateralize any portion of such Defaulting Lender’s LC Exposure pursuant to
clause (ii) above, the Borrowers shall not be required to pay any fees to such
Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting
Lender’s cash collateralized LC Exposure during the period such Defaulting
Lender’s LC Exposure is cash collateralized;




(iv)if the LC Exposure of the
non-Defaulting Lenders is reallocated pursuant to this paragraph (c), then the
fees payable to the Lenders pursuant to Section 2.12(b) shall be adjusted in
accordance with such non-Defaulting Lenders’ Applicable Percentages;
or


63


(v)if any Defaulting Lender’s
LC Exposure is neither cash collateralized nor reallocated pursuant to this
paragraph (c), then, without prejudice to any rights or remedies of the
applicable Issuing Bank or any Lender hereunder, all letter of credit fees
payable under Section 2.12(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to the applicable Issuing Bank until such LC Exposure
is cash collateralized and/or reallocated;




(d)the Swingline
Lender shall not be required to fund any Swingline Loan and an Issuing Bank
shall not be required to issue, amend or increase any Letter of Credit, unless
it is satisfied that the related exposure will be 100% covered by the
Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrowers in accordance with this paragraph (c) of this Section,
and participating interests in any such newly issued or increased Letter of
Credit or newly made Swingline Loan shall be allocated among non-Defaulting
Lenders in a manner consistent with this paragraph (c)(i) of this Section (and
Defaulting Lenders shall not participate therein); and




(e)in the event and
on the date that each of the Administrative Agent, the Company, each Issuing
Bank and the Swingline Lender agrees that a Defaulting Lender has adequately
remedied all matters that caused such Lender to be a Defaulting Lender, then the
Swingline Exposure and LC Exposure of the other Lenders shall be readjusted to
reflect the inclusion of such Lender’s Revolving Commitment and on such date
such Lender shall purchase at par such of the Loans of the other Lenders (other
than Swingline Loans) as the Administrative Agent shall determine may be
necessary in order for such Lender to hold such Loans in accordance with its
Applicable Percentage.




SECTION
2.21.  Returned
Payments.  If after receipt of any payment which is applied to
the payment of all or any part of the Obligations, the Administrative Agent or
any Lender is for any reason compelled to surrender such payment or proceeds to
any Person because such payment or application of proceeds is invalidated,
declared fraudulent, set aside or determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Administrative Agent
or such Lender.  The provisions of this Section shall be and remain
effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application
of proceeds.  The provisions of this Section shall survive the
termination of this Agreement.




SECTION
2.22.  Borrowing
Subsidiaries.  The Company may designate any Subsidiary that is
a wholly owned Domestic Subsidiary of the Company (other than Dunnigan) as a
Borrowing Subsidiary upon ten Business Days notice to the Administrative Agent
and the Lenders (such notice to include the name, primary business address and
tax identification number of such proposed Borrowing Subsidiary). Upon proper
notice and receipt by the Administrative Agent of such documents and legal
opinions as the Administrative Agent may reasonably request and subject to the
Administrative Agent’s determining in consultation with the Lenders that
designating such Subsidiary as a Borrowing Subsidiary would not cause any Lender
to suffer any economic, legal or regulatory disadvantage, such Subsidiary shall
be a Borrowing Subsidiary and a party to this Agreement and the other Loan
Documents.  A Subsidiary shall cease to be a Borrowing Subsidiary
hereunder at such time the Company gives at least ten Business Days prior notice
to the Administrative Agent and the Lenders of its intention to terminate such
Subsidiary as a Borrowing Subsidiary; provided that any
such termination shall not be effective and such Subsidiary shall remain a
Borrowing Subsidiary until such time as all Loans to such Borrowing Subsidiary
and accrued interest thereon and all other amounts then due from such Borrowing
Subsidiary have been paid in full.


64




ARTICLE
III




Representations and
Warranties




Each Loan
Party represents and warrants to the Lenders as follows (it being understood
that the following representations and warranties, insofar as they are made by
the Company with respect to the Acquired Company or its subsidiaries on the
Effective Date, are made to the best knowledge of the Company):




SECTION
3.01.  Organization;
Powers.  Each Loan Party and each of its subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, 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.




SECTION
3.02.  Authorization;
Enforceability; Benefit to Loan Parties.  (a)  The
Transactions, insofar as they are to be carried out by each Loan Party, are
within such Loan Party’s organizational powers and have been duly authorized by
all necessary corporate and, if required, shareholder action.  This
Agreement has been duly executed and delivered by each Loan Party and
constitutes, and the other Loan Documents to which each Loan Party is a party,
when executed and delivered by such Loan Party, will constitute, the legal,
valid and binding obligations of such Loan Party, enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.




(b)Each Loan Party
expects to derive benefit (and its board of directors or other governing body
has determined that it may reasonably be expected to derive benefit), directly
and indirectly, from (i) successful operations of each of the other Loan Parties
and (ii) the credit extended by the Lenders to the Borrowers
hereunder.  Each Loan Party has determined that execution, delivery,
and performance of this Agreement and any other Loan Documents to be executed by
such Loan Party is within its purpose, will be of direct and indirect benefit to
such Loan Party, and is in its best interest.


65


SECTION
3.03.  Governmental Approvals; No
Conflicts.  The Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect and except for filings 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 Loan Party or
any of its subsidiaries, or any order of any Governmental Authority, except, in
the case of any applicable law or regulation, a violation which would not
reasonably be expected to result in a Material Adverse Effect, (c) will not
violate or result in a default under any indenture, material agreement or other
material instrument binding upon any Loan Party or any of its subsidiaries or
its assets, or give rise to a right thereunder to require any payment to be made
by any Loan Party or its subsidiaries, and (d) will not result in the creation
or imposition of any Lien on any asset of any Loan Party or any of its
subsidiaries, except Liens created pursuant to the Loan Documents.




SECTION
3.04.  Financial Condition; No
Material Adverse Change.  (a)  The Loan Parties have
heretofore furnished to the Lenders (i)(A) the consolidated balance sheets
and related statements of earnings, shareholders’ equity and cash flows of the
Company and its consolidated Subsidiaries as of and for the fiscal years ended
July 25, 2009, and July 26, 2008, each audited by and accompanied by the
unqualified opinion of Deloitte & Touche LLP, independent public accountants
and (B) the unaudited consolidated balance sheet and related statements of
earnings, shareholders’ equity and cash flows of the Company and its
consolidated Subsidiaries as of and for the fiscal quarter ended July 25, 2009,
and (ii)(A) the consolidated balance sheets and related statements of operations
and cash flows of the Acquired Company and its consolidated subsidiaries as of
and for the fiscal years ended January 31, 2009, and February 2, 2008, each
audited by and accompanied by the unqualified opinion of Deloitte & Touche
LLP (in the case of fiscal year ending January 31, 2009) and
PricewaterhouseCoopers LLP (in the case of fiscal year ending February 2, 2008)
and (B) the unaudited consolidated balance sheet and related statements of
operations and cash flows of the Acquired Company and its consolidated
subsidiaries as of and for the fiscal quarter ended August 1,
2009.  Such financial statements (in the case of any financial
statements relating to the Acquired Company and its Subsidiaries, solely to the
Company’s best knowledge) present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its consolidated Subsidiaries or the Acquired Company and its consolidated
subsidiaries, as the case may be, as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clauses (i)(B) and
(ii)(B) above.




(b)The Loan Parties
have heretofore furnished to the Lenders a pro forma consolidated balance sheet
and pro forma statements of income, cash flows and profit and loss of the
Company as of and for the period of four fiscal quarters ended July 25, 2009,
prepared giving effect to the Transactions as if the Transactions had occurred
on such date, in the case of such balance sheet, and at the beginning of such
period, in the case of such statements of income, cash flows and profit and
loss.  Such pro forma consolidated balance sheet and pro forma
statements of income, cash flows and profit and loss (i) have been prepared in
good faith based on the same assumptions used to prepare the pro forma financial
statements included in the Information Materials (which assumptions are believed
by the Borrowers to be reasonable), (ii) are based on the best information
available to the Borrowers, (iii) accurately reflect all adjustments necessary
to give effect to the Transactions and (iv) present fairly, in all material
respects, the pro forma financial position and results of operations of the
Company and its consolidated Subsidiaries as of and for the period of four
fiscal quarters ended July 25, 2009, as if the Transactions had occurred on such
date or at the beginning of such period, as the case may be.


66




(c)Except as
disclosed in the financial statements referred to above or the notes thereto or
in the Information Materials and except for the Disclosed Matters, after giving
effect to the Transactions, none of the Loan Parties or their subsidiaries has,
as of the Effective Date, any material contingent liabilities, unusual long-term
commitments or unrealized losses.




(d)Since July 25,
2009 (with respect to any matter that relates to the Borrower or its
Subsidiaries), or January 31, 2009 (with respect to any matter that relates to
the Acquired Company or its subsidiaries), there has occurred no Material
Adverse Change.




SECTION
3.05.  Properties.  (a)  Each
Loan Party and each of their subsidiaries has good title to, or valid leasehold
interests in, all its real and personal property material to its business,
except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes and Liens expressly permitted by Section
6.02.




Each Loan
Party and each of its subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by each Loan Party and its Subsidiaries does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.




(b)Schedule 3.05 sets
forth the address of each real property that will be owned, and each material
parcel of property that will be leased, by the Loan Parties and their
subsidiaries as of the Effective Date after giving effect to the
Transactions.




SECTION
3.06.  Litigation and Environmental
Matters.  (a)  There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Loan Parties, threatened against or
affecting the Loan Parties or any of their subsidiaries (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 the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the
Transactions.




(b)Except for the
Disclosed Matters or matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, none of the Loan
Parties nor any of their subsidiaries (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.


67




(c)Since the date of
this Agreement, there has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially increased
the likelihood of, a Material Adverse Effect.




SECTION
3.07.  Compliance with Laws and
Agreements.  (a)  Each Loan Party and its
Subsidiaries is in compliance with all Requirements of Law applicable to it or
its property and all indentures, 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 (it being agreed that this Section does not apply to any law which is
specifically addressed in Section 3.06, 3.08, 3.09, 3.10 or 3.14).  No
Default has occurred and is continuing.




(b)No Loan Party is
in default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in (i) any material
agreement to which it is a party or (ii) any agreement or instrument evidencing
or governing Material Indebtedness.




SECTION
3.08.  Investment Company
Status.  No Loan Party nor any of its Subsidiaries is an
“investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940.




SECTION
3.09.  Taxes.  Each
Loan Party and its Subsidiaries 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 all Taxes required to have been paid by it, except (a) any Taxes that are
being contested in good faith by appropriate proceedings and for which such Loan
Party or such Subsidiary, as applicable, has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.




SECTION
3.10.  ERISA; Margin
Regulations.  (a)  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.  The present value of
all accumulated benefit obligations under each Plan (based on 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 by more than $2,000,000 the fair market value of the assets of
such Plan.




(b)None of the Loan
Parties or any of their Subsidiaries are engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.  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, in any manner or for any
purpose that would entail a violation of the Regulations T, U or X of the
Board.


68




SECTION
3.11.  Disclosure.  The
Loan Parties have disclosed to the Lenders all agreements, instruments and
corporate or other restrictions to which they or any of their Subsidiaries is
subject, and all other matters known to them, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.  Neither the Information Materials nor any of the other
reports, financial statements, certificates or other information furnished by or
on behalf of any Loan Party 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, the Loan Parties represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time furnished.




SECTION
3.12.  Subsidiaries.  Schedule 3.12
sets forth (a) the name of, and the ownership interest of the Company and each
Subsidiary in, each Subsidiary as of the Effective Date, (b) a true and complete
listing of each class of each of the Borrowers’ authorized Equity Interests, of
which all of such issued shares are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
(other than in the case of the owners of Equity Interests in the Company) on
Schedule 3.12,
and (c) the type of entity of the Company and each of its
Subsidiaries.  All the issued and outstanding Equity Interests in
Subsidiaries owned by any Loan Party have been (to the extent such concepts are
relevant with respect to such ownership interests) duly authorized and issued
and are fully paid and non assessable.




SECTION
3.13.  Insurance.  Schedule 3.13
sets forth a description of all insurance maintained by or on behalf of the Loan
Parties and the Subsidiaries as of the Effective Date.  As of the
Effective Date, all premiums due and payable in respect of such insurance have
been paid.  The Loan Parties believe that the insurance maintained by
or on behalf of the Loan Parties and the Subsidiaries is adequate.




SECTION
3.14.  Labor
Matters.  As of the Effective Date, there are no strikes,
lockouts or slowdowns against any Loan Party or any Subsidiary pending or, to
the knowledge of the Borrowers, threatened.  The hours worked by and
payments made to employees of the Loan Parties and the Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters except for any
such violation that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.  All payments due
from any Loan Party or any Subsidiary, or for which any claim may be made
against any Loan Party or any Subsidiary, 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 the Loan Party or such Subsidiary to the extent
required by GAAP.  The consummation of the Transactions 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 Loan Party or any
of its Subsidiaries is bound.


69




SECTION
3.15.  Solvency.  Immediately
after the consummation of the Transactions to occur on the Effective Date and
immediately following the making of each Loan made on the Effective Date and
after giving effect to the application of the proceeds of such Loans, (a) the
fair value of the assets of the Company and its consolidated subsidiaries, at a
fair valuation, will exceed their debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
the Company and its consolidated subsidiaries will be greater than the amount
that will be required to pay the probable liability of their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) the Company and its consolidated
subsidiaries will be able to pay their debts and liabilities, subordinated,
contingent or otherwise (it being understood and agreed that for purposes of
this Section, contingent liabilities mean the maximum amount of liability that
could reasonably be likely to result from pending litigation, asserted claims
and assessments, guaranties, indemnification obligations, adjustment of purchase
price or other post-closing payment adjustments (including earn-outs and other
similar arrangements) and uninsured risks of the Company and its subsidiaries),
as such debts and liabilities become absolute and matured; and (d) the Company
and its consolidated subsidiaries will not have unreasonably small capital with
which to conduct the businesses in which they are engaged as such businesses are
now conducted and are proposed to be conducted following the Effective
Date.




SECTION
3.16.  Collateral
Matters.  The provisions of this Agreement and the other Loan
Documents create legal and valid Liens on all the Collateral in favor of the
Administrative Agent, for the benefit of the Administrative Agent and the Lender
Parties, and such Liens will, upon the taking of the perfection actions required
to be taken under the Loan Documents, constitute perfected and continuing Liens
on the Collateral, securing the Secured Obligations, enforceable against the
applicable Loan Parties and all third parties, and having priority over all
other Liens on the Collateral except for (a) Permitted Encumbrances, to the
extent any such Permitted Encumbrances would have priority over the Liens in
favor of the Administrative Agent pursuant to any applicable law and
(b) Liens perfected only by possession (including possession of any
certificate of title) to the extent the Administrative Agent has not obtained or
does not maintain possession of such Collateral.




SECTION
3.17.  Use
of Proceeds.  The Borrowers will use the proceeds of the Loans
and will request the issuance of Letters of Credit only for purposes set forth
in Section 5.11.




SECTION
3.18.  Credit Card
Arrangements.  Schedule 3.18 (as
updated from time to time as permitted by Section 5.17) sets forth a list of all
credit card processing arrangements to which any Loan Party is a party with
respect to the payment to any Loan Party of the proceeds of all credit card
charges for sales by such Loan Party. True and complete copies of agreements
entered into in connection with the arrangements listed on Schedule 3.18 have
been delivered to the Administrative Agent, together with all material
amendments, waivers and other modifications thereto. All such agreements are in
full force and effect, currently binding upon each Loan Party that is a party
thereto and, to the knowledge of the Loan Parties, binding upon other parties
thereto in accordance with their terms. The Loan Parties are in compliance in
all material respects with such agreements.


70




ARTICLE
IV




Conditions




SECTION
4.01.  Effective
Date.  The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 9.02):




(a)  Credit Agreement and Loan
Documents.  The Administrative Agent (or its counsel) shall
have received (i) from each party hereto either (A) a counterpart of this
Agreement signed on behalf of such party or (B) written evidence satisfactory to
the Administrative Agent (which may include a facsimile or pdf. transmission of
a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and (ii) duly executed copies of the Loan
Documents and such other certificates, documents, instruments and agreements
mutually satisfactory to the Company and the Lenders as the Administrative Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Loan Documents, including any promissory notes
requested by a Lender pursuant to Section 2.10(f) payable to the order of such
requesting Lender and written opinions of the Loan Parties’ counsel, addressed
to the Administrative Agent, the Issuing Banks and the Lenders, in substantially
the form of Exhibit
B.




(b)  Financial Statements and
Projections.  The Administrative Agent and the Arrangers shall
have received (i) audited consolidated financial statements of the Company for
the fiscal year ended July 25, 2009, and the fiscal year ended July 26, 2008,
(ii) unaudited interim consolidated financial statements of the Company for each
fiscal quarter, if any, ended after the date of the latest financial statements
delivered pursuant to clause (i) of this paragraph for which such financial
statements are available (and any such interim financial statements shall not,
in the reasonable judgment of the Administrative Agent, reflect any Material
Adverse Effect in the consolidated financial condition of the Company, as
reflected in the financial statements or projections contained in the
Information Materials) and (iii) satisfactory projected consolidated income
statements, balance sheets and statements of cash flows of the Company and the
Subsidiaries (including the Acquired Company and its subsidiaries) for the
period beginning August 1, 2009, and ending July 31, 2014, prepared on a
quarterly basis through July 31, 2011, and on an annual basis
thereafter.


71




(c)  Closing Certificates;
Certified Certificate of Incorporation; Good Standing
Certificates.  The Administrative Agent shall have received (i)
a certificate of each Loan Party, dated the Effective Date and executed by its
Secretary or Assistant Secretary, which shall (A) certify the resolutions of its
Board of Directors, members or other governing body authorizing the execution,
delivery and performance of the Loan Documents to which it is a party, (B)
identify by name and title and bear the signatures of the Financial Officers and
any other officers of such Loan Party authorized to sign the Loan Documents to
which it is a party, and (C) contain appropriate attachments, including the
certificate or articles of incorporation or organization or other constitutive
documents of each Loan Party certified by the relevant authority of the
jurisdiction of organization of such Loan Party and a true and correct copy of
its by-laws or operating, management or partnership agreement, and (ii) a long
form good standing certificate (to the extent available) for each Loan Party
from its jurisdiction of organization.




(d)  No Default
Certificate.  The Administrative Agent shall have received a
certificate, signed by the chief financial officer of the Company, (i) stating
that no Default has occurred and is continuing, (ii) stating that the
representations and warranties contained in Article III are true and correct on
and as of such date, and (iii) certifying as to such other factual matters as
may be reasonably requested by the Administrative Agent.




(e)  Fees.  The
Lenders and the Administrative Agent shall have received all fees required to be
paid, and all reasonable out-of-pocket expenses (including the reasonable fees
and expenses of legal counsel) for which invoices have been presented on or
before the Effective Date.




(f)   Collateral and Guarantee
Requirement.  The Collateral and Guarantee Requirement shall
have been satisfied.  The Administrative Agent shall have received a
completed Perfection Certificate dated the Effective Date and signed by an
executive officer or Financial Officer of the Company, together with all
attachments contemplated thereby, including the results of a search of the UCC
filings made with respect to the Loan Parties in the jurisdictions contemplated
by the Perfection Certificate and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that (i) the Liens indicated by such financing statements
(or similar documents) are permitted by Section 6.02 or (ii) such Liens have
been, or substantially simultaneously with the initial funding of the Loans on
the Effective Date will be, released and such UCC filings
terminated.


72


(g)  Existing
Indebtedness.  Prior to or substantially contemporaneously with
the initial funding of Loans on the Effective Date, (i) all principal, premium,
if any, interest, fees and other amounts due or outstanding under the Existing
Credit Agreement shall have been or shall be paid in full, the commitments of
the lenders thereunder shall have been terminated, all letters of credit
outstanding thereunder shall have been terminated or shall on the Effective Date
become Existing Letters of Credit, all guarantees and Liens existing in
connection with the Existing Credit Agreement and the “Loan Documents” referred
to therein shall have been discharged and released and all related UCC and other
filings shall have been terminated; (ii) all principal, premium, if any,
interest, fees and other amounts due or outstanding under the Existing Acquired
Company Credit Agreement shall have been or shall be paid in full, the
commitments of the lenders thereunder shall have been terminated, all letters of
credit outstanding thereunder shall have been terminated or shall on the
Effective Date become Existing Letters of Credit, all guarantees and Liens
existing in connection with the Existing Acquired Company Credit Agreement shall
have been discharged and released and all related UCC filings shall have been
terminated; provided, that in
lieu of causing any loans outstanding under the Existing Acquired Company Credit
Agreement to be paid, the Company may (A) acquire such Loans, (B) pledge the
same, together with all related rights and interests (including all rights under
the Existing Acquired Company Credit Agreement and all related guarantees and
security agreements) as security for the Obligations under the Security
Agreement (and maintain in effect all UCC and other filings with respect to the
Liens securing such loans) and (C) cause the Existing Acquired Company Credit
Agreement and all related documentation to be amended in a manner satisfactory
to the Administrative Agent; and (iii) the ISDA Master Agreement dated as of
December 27, 2007, between the Acquired Company and JPMCB, and all swap
transactions governed thereby, shall have been terminated and all obligations in
respect thereof shall have been discharged.  The Administrative Agent
shall have received evidence reasonably satisfactory to it of the satisfaction
of the conditions set forth in this paragraph.




(h)  Funding
Accounts.  The Administrative Agent shall have received a
notice setting forth the deposit account(s) of the Borrowers (the “Funding Accounts”) to
which the Administrative Agent is authorized by the Borrowers to transfer the
proceeds of any Borrowings requested or authorized pursuant to this
Agreement.




(i)  Solvency.  The
Administrative Agent shall have received a solvency certificate from the chief
financial officer of the Company in form and substance reasonably satisfactory
to the Administrative Agent, confirming the solvency of the Company and its
Subsidiaries after giving effect to the Transactions.




(j)  Borrowing Base
Certificate.  The Administrative Agent shall have received a
Borrowing Base Certificate calculating the Borrowing Base as of a date mutually
satisfactory to the Administrative Agent and the Company.




(k)  Closing
Availability.  After giving effect to all Borrowings to be made
on the Effective Date, the issuance or deemed issuance of any Letters of Credit
on the Effective Date and the payment of all amounts to be paid on the Effective
Date (including amounts to be paid to discharge obligations under the Existing
Credit Agreement and to discharge or purchase obligations under the Existing
Acquired Company Credit Agreement and all fees and expenses due hereunder),
Availability shall not be less than $75,000,000.


73




(l)  Approvals.  All
material consents and approvals required to be obtained from any Governmental
Authority or other Person in connection with the Acquisition and the other
transactions shall have been obtained on satisfactory terms and be in full force
and effect, and all applicable waiting periods and appeal periods (including
extensions thereof) shall have expired and there shall be no governmental or
judicial action, actual or threatened, that could reasonably be expected to
restrain, prevent or impose materially burdensome conditions on the
Transactions.




(m)  Acquisition.  The
Acquisition shall have been consummated in accordance with applicable law and in
all material respects on the terms and conditions as set forth in the
Acquisition Agreement, without giving effect to any waiver, amendment or other
modification thereof that is materially adverse to the interests of the Lenders
without the prior written consent of the Administrative Agent and the
Arrangers.  The Acquired Company shall not have incurred any
additional Material Indebtedness from the date of the Acquisition
Agreement.




(n)  Insurance.  The
Administrative Agent shall have received evidence of insurance coverage in form,
scope, and substance reasonably satisfactory to the Administrative Agent and
otherwise in compliance with the terms of Section 4.10 of the Security
Agreement.




(o)  Letter of Credit
Application.  The Administrative Agent shall have received a
properly completed letter of credit application (whether standalone or pursuant
to a master agreement, as applicable) in respect of each Letter of Credit to be
issued on the Effective Date.




(p)  Tax
Forms.  The Administrative Agent shall have received a properly
completed and signed IRS Form W-8 or W-9, as applicable, for each Loan
Party.




(q)  Appraisals and Field
Exams.  (i) The Administrative Agent and the Arrangers
shall have received and shall be reasonably satisfied with appraisals of the
Inventory of each Loan Party from appraisers selected by the Administrative
Agent, (ii) the Administrative Agent, or its designee, shall have conducted
field examinations reasonably satisfactory to the Administrative Agent and the
Arrangers of the accounts receivable, inventory and related working capital
matters and financial information of each of the Loan Parties and of their
related data processing and other systems.




(r)  “Know Your Customer”
Requirements.  The Lenders shall have received all
documentation and other information reasonably requested by the Administrative
Agent and required under applicable “know your customer” and anti-money
laundering rules and regulations, including the Patriot Act.


74




(s)  Other
Documents.  The Administrative Agent shall have received such
other documents as the Administrative Agent may have reasonably
requested.




The
Administrative Agent shall notify the Borrower Representative 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 Banks to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New
York time, on December 31, 2009 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).




SECTION
4.02.  Each
Credit Event.  The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of each Issuing Bank to issue, amend, renew
or extend any Letter of Credit, is subject to the satisfaction of the following
conditions:




(a)  The
representations and warranties of the Borrowers set forth in this Agreement
shall be true and correct in all material respects on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable.




(b)  At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.




(c)  After
giving effect to any Borrowing or the issuance of any Letter of Credit, the
aggregate Credit Exposures shall not exceed the lesser of (x) the aggregate
Revolving Commitments or (y) (other than in the case of a Protective Advance or
an Overadvance) the Borrowing Base.




Each
Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a), (b)
and (c) of this Section.




Notwithstanding
the failure to satisfy the conditions precedent set forth in paragraphs (a) or
(b) of this Section, unless otherwise directed by the Required Lenders, the
Administrative Agent may, but shall have no obligation to, continue to make
Loans and an Issuing Bank may, but shall have no obligation to, issue or cause
to be issued any Letter of Credit for the ratable account and risk of Lenders
from time to time if the Administrative Agent believes that making such Loans or
issuing or causing to be issued any such Letter of Credit is in the best
interests of the Lenders.


75




ARTICLE
V




Affirmative
Covenants




Until the
Commitments have expired or terminated and the principal of and interest on each
Loan and all fees, expenses and other amounts payable under any Loan Document
(other than Banking Services Obligations and contingent or indemnity obligations
for which no claim has been made) have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Loan Parties covenant and agree, jointly and severally, with the
Lenders that:




SECTION
5.01.  Financial Statements;
Borrowing Base and Other Information.  The Borrowers will
furnish to the Administrative Agent and each Lender:




(a)  within
90 days after the end of each fiscal year of the Company, its audited
consolidated balance sheet and related statements of operations, shareholders’
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 reported
on by Deloitte & Touche LLP or other independent public accountants of
recognized national standing (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Company and its consolidated subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;




(b)  within
45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Company, its consolidated balance sheet and related
statements of operations, shareholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Company and its consolidated subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;




(c)  at
any time that any Revolving Loan is outstanding or the LC Exposure is equal to
or greater than $100,000,000, within 20 days after the end of each fiscal month
of the Company, its consolidated balance sheet and related statements of
operations, shareholders’ equity and cash flows as of the end of and for such
fiscal month and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of operations of
the Company and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;


76




(d)  concurrently
with any delivery of financial statements under clause (a) or (b) or
(c) above, a certificate of a Financial Officer of the Company in substantially
the form of Exhibit
D (i) certifying, in the case of the financial statements delivered
under clause (b) or (c), that such financial statements present fairly in
all material respects the financial condition and results of operations of the
Company and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes, (ii) 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, (iii) setting forth
reasonably detailed calculations demonstrating compliance with Section 6.12
and, if any Convertible Notes Conversion Date shall have occurred since the
delivery of the last certificate under this paragraph, Section 6.13,
(iv) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such
certificate;




(e)  concurrently
with any delivery of financial statements under clause (a) above, a
certificate of the accounting firm that reported on such financial statements
stating whether they obtained knowledge during the course of their examination
of such financial statements of any Default (which certificate may be limited to
the extent required by accounting rules or guidelines);




(f)  as
soon as available, but within 15 days after the end of each fiscal year of the
Company, a copy of the plan and forecast (including a projected consolidated and
consolidating balance sheet, income statement and funds flow statement in form
acceptable to the Administrative Agent) of the Company for each month of the
upcoming fiscal year in form reasonably satisfactory to the Administrative
Agent;




(g)  as
soon as available but in any event within 20 days after the end of each
calendar month (and, during any Enhanced Reporting Period, within 3 days
after the end of each week), and at such other times as may be requested by the
Administrative Agent, a Borrowing Base Certificate setting forth a computation
of the Borrowing Base as of the end of such month (or, if applicable, such
week), together with supporting information and any additional reports with
respect to the Borrowing Base that the Administrative Agent may reasonably
request;




(h)  as
soon as available but in any event within 20 days of the end of each
calendar month (and, during any Enhanced Reporting Period, within 3 days
after the end of each week), and at such other times as may be requested by the
Administrative Agent, the following information as of the end of the month (or,
if applicable, the week) then ended, all delivered electronically in a text
formatted file reasonably acceptable to the Administrative
Agent:


77




(i)  a
detailed aging of the Borrowers’ Credit Card Receivables (A) including aging by
credit card issuer and processor and (B) reconciled to the Borrowing Base
Certificate delivered as of such date, prepared in a manner reasonably
acceptable to the Administrative Agent, together with a summary specifying the
balance due from each credit card issuer or credit card processor;




(ii)  a
schedule detailing the Borrowers’ Inventory, in form reasonably satisfactory to
the Administrative Agent, (A) by location (showing Inventory in transit, any
Inventory located with a third party under any consignment, bailee arrangement,
or warehouse agreement), by product type and by volume on hand, which Inventory
shall be valued at the lower of cost (determined on a first-in, first-out basis)
or market and adjusted for Reserves as the Administrative Agent has previously
indicated to the Borrower Representative are deemed by the Administrative Agent
to be appropriate, (B) including a report of any variances or other results of
Inventory counts performed by the Borrowers since the last Inventory schedule
(including information regarding sales or other reductions, additions, returns,
credits issued by Borrowers), and (C) reconciled to the Borrowing Base
Certificate delivered as of such date;




(iii)  a
worksheet of calculations prepared by the Borrowers to determine Eligible Credit
Card Receivables and Eligible Inventory, such worksheets detailing the Credit
Card Receivables and Inventory excluded from Eligible Credit Card Receivables
and Eligible Inventory and the reasons for such exclusion;




(iv)  a
reconciliation of the Borrowers’ Credit Card Receivables and Inventory between
the amounts shown in the Borrowers’ general ledger and financial statements and
the reports delivered pursuant to clauses (i) and (ii) above; and




(v)  a
reconciliation of the loan balance per the Borrowers’ general ledger to the loan
balance under this Agreement.




(i)  at
any time that any Revolving Loan is outstanding or the LC Exposure is equal to
or greater than $100,000,000, as soon as available but in any event within
20 days after the end of each calendar month and at such other times as may
be reasonably requested by the Administrative Agent, a schedule and aging of the
Borrowers’ accounts payable as of the month then ended, delivered electronically
in a text formatted file reasonably acceptable to the Administrative
Agent;




(j)  promptly
upon the Administrative Agent’s request:


78




(i)  copies
of purchase orders, invoices, and shipping and delivery documents in connection
with any Inventory purchased by any Loan Party; and




(ii)  a
schedule detailing the balance of all intercompany accounts of the Loan
Parties;




(k)  at
such other times as may be requested by the Administrative Agent, the Borrowers’
sales journal, cash receipts journal and debit memo/credit memo journal as of
the period then ended;




(l)  at
such other times as may be requested by the Administrative Agent, copies of all
tax returns filed by any Loan Party with the US Internal Revenue
Service;




(m)  within
20 days after the first Business Day of March of each year, a certificate
of good standing for each Loan Party from the appropriate governmental officer
in its jurisdiction of incorporation, formation, or organization;




(n)  promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by any Borrower or any
Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed by any Borrower to its
shareholders generally, as the case may be; and




(o)  promptly
following any request therefor, such other information regarding the operations,
business affairs and financial condition of any Borrower or any Subsidiary, or
compliance with the terms of this Agreement, as the Administrative Agent or any
Lender may reasonably request.




Information
required to be delivered pursuant to clauses (a), (b) and (o) of this Section
shall be deemed to have been delivered if such information, or one or more
annual or quarterly reports containing such information, shall have been posted
by the Administrative Agent on an IntraLinks or similar site to which the
Lenders have been granted access or shall be available on the website of the
Securities and Exchange Commission at http://www.sec.gov
(and a confirming electronic correspondence shall have been delivered or caused
to be delivered to the Lenders providing notice of such posting or
availability); provided that the
Borrowers shall deliver paper copies of such information to any Lender that
requests such delivery.  Information required to be delivered pursuant
to this Section may also be delivered by electronic communications pursuant
to procedures approved by the Administrative Agent.




SECTION
5.02.  Notices of Material
Events.  The Borrowers will furnish to the Administrative Agent
and each Lender written notice promptly upon any Financial Officer, or other
officer or employee responsible for compliance with the Loan Documents, of any
Borrower or Subsidiary becoming aware of any of the following:


79




(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 the Borrower or any
Affiliate thereof that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;




(c)  any
Lien (other than a Permitted Encumbrance) or claim made or asserted against any
material portion of the Collateral;




(d)  any
and all default notices received under or with respect to any leased location or
public warehouse where Collateral having an aggregate value in excess of
$10,000,000 is located (which shall be delivered within two Business Days after
receipt thereof);




(e)  the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrowers and their Subsidiaries in an aggregate amount exceeding
$10,000,000; and




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




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




SECTION
5.03.  Information Regarding
Collateral.  (a)  Each Loan Party will furnish to the
Administrative Agent prompt written notice of any change in its (i) legal name,
(ii) organizational identity, (iii) organizational identification number or (iv)
organizational structure.  Each Loan Party agrees not to effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the UCC or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral affected
thereby.  Each Loan Party also agrees promptly to notify the
Administrative Agent if any material portion of the Collateral is damaged or
destroyed.




(b)Each year, at the
time of delivery of annual financial statements with respect to the preceding
fiscal year pursuant to clause (a) of Section 5.01, the Borrowers shall deliver
to the Administrative Agent a certificate of a Financial Officer of the Company
setting forth the information required pursuant to the Perfection Certificate or
confirming that there has been no material change in such information since the
date of the Perfection Certificate delivered on the Effective Date or the date
of the most recent certificate delivered pursuant to this
Section.


80


SECTION
5.04.  Existence; Conduct of
Business.  Each Loan Party will, and will cause each of its
Subsidiaries to, do or cause to be done all things reasonably necessary 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, consolidation, liquidation or
dissolution permitted under Section 6.03.




SECTION
5.05.  Payment of
Obligations.  Each Loan Party will, and will cause
each  of its Subsidiaries to, pay or discharge all Material
Indebtedness and all other material liabilities and obligations, including
Taxes, 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
proceedings, (b) such Loan Party or such subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the contested obligation and the enforcement
of any Lien securing such obligation and (d) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.




SECTION
5.06.  Maintenance of
Properties.  Each Loan Party will, and will cause each of its
Subsidiaries to, keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear
excepted.




SECTION
5.07.  Insurance.  The
Loan Parties will, and will cause each of their subsidiaries to, maintain, with
financially sound and reputable insurance companies having a financial strength
rating of at least A- by A.M. Best Company (a) insurance in such amounts (with
no greater risk retention) and against such risks as are customarily maintained
by companies of established repute engaged in the same or similar businesses
operating in the same or similar locations and (b) all insurance required to be
maintained pursuant to the Collateral Documents.  The Borrower will
furnish to the Lenders, upon request of the Administrative Agent, information in
reasonable detail as to the insurance so maintained.




SECTION
5.08.  Casualty.  The
Borrowers (a) will furnish to the Administrative Agent and the Lenders prompt
written notice of any casualty or other insured damage to any Collateral with a
value of $5,000,000 or more and (b) will ensure that the Net Proceeds of
any such event (whether in the form of insurance proceeds or otherwise) are
collected and applied in accordance with the applicable provisions of this
Agreement and the Collateral Documents.




SECTION
5.09.  Books
and Records; Inspection Rights.  Each Loan Party will, and will
cause each Subsidiary to, (a) keep proper books of record and account in which
full, true and correct (in all material respects) entries are made of all
dealings and transactions in relation to its business and activities and (b)
permit any representatives designated by the Administrative Agent or any Lender
(including employees of the Administrative Agent, any Lender or any consultants,
accountants, lawyers and appraisers retained by the Administrative Agent), upon
reasonable prior notice (but in no event more than once each fiscal quarter
unless a Default has occurred and is continuing), 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, accompanied
by one or more such officers or their designees if requested by the Borrower
Representative, independent accountants, all at such reasonable times during
normal business hours and as often as reasonably
requested.  Notwithstanding anything herein to the contrary, the right
of the Administrative Agent or any Lender to conduct appraisals or field
examinations shall be governed exclusively by Sections 5.12 and 5.13,
respectively, and shall not be limited by this Section.


81




SECTION
5.10.  Compliance with
Laws.  Each Loan Party will, and will cause each Subsidiary to,
comply with all Requirements of Law 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.




SECTION
5.11.  Use
of Proceeds.  The Letters of Credit and the proceeds of the
Loans will be used only to continue or refinance the letters of credit of the
Company under the Existing Credit Agreement and of the Acquired Company under
the Existing Acquired Company Credit Agreement and for general corporate
purposes of the Borrowers and their subsidiaries.  No part of the
proceeds of any Loan and no Letter of Credit will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X.




SECTION
5.12.  Appraisals.  The
Borrowers will provide to the Administrative Agent from time to time upon the
Administrative Agent’s request, at the sole expense of the Borrowers, appraisals
(or updates thereof) of the Inventory of the Borrowers from appraisers selected
and engaged by the Administrative Agent, prepared on a basis consistent in all
material respects with the inventory appraisals referred to in Section 4.01(q)
(with such adjustments as shall be deemed appropriate to reflect events or
changes in circumstances after the dates of such appraisals); provided, that the
Administrative Agent shall be entitled to request only one such appraisal in any
calendar year, except that (a) at any time when any Revolving Loan is
outstanding or the LC Exposure is equal to or greater than $75,000,000, the
Administrative Agent may request a second appraisal in the then-current calendar
year, (b) at any time when Availability shall have been less than 20% of the
aggregate Revolving Commitments then in effect for three consecutive Business
Days, the Administrative Agent may request a second or a third appraisal in the
then-current calendar year and (c) if an Event of Default shall have occurred
and be continuing, there shall be no limitation on the number of appraisals that
the Administrative Agent may request.  For purposes of the foregoing,
it is understood that a single appraisal may consist of appraisals of the assets
of each Borrower and may be conducted at multiple
sites.  Notwithstanding the foregoing, upon reasonable advance notice
to the Borrowers, the Administrative Agent may request appraisals in addition to
those authorized by the preceding sentences of this Section; provided that the
Borrowers will not be responsible for the expense of appraisals conducted
pursuant to this sentence.


82


SECTION
5.13.  Field
Examinations.  At any time that the Administrative Agent
requests, the Borrowers and the Subsidiaries will allow the Administrative
Agent, at the sole expense of the Borrowers, to conduct, or engage a third party
to conduct, field examinations (or updates thereof) during normal business hours
to ensure the adequacy of Collateral included in the Borrowing Base and related
reporting and control systems; provided, that the
Administrative Agent shall be entitled to conduct only one such field
examination in any calendar year, except that (a) at any time when any Revolving
Loan is outstanding or the LC Exposure is equal to or greater than $75,000,000,
the Administrative Agent may conduct a second field examination in the
then-current calendar year, (b) at any time when Availability shall have been
less than 20% of the aggregate Revolving Commitments then in effect for three
consecutive Business Days, the Administrative Agent may conduct a second or a
third field examination in the then-current calendar year and (c) if an Event of
Default shall have occurred and be continuing, there shall be no limitation on
the number of field examinations that the Administrative Agent may
conduct.  For purposes of the foregoing, it is understood that a
single field examination may consist of examinations of the assets of each
Borrower and may be conducted at multiple sites.  Notwithstanding the
foregoing, upon reasonable advance notice to the Borrower, the Administrative
Agent may conduct, or engage a third party to conduct, field examinations in
addition to those authorized by the preceding sentences of this Section; provided that the
Borrowers will not be responsible for the expense of field examinations
conducted pursuant to this sentence.




SECTION
5.14.  Depository
Banks.  The Borrowers and their subsidiaries will maintain the
Administrative Agent or one or more Lenders acceptable to the Administrative
Agent as their principal depository bank, including for the maintenance of
operating, administrative, cash management, collection activity, and other
deposit accounts for the conduct of their business; provided, that the
Borrowers shall not be required to satisfy the foregoing requirement with
respect to (i) the accounts of the Acquired Company and its subsidiaries prior
to the 90th day
following the completion of the Acquisition or (ii) any (A) retail operating
store deposit account that is not a concentration or cash sweep account, (B)
payroll account or (C) medical or insurance reimbursement account) so long as
such accounts in clauses (A), (B) and (C) are established in the ordinary course
of business consistent with past practice.




SECTION
5.15.  Additional
Subsidiaries.  If any additional Domestic Subsidiary is formed
or acquired after the Effective Date, the Borrowers will promptly notify the
Administrative Agent thereof and will, as promptly as practicable, and in any
event within 30 days (or such longer period as the Administrative Agent may
agree in writing) after such Subsidiary is formed or acquired (i) execute and
deliver a Joinder Agreement, substantially in the form of Exhibit E hereto (the
“Joinder
Agreement”) and (ii) cause the Collateral and Guarantee Requirement to be
satisfied with respect to such Subsidiary and with respect to any Equity
Interests in or Indebtedness of such Subsidiary owned by or on behalf of any
Loan Party.




SECTION
5.16.  Further
Assurances.  (a)  The Borrowers will, and will cause
each Loan Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all further actions (including the filing
and recording of financing statements and other documents), which may be
required under applicable law, or which the Administrative Agent may reasonably
request, to cause the Collateral and Guarantee Requirement to be and remain
satisfied at all times, all at the expense of the Loan Parties.  The
Borrowers also agree to provide to the Administrative Agent, from time to time
upon request, evidence reasonably satisfactory to the Administrative Agent as to
the perfection and priority of the Liens created or intended to be created by
the Collateral Documents.


83




(b)If any material
assets (other than interests in real property) are acquired by any Loan Party
after the Effective Date (other than assets constituting Collateral under the
Collateral Agreements that become subject to the Lien of the Collateral
Agreements upon the acquisition thereof), the Borrowers will promptly notify the
Administrative Agent thereof and, if requested by the Administrative Agent or
the Required Lenders, will cause such assets to be subjected to a Lien securing
the Obligations and will take, and cause the Subsidiary Parties to take, such
actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in paragraph
(a) of this Section, all at the expense of the Loan Parties.  It is
understood and agreed that, notwithstanding anything to the contrary in the
foregoing provisions of this Section or any Collateral Document, the Loan
Parties shall not be required to (i)(A) grant mortgages, leasehold mortgages or
collateral assignments of leases and rents or (B) obtain landlord lien waivers
or collateral access rights agreements with respect to any of its retail
operating store locations or (ii) enter into deposit control agreements in
respect of (A) any retail operating store deposit account that is not a
concentration or cash sweep account, (B) any payroll account or (C) medical or
insurance reimbursement accounts.




SECTION
5.17.  Credit Card Notification
Agreements.  Each Borrower will, and will cause each of its
subsidiaries to, (a) comply in all material respects with all its
obligations under each credit card processing agreement to which it is party and
(b) maintain credit card processing arrangements with the credit card
issuers and processors identified on Schedule 3.18; provided, however, that the
Borrowers may amend Schedule 3.18 to
remove any credit card issuer or processor identified therein or to add
additional credit card issuers and processors that are satisfactory to the
Administrative Agent in its reasonable discretion, and concurrently with the
making of any such amendment the Borrowers shall provide to the Administrative
Agent evidence that a Credit Card Notification Agreement shall have been
delivered to any credit card issuer or processor added to such
Schedule.




SECTION
5.18.  Post
Closing Requirements.  The Borrowers and the other Loan Parties
shall deliver, when and as required by the terms of the Post-Closing Letter
Agreement, the items referenced therein.




ARTICLE
VI




Negative
Covenants


Until the
Commitments have expired or terminated and the principal of and interest on each
Loan and all fees, expenses and other amounts payable under any Loan Document
(other than Banking Services Obligations and contingent or indemnity obligations
for which no claim has been made) have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Loan Parties covenant and agree, jointly and severally, with the
Lenders that:




84




SECTION
6.01.  Indebtedness; Certain Equity
Securities.  (a)  The Borrowers will not, and will
not permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:




(i)  Indebtedness
created under the Loan Documents;




(ii)  Indebtedness
under the Amended Acquired Company Credit Agreement and the Existing Mortgage
Loan;




(iii)  Indebtedness
in respect of the Convertible Notes and extensions, renewals and replacements of
such Indebtedness that do not increase the outstanding principal amount thereof
or result in an earlier maturity date or decreased weighted average life
thereof; provided that (a) any
such refinancing Indebtedness shall be unsecured and (b) only the Company may
become obligated with respect to any such refinancing Indebtedness;




(iv)  Indebtedness
existing on the Effective Date and set forth in Schedule 6.01
and extensions, renewals and replacements of such Indebtedness that do not
increase the outstanding principal amount thereof or result in an earlier
maturity date or decreased weighted average life thereof or add any new obligor
or any security in respect thereof;




(v)  Indebtedness
of the Company to any Subsidiary and of any Subsidiary to the Company or any
other Subsidiary (including in connection with the lease of the Distribution
Center with Dunnigan); provided that
Indebtedness of any Subsidiary that is not a Loan Party to any Loan Party shall
be subject to Section 6.04;




(vi)  Guarantees
by the Company of Indebtedness of any Subsidiary and by any Subsidiary of
Indebtedness of the Company or any other Subsidiary (including Guarantees of the
obligations of Dunnigan under the lease of the Distribution Center); provided that
Guarantees by any Loan Party of Indebtedness of any Subsidiary that is not a
Loan Party shall be subject to Section 6.04;




(vii)  Indebtedness
in respect of netting services, overdraft protections (in an aggregate amount
not to exceed $1,000,000 at any time outstanding) and otherwise in connection
with deposit and checking accounts; and




(viii)  other
Indebtedness in an aggregate principal amount not exceeding $250,000,000 at any
time outstanding, which may be secured by real property and interests therein
and by other assets to the extent permitted by Section 6.02(e); provided, that any
such Indebtedness secured by assets other than real property and interests
therein shall have been incurred in the ordinary course of business and shall be
in an aggregate principal amount not greater than $20,000,000.


85




(b)The Borrower will
not, and will not permit any Subsidiary to, issue any Equity Interests that are
not Qualified Capital Stock, other than to the Borrower or a Subsidiary; provided that any
issuance of Equity Interests of any Subsidiary that is not a Loan Party to any
Loan Party shall be subject to Section 6.04.




SECTION
6.02.  Liens.  The
Borrowers will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Lien on any property or asset, 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 (or under the Amended Acquired Company Credit
Agreement and related documents, but only if all the Company’s rights
thereunder, including all Liens (other than Liens on real property) securing the
obligations thereunder, shall have been assigned to the Administrative Agent as
provided in the Collateral Documents);




(b)  Permitted
Encumbrances;




(c)  any
Lien on any property or asset of the Company or any Subsidiary existing on the
Effective Date and set forth in Schedule 6.02;
provided that
(i) such Lien shall not apply to any other property or asset of the Company or
any Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the Effective Date and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;




(d)  any
Lien existing on any property or asset prior to the acquisition thereof by the
Company or any Subsidiary or existing on any property or asset of any Person
that becomes a Subsidiary after the Effective Date prior to the time such Person
becomes a Subsidiary (including pursuant to a Permitted Acquisition); provided that
(A) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be,
(B) such Lien shall not apply to any other property or assets of the
Company or any Subsidiary and (C) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such Person becomes
a Subsidiary, as the case may be and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
and




(e)  Liens
on assets (other than Accounts, Inventory, Equity Interests, Intellectual
Property and proceeds thereof) securing Indebtedness permitted under Section
6.01(a)(viii).


86


SECTION
6.03.  Fundamental Changes;
Restrictions on Dunnigan.  (a)  No Borrower will, or
will permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into the Company in a transaction in which the Company is
the surviving corporation, (ii) any Subsidiary may merge into any
Subsidiary in a transaction in which the surviving entity is a Subsidiary and,
if any party to such merger is a Loan Party, a Loan Party, (iii) any Subsidiary
(other than a Loan Party) or Dunnigan may liquidate or dissolve if the Company
determines in good faith that such liquidation or dissolution is in the best
interests of the Company and is not materially disadvantageous to the Lenders
(and, in the case of the liquidation or dissolution of Dunnigan, its fee
ownership interest in the Distribution Center is transferred to the Company or
another Loan Party in connection therewith) and (iv) the Company or any
Subsidiary may effect a Permitted Acquisition by means of any merger or
consolidation of a type permitted by this Section in which the Company or a
Subsidiary is the surviving entity in such transaction; provided that any
such merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.04.




(b)No Borrower will,
or will permit any of its Subsidiaries to, engage to any material extent in any
business other than businesses of the type conducted by the Borrowers and their
Subsidiaries on the date of this Agreement and businesses reasonably related
thereto, including development, operation and promotion of other apparel or
accessories in a specialty store environment.




(c)The Borrowers
will not permit Dunnigan to (a) engage in any business or activity other than
(i) the ownership of the Distribution Center and activities incidental
thereto (including the leasing of space therein), (ii) performance of its
obligations under and in connection with the Existing Mortgage Loan and
(iii) actions required by law to maintain its existence, (b) purchase,
own, hold or acquire any assets other than the Distribution Center, cash and
Permitted Investments, (c) sell, transfer, lease or otherwise dispose of any
asset (other than the leasing of space in the Distribution Center in the
ordinary course of business), (d) incur any liabilities other than liabilities
under the Existing Mortgage Loan, liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence and permitted
business and activities, (e) create, incur, assume or permit to exist any Lien
on any property or asset owned by it, other than pursuant to the Existing
Mortgage, judgment liens in respect of judgments that do not constitute an Event
of Default under clause (k) of Article VII and other Liens that constitute
Permitted Encumbrances or (f) merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or liquidate or
dissolve (other then permitted by paragraph (a) of this Section).




SECTION
6.04.  Investments, Loans,
Advances, Guarantees and Acquisitions.  The Borrowers will not,
and will not permit any of their Subsidiaries to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a wholly owned
Subsidiary prior to such merger) any Equity Interests in or 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 capital
contributions or any loans or advances to, enter into or permit to exist any
Guarantee any obligations of, or make or permit to exist any investment or any
other interest in, any other Person (all the foregoing being called
“investments”), or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person constituting a business unit,
except:


87




(a)  the
Acquisition;




(b)  Permitted
Investments;




(c)  investments
existing on the Effective Date and set forth on Schedule
6.04;




(d)  investments
by the Borrowers and their Subsidiaries in Equity Interests in their respective
subsidiaries and in Dunnigan; provided that any
such Equity Interests (other than those of Dunnigan) held by a Loan Party shall
be pledged pursuant to the Security Agreement to the extent required in order
for the Collateral and Guarantee Requirement to be satisfied;




(e)  loans
or advances made by the Company to any Subsidiary and made by any Subsidiary to
the Company or any other Subsidiary; provided that (i) the
aggregate amount of any such loans and advances made by a Loan Party to any
Subsidiary that is not a Loan Party shall not exceed $35,000,000 and (ii) any
such loans and advances made by a Loan Party shall be evidenced by a promissory
note (which may be in the form of a grid note) pledged pursuant to the Security
Agreement;




(f)  Guarantees
constituting Indebtedness permitted by Section 6.01;




(g)  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;




(h)  the
acquisition of all or substantially all the assets of a Person or line of
business of such Person, or not less than 100% of the Equity Interests (except
for directors’ qualifying shares) of a Person (referred to herein as the “Acquired Entity”);
provided that
(i) such acquisition was not preceded by an unsolicited tender offer for such
Equity Interests by, or proxy contest initiated by, the Company or any
Subsidiary; (ii) after giving effect to the acquisition the Borrower shall be in
compliance with Section 6.03(b); (iii) the Acquired Entity is located, and
substantially all of its operations are conducted, in the United States of
America; (iv) both before and after giving effect to such acquisition no
Default or Event of Default shall have occurred and be continuing; (v) after
giving effect to such acquisition (A) the Borrower would be in Pro Forma
Compliance and (B) Availability, determined on a Pro Forma Basis, shall
have been and shall be not less than 25% of the aggregate Revolving Commitments
at all times during the period commencing on the 60th day before such
acquisition and ending on the first anniversary of such acquisition; (vi) the
Company shall comply, and shall cause the Acquired Entity to comply, with the
applicable provisions of Sections 5.14 and 5.15 and the Collateral Documents;
and (vii) the Company shall have delivered to the Administrative Agent a
certificate of a Financial Officer of the Company in form and detail reasonably
satisfactory to the Administrative Agent setting forth computations
demonstrating compliance with the requirement set forth in the preceding clause
(v) and confirming that the other requirements of this paragraph (h) have been
satisfied (any acquisition of an Acquired Entity meeting all the criteria of
this paragraph (h) being referred to herein as a “Permitted
Acquisition”);


88




(i)  deposits,
prepayments and other credits to suppliers, lessors and landlords made in the
ordinary course of business;




(j)  advances
by the Company or any Subsidiary to employees in the ordinary course of business
consistent with past practices for travel and entertainment expenses, relocation
costs and similar purposes;




(k)  promissory
notes and/or Equity Interests issued by purchasers in connection with sales of
assets permitted under Section 6.05 (provided that any
such promissory note in an amount in excess of $2,500,000 shall be pledged
pursuant to the Security Agreement);




(l)  investments
constituting deposits described in clauses (c) and (d) of the definition of
“Permitted Encumbrances”;




(m)  investments
made by any Loan Party in any Subsidiary that is not a Loan Party; provided that such
investments are made in the ordinary course of business and the aggregate amount
of all such investments shall not exceed $35,000,000; and




(n)  acquisitions
of individual retail store locations and leases.




For the
purposes of this Section, any unreimbursed payment by the Borrower for goods or
services delivered to a Subsidiary shall be deemed to be an investment in such
Subsidiary.




SECTION
6.05.  Asset
Sales.  The Borrowers will not, and will not permit any of
their subsidiaries to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrowers permit any of
their subsidiaries to issue any additional Equity Interests in such
subsidiaries, except:




(a)  sales
of inventory, used, surplus, obsolete or outmoded machinery or equipment and
Permitted Investments and contributions of merchandise to charitable
organizations, in each case in the ordinary course of business;




(b)  sales,
transfers and dispositions to the Company or a Subsidiary; provided that any
such sales, transfers or dispositions involving a Subsidiary that is not a Loan
Party shall be made in compliance with Section 6.09;


89




(c)  the
sale or discount of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof and
not in connection with any financing transaction;




(d)  leases
or subleases granted by the Company or any Subsidiary to third Persons not
interfering in any material respect with the business of the Company or any
subsidiary, including retail store lease assignments and
surrenders;




(e)  the
sale, transfer or other disposition of patents, trademarks, copyrights and
know-how (i) in the ordinary course of business or (ii) which, in the reasonable
judgment of the Company or any Subsidiary, are determined to be uneconomical,
negligible or obsolete in the conduct of business;




(f)  sale
and leaseback transactions permitted by Section 6.06; or




(g)  sales,
transfers and other dispositions of assets (other than Equity Interests in a
Subsidiary) that are not permitted by any other clause of this Section; provided that the
aggregate fair market value of all assets sold, transferred or otherwise
disposed of in reliance upon this clause (g) shall not exceed $20,000,000 during
any fiscal year of the Company;




provided that all
sales, transfers, leases and other dispositions permitted hereby (other than
those permitted by clause (b) above) shall be made for fair value and for at
least 75% cash consideration.




SECTION
6.06.  Sale
and Leaseback Transactions.  The Borrowers will not, and will
not permit any of their subsidiaries to, enter into any arrangement, directly or
indirectly, whereby they shall sell or transfer any property, real or personal,
used or useful in their businesses, whether now owned or hereinafter acquired,
and thereafter rent or lease such property or other property that they intend to
use for substantially the same purpose or purposes as the property sold or
transferred, except for any such sale of any fixed or capital assets that is
made for cash consideration in an amount not less than the cost of such fixed or
capital asset and is consummated within 180 days after the applicable Borrower
or subsidiary acquires or completes the construction of such fixed or capital
asset.




SECTION
6.07.  Swap
Agreements.  The Borrowers will not, and will not permit any of
their subsidiaries to, enter into any Swap Agreement, other than Swap Agreements
entered into in the ordinary course of business to hedge or mitigate risks to
which any Borrower or subsidiary is exposed in the conduct of its business or
the management of its liabilities and not for speculative
purposes.


90


SECTION
6.08.  Restricted Payments; Certain
Payments of Indebtedness.  (a)  The Borrowers will
not, and will not permit any Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except (i) the Company may declare and pay
dividends with respect to its capital stock payable solely in additional shares
of its common stock, (ii) Subsidiaries may declare and pay dividends
ratably with respect to their capital stock, (iii) the Company may make
Restricted Payments, not exceeding $1,000,000 during any fiscal year, pursuant
to and in accordance with stock option plans or other benefit plans for
management or employees of the Company and the Subsidiaries, (iv) Permitted
Tax Distributions by any Loan Party to another Loan Party, so long as such Loan
Party uses such distributions to pay its Taxes and (v) the Company may
repurchase shares of its common stock (including repurchase of Convertible
Notes, either in the open market or through private transactions); provided that at the
time of and immediately after giving effect to any such Restricted Payment, (A)
no Default or Event of Default shall have occurred and be continuing (other than
any Restricted Payment set forth in clause (iv)), (B) the Fixed Charge Coverage
Ratio, computed on a Pro Forma Basis for the most recent period of four fiscal
quarters for which financial statements shall have been delivered pursuant to
Section 5.01, shall be not less than 1.25 to 1.00 and (C) Availability,
determined on a Pro Forma Basis, shall have been and shall be not less than 25%
of the aggregate Revolving Commitments at all times during the period commencing
on the 60th day before such Restricted Payment and ending on the first
anniversary of such Restricted Payment.




(b)The Borrowers
will not, nor will they permit any Subsidiary to, make or agree to pay or make,
directly or indirectly, any payment or other distribution (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
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Indebtedness, except:




(i)payments of Indebtedness
created under the Loan Documents;




(ii)redemptions and repurchases
of Convertible Notes to the extent permitted by paragraph (a) of this Section,
and payment of the cash portion of the settlement amount required to be paid to
any holder of Convertible Notes upon the conversion thereof in accordance with
the terms of the Convertible Note Documents (provided that no such
payment may be financed in whole or in part by any Borrowings hereunder unless
Availability, determined on a Pro Forma Basis, shall be at least
$50,000,000);




(iii)payment of regularly
scheduled interest and principal payments as and when due in respect of any
Indebtedness, other than payments in respect of any Subordinated Indebtedness
prohibited by the subordination provisions thereof;




(iv)refinancings of
Indebtedness to the extent permitted by Section 6.01;




(v)payment of secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness; and


91


(vi)payments of Indebtedness
solely by issuance of the common stock of the Company.




SECTION
6.09.  Transactions with
Affiliates.  No Borrower will, or will permit any Subsidiary
to, 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 at prices and on terms and conditions not less
favorable to such Borrower or Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties, (b) transactions between or
among the Loan Parties not involving any other Affiliate, (c) any Restricted
Payment permitted by Section 6.08, (d) the payment of reasonable fees and
compensation to, and the providing of reasonable indemnities on behalf of,
directors and officers of the Company, as determined by the board of directors
of the Company in good faith, (e) the transactions described on Schedule 6.09 and (f)
the lease between Dunnigan and the Company in respect of the Distribution Center
as in effect on the Effective Date or any amendments thereto that (i) do not
increase the Company’s obligations thereunder in any material respect or (ii)
would be permitted in accordance with clause (a) of this Section.




SECTION
6.10.  Restrictive
Agreements.  The Borrowers will not, and will not permit any
Subsidiary 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 the Company or Subsidiary to create, incur or
permit to exist any Lien upon any of its property or assets, or (b) the ability
of any Subsidiary to pay dividends or other distributions with respect to its
Equity Interests or to make or repay loans or advances to the Company or any
other Subsidiary or to Guarantee Indebtedness of the Company or any Subsidiary;
provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document or Convertible Note Document (as such Convertible Note
Document is in effect on the date hereof), (ii) the foregoing shall not apply to
restrictions and conditions existing on the Effective Date identified on Schedule 6.10 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) the foregoing
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, (iv) 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 (v) clause
(a) of the foregoing shall not apply to customary provisions in leases
restricting the assignment thereof.




SECTION
6.11.  Amendment of Material
Documents.  No Borrower will , or will permit any Subsidiary
to, amend, modify or waive any of its rights under (a) any Convertible Note
Document or (b) its certificate of incorporation, by-laws or other
organizational documents, in either case, to the extent such amendment,
modification or waiver would be adverse in any material respect to the rights or
interests of the Lenders hereunder or under any other Loan
Document.


92


SECTION
6.12.  Fixed
Charge Coverage Ratio.  The Borrowers will not permit the Fixed
Charge Coverage Ratio for any period of four fiscal quarters ending during a
Covenant Period to be less than 1.10 to 1.00.




SECTION
6.13.  Minimum
Liquidity.  Permit Liquidity on any Convertible Notes
Conversion Date, determined on a Pro Forma Basis giving effect to maximum cash
payment that could be required assuming the conversion of all the Convertible
Notes on such date, to be less than $50,000,000.




SECTION
6.14.  Changes in Fiscal
Periods.  The Borrowers will not change their fiscal year or
their method of determining fiscal quarters, except for changes to the fiscal
years of each of the Acquired Company and its Subsidiaries in order to conform
to the fiscal year of the Company.




ARTICLE
VII




Events of
Default




If any of
the following events (“Events of Default”)
shall occur:




(a)  the
Borrowers shall fail to pay any principal of any Loan or any reimbursement
obligation in respect of any LC 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 Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of three Business
Days;




(c)  any
representation or warranty made or deemed made by or on behalf of any Loan Party
or any Subsidiary in or in connection with this Agreement or any other Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any other Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have
been materially incorrect when made or deemed made;




(d)  any
Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.02(a) or 5.03 (with respect to a Loan Party’s
existence) or in Article VI;




(e)  the
Company shall fail to comply with Section 5.01(g), 5.01(h) or 5.07 and any such
failure shall continue unremedied for a period of three Business Days or more,
or any Loan Party shall fail to observe or perform any other covenant, condition
or agreement contained in this Agreement, and such failure shall continue
unremedied for a period of 30 days after the earlier of (i) any Loan Party’s
knowledge of such breach or (ii) notice thereof from the Administrative
Agent;


93


(f)  any
Loan Party or any Subsidiary 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 any applicable grace period);




(g)  any
event or condition shall occur that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that
this clause (g) shall not apply to secured Indebtedness that becomes due as
a result of the voluntary sale or transfer of the property or assets securing
such Indebtedness;




(h)  an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of
a Loan Party or any Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
a Loan Party or any 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;




(i)  a
Loan Party or any Subsidiary shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar
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 (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for such Loan Party or 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 general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;




(j)  a
Loan Party or any Subsidiary shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;


94


(k)  one
or more judgments for the payment of money in an aggregate amount in excess of
$20,000,000 (to the extent not covered by independent third-party insurance as
to which the insurer has been notified of such judgment and has not denied
coverage) shall be rendered against one or more Loan Parties, one or more
Subsidiaries or any combination thereof and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of any Loan Party or any Subsidiary to enforce
any such judgment;




(l)  an
ERISA Event shall have occurred that, in the opinion of the Required Lenders,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in liability of the Loan Parties and their
Subsidiaries in an aggregate amount exceeding (i) $10,000,000 in any year or
(ii) $20,000,000 in the aggregate for all periods;




(m)  a
Change in Control shall occur;




(n)  the
occurrence of any “default”, as defined in any Loan Document (other than this
Agreement) or the breach of any of the terms or provisions of any Loan Document
(other than this Agreement), which default or breach continues beyond any period
of grace therein provided;




(o)  the
Loan Guarantee shall fail to remain in full force or effect or any action shall
be taken to discontinue or to assert the invalidity or unenforceability of the
Loan Guarantee, or any Loan Guarantor shall fail to comply in any material
respect with any of the terms or provisions of the Loan Guarantee to which it is
a party, or any Loan Guarantor shall deny that it has any further liability
under the Loan Guarantee to which it is a party, or shall give notice to such
effect; or




(p)  any
security interest purported to be created under any Collateral Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected first priority security interest in any Collateral with the priority
required by the applicable Collateral Document, except (i) as a result of the
sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of the Administrative
Agent’s failure to (A) maintain possession of any stock certificates, promissory
notes or other instruments delivered to it under the Security Agreement or (B)
continue in accordance with applicable Law the effectiveness of any UCC
financing statement.




then, and
in every such event (other than an event with respect to any Borrower described
in clause (h) or (i) of this Article), 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 Borrower Representative, 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 (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 in case of any event with
respect to any Borrower described in clause (h) or (i) of this Article, 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 to the extent permitted by
applicable law.


95


ARTICLE
VIII




The
Administrative Agent




Each of
the Lenders and each of the Issuing Banks hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.




The bank
serving as the Administrative Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not the Administrative Agent, and such bank and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with the Loan Parties or any Subsidiary of a Loan Party or other
Affiliate thereof as if it were not the Administrative Agent
hereunder.




The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents.  Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall
not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated by the
Loan Documents that the Administrative Agent is required to exercise in writing
as directed by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Loan Party
or any of its subsidiaries that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any
capacity.  The Administrative Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02) or in the absence of
its own gross negligence or wilful misconduct.  The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower
Representative or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection with any Loan Document, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, (v) the creation, perfection or priority of
Liens on the Collateral or the existence of the Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere in any
Loan Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.




96


The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon.  The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.




The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative Agent and any such sub-agent
may perform any and all its duties and exercise its rights and powers through
their respective Related Parties.  The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative
Agent.




Subject
to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Banks and the Borrower
Representative.  Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Borrowers, to appoint a successor that
is an Eligible Successor Agent.  If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, in consultation with
the Borrower Representative, on behalf of the Lenders and the Issuing Banks,
appoint a successor Administrative Agent which is an Eligible Successor Agent,
until such time, if any, as the Required Lenders appoint a Successor
Administrative Agent.  Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder.  The fees
payable by the Borrowers to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the
Borrowers and such successor.  After the Administrative Agent’s
resignation hereunder, the provisions of this Article, Section 2.17(d) and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.


97


Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.  Each Lender also acknowledges
that it will, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or
thereunder.




The Loan
Parties acknowledge and agree that the Administrative Agent may prepare and
distribute to the Lenders Reports containing information obtained by the
Administrative Agent through the conduct of appraisals and field examinations
pursuant to Sections 5.12 and 5.13 and the exercise of its inspection rights
under Section 5.09.  Each Lender hereby agrees that (a) it has
requested a copy of each Report prepared by or on behalf of the Administrative
Agent; (b) the Administrative Agent (i) makes no representation or warranty,
express or implied, as to the completeness or accuracy of any Report or any of
the information contained therein or any inaccuracy or omission contained in or
relating to a Report and (ii) shall not be liable for any information contained
in any Report; (c) the Reports are not comprehensive audits or examinations, and
that any Person performing any field examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the Loan
Parties’ books and records, as well as on representations of the Loan Parties’
personnel and that the Administrative Agent undertakes no obligation to update,
correct or supplement the Reports; (d) it will keep all Reports confidential and
strictly for its internal use, not share the Report with any Loan Party or any
other Person except as otherwise permitted pursuant to this Agreement; and (e)
without limiting the generality of any other indemnification provision contained
in this Agreement, it will pay and protect, and indemnify, defend, and hold
the Administrative Agent and any such other Person preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including reasonable attorney fees) incurred by as the direct
or indirect result of any third parties who might obtain all or part of any
Report through the indemnifying Lender.




The
Syndication Agent shall not have any rights, powers, obligations, liabilities,
responsibilities or duties under this Agreement other than those applicable to
all Lenders as such.


98




ARTICLE
IX




Miscellaneous




SECTION
9.01.  Notices.  (a)  Except
in the case of notices and other communications expressly permitted to be given
by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by facsimile, as follows:




(i)  if
to any Loan Party, to the Borrower Representative at:




30
Dunnigan Drive


Suffern,
New York  10901


Attention:
Mr. Armand Correia, Chief Financial Officer


Facsimile
No: (845) 369-4625




(ii)  if
to the Administrative Agent, JPMCB in its capacity as an Issuing Bank or the
Swingline Lender, to JPMorgan Chase Bank, N.A. at:




270 Park
Avenue, 44th Floor


Mail
Code: NY1-K855


New York,
New York  10017


Attention:
Donna DiForio


Facsimile
No: (646) 534-2274




(iii)  if
to any other Issuing Bank, to the address most recently specified by it in a
notice delivered to the Administrative Agent and the Borrower; and




(iv)  if
to any other Lender, to it at its address or facsimile number set forth in its
Administrative Questionnaire.




All such
notices and other communications (i) sent by hand or overnight courier service,
or mailed by certified or registered mail, shall be deemed to have been given
when received or (ii) sent by facsimile shall be deemed to have been given when
sent (or, if not given during normal business hours for the recipient, at the
opening of business on the next Business Day for the recipient).




(b)Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices pursuant to Article II unless otherwise
agreed by the Administrative Agent and the applicable Lender.  The
Administrative Agent or the Borrower Representative (on behalf of the Loan
Parties) may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications. All such notices and other communications (i) sent to an e-mail
address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by return e-mail or other written
acknowledgement); provided that if not
given during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next Business Day for the recipient, and (ii) posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(b)(i) of notification that such notice or communication is available and
identifying the website address therefor.


99


(c)Any party hereto
may change its address or facsimile number for notices and other communications
hereunder by notice to the other parties hereto.




SECTION
9.02.  Waivers;
Amendments.  (a)  No failure or delay by the
Administrative Agent, any 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 Administrative Agent,
the Issuing Banks and the Lenders hereunder and under any other Loan Document
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 any Loan Party 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 of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.


100


(b)None of this
Agreement, any other Loan Document or any provision hereof or thereof may be
waived, amended or modified except (i) in the case of this Agreement, pursuant
to an agreement or agreements in writing entered into by the Borrowers and the
Required Lenders or (ii) in the case of any other Loan Document, pursuant to an
agreement or agreements in writing entered into by the Administrative Agent and
the Loan Party or Loan Parties that are parties thereto, 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 (provided that the Administrative Agent may make
Protective Advances as set forth in Section 2.04), (ii) reduce or forgive the
principal amount of any Loan or LC Disbursement or reduce the rate of interest
thereon, or reduce or forgive any interest or fees payable hereunder, without
the written consent of each Lender directly affected thereby, (iii) postpone any
scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any date for the payment of any interest, fees or other
Obligations payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment, without
the written consent of each Lender directly affected thereby, (iv) change
Section 2.18(b) or (d) in a manner that would alter the manner in which payments
are shared, without the written consent of each Lender, (v) increase the advance
rates set forth in the definition of Borrowing Base or add new categories of
eligible assets, without the written consent of each Lender, (vi) change any of
the provisions of this Section or the definition of “Required 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, (vii) change Section 2.20 without the consent of each Lender (other
than any Defaulting Lender), (viii) release any Loan Guarantor from its
obligation under its Loan Guarantee (except as otherwise permitted herein or in
the other Loan Documents), without the written consent of each Lender, or (ix)
except as provided in clauses (c) and (d) of this Section or in any Collateral
Document, release Collateral having an aggregate value in excess of $20,000,000
without the written consent of each Lender; provided further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Issuing Banks or the Swingline Lender hereunder
without the prior written consent of the Administrative Agent, the Issuing Banks
or the Swingline Lender, as the case may be (it being understood that any change
to Section 2.20 shall require the consent of the Administrative Agent, the
Swingline Lender and the Issuing Banks). Notwithstanding any of the foregoing,
this Agreement may be amended without any additional consents to provide for
increased Commitments in the manner contemplated by Section 2.09. The
Administrative Agent may also amend the Commitment Schedule
to reflect assignments entered into pursuant to Section 9.04.




(c)The Lenders
hereby irrevocably authorize the Administrative Agent, at its option and in its
sole discretion, to release any Liens granted to the Administrative Agent by the
Loan Parties on any Collateral (i) upon the termination of the all Commitments,
payment and satisfaction in full in cash of all Secured Obligations (other than
Unliquidated Obligations), and the cash collateralization of all Unliquidated
Obligations in a manner satisfactory to each affected Lender,
(ii) constituting property being sold or disposed of if the Loan Party
disposing of such property certifies to the Administrative Agent that the sale
or disposition is made in compliance with the terms of this Agreement (and the
Administrative Agent may rely conclusively on any such certificate, without
further inquiry), and to the extent that the property being sold or disposed of
constitutes 100% of the Equity Interest of a Subsidiary, the Administrative
Agent is authorized to release any Loan Guarantee provided by such Subsidiary,
(iii) constituting property leased to a Loan Party under a lease which has
expired or been terminated in a transaction not prohibited under this Agreement,
or (iv) as required to effect any sale or other disposition of such Collateral
in connection with any exercise of remedies of the Administrative Agent and the
Lenders pursuant to Article VII.  Except as provided in the preceding
sentence and clause (b) of this Section, the Administrative Agent will not
release any Liens on Collateral without the prior written authorization of the
Required Lenders; provided that, the
Administrative Agent may in its discretion, release its Liens on Collateral
valued in the aggregate not in excess of $10,000,000 during any calendar year
without the prior written authorization of the Required
Lenders.  Any such release shall not in any manner discharge,
affect, or impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of the Loan Parties in respect of) all interests
retained by the Loan Parties, including the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.


101


(d)If, in connection
with any proposed amendment, waiver or consent requiring the consent of “each
Lender” or “each Lender affected thereby,” the consents of Lenders having Credit
Exposure and unused Commitments representing more than 66% of the sum of the
total Credit Exposure and unused Commitments at such time are obtained, but the
consents of other necessary Lenders are not obtained (any such Lender whose
consent is necessary but not obtained being referred to herein as a “Non-Consenting
Lender”), then the Borrowers may elect to replace any Non-Consenting
Lender as a Lender party to this Agreement; provided that,
concurrently with such replacement, (i) another bank or other entity which is
reasonably satisfactory to the Borrowers and the Administrative Agent shall
agree, as of such date, to purchase for cash the Loans and other Obligations due
to the Non-Consenting Lender pursuant to an Assignment and Assumption and to
become a Lender for all purposes under this Agreement and to assume all
obligations of the Non-Consenting Lender to be terminated as of such date and to
comply with the requirements of clause (b) of Section 9.04, and (ii) the
Borrowers shall pay to such Non-Consenting Lender in same day funds on the day
of such replacement (A) all interest, fees and other amounts then accrued but
unpaid to such Non-Consenting Lender by the Borrowers hereunder to and including
the date of termination, including without limitation payments due to such
Non-Consenting Lender under Sections 2.15 and 2.17, and (B) an amount, if any,
equal to the payment which would have been due to such Lender on the day of such
replacement under Section 2.16 had the Loans of such Non-Consenting Lender been
prepaid on such date rather than sold to the replacement Lender.




SECTION
9.03.  Expenses; Indemnity; Damage
Waiver.  (a)  The Borrowers shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent, the
Arrangers and their respective Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Arrangers, in connection with the
syndication and distribution (including, without limitation, via the internet or
through a service such as Intralinks) of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions of the Loan Documents
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by each
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 Administrative Agent, any
Issuing Bank or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent, any Issuing Bank or any Lender, in
connection with the enforcement, collection 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.  Subject to the provisions of Sections 5.09, 5.12 and 5.13,
expenses subject to reimbursement by the Borrowers under this Section include,
without limiting the generality of the foregoing, reasonable costs and expenses
incurred in connection with:




(i)appraisals and insurance
reviews;


102


(ii)field examinations and the
preparation of Reports based on the fees charged by a third party retained by
the Administrative Agent or the internally allocated fees for each Person
employed by the Administrative Agent with respect to each field
examination;




(iii)taxes, fees and other
charges for (A) lien searches and (B) filing financing statements and
continuations, and other actions to perfect, protect, and continue the
Administrative Agent’s Liens;




(iv)sums paid or incurred to
take any action required of any Loan Party under the Loan Documents that such
Loan Party fails to pay or take; and




(v)forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
the accounts and lock boxes, and costs and expenses of preserving and protecting
the Collateral.




All of
the foregoing costs and expenses may be charged to the Borrowers as Revolving
Loans or to another deposit account, all as described in
Section 2.18(c).




(b)The Borrowers
agree, jointly and severally, to indemnify the Administrative Agent, the
Arrangers, each 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,
penalties, incremental taxes, 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 the Loan Documents
or any agreement or instrument contemplated thereby, the performance by the
parties hereto of their respective obligations thereunder or the consummation of
the Transactions or any other transactions contemplated hereby, (ii) any
Loan or Letter of Credit or the use of the proceeds therefrom (including any
refusal by an 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 at, to or from any
property owned or operated by any Borrower or any of its Subsidiaries, or any
other Environmental Liability related in any way to any Borrower or any of its
Subsidiaries, (iv) the failure of the Borrowers to deliver to the Administrative
Agent the required receipts or other required documentary evidence with respect
to a payment made by the Borrowers for Taxes pursuant to Section 2.17, or (v)
any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether such proceeding is initiated by an Indemnitee
or any third party or 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, penalties, liabilities or related expenses are
determined by a court of competent jurisdiction by a final and non-appealable
judgment to have resulted from the bad faith, gross negligence or wilful
misconduct of such Indemnitee.  Except as set forth in clause (iv) of
this paragraph (b), this Section 9.03 shall not apply to any Taxes (other than
Other Taxes).


103


(c)To the extent the
Borrowers fail to pay any amount required to be paid by them to the
Administrative Agent, the Arrangers, any Issuing Bank or the Swingline Lender
under paragraph (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent, such Issuing Bank or the Swingline Lender, as the
case may be, such Lender’s Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, penalty, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent, such Issuing Bank or the Swingline Lender in its capacity
as such.




(d)To the extent
permitted by applicable law, no Loan Party shall assert, and each hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement
or any agreement or instrument contemplated hereby, the Transactions, any Loan
or Letter of Credit or the use of the proceeds thereof.




(e)All amounts due
under this Section shall be payable not later than 10 days after written
demand therefor.




SECTION
9.04.  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
an Issuing Bank that issues any Letter of Credit), except that (i) the Borrowers
may not assign or otherwise transfer any of their rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by a Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section.  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 an Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Issuing Banks and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this
Agreement.




(b)(i)  Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to
one or more 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) with the prior written consent (such consent not to be
unreasonably withheld) of:




(A)the Borrower Representative;
provided that
no consent of the Borrower Representative shall be required for an assignment to
a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default
has occurred and is continuing, any other assignee;


104


(B)the Administrative Agent;
and




(C)each Issuing Bank; provided
that if any Issuing Bank has not provided written notice of its objection to any
proposed assignment within three Business Days of its receipt thereof from the
Administrative Agent, such Issuing Bank shall be deemed to have consented to
such proposed assignment.




(ii)Assignments shall be
subject to the following additional conditions:




(A)except in the case of an
assignment to a Lender or an Affiliate of a Lender 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 Assumption with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 unless each of the Borrower Representative and the
Administrative Agent otherwise consent; provided that no such
consent of the Borrower Representative shall be required if an Event of Default
has occurred and is continuing;




(B)each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement;




(C)the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500;
and




(D)the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire in which the assignee designates one or more credit contacts to
whom all syndicate-level information (which may contain material non-public
information about the Company, the Loan Parties and their Related Parties or
their respective securities) will be made available and who may receive such
information in accordance with the assignee’s compliance procedures and
applicable laws, including Federal and state securities laws.




For the
purposes of this Section 9.04(b), the term “Approved Fund” means
any Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.


105


(iii)  Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 9.03).  Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 9.04 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 (c) of this Section.




(iv)  The
Administrative Agent, acting for this purpose as an agent of the Borrowers,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitment of, and principal amount of the Loans and LC
Disbursements owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  The
entries in the Register shall be conclusive, and the Borrowers, the
Administrative Agent, the Issuing Banks 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
Borrowers, any Issuing Bank and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.




(v)  Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), 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 Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.05, 2.06(d) or (e),
2.07(b), 2.17(d) or 9.03(c), the Administrative Agent shall have no obligation
to accept such Assignment and Assumption and record the information therein in
the Register unless and until such payment shall have been made in full,
together with all accrued interest thereon.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.


106




(c)(i)  Any
Lender may, without the consent of the Borrowers, the Administrative Agent, the
Issuing Banks or the Swingline Lender, sell participations to one or more banks
or other entities (each 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
(A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations and (C) the Borrowers, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under the Loan Documents.  Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce 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 9.02(b) that affects such
Participant.  Subject to paragraph (c)(ii) of this Section, the
Borrowers agree that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 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 9.08 as though it were a Lender;
provided that
such Participant agrees to be subject to Section 2.18(c) as though it were a
Lender.




(ii)  A
Participant shall not be entitled to receive any greater payment under Section
2.15 or 2.17 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 Borrower Representative’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 2.17
unless the Borrower Representative is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to
comply with Section 2.17(f) as though it were a Lender.  Each Lender
that sells a participation shall, acting solely for this purpose as an agent of
the Borrower, maintain a register on which it enters the name and address of
each Participant and the principal amounts (and stated interest) of each
participant’s interest in the Loans or other obligations under this Agreement
(the “Participant
Register”).  The entries in the Participant Register shall be
conclusive absent manifest error, and the Borrower and such Lender shall treat
each person whose name is recorded in the Participant Register as the owner of
such participation for all purposes of this Agreement notwithstanding any notice
to the contrary.  The Participant Register shall be available for
inspection by the Borrowers and the Administrative Agent, at any reasonable time
and from time to time upon reasonable prior notice.




(d)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
without limitation 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.


107


SECTION
9.05.  Survival.  All
covenants, agreements, representations and warranties made by the Loan Parties
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
Administrative Agent, any 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 2.15, 2.16, 2.17 and 9.03
and Article VIII 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.




SECTION
9.06.  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 Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, 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 facsimile shall be effective as delivery of
a manually executed counterpart of this Agreement.




SECTION
9.07.  Severability.  Any
provision of any Loan Document 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 thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.


108


SECTION
9.08.  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 or such
Loan Guarantor against any of and all the Secured Obligations held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under the Loan Documents and although such obligations may be
unmatured.  The applicable Lender shall notify the Borrower
Representative and the Administrative Agent of such set-off or application;
provided that
any failure to give or any delay in giving such notice shall not affect the
validity of any such set-off or application under this Section.  The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may
have.




SECTION
9.09.  Governing Law; Jurisdiction;
Consent to Service of Process.  (a)  The Loan
Documents (other than those containing a contrary express choice of law
provision) shall be governed by and construed in accordance with the laws of the
State of New York, but giving effect to federal laws applicable to national
banks.




(b)Each Loan Party
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any US Federal or New York State court sitting
in New York, New York in any action or proceeding arising out of or relating to
any Loan Documents, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in New York State or, to the extent permitted by law, in such Federal
court.  Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against any Loan Party or its properties in the
courts of any jurisdiction.




(c)Each Loan Party
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any court referred to
in paragraph (b) of this Section.  Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.




(d)Each party to
this Agreement irrevocably consents to service of process in the manner provided
for notices in Section 9.01.  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.


109


SECTION
9.10.  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 THEREBY
(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.




SECTION
9.11.  Headings.  Article
and 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.




SECTION
9.12.  Confidentiality.  Each
of the Administrative Agent, the Issuing Banks and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by Requirement of Laws or
by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Loan Parties and their obligations, (g)
with the consent of the Borrower Representative, or (h) to the extent such
Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative
Agent, any Issuing Bank or any Lender on a non-confidential basis from a source
other than the Borrowers.  For the purposes of this Section, “Information” means
all information received from the Borrowers relating to the Borrowers or their
business, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a non-confidential basis
prior to disclosure by the Borrowers; provided that, in the
case of information received from the Borrowers after the Effective Date, such
information is clearly identified at the time of delivery as
confidential.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.


110




EACH
LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12 FURNISHED TO IT
PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION
CONCERNING THE COMPANY AND ITS AFFILIATES AND THEIR RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.




ALL
INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE COMPANY, THE LOAN PARTIES AND
THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY,
EACH LENDER REPRESENTS TO THE BORROWERS AND THE ADMINISTRATIVE AGENT THAT IT HAS
IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE
INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH
ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE
SECURITIES LAWS.




SECTION
9.13.  Several Obligations;
Nonreliance; Violation of Law.  The respective obligations of
the Lenders hereunder are several and not joint and the failure of any Lender to
make any Loan or perform any of its obligations hereunder shall not relieve any
other Lender from any of its obligations hereunder. Anything contained in this
Agreement to the contrary notwithstanding, neither any Issuing Bank nor any
Lender shall be obligated to extend credit to the Borrowers in violation of any
Requirement of Law.




SECTION
9.14.  USA
PATRIOT Act.  Each Lender that is subject to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”) hereby notifies
the Borrowers that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Borrowers, which
information includes the names and addresses of the Borrowers and other
information that will allow such Lender to identify the Borrowers in accordance
with the Act.




SECTION
9.15.  Appointment for
Perfection.  Each Lender hereby appoints each other Lender as
its agent for the purpose of perfecting Liens, for the benefit of the
Administrative Agent and the Lenders, in assets which, in accordance with
Article 9 of the UCC or any other applicable law can be perfected only by
possession.  Should any Lender (other than the Administrative Agent)
obtain possession of any such Collateral, such Lender shall notify the
Administrative Agent thereof, and, promptly upon the Administrative Agent’s
request therefor shall deliver such Collateral to the Administrative Agent or
otherwise deal with such Collateral in accordance with the Administrative
Agent’s instructions.


111


SECTION
9.16.  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 which are treated as interest on such Loan under
applicable law (collectively the “Charges”), shall
exceed the maximum lawful rate (the “Maximum Rate”) which
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 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.




ARTICLE
X




Loan
Guarantee




SECTION
10.01.  Guarantee.  Each
Loan Guarantor hereby agrees that it is jointly and severally liable for, and
absolutely, irrevocably and unconditionally guarantees to the Lenders, the
prompt payment when due, whether at stated maturity, upon acceleration or
otherwise, and at all times thereafter, of the Secured Obligations and all
reasonable costs and expenses including, without limitation, all court costs and
attorneys’ and paralegals’ fees and expenses paid or incurred by the
Administrative Agent, the Issuing Banks and the Lenders in endeavoring to
collect all or any part of the Secured Obligations from, or in prosecuting any
action against, any Borrower, any Loan Guarantor or any other guarantor of all
or any part of the Secured Obligations (such costs and expenses, together with
the Secured Obligations, being collectively called the “Guaranteed
Obligations”). Each Loan Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal. All terms of this Loan Guarantee
apply to and may be enforced by or on behalf of any domestic or foreign branch
or Affiliate of any Lender that extended any portion of the Guaranteed
Obligations.




SECTION
10.02.  Guarantee of
Payment.  This Loan Guarantee is a Guarantee of payment and not
of collection. Each Loan Guarantor waives any right to require the
Administrative Agent, any Issuing Bank or any Lender to sue any Borrower, any
other Loan Guarantor, any other guarantor, or any other Person obligated for all
or any part of the Guaranteed Obligations (each, an “Obligated Party”), or
to enforce its rights against any collateral securing all or any part of the
Guaranteed Obligations.


112


SECTION
10.03.  No
Discharge or Diminishment of Loan
Guarantee.  (a)   Except as otherwise provided
for herein, the obligations of each Loan Guarantor hereunder are unconditional
and absolute and not subject to any reduction, limitation, impairment or
termination for any reason (other than the indefeasible payment in full in cash
of the Guaranteed Obligations), including: (i) any claim of waiver, release,
extension, renewal, settlement, surrender, alteration, or compromise of any of
the Guaranteed Obligations, by operation of law or otherwise; (ii) any change in
the corporate existence, structure or ownership of any Borrower or any other
guarantor of or other Person liable for any of the Guaranteed Obligations; (iii)
any insolvency, bankruptcy, reorganization or other similar proceeding affecting
any Obligated Party or its assets or any resulting release or discharge of any
obligation of any Obligated Party; or (iv) the existence of any claim, setoff or
other right which any Loan Guarantor may have at any time against any Obligated
Party, the Administrative Agent, any Issuing Bank, any Lender, or any other
Person, whether in connection herewith or in any unrelated
transaction.




(b)The obligations
of each Loan Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the invalidity,
illegality, or unenforceability of any of the Guaranteed Obligations or
otherwise, or any provision of applicable law or regulation purporting to
prohibit payment by any Obligated Party, of the Guaranteed Obligations or any
part thereof.




(c)Further, the
obligations of any Loan Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of the Administrative Agent, any Issuing
Bank or any Lender to assert any claim or demand or to enforce any remedy with
respect to all or any part of the Guaranteed Obligations; (ii) any waiver or
modification of or supplement to any provision of any agreement relating to the
Guaranteed Obligations; (iii) any release, non-perfection or invalidity of any
indirect or direct security for the obligations of any Borrower for all or any
part of the Guaranteed Obligations or any obligations of any other guarantor of
or other Person liable for any of the Guaranteed Obligations; (iv) any action or
failure to act by the Administrative Agent, any Issuing Bank or any Lender with
respect to any collateral securing any part of the Guaranteed Obligations; or
(v) any default, failure or delay, willful or otherwise, in the payment or
performance of any of the Guaranteed Obligations, or any other circumstance,
act, omission or delay that might in any manner or to any extent vary the risk
of such Loan Guarantor or that would otherwise operate as a discharge of any
Loan Guarantor as a matter of law or equity (other than the indefeasible payment
in full in cash of the Guaranteed Obligations).


113


SECTION
10.04.  Defenses
Waived.  To the fullest extent permitted by applicable law,
each Loan Guarantor hereby waives any defense based on or arising out of any
defense of any Borrower or any Loan Guarantor or the unenforceability of all or
any part of the Guaranteed Obligations from any cause, or the cessation from any
cause of the liability of any Borrower or any Loan Guarantor, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Without
limiting the generality of the foregoing, each Loan Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any person against any Obligated Party
or any other Person.  Each Loan Guarantor confirms that it is not a
surety under any state law and shall not raise any such law as a defense to its
obligations hereunder.  The Administrative Agent may, at its election,
foreclose on any Collateral held by it by one or more judicial or nonjudicial
sales, accept an assignment of any such Collateral in lieu of foreclosure or
otherwise act or fail to act with respect to any collateral securing all or a
part of the Guaranteed Obligations, compromise or adjust any part of the
Guaranteed Obligations, make any other accommodation with any Obligated Party or
exercise any other right or remedy available to it against any Obligated Party,
without affecting or impairing in any way the liability of such Loan Guarantor
under this Loan Guarantee except to the extent the Guaranteed Obligations have
been fully and indefeasibly paid in cash.  To the fullest extent
permitted by applicable law, each Loan Guarantor waives any defense arising out
of any such election even though that election may operate, pursuant to
applicable law, to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of any Loan Guarantor against any Obligated
Party or any security.




SECTION
10.05.  Rights of
Subrogation.  No Loan Guarantor will assert any right, claim or
cause of action, including, without limitation, a claim of subrogation,
contribution or indemnification that it has against any Obligated Party, or any
Collateral, until the Loan Parties and the Loan Guarantors have fully performed
all their obligations to the Administrative Agent, the Issuing Banks and the
Lenders.




SECTION
10.06.  Reinstatement; Stay of
Acceleration.  If at any time any payment of any portion of the
Guaranteed Obligations is rescinded or must otherwise be restored or returned
upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise,
each Loan Guarantor’s obligations under this Loan Guarantee with respect to that
payment shall be reinstated at such time as though the payment had not been made
and whether or not the Administrative Agent, the Issuing Banks and the Lenders
are in possession of this Loan Guarantee. If acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, all such amounts otherwise subject
to acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Lender.




SECTION
10.07.  Information.  Each
Loan Guarantor assumes all responsibility for being and keeping itself informed
of the Borrowers’ financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks that each Loan Guarantor assumes and
incurs under this Loan Guarantee, and agrees that none of the Administrative
Agent, any Issuing Bank or any Lender shall have any duty to advise any Loan
Guarantor of information known to it regarding those circumstances or
risks.




SECTION
10.08.  Taxes.  The provisions of Section 2.17 shall apply mutatis mutandis to all
payments by the Loan Guarantors of the Guaranteed Obligations.


114


SECTION
10.09.  Maximum
Liability.  The provisions of this Loan Guarantee are
severable, and in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any Loan
Guarantor under this Loan Guarantee would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor’s liability under this Loan Guarantee, then, notwithstanding any other
provision of this Loan Guarantee to the contrary, the amount of such liability
shall, without any further action by the Loan Guarantors or the Lenders, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Loan Guarantor’s “Maximum
Liability”).  This Section with respect to the Maximum
Liability of each Loan Guarantor is intended solely to preserve the rights of
the Lenders to the maximum extent not subject to avoidance under applicable law,
and no Loan Guarantor nor any other Person or entity shall have any right or
claim under this Section with respect to such Maximum Liability, except to the
extent necessary so that the obligations of any Loan Guarantor hereunder shall
not be rendered voidable under applicable law. Each Loan Guarantor agrees that
the Guaranteed Obligations may at any time and from time to time exceed the
Maximum Liability of each Loan Guarantor without impairing this Loan Guarantee
or affecting the rights and remedies of the Lenders hereunder; provided that,
nothing in this sentence shall be construed to increase any Loan Guarantor’s
obligations hereunder beyond its Maximum Liability.




SECTION
10.10.  Contribution.  In
the event any Loan Guarantor (a “Paying Guarantor”)
shall make any payment or payments under this Loan Guarantee or shall suffer any
loss as a result of any realization upon any collateral granted by it to secure
its obligations under this Loan Guarantee, each other Loan Guarantor (each a
“Non-Paying
Guarantor”) shall contribute to such Paying Guarantor an amount equal to
such Non-Paying Guarantor’s Applicable Share of such payment or payments made,
or losses suffered, by such Paying Guarantor.  For purposes of this
Article X, each Non-Paying Guarantor’s “Applicable Share”
with respect to any such payment or loss by a Paying Guarantor shall be
determined as of the date on which such payment or loss was made by reference to
the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from the Borrowers after the Effective Date (whether by
loan, capital infusion or by other means) to (ii) the aggregate Maximum
Liability of all Loan Guarantors hereunder (including such Paying Guarantor) as
of such date (without giving effect to any right to receive, or obligation to
make, any contribution hereunder), or to the extent that a Maximum Liability has
not been determined for any Loan Guarantor, the aggregate amount of all monies
received by such Loan Guarantors from the Borrowers after the Effective Date
(whether by loan, capital infusion or by other means).  Nothing in
this provision shall affect any Loan Guarantor’s several liability for the
entire amount of the Guaranteed Obligations (up to such Loan Guarantor’s Maximum
Liability).  Each of the Loan Guarantors covenants and agrees that its
right to receive any contribution under this Loan Guarantee from a Non-Paying
Guarantor shall be subordinate and junior in right of payment to the payment in
full in cash of the Guaranteed Obligations.  This provision is for the
benefit of both the Administrative Agent, the Issuing Banks, the Lenders and the
Loan Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.


115


SECTION
10.11.  Liability
Cumulative.  The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative with
all other liabilities of each Loan Party to the Administrative Agent, the
Issuing Banks and the Lenders under this Agreement and the other Loan Documents
to which such Loan Party is a party or in respect of any obligations or
liabilities of the other Loan Parties, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.




ARTICLE
XI




The Borrower
Representative




SECTION
11.01.  Appointment; Nature of
Relationship.  The Company is hereby appointed by each of the
Borrowers as its contractual representative (herein referred to as the “Borrower
Representative”) hereunder and under each other Loan Document, and each
of the Borrowers irrevocably authorizes the Borrower Representative to act as
the contractual representative of such Borrower with the rights and duties
expressly set forth herein and in the other Loan Documents.  The
Borrower Representative agrees to act as such contractual representative upon
the express conditions contained in this Article XI.  Additionally,
the Borrowers hereby appoint the Borrower Representative as their agent to
receive all of the proceeds of the Loans in the Funding Account(s), at which
time the Borrower Representative shall promptly disburse such Loans to the
appropriate Borrower.  The Administrative Agent and the Lenders, and
their respective officers, directors, agents or employees, shall not be liable
to the Borrower Representative or any Borrower for any action taken or omitted
to be taken by the Borrower Representative or the Borrowers pursuant to this
Section.




SECTION
11.02.  Powers.  The
Borrower Representative shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Borrower Representative by the
terms of each thereof, together with such powers as are reasonably incidental
thereto.  The Borrower Representative shall have no implied duties to
the Borrowers, or any obligation to the Lenders to take any action thereunder
except any action specifically provided by the Loan Documents to be taken by the
Borrower Representative.




SECTION
11.03.  Employment of
Agents.  The Borrower Representative may execute any of its
duties as the Borrower Representative hereunder and under any other Loan
Document by or through authorized officers.


116


SECTION
11.04.  Notices.  Each
Borrower shall immediately notify the Borrower Representative of the occurrence
of any Default hereunder referring to this Agreement describing such Default and
stating that such notice is a “notice of default.”  In the event that
the Borrower Representative receives such a notice, the Borrower Representative
shall give prompt notice thereof to the Administrative Agent and the
Lenders.  Any notice provided to the Borrower Representative hereunder
shall constitute notice to each Borrower on the date received by the Borrower
Representative.




SECTION
11.05.  Successor Borrower
Representative.  Upon the prior written consent of the
Administrative Agent, the Borrower Representative may resign at any time, such
resignation to be effective upon the appointment of a successor Borrower
Representative.  The Administrative Agent shall give prompt written
notice of such resignation to the Lenders.




SECTION
11.06.  Execution of Loan Documents;
Borrowing Base Certificate.  The Borrowers hereby empower and
authorize the Borrower Representative, on behalf of the Borrowers, to execute
and deliver to the Administrative Agent and the Lenders the Loan Documents and
all related agreements, certificates, documents, or instruments as shall be
necessary or appropriate to effect the purposes of the Loan Documents, including
without limitation, the Borrowing Base Certificates and the Compliance
Certificates.  Each Borrower agrees that any action taken by the
Borrower Representative or the Borrowers in accordance with the terms of this
Agreement or the other Loan Documents, and the exercise by the Borrower
Representative of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Borrowers.




SECTION
11.07.  Reporting.  Each
Borrower hereby agrees that such Borrower shall furnish promptly after each
fiscal month to the Borrower Representative any certificate or report requested
by the Borrower Representative, on which the Borrower Representative shall rely
to prepare the Borrowing Base Certificates and Compliance Certificates required
pursuant to the provisions of this Agreement.


117


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.




BORROWERS:THE
      DRESS BARN, INC.ByName:Title:TWEEN
      BRANDS, INC.ByName:Title:MAURICES
      INCORPORATEDByName:Title:OTHER
      LOAN PARTIES:D.B.R.,
      INC.ByName:Title:DBX,
      INC.ByName:Title:




1




DRESS
      BARN CREDIT MANAGEMENT,
                LLCByName:Title:MAURICES
      CREDIT MANAGEMENT, INC.ByName:Title:TWEEN
      BRANDS AGENCY, INC.ByName:Title:TWEEN
      BRANDS PURCHASING, INC.ByName:Title:TWEEN
      BRANDS SERVICE CO.ByName:Title:TWEEN
      BRANDS INVESTMENT, LLCByName:Title:TOO
      GC, LLCByName:Title:


2




TWEEN
      BRANDS DIRECT, LLCByName:Title:TWEEN
      BRANDS DIRECT SERVICES, INC.ByName:Title:AMERICAN
      FACTORING, INC.ByName:Title:TWEEN
      BRANDS STORE PLANNING,
                INC.ByName:Title:


3




JPMORGAN
      CHASE BANK, N.A.,
                individually,
      as Administrative Agent,
                Issuing
      Bank and Swingline LenderByName:Title:BANK
      OF AMERICA, N.A., individually,
                as
      Issuing Bank and LenderByName:Title:


4


SIGNATURE
PAGE TO


THE
CREDIT AGREEMENT


OF THE
DRESS BARN, INC.




Name
      of Institution:byName:Title:For
      any Lender requiring a second signature line:byName:Title:





SCHEDULE
2.01




COMMITMENT
SCHEDULE





Lender
                
                Commitment
                
                
                PercentageJPMorgan
      Chase Bank, N.A.
                
                $
                52,500,000
                
                
                
                26.25
                %Bank
      of America, N.A.
                
                $
                52,500,000
                
                
                
                26.25
                %U.S.
      Bank National Association
                
                $
                27,500,000
                
                
                
                13.75
                %Fifth
      Third Bank
                
                $
                22,500,000
                
                
                
                11.25
                %Capital
      One Leverage Finance Corp.
                
                $
                22,500,000
                
                
                
                11.25
                %PNC
      Bank, National Association
                
                $
                22,500,000
                
                
                
                11.25
                %Total
                
                $
                200,000,000
                
                
                
                100
                %





SCHEDULE
2.06




EXISTING
LETTERS OF CREDIT


(Issuing
Bank: JPMorgan Chase Bank, N.A.)




The Dress Barn,
Inc.




LC Reference
                              
                              Beneficiary
                              
                              Issued
                              
                              Expiry
                              
                              LC BalanceHLCDSB00800080
                              
                              HUALEY KNITWEARS LTD.
                              
                              26JUN09
                              
                              14APR10
                              
                              $
                              706,140.10HLCDSB00800081
                              
                              PT.
      RISMAR DAEWOO APPAREL
                              
                              09JUL09
                              
                              29JAN10
                              
                              $
                              732,880.20HLCDSB00800083
                              
                              NEELKAMAL
      INTERNATIONAL TRADERS
                              
                              09JUL09
                              
                              04MAR10
                              
                              $
                              2,401,793.67HLCDSB00800085
                              
                              ZHUJI
      WONDERFUL WIN GARMENTS CO.
                              
                              28JUL09
                              
                              14JAN10
                              
                              $
                              592,089.70HLCDSB00800087
                              
                              EVERKIND
      KNITTERS LIMITED
                              
                              28JUL09
                              
                              01MAR10
                              
                              $
                              1,697,003.90HLCDSB00800088
                              
                              NIEN
      HSING TEXTILE CO. LTD
                              
                              30JUL09
                              
                              17MAR10
                              
                              $
                              1,003,666.40HLCDSB00800089
                              
                              CHIAO
      KUANG GROUP LTD
                              
                              30JUL09
                              
                              04FEB10
                              
                              $
                              1,297,189.93HLCDSB00800090
                              
                              LAIS
      KNITWEAR MANUFACTURING LTD.
                              
                              30JUL09
                              
                              01MAR10
                              
                              $
                              61,293.60HLCDSB00800092
                              
                              KENTRIP
      INDUSTRIES LTD.
                              
                              30JUL09
                              
                              14FEB10
                              
                              $
                              1,836,511.30HLCDSB00800094
                              
                              MAU
      WING INDUSTRIAL LTD.
                              
                              30JUL09
                              
                              29JAN10
                              
                              $
                              48,366.80HLCDSB00800095
                              
                              TOTAL
      COSMOS LIMITED
                              
                              30JUL09
                              
                              14APR10
                              
                              $
                              632,675.00HLCDSB00800096
                              
                              TRISCO
      (OVERSEAS) LIMITED
                              
                              03AUG09
                              
                              24FEB10
                              
                              $
                              297,621.60HLCDSB00800097
                              
                              GET
      EVER INTERNATIONAL LTD.
                              
                              03AUG09
                              
                              17FEB10
                              
                              $
                              345,210.00HLCDSB00800101
                              
                              GREATWIND
      INTERNATIONAL LIMITED
                              
                              03AUG09
                              
                              01MAR10
                              
                              $
                              725,992.00HLCDSB00800116
                              
                              MEGATREND
      ENTERPRISES LTD
                              
                              17AUG09
                              
                              25DEC09
                              
                              $
                              77,889.60HLCDSB00800118
                              
                              HONTEX
      KNITTERS LIMITED
                              
                              17AUG09
                              
                              29JAN10
                              
                              $
                              133,135.50HLCDSB00800120
                              
                              WELSON
      TRADING LIMITED
                              
                              24AUG09
                              
                              29JAN10
                              
                              $
                              161,001.80HLCDSB00800121
                              
                              SILVER
      ENTERPRISES CO., LTD
                              
                              31AUG09
                              
                              14FEB10
                              
                              $
                              594,063.80HLCDSB00800126
                              
                              PACIFIC
      LINK FOOTWEAR LIMITED
                              
                              31AUG09
                              
                              20DEC09
                              
                              $
                              108,420.00HLCDSB00800128
                              
                              GIANT
      MAXWELL INT'L LTD.
                              
                              31AUG09
                              
                              29APR10
                              
                              $
                              1,174,571.00HLCDSB00800131
                              
                              CRYSTALCLEAR
      WEALTH LIMITED
                              
                              04SEP09
                              
                              30DEC09
                              
                              $
                              379,200.00HLCDSB00800134
                              
                              INTERNATIONAL
      TRADE CONNECTION
                              
                              04SEP09
                              
                              04APR10
                              
                              $
                              2,230,725.70HLCDSB00800137
                              
                              LL  S
      PURCHASING CORP.
                              
                              07SEP09
                              
                              10DEC09
                              
                              $
                              88,650.00HLCDSB00800140
                              
                              JIU
      DA INTERNATIONAL LTD.
                              
                              11SEP09
                              
                              30DEC09
                              
                              $
                              83,200.00HLCDSB00800142
                              
                              ZHEJIANG
      SPRINGAIR GROUP
                              
                              14SEP09
                              
                              17MAR10
                              
                              $
                              99,421.00HLCDSB00800143
                              
                              TAK
      VENG GARMENT FACTORY LTD
                              
                              14SEP09
                              
                              17MAR10
                              
                              $
                              201,360.50HLCDSB00800145
                              
                              FUN
      YVES INTERNATIONAL CO., LTD.
                              
                              14SEP09
                              
                              01MAR10
                              
                              $
                              56,420.00HLCDSB00800146
                              
                              SING
      SHUN KNITTING FACTORY LIMITED
                              
                              22SEP09
                              
                              30MAR10
                              
                              $
                              167,134.00HLCDSB00800156
                              
                              ZHEJIANG
      ZHONGLIYA IND.CO., LTD.
                              
                              22SEP09
                              
                              30MAR10
                              
                              $
                              1,155,559.60HLCDSB00800157
                              
                              TOP
      GLORY SHOES LIMITED
                              
                              21SEP09
                              
                              30DEC09
                              
                              $
                              54,000.00HLCDSB00800159
                              
                              KOSTROMA
      LIMITED
                              
                              24SEP09
                              
                              20DEC09
                              
                              $
                              204,765.00HLCDSB00800160
                              
                              JUNIOR
      GALLERY LTD
                              
                              24SEP09
                              
                              19JAN10
                              
                              $
                              298,087.50HLCDSB00800165
                              
                              NINGBO
      SEDUNO IMPORT AND EXPORT CO.
                              
                              24SEP09
                              
                              01MAR10
                              
                              $
                              26,428.80HLCDSB00800166
                              
                              JIANGSU
      GUOTAI INTERNATIONAL GROUP
                              
                              24SEP09
                              
                              12MAR10
                              
                              $
                              516,453.50HLCDSB00800170
                              
                              FOOTWEAR
      UNLIMITED INC.
                              
                              28SEP09
                              
                              30DEC09
                              
                              $
                              51,960.00HLCDSB00800172
                              
                              ZHANGJIAGANG
      UNITEX CO., LTD
                              
                              28SEP09
                              
                              14MAR10
                              
                              $
                              183,474.00HLCDSB00800173
                              
                              GREENWAY
      GROUP HOLDING INV., LTD.
                              
                              28SEP09
                              
                              14MAR10
                              
                              $
                              844,288.00HLCDSB00800177
                              
                              NEW
      WORLD FASHION LIMITED
                              
                              30SEP09
                              
                              14JAN10
                              
                              $
                              136,098.00HLCDSB00800180
                              
                              YEE
      TUNG GARMENT CO. LTD.
                              
                              02OCT09
                              
                              01MAR10
                              
                              $
                              77,830.00HLCDSB00800183
                              
                              KUNSHAN
      HOZA GARMENT MANUFACTURING
                              
                              02OCT09
                              
                              17MAR10
                              
                              $
                              507,160.00HLCDSB00800184
                              
                              ZHEJIANG
      CHARM WINNER GARMENTS CO.
                              
                              02OCT09
                              
                              28MAR10
                              
                              $
                              331,953.20HLCDSB00800190
                              
                              GARMENT
      10 JOINT STOCK COMPANY
                              
                              02OCT09
                              
                              14FEB10
                              
                              $
                              172,776.00HLCDSB00800193
                              
                              QUEENLAND
      LTD.
                              
                              02OCT09
                              
                              29JAN10
                              
                              $
                              84,643.50HLCDSB00800195
                              
                              MEGATREND
      ENTERPRISES LTD
                              
                              13OCT09
                              
                              24JAN10
                              
                              $
                              60,000.00HLCDSB00800204
                              
                              JUNIOR
      GALLERY LTD
                              
                              19OCT09
                              
                              30DEC09
                              
                              $
                              102,400.00HLCDSB00800206
                              
                              NEELKAMAL
      INTERNATIONAL TRADERS
                              
                              20OCT09
                              
                              09FEB10
                              
                              $
                              285,723.15HLCDSB00800212
                              
                              CHINA
      UNION (CASHMERE) INT'L
                              
                              22OCT09
                              
                              29NOV09
                              
                              $
                              879.84HLCDSB00800220
                              
                              MODA
      SHOE LTD
                              
                              23OCT09
                              
                              24FEB10
                              
                              $
                              78,510.00HLCDSB00800223
                              
                              YANTAI
      YAQI TEXTILE CO., LTD
                              
                              23OCT09
                              
                              01MAR10
                              
                              $
                              371,654.80HLCDSB00800230
                              
                              FUNG
      MOU ENTERPRISE CO, LTD.
                              
                              27OCT09
                              
                              07MAR10
                              
                              $
                              72,515.00HLCDSB00800232
                              
                              EVERKIND
      KNITTERS LIMITED
                              
                              27OCT09
                              
                              01MAR10
                              
                              $
                              154,180.00HLCDSB00800234
                              
                              CHIAO
      KUANG GROUP LTD
                              
                              27OCT09
                              
                              24FEB10
                              
                              $
                              149,448.00HLCDSB00800237
                              
                              SHANGHAI
      XIANGYI INTERNATIONAL
                              
                              27OCT09
                              
                              30DEC09
                              
                              $
                              51,495.60HLCDSB00800238
                              
                              KING
      STAR GARMENT INT'L CO. LTD
                              
                              29OCT09
                              
                              14FEB10
                              
                              $
                              15,600.00HLCDSB00800239
                              
                              ICB
      ASIA CO LIMITED
                              
                              29OCT09
                              
                              12MAR10
                              
                              $
                              99,180.00


Schedule
2.06 - 1





LC Reference
                              
                              Beneficiary
                              
                              Issued
                              
                              Expiry
                              
                              LC BalanceHLCDSB00800245
                              
                              GUANGZHOU
      LIGHT HOLDING FOOTWEAR
                              
                              29OCT09
                              
                              30DEC09
                              
                              $
                              6,960.00HLCDSB00800247
                              
                              CRYSTALCLEAR
      WEALTH LIMITED
                              
                              29OCT09
                              
                              14APR10
                              
                              $
                              626,749.00HLCDSB00800250
                              
                              SUREFIELD
      LIMITED
                              
                              29OCT09
                              
                              12MAR10
                              
                              $
                              294,885.00HLCDSB00800256
                              
                              LUSUNG
      SHOE LTD.
                              
                              02NOV09
                              
                              24FEB10
                              
                              $
                              174,900.00HLCDSB00800257
                              
                              CRYSTALCLEAR
      WEALTH LIMITED
                              
                              04NOV09
                              
                              14APR10
                              
                              $
                              511,898.60HLCDSB00800258
                              
                              ZHUJI
      WONDERFUL WIN GARMENTS CO.
                              
                              05NOV09
                              
                              12MAR10
                              
                              $
                              543,381.00HLCDSB00800259
                              
                              KENTRIP
      INDUSTRIES LTD.
                              
                              09NOV09
                              
                              24FEB10
                              
                              $
                              182,745.00HLCDSB00800261
                              
                              NIEN
      HSING TEXTILE CO. LTD
                              
                              09NOV09
                              
                              17MAR10
                              
                              $
                              59,447.00HLCDSB00800262
                              
                              GOLDEN
      MATE INTERNATIONAL CORP
                              
                              09NOV09
                              
                              18APR10
                              
                              $
                              148,128.00HLCDSB00800264
                              
                              CARNIVAL
      INDUSTRIAL CORPORATION
                              
                              11NOV09
                              
                              01MAR10
                              
                              $
                              150,028.00HLCDSB00800265
                              
                              SIMPLE
      APPROACH LTD
                              
                              11NOV09
                              
                              30MAR10
                              
                              $
                              164,544.00HLCDSB00800268
                              
                              SUREFIELD
      LIMITED
                              
                              11NOV09
                              
                              12MAR10
                              
                              $
                              83,250.00HLCDSB00800270
                              
                              PT.
      RISMAR DAEWOO APPAREL
                              
                              17NOV09
                              
                              14FEB10
                              
                              $
                              229,335.00HLCDSB00800271
                              
                              FORTUNE
      FOOTWEAR INC.
                              
                              17NOV09
                              
                              21FEB10
                              
                              $
                              195,525.00HLCDSB00800276
                              
                              FOOTWEAR
      UNLIMITED INC.
                              
                              16NOV09
                              
                              21FEB10
                              
                              $
                              59,040.00HLCDSB00800282
                              
                              ZHEJIANG
      ZHUJI SHENYING TRADING
                              
                              18NOV09
                              
                              07MAR10
                              
                              $
                              35,280.00HLCDSB00800283
                              
                              CRYSTAL
      CLEAR
                              
                              19NOV09
                              
                              01MAR10
                              
                              $
                              718,526.00HLHI-491065
                              
                              LUSUNG
      SHOE
                              
                              11/06/09
                              
                              03/07/10
                              
                              
                              129,412.50HLHI-490819
                              
                              BUSINESS
      FAITH INTERNATIONAL LTD.
                              
                              09/25/09
                              
                              01/29/10
                              
                              
                              122,200.00HLHI-490820
                              
                              GREAT
      GAIN TRADING LTD
                              
                              09/25/09
                              
                              12/25/09
                              
                              
                              35,650.00HLHI-490822
                              
                              THE
      HONESTIEST ENTERPRISE CO.,LTD.
                              
                              09/25/09
                              
                              02/04/10
                              
                              
                              547,091.25HLHI-490823
                              
                              THE
      HONESTIEST ENTERPRISE CO.,LTD.
                              
                              09/25/09
                              
                              12/10/09
                              
                              
                              41,925.00HLHI-490824
                              
                              SHAN
      JIA KNITTING CO. LTD
                              
                              09/25/09
                              
                              12/20/09
                              
                              
                              51,300.00HLHI-490825
                              
                              ZHEJIANG
      JIAXING SILK CORP LTD
                              
                              09/25/09
                              
                              02/19/10
                              
                              
                              229,320.00HLHI-490826
                              
                              EINS
      TREND INC.
                              
                              09/25/09
                              
                              02/24/10
                              
                              
                              514,900.50HLHI-490844
                              
                              GREAT
      FUTURE CO., LTD.
                              
                              09/30/09
                              
                              12/30/09
                              
                              
                              52,768.00HLHI-490848
                              
                              TAK
      VENG GARMENT FACTORY LTD
                              
                              09/30/09
                              
                              12/20/09
                              
                              
                              21,200.00HLHI-490849
                              
                              ATTRACTIONS
      FOOTWEAR LIMITED
                              
                              09/30/09
                              
                              01/29/10
                              
                              
                              113,466.00HLHI-490853
                              
                              MERRY
      LINK DEVELOPMENT
                              
                              09/30/09
                              
                              01/31/10
                              
                              
                              496,027.60HLHI-490919
                              
                              TAK
      VENG GARMENT FACTORY LTD
                              
                              10/27/09
                              
                              01/31/10
                              
                              
                              285,900.00HLHI-490935
                              
                              TOP
      GLORY SHOES LIMITED
                              
                              10/16/09
                              
                              12/31/09
                              
                              
                              61,335.00HLHI-490939
                              
                              GREATWIND
      INTERNATIONAL LTD
                              
                              10/27/09
                              
                              01/29/10
                              
                              
                              324,220.00HLHI-490998
                              
                              FORTUNESTAR
      CO.
                              
                              10/29/09
                              
                              01/27/10
                              
                              
                              114,147.00HLHI-491038
                              
                              NINGBO
      FUMAO TEXTILE INTL LTD.
                              
                              11/06/09
                              
                              12/27/09
                              
                              
                              23,780.00HLHI-491043
                              
                              TOP
      GLORY SHOES LIMITED
                              
                              11/06/09
                              
                              02/19/10
                              
                              
                              261,895.50HLHI-491057
                              
                              NINGBO
      SEDUNO IMP EXP CO., LTD.
                              
                              11/06/09
                              
                              01/24/10
                              
                              
                              13,776.00HLHI-491061
                              
                              MODA
      SHOE LTD
                              
                              11/06/09
                              
                              02/14/10
                              
                              
                              109,102.95HLHI-491065
                              
                              LUSUNG
      SHOE
                              
                              11/06/09
                              
                              03/07/10
                              
                              
                              129,412.50CTCS-729206
                              
                              LIMITED
      BRANDS, INC.
                              
                              11/23/09
                              
                              8/13/10
                              
                              $
                              48,819.40CTCS-729213
                              
                              LIMITED
      BRANDS, INC.
                              
                              11/23/09
                              
                              7/30/22
                              
                              $
                              593,347.80T-229236
                              
                              LIBERTY
      MUTUAL INSURANCE COMPANY
                              
                              08/23/02
                              
                              08/30/10
                              
                              $
                              650,000.00T-238650
                              
                              JOHN
      HANCOCK LIFE INSURANCE COMPANY
                              
                              06/20/03
                              
                              06/30/10
                              
                              $
                              1,350,000.00T-250454
                              
                              HARTFORD
      FIRE INSURANCE COMPANY
                              
                              08/30/04
                              
                              08/30/10
                              
                              $
                              2,188,369.00


Schedule
2.06 - 2


SCHEDULE
3.05




REAL
PROPERTIES




OWNED
PROPERTIES





Loan Party
                  
                  Property LocationMaurices
      Incorporated
                  
                  105,
      106, 108, 110, 112, 117 W Superior StreetDuluth,
      Minnesota 558026600
      Merle Hay RoadJohnston,
      Iowa 50131Tween
      Brands Service Co.
                  
                  8323
      Walton ParkwayNew
      Albany, Ohio 4305444-acre
      Vacant ParcelNorth
      of Walton ParkwayWest
      of Bevelhymer RoadNew
      Albany, Ohio 43054200
      Heritage DrivePataskala,
      Ohio  43062





LEASED
PROPERTIES





Attached.


Schedule 3.05


SCHEDULE
3.06




DISCLOSED
MATTERS




None.




Schedule
3.06


SCHEDULE
3.12




SUBSIDIARIES




Name of Subsidiary
                    
                    Jurisdiction of
                      Organization
                    
                    Authorized Shares
                    
                    
                    Issued Shares
                    
                    OwnershipThe Dress
      Barn, Inc.
                    
                    Connecticut
                    
                    
                    
                    
                    
                    
                    Publicly
      heldDBX,
      Inc.
                    
                    New
      York
                    
                    
                    200
                    
                    
                    
                    1
                    
                    100%
      owned by The Dress Barn, Inc.D.B.R.,
      Inc.
                    
                    Delaware
                    
                    
                    200
                    
                    
                    
                    1
                    
                    100%
      owned by The Dress Barn, Inc.Dress
      Barn Credit Management, LLC
                    
                    Virginia
                    
                    
                    N/A
                    
                    
                    
                    N/A
                    
                    100%
      owned by The Dress Barn, Inc.Maurices
      Incorporated
                    
                    Delaware
                    
                    
                    1,000
                    
                    
                    
                    1,000
                    
                    100%
      owned by The Dress Barn, Inc.Maurices
      Credit Management, Inc.
                    
                    Virginia
                    
                    
                    1,000
                    
                    
                    
                    1,000
                    
                    100%
      owned by Maurices IncorporatedTween
      Brands, Inc.
                    
                    Delaware
                    
                    
                    100
                    
                    
                    
                    100
                    
                    100%
      owned by The Dress Barn, Inc.Tween
      Brands Agency, Inc.
                    
                    Ohio
                    
                    
                    850
                    
                    
                    
                    100
                    
                    100%
      owned by Tween Brands, Inc.Tween
      Brands Purchasing, Inc.
                    
                    Ohio
                    
                    
                    850
                    
                    
                    
                    100
                    
                    100%
      owned by Tween Brands, Inc.Tween
      Brands Service Co.
                    
                    Ohio
                    
                    
                    1,500
                    
                    
                    
                    100
                    
                    100%
      owned by Tween Brands, Inc.Tween
      Brands Investment, LLC
                    
                    Ohio
                    
                    
                    N/A
                    
                    
                    
                    N/A
                    
                    100%
      owned by Tween Brands Service Co.Too
      GC, LLC
                    
                    Ohio
                    
                    
                    N/A
                    
                    
                    
                    N/A
                    
                    100%
      owned by Tween Brands, Inc.Tween
      Brands Direct, LLC
                    
                    Ohio
                    
                    
                    N/A
                    
                    
                    
                    N/A
                    
                    100%
      owned by Tween Brands, Inc.Tween
      Brands Direct Services, Inc.
                    
                    Ohio
                    
                    
                    850
                    
                    
                    
                    100
                    
                    100%
      owned by Tween Brands, Inc.American
      Factoring, Inc.
                    
                    Nevada
                    
                    
                    2,500
                    
                    
                    
                    100
                    
                    100%
      owned by Tween Brands, Inc.Tween
      Brands Store Planning, Inc.
                    
                    Ohio
                    
                    
                    850
                    
                    
                    
                    100
                    
                    100%
      owned by Tween Brands, Inc.Too
      Retail & Sales Puerto Rico, Inc.
                    
                    Puerto
      Rico
                    
                    
                    100
                    
                    
                    
                    100
                    
                    100%
      owned by Tween Brands, Inc.Tween
      Brands Sourcing Hong Kong Limited
                    
                    Hong
      Kong
                    
                    
                    163,800,200
                    
                    
                    
                    163,800,200
                    
                    100%
      owned by Tween Brands,
Inc.


Schedule
3.12


SCHEDULE
3.13




INSURANCE




As of the
Effective Date, the Company, together with its Subsidiaries (other than the
Acquired Company and its Subsidiaries (except for the Excess Umbrella policy
below, which includes the Acquired Company and its Subsidiaries)), maintains the
following insurance, as described below and as specified in the Schedule
below:




COVERAGE
                                                    
                                                    CURRENT
                                                      CARRIER
                                                    
                                                    CURRENT
                                                      BROKER
                                                    
                                                    EXPIRATION
                                                    
                                                    CURRENT LIMIT
                                                      / VALUEPROPERTY
                                                      incl
      B & M
                                                    
                                                    LEXINGTON
      INS CO. and CONTINENTAL CASUALTY
                                                    
                                                    WILLIS
                                                    
                                                    8/1/10
                                                    
                                                    210MM
                                                      /
      1,151,477,000
                                                      property
      valuesOCEAN
      CARGO
                                                    
                                                    ZURICH
                                                    
                                                    WILLIS
                                                    
                                                    11/1/10
                                                    
                                                    2.5MM
                                                      /
      1,568,000,000 salesPENSION
      BOND
                                                    
                                                    TRAVELERS
                                                    
                                                    ARC
                                                    
                                                    CONTINUOUS
                                                    
                                                    500,000GENERAL
                                                      LIABILITY
                                                    
                                                    LIBERTY
      MUTUAL
                                                    
                                                    USI
                                                      NORTHEAST
                                                    
                                                    8/1/10
                                                    
                                                    1MM
                                                      /
      1,549,000,000 salesAUTO
      ALL STATES
                                                    
                                                    LIBERTY
      MUTUAL
                                                    
                                                    USI
                                                      NORTHEAST
                                                    
                                                    8/1/10
                                                    
                                                    1MM
                                                      /
      169 vehiclesUMBRELLA
                                                    
                                                    CONTINENTAL
      CASUALTY
                                                    
                                                    USI
      NORTHEAST
                                                    
                                                    8/1/10
                                                    
                                                    25,000,000EXCESS
      UMBRELLA
                                                    
                                                    NATIONAL
      SURETY
                                                    
                                                    USI
      NORTHEAST
                                                    
                                                    8/1/10
                                                    
                                                    50,000,000
      XS 25,000,000
                                                      TOTAL
      LIMITS BETWEEN UMBRELLA AND EXCESS - $75MMWORKERS
      COMPENSATION
                                                      ALL
      STATES
                                                    
                                                    HARTFORD
                                                      INS
      CO.
                                                    
                                                    USI
      NORTHEAST
                                                    
                                                    8/1/10
                                                    
                                                    STATUTORY
                                                      /
      245,519,031 payrollDIRECTORS
      &
                                                      OFFICERS
                                                    
                                                    FEDERAL
                                                    
                                                    ARC
                                                    
                                                    5/31/10
                                                    
                                                    10,000,000EXCESS
      DIRECTORS & OFFICERS
                                                    
                                                    ZURICH
      AMERICAN
                                                    
                                                    ARC
                                                    
                                                    5/31/10
                                                    
                                                    10,000,000
      XS 10,000,000
                                                      TOTAL
      LIMITS BETWEEN DIRECTORS &
                                                      OFFICERS
      AND EXCESS - $20MMFIDUCIARY
                                                    
                                                    EXECUTIVE
      RISK
                                                    
                                                    ARC
                                                    
                                                    7/29/10
                                                    
                                                    10,000,000


Schedule
3.13 - 1


As of the
Effective Date, the Acquired Company, together with its Subsidiaries, maintains
the following insurance, as described below and as specified in the Schedule
below:




1.
            Federal
      Insurance Company–


(i)
            Commercial
      General Liability - Policy #35799228; Term: 9/1/09–12/31/09; Amt:
      $1,000,000 (Each occurrence)


(ii)
            Automobile
      Liability - Policy #74982851; Term: 9/1/09–12/31/09 - Amt: $1,000,000
      (Each accident)


(iii)
            Worker’s
      Comp. & Employers’ Liability - Policy #71707625; Term: 9/1/09-9/1/10 –
      Amt: $1,000,000 (Each accident)


2.
            Lexington
      Insurance Company - Commercial Property Insurance – Policy # 1157146 -
      Term: 9/1/09-12/31/09 – Amt:
$150,000,000


Schedule
3.13 - 2


SCHEDULE
3.18




CREDIT
CARD ARRANGEMENTS




1.
            Fifth
      Third Bank


Attention:
Eric Colfer, MD 10909A


38
Fountain Square


Cincinnati,
OH 45263





2.
            American
      Express


P.O. Box
981532


El Paso,
TX 79998





3.
            Discover
      Network


P.O. Box
3011


New
Albany, OH 43054-3011





4.
            Alliance
      Data Systems


CAD 4/
Support Accounting


3100
Easton Square Place Rd.


Columbus,
OH 43219





5.
            Fifth
      Third Securities


MD
1MOB2A


5050
Kingsley Drive


Cincinnati,
OH 45263





6.
            Bank
      of America Merchant Services


4444
Dunmovin Drive


Kennesaw,
GA  30144





7.
            Discover
      Financial Services


2500 Lake
Cook Road (RW2)


Riverwoods,
IL 60015





8.
            Alliance
      Data Systems


3100
Easton Square Plaza


Columbus,
OH  43219





9.
            American
      Express


1120
Avenue of the Americas


New York,
NY  10036


Schedule
3.18


SCHEDULE
6.01




EXISTING
INDEBTEDNESS





In
connection with the Company’s leases of its stores, certain leases provide for
additional rents based on percentages of net sales, charges for real estate
taxes, insurance and other occupancy costs, the amounts of which are publicly
disclosed in the Company’s filings.





Acquired
Company


Purpose
                    
                    Outstanding
                      Balance
                    
                    
                    Termination
                      DateVigilant
      Insurance - Import Bond Too Import LLP
                    
                    Customs
      Bond - Import
                    
                    $
                    2,000,000.00
                    
                    
                    2/10/10Avalon
      Risk Mgmt - Custodial Bond Too Brands, Inc.
                    
                    Custodian
      of Bonded Merchandise
                    
                    $
                    200,000.00
                    
                    
                    9/16/10State
      of Nevada Department of Taxation - Too Inc #929127556
                    
                    Sales
      & Use Tax Bond
                    
                    $
                    40,313.00
                    
                    
                    12/2/09State
      of Nevada Department of Taxation - Too Store Plan.
    #83034291
                    
                    Sales
      & Use Tax Bond
                    
                    $
                    4,000.00
                    
                    
                    12/22/10State
      of Nevada Department of Taxation - Justice Stores #
    83034781
                    
                    Sales
      & Use Tax Bond
                    
                    $
                    24,000.00
                    
                    
                    4/22/12State
      of Oklahoma Department of Taxation - Too Store Plan #
    83034292
                    
                    Sales
      & Use Tax Bond
                    
                    $
                    9,000.00
                    
                    
                    12/16/09State
      of Arizona Department of Utilities - #83036384
                    
                    Utilities
      Bond
                    
                    $
                    6,075.00
                    
                    
                    8/1/10State
      of Arizona - Justice Stores #83036620 (surety bond)
                    
                    Sales
      & Use/Utility  Bond
                    
                    $
                    2,160.00
                    
                    
                    10/13/10Justice
      Stores Utility Bond - #83037032
                    
                    Utilities
      Bond
                    
                    $
                    3,200.00
                    
                    
                    4/4/12Justice
      Utility Bond - #83037547
                    
                    Utilities
      Bond
                    
                    $
                    3,200.00
                    
                    
                    1/19/10Justice
      Utility Bond - #83038370
                    
                    Utilities
      Bond
                    
                    $
                    3,990.00
                    
                    
                    5/1/11IBM
      Credit Corporation
                    
                    Technology
      Lease
                    
                    $
                    115,200
                    
                    
                    
                    06/2010IBM
      Credit Corporation
                    
                    Technology
      Lease
                    
                    $
                    202.432
                    
                    
                    
                    12/2010Net
      Jets
                    
                    Jet
      lease dep
                    
                    $
                    47,93332M&S
      Property
                    
                    Security
      dep
                    
                    $
                    500Cathedral
      St
                    
                    Security
      dep
                    
                    $
                    2,030Richard
      Bahadurian
                    
                    
                    
                    $
                    5,190American
      Ventures
                    
                    Regional
      office lease
                    
                    $
                    2,500O’Brien
      Kieman Inv Co
                    
                    
                    
                    $
                    2,500CitiCapital
      Fleet
                    
                    Vehicle
      Fleet Lease Program
                    
                    $
                    142,091.46Ikon
      Financial Services
                    
                    Equipment
      Lease


Schedule
6.01 - 1





Purpose
                    
                    Outstanding
                      Balance
                    
                    
                    Termination
                      DatePostage Meter
                    
                    Postage
      Meter Lease
                    
                    $
                    17,401.12Speed
      FC
                    
                    Postage
      Permit Deposit
                    
                    $
                    20,500.00Taylor
      & Malhis, Inc, et al.
                    
                    Regional
      Office Property Lease
                    
                    $
                    277.62Corporate
      Plaza
                    
                    Regional
      Office Property Lease
                    
                    $
                    1,742.19Hong
      Kong/Korea offices
                    
                    Office
      Deposit/Facilitation Fee Deposit/Copiers
                    
                    $
                    93,029Ohio
      Power
                    
                    Utility
      Deposit - Etna Ohio DC
                    
                    $
                    6,920.00Various
      Utility Deposits (Water & Electric) Justice Stores
                    
                    121
      Store Utility Deposits (Water & Electric)
                    
                    $
                    180,492.96Various
      Utility Deposits (Water & Electric) Hong Kong
                    
                    Utility
      Deposits (Water & Electric)
                    
                    $
                    3,036.23Various
      Utility Deposits (Water & Electric) Puerto Rico
                    
                    Store
      Utility Deposit (Water & Electric)
                    
                    $
                    3,650.00




Schedule
6.01 - 2


SCHEDULE
6.02




EXISTING
LIENS




Name
                            
                            Secured Party
                            
                            Filing
                              Location
                            
                            Filing
                              Date
                            
                            Filing Number
                            
                            CollateralToo
      Brands, Inc.
                            
                            LeaseNet
      Group, Inc.
                            
                            OH
      SOS
                            
                            02/03/05
                            
                            OH00086147951
                            
                            Leased
      EquipmentToo
      Brands, Inc.
                            
                            LeaseNet
      Group, Inc.
                            
                            OH
      SOS
                            
                            02/03/05
                            
                            OH00086148074
                            
                            Leased
      EquipmentToo
      Brands, Inc.
                            
                            IBM
      Credit LLC
                            
                            OH
      SOS
                            
                            02/07/05
                            
                            OH00086215461
                            
                            Leased
      EquipmentToo
      Brands, Inc.
                            
                            LeaseNet
      Group, Inc.
                            
                            OH
      SOS
                            
                            06/20/05
                            
                            OH00090550982
                            
                            Leased
      EquipmentToo
      Brands, Inc.
                            
                            IBM
      Credit LLC
                            
                            OH
      SOS
                            
                            09/30/05
                            
                            OH00093835757
                            
                            Leased
      EquipmentToo
      Brands, Inc.
                            
                            IBM
      Credit LLC
                            
                            OH
      SOS
                            
                            10/04/05
                            
                            OH00093968506
                            
                            Leased
      EquipmentToo
      Brands, Inc.
                            
                            IBM
      Credit LLC
                            
                            OH
      SOS
                            
                            11/14/05
                            
                            OH00095538880
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            07/06/05
                            
                            52063304
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            09/09/05
                            
                            52805092
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            09/30/05
                            
                            53029643
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            10/19/05
                            
                            53231611
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            10/19/05
                            
                            53231629
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            02/03/06
                            
                            60417998
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            05/02/06
                            
                            61474022
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            06/20/06
                            
                            62098812
                            
                            Leased
      EquipmentToo,
      Inc.
                            
                            IOS
      Capital
                            
                            DE
      SOS
                            
                            02/15/07
                            
                            2007
      0596139
                            
                            Leased
      EquipmentTween
      Brands Service Co.
                            
                            IBM
      Credit LLC
                            
                            OH
      SOS
                            
                            1/2/07
                            
                            OH00110455511
                            
                            Leased
      EquipmentTween
      Brands Service Co.
                            
                            IBM
      Credit LLC
                            
                            OH
      SOS
                            
                            2/4/08
                            
                            OH00123508327
                            
                            Leased
      EquipmentTween
      Brands Service Co.
                            
                            IBM
      Corporation
                            
                            OH
      SOS
                            
                            9/8/08
                            
                            OH00129407147
                            
                            Leased
      Equipment


Schedule
6.02 - 1


SCHEDULE
6.04




EXISTING
INVESTMENTS







1.
            The
      Dress Barn, Inc.’s Investments in Nina McLemore, Inc., a Delaware
      corporation




(a)
            Purchased
      40,000 shares for a price of $400,000.00 on or about September 15,
      2004




(b)
            Purchased
      15,105 shares for a price of $151,052 on August 17,
  2005




(c)
            Purchased
      20,000 shares of Series B Convertible Preferred Stock for $200,000
      ($10/share) on January 2, 2008




2.
            The
      Dress Barn, Inc.’s Investments in Jule, Inc., a Delaware
      corporation




(a)
            Purchased
      280,000 shares of Series A Preferred Stock for $5.00 per share, for a
      total price of $1,400,000, on September 22,
2006




(b)
            Purchased
      61,965 shares of Series A Preferred Stock on June 1, 2007 for $300,000
      (approx. $4.841443/share)




(c)
            Purchased
      61,965 shares of Series A Preferred Stock on July 19, 2007 for $300,000
      (approx. $4.841443/share), after Jule, Inc. signed its 4th
      retail lease




(d)
            Purchased
      15,000 shares of Common Stock from Alex Wong on August 7, 2007 for $30,000
      ($2.00/share)




(e)
            Purchased
      15,000 shares of Common Stock from Doug Zaper on July 2, 2008 for $60,000
      ($4.00/share)




(f)
            $900,000
      of cash advances to Jule, Inc. ($300,000 to open each of three new
      stores), to be converted by December 5, 2008 into shares of Series A
      Convertible Preferred Stock of Jule, Inc. at a price of
    $4.70.




(g)
              The
      Dress Barn, Inc. owns 42,500 shares of Common Stock and 804,306 shares of
      Series A Convertible Preferred Stock of Jule, Inc.  The Dress
      Barn, Inc. owns
      approximately 62% of the equity of Jule, Inc. on an as-converted
      basis.




(h)
            The
      Dress Barn, Inc. has the right and the obligation to acquire 105,882
      shares of Series A Convertible Preferred Stock of Jule, Inc. for an
      aggregate purchase price of $450,000 (i.e., $4.25 per
    share).




3.
            The
      lease of the Distribution Center with
Dunnigan.




4.
            The
      capital contribution by the Company to the Acquired Company in connection
      with Amended Acquired Company Credit
Agreement.


Schedule
6.04


SCHEDULE
6.10




EXISTING
RESTRICTIONS




None.


Schedule
6.10




EXHIBIT
A





ASSIGNMENT
AND ASSUMPTION





This
Assignment and Assumption (the “Assignment and
Assumption”) is dated as of the Effective Date set forth below and is
entered into by and between [Insert name of Assignor] (the
“Assignor”) and
[Insert name of
Assignee] (the “Assignee”).  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (as amended, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the
Assignee.  The Standard Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in
full.





For an
agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit, guarantees, and swingline
loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including contract claims, tort claims, malpractice claims, statutory
claims and all other claims at law or in equity related to the rights and
obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned
Interest”).  Such sale and assignment is without recourse to
the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.





1.
                          Assignor:2.
                          Assignee:[and is an
      Affiliate/Approved Fund of [identify
      Lender]13.
                          Borrowers:







1Select
as applicable.









4.
              Administrative
      Agent:
              JPMorgan
      Chase Bank, N.A., as the administrative agent under the Credit
      Agreement





5.
              Credit
      Agreement:
              The
      $200,000,000 Credit Agreement dated as of November [25], 2009 among The
      Dress Barn, Inc., Tween Brands, Inc. and Maurices Incorporated, the
      Lenders parties thereto and JPMorgan Chase Bank, N.A., as Administrative
      Agent





6.
              Assigned
      Interest:





Facility Assigned
                
                Aggregate Amount of
                  Commitment/Loans
                  for all Lenders
                
                
                Amount of
                  Commitment/Loans
                  Assigned
                
                
                Percentage Assigned
                  of
                  Commitment/Loans2Revolving
      Facility
                
                $
                
                
                
                $
                
                
                
                
                
                %$
                
                
                
                $
                
                
                
                
                
                %$
                
                
                
                $
                
                
                
                
                
                %





Effective
Date:   _____________ ___, 20___ [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]





The
Assignee agrees to deliver to the Administrative Agent a completed
Administrative Questionnaire in which the Assignee designates on or more Credit
Contacts to whom all syndicate-level information (which may contain material
non-public information about the Company, the Loan Parties and their Related
Parties or their respective securities) will be made available and who may
receive such information in accordance with the Assignee’s compliance procedures
and applicable laws, including Federal and state securities laws.







2Set
forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all
Lenders thereunder.


Exhibit
A





The terms
set forth in this Assignment and Assumption are hereby agreed to:





ASSIGNOR[NAME
      OF ASSIGNOR]By:Title:ASSIGNEE[NAME
      OF ASSIGNEE]By:Title:





Consented
      to and Accepted:JPMorgan
      Chase Bank, N.A., asAdministrative
      AgentByTitle:[NAME
      OF RELEVANT PARTY]ByTitle:




Exhibit
A


ANNEX
1





THE
DRESS BARN, INC. CREDIT AGREEMENT





STANDARD
TERMS AND CONDITIONS FOR


ASSIGNMENT
AND ASSUMPTION





1.  Representations and
Warranties.





1.1   Assignor.  The
Assignor (a) represents and warrants that (i) it is the legal and beneficial
owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of
any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated
hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
collateral thereunder, (iii) the financial condition of any Borrower, any of
their Subsidiaries or Affiliates or any other Person obligated in respect of any
Loan Document or (iv) the performance or observance by any Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.





1.2.  Assignee.  The
Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender, (iii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 4.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.





2.  Payments.    From
and after the Effective Date, the Administrative Agent shall make all payments
in respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.








3.  General Provisions.
This Assignment and Assumption shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and
assigns.  This Assignment and Assumption may be executed in any number
of counterparts, which together shall constitute one
instrument.  Delivery of an executed counterpart of a signature page
of this Assignment and Assumption by facsimile shall be effective as delivery of
a manually executed counterpart of this Assignment and
Assumption.  This Assignment and Assumption shall be governed by, and
construed in accordance with, the law of the State of New York.





EXHIBIT
B





OPINION
OF COUNSEL FOR THE LOAN PARTIES





November
[25], 2009





To the
Lenders and the Administrative


Agent
Referred to Below


c/o JPMorgan
Chase Bank, N.A., as


Administrative
Agent


270 Park
Avenue


New York,
New York 10017





Dear
Sirs:





We have
acted as counsel for The Dress Barn Inc., a Connecticut corporation (the “Company”) and the
other Loan Parties, in connection with the Credit Agreement dated as of November
[25], 2009 (the “Credit Agreement”),
among the Company, the Borrowing Subsidiaries party thereto, the banks and other
financial institutions identified therein as Lenders, and JPMorgan Chase Bank,
N.A., as Administrative Agent.  Terms defined in the Credit Agreement
are used herein with the same meanings.





We have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.





Upon the
basis of the foregoing, we are of the opinion that:





1.  Each
Loan Party (a) is a corporation, partnership or limited liability company duly
and properly incorporated or organized, as the case may be, validly existing and
(to the extent such concept applies to such entity) in good standing under the
laws of its jurisdiction of incorporation or organization, (b) has all requisite
power and authority to carry on its business as now conducted and (c) 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.





2.  The
Transactions are within each Loan Party’s corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder
action.  The Loan Documents have been duly executed and delivered by
the Loan Parties and constitute legal, valid and binding obligations of the Loan
Parties, 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.  The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Loan Party or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon any Loan Party or its assets, or give
rise to a right thereunder to require any payment to be made by the such Loan
Party, and (d) will not result in the creation or imposition of any Lien on any
asset of any Loan Party.





4.  There
are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to our knowledge, threatened against or affecting
any Loan Party (a) 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 have a Material Adverse Effect
(other than the Disclosed Matters) or (b) that involve the Loan Documents
or the Transactions.





5.  None
of the Loan Parties is an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940.





6.           The
Obligations constitute senior indebtedness which is entitled to the benefits of
the subordination provisions of all outstanding Subordinated
Indebtedness.





7.           The
making of the Loans and the application of proceeds thereof as provided in the
Agreement do not violate Regulation U of the Board of Governors of the Federal
Reserve System.





8.           The
provisions of the Collateral Documents are sufficient to create in favor of the
Administrative Agent a security interest in all right, title and interest of
each Loan Party in those items and types of collateral described in the
Collateral Documents in which a security interest may be created under Article 9
of the UCC as in effect on the date hereof in the State of
[        ].  Financing statements
on Form UCC-1’s have been duly authorized by each Loan Party and have been duly
filed in each filing office indicated in Exhibit A hereto
under the UCC in effect in each state in which said filing offices are
located.  The description of the collateral set forth in said
financing statements is sufficient to perfect a security interest in the items
and types of collateral described therein in which a security interest may be
perfected by the filing of a financing statement under the UCC as in effect in
such states.  Such filings are in proper form for filing and are
sufficient to perfect the security interest created by the Collateral Documents
in all right, title and interest of the Loan Parties in those items and types of
collateral described in the Collateral Documents in which a security interest
may be perfected by the filing of a financing statement under the UCC in such
states.




Exhibit
B


9.           Assuming
that the Administrative Agent has taken and is retaining possession of the stock
certificates evidencing any Capital Stock described in the Security Agreement
(the “Pledged
Stock”), together with properly completed stock powers endorsing the
Pledged Stock and executed by the “Grantors” named in the Security Agreement in
blank, and that the Agent has taken such Pledged Stock in good faith without
notice of any adverse claim within the meaning of the UCC, there has been
created under the Security Agreement, and there has been granted to the Agent a
valid and perfected first priority security interest in the Pledged Stock, with
the consequence of perfection by control accorded by the UCC.





10.           Assuming
that funds are maintained on deposit in Deposit Accounts with JPMorgan Chase
Bank, N.A., the Deposit Account Control Agreements [Lock Box Agreements] with
such banks are sufficient to create in favor of the Administrative Agent, a
perfected security interest in such Deposit Accounts and the funds deposited
therein, with the consequences of perfection by control accorded by the
UCC.





We are
members of the bar of the State of
[        ]3 and the foregoing opinion
is limited to the laws of the State of
[        ][, the General Corporation Law
of the State of Delaware] and the Federal laws of the United States of
America.  We note that the Credit Agreement is governed by the laws of
the State of New York and, for purposes of the opinion expressed in
paragraph 2 above, we have assumed that the laws of the State of New York
do not differ from the laws of
[          ] in any manner
that would render such opinion incorrect.]4  This opinion
is rendered solely to you in connection with the above matter.  This
opinion may not be relied upon by you for any other purpose or relied upon by
any other Person (other than your successors and assigns as Lenders and Persons
that acquire participations in your Loans) without our prior written
consent.







3 Insert
relevant state for each counsel providing an opinion.


4 Only
to be included in the opinions of non-New York local
counsel.


Exhibit
B


BORROWING BASE
      REPORTRpt
      #Obligor
      Number:
                                                  
                                                  
                                                  Date:Loan
      Number:
                                                  Period
      Covered:___________ to ____________COLLATERAL
      CATEGORY
                                                  Credit
                                                    Card
                                                    A/R
                                                  Inventory
                                                  Total
      Eligible CollateralDescription1   Beginning
      Balance (Previous report - Line 8)2   Additions
      to Collateral (Gross Sales or Purchases)3   Other
      Additions (Add back any non-A/R cash in line 3)4   Deductions
      to Collateral (Cash Received)5   Deductions
      to Collateral (Discounts, other)6   Deductions
      to Collateral (Credit Memos, all)7   Other
      non-cash credits
      to Credit Card A/R8   Total Ending Collateral
      Balance9   Less
      Ineligible - Past Due10  Less
      Ineligible  - Cross-age (___%)11  Less
      Ineligible - Foreign12  Less
      Ineligible - Contra13  Less
      Ineligible - Other (attached schedule)14  Total Ineligibles - Credit Card
      Accounts Receivable15  Less
      Ineligible – Inventory Slow-moving16  Less
      Ineligible – Inventory Offsite not covered17  Less
      Ineligible – Inventory WIP18  Less
      Ineligible – Consigned19  Less
      Ineligible – Other (attached schedule)20  Total Ineligible
      Inventory21  Total Eligible
      Collateral22  Advance
      Rate Percentage
                                                  90%
                                                  75%23  Net Available - Borrowing Base
      Value24  Reserves
      (other)[25]  Total Borrowing Base
      Value25A
      Total
      Availability/CAPS26  Revolver
      Line
                                                  
                                                  
                                                  Total
      Revolver Line27  Maximum Borrowing Limit (Lesser
      of [25] or 26)*
                                                  
                                                  
                                                  Total
      Available27A
      Suppressed
      AvailabilityLOAN
    STATUS28
      Previous Loan Balance (Previous Report Line 31)29
      Less:  A.  Net Collections (Same as line
      4)
                                                    B.  Adjustments/Other
      _______________30
      Add:   A.  Request for Funds
                                                    B.  Adjustments/Other
      _______________31
      New Loan Balance32
      Letters of Credit outstanding33
      Availability Not Borrowed
      (Lines 27 less 31 & 32)34
      OVERALL EXPOSURE (Line
      31)Pursuant
      to, and in accordance with, the terms and provisions of that certain
      Credit Agreement (“Agreement”), among JPMorgan Chase Bank, N.A. (“JPMCB”),
      as administrative agent for the Lenders, the Loan Parties, The Dress Barn
      Inc. (the “Company”) and the other Borrowing Subsidiaries party thereto,
      the Company is executing and delivering to JPMCB this Collateral Report
      accompanied by supporting data (collectively referred to as the
      “Report”).  The Company represents and warrants to JPMCB that
      this Report is true and correct, and is based on information contained in
      the Company’s own financial accounting records.  The Company, by
      the execution of this Report, hereby ratifies, confirms and affirms all of
      the terms, conditions and provisions of the Agreement, and further
      certifies on this ________ day of _______________, 20__, that the Company
      is in compliance with said Agreement.COMPANY
      NAME:
                                                  AUTHORIZED
      SIGNATURE:


Exhibit
C


EXHIBIT
D





COMPLIANCE
CERTIFICATE





To:
            The
      Lenders parties to the


Credit
      Agreement Described Below





This
Compliance Certificate is furnished pursuant to that certain Credit Agreement
dated as of November [25], 2009 (as amended, modified, renewed or extended from
time to time, the “Credit Agreement”) among The Dress Barn, Inc., (the
“Company”), the Borrowing Subsidiaries from time to time party thereto, the
Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent for
the Lenders and as an Issuing Bank.  Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings ascribed
thereto in the Credit Agreement.





THE
UNDERSIGNED HEREBY CERTIFIES, ON ITS BEHALF AND ON BEHALF OF THE BORROWERS,
THAT:





1.   I
am the duly elected
[                ] of the Borrower
Representative;





2.  I
have reviewed the terms of the Credit Agreement and I have made, or have caused
to be made under my supervision, a detailed review of the transactions and
conditions of the Company and its Subsidiaries during the accounting period
covered by the attached financial statements [and such financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes]5;





3.  The
examinations described in paragraph 2 did not disclose, except as set forth
below, and I have no knowledge of (i) the existence of any condition or event
which constitutes a Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate or (ii) any change in GAAP or in the application thereof that has
occurred since the date of the audited financial statements referred to in
Section 3.04 of the Credit Agreement;





4.   I
hereby certify that no Loan Party has changed (i) its name, (ii) its chief
executive office, (iii) principal place of business, (iv) the type of entity it
is or (v) its state of incorporation or organization without having given the
Agent the notice required by Section 4.14 of the Security
Agreement;





5. Schedule I attached
hereto sets forth financial data and computations evidencing the Borrowers’
compliance with certain covenants of the Agreement, all of which data and
computations are true, complete and correct;  and





5 For
quarterly or monthly financial statements.


Exhibit
D





6.  Schedule II hereto
sets forth the computations necessary to determine the Applicable Rate and
commencing on the first day of the calendar month after the month in which this
Compliance Certificate is delivered.





Described
below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i)
nature of the condition or event, the period during which it has existed and the
action which the Borrowers have taken, are taking, or propose to take with
respect to each such condition or event or (i) the change in GAAP or the
application thereof and the effect of such change on the attached financial
statements:













The
foregoing certifications, together with the computations set forth in Schedule I
and Schedule II hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this __ day of
_______, 20[  ].





______________________________________________,as
      Borrower RepresentativeBy:Name:Title:


Exhibit
D


SCHEDULE
I





Compliance
as of _________, ____ with


Provisions
of Section 6.12 and Section 6.13 of


the
Credit Agreement





SCHEDULE
II





Borrowers’
Applicable Rate Calculation









EXHIBIT
E





JOINDER
AGREEMENT





THIS
JOINDER AGREEMENT (this “Agreement”), dated as
of [  ], 200_, is entered into between [entity name of the new
subsidiary], a [type of
entity and jurisdiction of organization](the “New Subsidiary”) and
JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent (the “Administrative
Agent”) under that certain Credit Agreement, dated as of November [25],
2009 among The Dress Barn Inc., (the “Company”), the Borrowing Subsidiaries
party thereto, the Lenders party thereto and the Administrative Agent (as the
same may be amended, modified, extended or restated from time to time, the
“Credit
Agreement”).  All capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit
Agreement.





The New
Subsidiary and the Administrative Agent, for the benefit of the Lenders, hereby
agree as follows:





1.           The
New Subsidiary hereby acknowledges, agrees and confirms that, by its execution
of this Agreement, the New Subsidiary will be deemed to be a Loan Party under
the Credit Agreement and a “Loan Guarantor” for all purposes of the Credit
Agreement and shall have all of the obligations of a Loan Party and a Loan
Guarantor thereunder as if it had executed the Credit Agreement.  The
New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound
by, all of the terms, provisions and conditions contained in the Credit
Agreement, including without limitation (a) all of the representations and
warranties of the Loan Parties set forth in Article III of the Credit Agreement,
(b) all of the covenants set forth in Articles V and VI of the Credit Agreement
and (c) all of the guaranty obligations set forth in Article X of the Credit
Agreement.  Without limiting the generality of the foregoing terms of
this paragraph 1, the New Subsidiary, subject to the limitations set forth in
Section 10.10 of the Credit Agreement, hereby guarantees, jointly and severally
with the other Loan Guarantors, to the Administrative Agent and the Lenders, as
provided in Article X of the Credit Agreement, the prompt payment and
performance of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in
accordance with the terms thereof and agrees that if any of the Guaranteed
Obligations are not paid or performed in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise), the New
Subsidiary will, jointly and severally together with the other Loan Guarantors,
promptly pay and perform the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due (whether
at extended maturity, as a mandatory prepayment, by acceleration or otherwise)
in accordance with the terms of such extension or renewal.





2.           If
required, the New Subsidiary is, simultaneously with the execution of this
Agreement, executing and delivering such Collateral Documents (and such other
documents and instruments) as requested by the Administrative Agent in
accordance with the Credit Agreement.








3.           The
address of the New Subsidiary for purposes of Section 9.01 of the Credit
Agreement is as follows:











4.           The
New Subsidiary hereby waives acceptance by the Administrative Agent and the
Lenders of the guaranty by the New Subsidiary upon the execution of this
Agreement by the New Subsidiary.





5.           This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which shall constitute
one and the same instrument.





6.           THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.





IN
WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly
executed by its authorized officer, and the Administrative Agent, for the
benefit of the Lenders, has caused the same to be accepted by its authorized
officer, as of the day and year first above written.





[NEW
      SUBSIDIARY]By:Name:Title:Acknowledged
      and accepted:JPMORGAN
      CHASE BANK, N.A., asAdministrativeAgentBy:Name:Title:




Exhibit
E


EXHIBIT
F




PERFECTION
CERTIFICATE




Reference
is made to the Credit Agreement dated as of November [25], 2009 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among The Dress Barn, Inc. (the “Borrower
Representative”), the other Loan Parties party thereto, the Lenders party
thereto, JPMorgan Chase Bank, N.A. as Administrative Agent, Bank of America,
N.A. as Syndication Agent and J.P. Morgan Securities Inc. and Banc of America
Securities LLC as sole and exclusive joint lead arrangers and joint
bookrunners.  Capitalized terms used but not defined herein have the
meanings assigned in the Credit Agreement or the Security Agreement referred to
therein, as applicable.




The
undersigned, a Financial Officer and a Legal Officer, respectively, of the
Borrower Representative, hereby certify (in their respective capacities as
officers of the Borrower Representative and not individually, and, in the case
of the Acquired Company and its Subsidiaries, solely to such officer’s actual
knowledge) to the Administrative Agent and each other Secured Party as
follows:




1.           Names.  (a)  The
exact legal name of each Grantor, as such name appears in its respective
certificate of formation, is as follows:




(b)  Set
forth below is each other legal name each Grantor has had in the past five
years, together with the date of the relevant change:




(c)  Except
as set forth in Schedule 1 hereto, no Grantor has changed its identity or
corporate structure in any way within the past five years.  Changes in
identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
organization.  If any such change has occurred, include in
Schedule 1 the information required by Sections 1 and 2 of this
certificate as to each acquiree or constituent party to a merger or
consolidation.




(d)  The
following is a list of all other names (including trade names or similar
appellations) used by each Grantor or any of its divisions or other business
units in connection with the conduct of its business or the ownership of its
properties at any time during the past five years:




(e)  Set
forth below is the Organizational Identification Number, if any, issued by the
jurisdiction of formation of each Grantor that is a registered
organization:




(f)  Set
forth below is the Federal Taxpayer Identification Number of each
Grantor:









2.  Current
Locations.  (a)  The chief executive office of each
Grantor is located at the address set forth opposite its name
below:





Grantor
                
                Mailing Address
                
                County
                
                State





(b)  Set
forth below opposite the name of each Grantor are all locations where such
Grantor maintains any books or records relating to any Accounts Receivable (with
each location at which chattel paper, if any, is kept being indicated by an
“*”):





Grantor
                
                Mailing Address
                
                County
                
                State





(c)  The
jurisdiction of formation of each Grantor that is a registered organization is
set forth opposite its name below:




Grantor:
              
              Jurisdiction:




(d)  Set
forth below opposite the name of each Grantor are all the locations where such
Grantor maintains any Equipment or other Collateral not identified
above:





Grantor
                
                Mailing Address
                
                County
                
                State





(e)  Set
forth below opposite the name of each Grantor are all the places of business of
such Grantor not identified in paragraph (a), (b), (c) or (d)
above:





None.





(f)  Set
forth below opposite the name of each Grantor are the names and addresses of all
Persons other than such Grantor that have possession of any of the Collateral of
such Grantor:





[See
bailees in 2(d)]6




3.  Unusual
Transactions.  All Accounts have been originated by the
Grantors and all Inventory has been acquired by the Grantors in the ordinary
course of business.




4.  File Search
Reports.  File search reports have been obtained from each
Uniform Commercial Code filing office identified with respect to such Grantor in
Section 2 hereof, and such search reports reflect no liens against any of the
Collateral other than those reflected thereon and/or permitted under the Credit
Agreement.







6 DB
to confirm.


Exhibit
F




5.  UCC
Filings.  Financing statements in substantially the form of
Schedule 5
hereto have been prepared for filing in the proper Uniform Commercial Code
filing office in the jurisdiction in which each Grantor is located and, to the
extent any of the collateral is comprised of fixtures, timber to be cut or as
extracted collateral from the wellhead or minehead, in the proper local
jurisdiction, in each case as set forth with respect to such Grantor in
Section 2 hereof.




6.  Schedule of
Filings.  Attached hereto as Schedule 6 is a
schedule setting forth, with respect to the filings described in Section 5
above, each filing and the filing office in which such filing is to be
made.




7.  Stock Ownership and other
Equity Interests.  Attached hereto as Schedule 7 is a true
and correct list of all the issued and outstanding stock, partnership interests,
limited liability company membership interests or other equity interest of the
Borrower Representative and each Subsidiary and the record and beneficial owners
of such stock, partnership interests, membership interests or other equity
interests. Also set forth on Schedule 7 is each equity investment of the
Borrower Representative or any Subsidiary that represents 50% or less of the
equity of the entity in which such investment was made (other than Permitted
Investments).




8.  Debt
Instruments.  Attached hereto as Schedule 8 is a
true and correct list of all promissory notes and other evidence of indebtedness
held by the Borrower Representative and each Subsidiary that are required to be
pledged under the Security Agreement, including all intercompany notes between
the Borrower Representative and each Subsidiary and each Subsidiary of the
Borrower Representative and each other such Subsidiary.




9.  Advances.  Attached
hereto as Schedule
9 is (a) a true and correct list of all advances made by the Borrower
Representative to any Subsidiary of the Borrower Representative or made by any
Subsidiary of the Borrower Representative to the Borrower Representative or to
any other Subsidiary of the Borrower Representative (other than those identified
on Schedule 8), which advances will be on and after the date hereof evidenced by
one or more intercompany notes pledged to the Administrative Agent under the
Security Agreement and (b) a true and correct list of all unpaid intercompany
transfers of goods sold and delivered by or to the Borrower Representative or
any Subsidiary of the Borrower Representative.




10.  [Intentionally
Omitted]




11.  Intellectual
Property.  Attached hereto as Schedule 11(A)
in proper form for filing with the United States Patent and Trademark Office is
a schedule setting forth all of each Grantor’s Patents, Patent Licenses,
Trademarks and Trademark Licenses, including the name of the registered owner,
the registration number and the expiration date of each Patent, Patent License,
Trademark and Trademark License owned by any Grantor. Attached hereto as Schedule 11(B)
in proper form for filing with the United States Copyright Office is a schedule
setting forth all of each Grantor’s Copyrights and Copyright Licenses, including
the name of the registered owner, the registration number and the expiration
date of each Copyright or Copyright License owned by any Grantor.




12.  Commercial Tort
Claims.  Attached hereto as Schedule 12 is a
true and correct list of each commercial tort claim in excess of $500,000 to be
held by any Grantor on the Closing Date, including a brief description thereof,
except those claims which are publicly filed and/or disclosed.


Exhibit
F





13.  Deposit
Accounts.  Attached hereto as Schedule 13 is a
true and correct list of deposit accounts maintained by each Grantor (other than
those deposit accounts attributable to individual store locations), including
the name and address of the depositary institution, the type of account, the
account number and the account holder for each account.




14.  Securities
Accounts.  Attached hereto as Schedule 14 is a
true and correct list of securities accounts maintained by each Grantor,
including the name and address of the financial institution holding the security
account (including a securities intermediary or commodity intermediary), the
type of account and the account number.




Exhibit
F


IN
WITNESS WHEREOF, the undersigned have duly executed this certificate on this
[25th] day of
November, 2009.




THE
      DRESS BARN, INC.By:Name:
                          Reid
      HackneyTitle:
                          Vice
      President of Finance and CorporateControllerBy:Name:
                          Gene
      WexlerTitle:
                          Senior
      Vice President, General Counsel&
      Assistant
Secretary




EXHIBIT
F


Schedule
1


Changes in Corporate
Identity/Structure




EXHIBIT
F




Schedule
2(b)


List of Store
Locations




Attached
hereto.




EXHIBIT
F


Schedule
5


UCC Financing
Statements




Attached
hereto.




EXHIBIT
F


Schedule
6


Filing
Locations




Entity
                
                Filing
Office




EXHIBIT
F


Schedule
7


Capital Stock &
Investments




EXHIBIT
F


Schedule
8


Debt
Instruments




EXHIBIT
F


Schedule
9


Intercompany
Advances




There are
multiple intercompany advances, but as of the Effective Date, all such advances
will be made pursuant to the promissory notes listed on Schedule 8.7




EXHIBIT
F


Schedule
10





Intentionally
Omitted


EXHIBIT
F


Schedule
11(A)


Patents/Trademarks





1.


EXHIBIT
F


LICENSES8




a.
            Patent
      Licenses




None.




b.
            Copyright
      Licenses




None.




c.
            Trademark
      Licenses




2.
            Patents







8.
 EXHIBIT
F


Schedule
11(B)


Copyrights


EXHIBIT
F


Schedule
12


Commercial Tort
Claims




None.


EXHIBIT
F


Schedule
13


Deposit Accounts9




Borrower
Representative Concentration Account







9 DB to confirm.
 EXHIBIT
F




Schedule 1410


Securities
Accounts







EXHIBIT
F