**Exhibit
      10.21**










**SPORT
      CHALET, INC.,**





as
      Borrower,





together
      with each of the other Obligated Parties


party
      hereto from time to time







**AMENDED
      AND RESTATED**


**LOAN
      AND SECURITY AGREEMENT**





Dated
      as
      of June 20, 2008





$70,000,000









**CERTAIN
      FINANCIAL INSTITUTIONS,**





as
      Lenders





and





**BANK
      OF AMERICA, N.A** .,





as
      Agent







Sport Chalet







TABLE
      OF CONTENTS




PageSECTION
                1.
            
            DEFINITIONS;
                RULES OF CONSTRUCTION
            11.1.
            
            Definitions
            11.2.
            
            Accounting
                Terms
            211.3.
            
            Uniform
                Commercial Code
            211.4.
            
            Certain
                Matters of Construction
            22SECTION
                2
            
            CREDIT
                FACILITIES
            222.1.
            
            Revolver
                Commitment
            222.1.1.     
                Revolver Loans
            222.1.2.     
                Revolver Notes
            222.1.3.     
                Use of Proceeds
            232.1.4.     
                Termination of Revolver Commitments
            232.1.5.     
                Overadvances
            232.1.6.     
                Protective Advances
            232.2.
            
            Intentionally
                Omitted
            232.3.
            
            Letter
                of Credit Facility
            242.3.1.     
                Issuance of Letters of Credit
            242.3.2.     
                Reimbursement; Participations
            252.3.3.     
                Cash Collateral
            262.3.4.     
                Existing Letters of Credit
            26SECTION
                3.
            
            INTEREST,
                FEES AND CHARGES
            263.1.
            
            Interest
            263.1.1.     
                Rates and Payment of Interest
            263.1.2.     
                Application of LIBOR to Outstanding Loans
            273.1.3.     
                Interest Periods
            273.1.4.     
                Interest Rate Not Ascertainable
            273.2.
            
            Fees
            273.3.
            
            Computation
                of Interest, Fees, Yield Protection
            283.4.
            
            Reimbursement
                Obligations
            283.5.
            
            Illegality
            293.6.
            
            Inability
                to Determine Rates
            293.7.
            
            Increased
                Costs; Capital Adequacy
            293.7.1.     
                Change in Law
            293.7.2.     
                Capital Adequacy
            303.7.3.     
                Compensation
            303.8.
            
            Mitigation
            303.9.
            
            Funding
                Losses
            303.10.
            
            Maximum
                Interest
            30SECTION
                4.
            
            LOAN
                ADMINISTRATION
            314.1.
            
            Manner
                of Borrowing and Funding Revolver Loans
            314.1.1.     
                Notice of Borrowing
            314.1.2.     
                Fundings by Lenders
            31




ii




4.1.3.     
                Swingline Loans; Settlement
            324.1.4.     
                Notices
            324.2.
            
            Defaulting
                Lender
            324.3.
            
            Number
                and Amount of LIBOR Loans; Determination of Rate
            334.4.
            
            Borrower
                as Agent for Obligated Parties
            334.5.
            
            One
                Obligation
            334.6.
            
            Effect
                of Termination
            34SECTION
                5.
            
            PAYMENTS
            345.1.
            
            General
                Payment Provisions
            345.2.
            
            Repayment
                of Revolver Loans
            345.3.
            
            Mandatory
                Prepayments
            345.3.1.     
                Extraordinary Receipts
            345.3.2.     
                Overadvances
            345.3.3.     
                Seasonal Revolver Limit
            355.4.
            
            Payment
                of Other Obligations
            355.5.
            
            Marshaling;
                Payments Set Aside
            355.6.
            
            Post-Default
                Allocation of Payments
            355.6.1.     
                Allocation
            355.6.2.     
                Erroneous Application
            365.7.
            
            Application
                of Payments
            365.8.
            
            Loan
                Account; Account Stated
            365.8.1.     
                Loan Account
            365.8.2.   
                  Entries Binding
            365.9.
            
            Taxes
            365.9.1. 
                    Payments Free of Taxes
            365.9.2.    
                 Payment
            365.10.
            
            Foreign
                Lenders
            375.10.1. 
                  Exemption
            375.10.2.   
                Documentation
            37SECTION
                6.
            
            CONDITIONS
                PRECEDENT
            376.1.
            
            Conditions
                Precedent to Initial Loans
            376.2.
            
            Conditions
                Precedent to All Credit Extensions
            396.3.
            
            Limited
                Waiver of Conditions Precedent
            39SECTION
                7.
            
            COLLATERAL
            407.1.
            
            Grant
                of Security Interest
            407.2.
            
            Lien
                on Deposit Accounts; Cash Collateral
            407.2.1.     
                Deposit Accounts
            407.2.2.     
                Cash Collateral
            417.3.
            
            Intentionally
                Omitted
            417.4.
            
            Other
                Collateral
            417.4.1.     
                Commercial Tort Claims
            417.4.2.     
                Certain After-Acquired Collateral
            417.5.
            
            No
                Assumption of Liability
            417.6.
            
            Further
                Assurances
            417.7.
            
            Foreign
                Subsidiary Stock
            41




iii




SECTION
                8.
            
            COLLATERAL
                ADMINISTRATION
            418.1.
            
            Borrowing
                Base Certificates
            418.2.
            
            Administration
                of Accounts and Receipts
            428.2.1.     
                Records and Schedules of Sales and Accounts
            428.2.2.     
                Taxes
            428.2.3.     
                Intentionally Omitted
            428.2.4.     
                Maintenance of Dominion Account
            428.2.5.     
                Deposits and Other Proceeds of Collateral
            428.3.
            
            Administration
                of Inventory
            428.3.1.     
                Records and Reports of Inventory
            428.3.2.     
                Returns of Inventory
            438.3.3.     
                Acquisition, Sale and Maintenance
            438.4.
            
            Administration
                of Equipment
            438.4.1.     
                Records and Schedules of Equipment
            438.4.2.     
                Dispositions of Equipment
            438.4.3.     
                Condition of Equipment
            438.5.
            
            Administration
                of Deposit Accounts
            438.6.
            
            General
                Provisions
            448.6.1.   
                  Location of Collateral
            448.6.2.     
                Insurance of Collateral; Condemnation Proceeds
            448.6.3.   
                  Protection of Collateral
            458.6.4.    
                 Defense of Title to Collateral
            458.7.
            
            Power
                of Attorney
            45SECTION
                9.
            
            REPRESENTATIONS
                AND WARRANTIES
            459.1.
            
            General
                Representations and Warranties
            459.1.1.   
                  Organization and Qualification
            459.1.2.  
                   Power and Authority
            469.1.3.     
                Enforceability
            469.1.4.     
                Capital Structure
            469.1.5.     
                Corporate Names; Locations
            469.1.6.     
                Title to Properties; Priority of Liens
            469.1.7.    
                 Financial Statements
            479.1.8.   
                  Surety Obligations
            479.1.9.  
                   Taxes
            479.1.10.   
                Brokers
            479.1.11.   
                Intellectual Property
            479.1.12.   
                Governmental Approvals
            479.1.13.   
                Compliance with Laws
            479.1.14.   
                Compliance with Environmental Laws
            489.1.15.   
                Burdensome Contracts
            489.1.16.   
                Litigation
            489.1.17.   
                No Defaults
            489.1.18.   
                ERISA
            489.1.19.   
                Trade Relations
            499.1.20.   
                Labor Relations
            499.1.21.   
                Payable Practices
            49




iv




9.1.22.   
                Not a Regulated Entity
            499.1.23.   
                Margin Stock
            499.2.
            
            Complete
                Disclosure
            49SECTION
                10.
            
            COVENANTS
                AND CONTINUING AGREEMENTS
            5010.1.
            
            Affirmative
                Covenants
            5010.1.1.   
                Inspections; Appraisals
            5010.1.2.   
                Financial and Other Information
            5010.1.3.   
                Notices
            5110.1.4.   
                Landlord and Storage Agreements
            5210.1.5.   
                Compliance with Laws
            5210.1.6.   
                Taxes
            5210.1.7.   
                Insurance
            5210.1.8.   
                Licenses
            5210.1.9.   
                Future Subsidiaries
            5210.2.
            
            Negative
                Covenants
            5310.2.1.   
                Permitted Debt
            5310.2.2.   
                Permitted Liens
            5310.2.3.   
                Intentionally Omitted
            5410.2.4.   
                Distributions; Upstream Payments
            5410.2.5.   
                Restricted Investments
            5410.2.6.   
                Disposition of Assets
            5410.2.7.   
                Loans
            5410.2.8.   
                Restrictions on Payment of Certain Debt
            5410.2.9.   
                Fundamental Changes
            5410.2.10.  Subsidiaries
            5510.2.11.  Organic
                Documents
            5510.2.12.  Tax
                Consolidation
            5510.2.13.  Accounting
                Changes
            5510.2.14.  Restrictive
                Agreements
            5510.2.15.  Hedging
                Agreements
            5510.2.16.  Conduct
                of Business
            5510.2.17.  Affiliate
                Transactions
            5510.2.18.  Plans
            5510.3.
            
            Financial
                Covenants
            5510.3.1.   
                Fixed Charge Coverage Ratio
            55SECTION
                11.
            
            EVENTS
                OF DEFAULT; REMEDIES ON DEFAULT
            5511.1.
            
            Events
                of Default
            5511.2.
            
            Remedies
                upon Default
            5711.3.
            
            License
            5811.4.
            
            Setoff
            5811.5.
            
            Remedies
                Cumulative; No Waiver
            5811.5.1.   
                Cumulative Rights
            5811.5.2.   
                Waivers
            58SECTION
                12.
            
            AGENT
            5912.1.
            
            Appointment,
                Authority and Duties of Agent
            59




v




12.1.1.   
                Appointment and Authority
            5912.1.2.   
                Duties
            5912.1.3.   
                Agent Professionals
            5912.1.4.   
                Instructions of Required Lenders
            5912.2.
            
            Agreements
                Regarding Collateral and Field Examination Reports
            6012.2.1.   
                Lien Releases; Care of Collateral
            6012.2.2.   
                Possession of Collateral
            6012.2.3.   
                Reports
            6012.3.
            
            Reliance
                By Agent
            6012.4.
            
            Action
                Upon Default
            6012.5.
            
            Ratable
                Sharing
            6112.6.
            
            Indemnification
                of Agent Indemnitees
            6112.7.
            
            Limitation
                on Responsibilities of Agent
            6112.8.
            
            Successor
                Agent and Co-Agents
            6212.8.1.   
                Resignation; Successor Agent
            6212.8.2.   
                Separate Collateral Agent
            6212.9.
            
            Due
                Diligence and Non-Reliance
            6212.10.
            
            Replacement
                of Certain Lenders
            6212.11.
            
            Remittance
                of Payments
            6312.11.1. 
                Remittances Generally
            6312.11.2. 
                Failure to Pay
            6312.11.3. 
                Recovery of Payments
            6312.12.
            
            Agent
                in its Individual Capacity
            6312.13.
            
            Agent
                Titles
            6312.14.
            
            No
                Third Party Beneficiaries
            64SECTION
                13.
            
            BENEFIT
                OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
            6413.1.
            
            Successors
                and Assigns
            6413.2.
            
            Participations
            6413.2.1.   
                Permitted Participants; Effect
            6413.2.2.   
                Voting Rights
            6413.2.3.   
                Benefit of Set-Off
            6413.3.
            
            Assignments
            6513.3.1.   
                Permitted Assignments
            6513.3.2.   
                Effect; Effective Date
            65SECTION
                14.
            
            MISCELLANEOUS
            6514.1.
            
            Consents,
                Amendments and Waivers
            6514.1.1.
                Amendment
            6514.1.2.   
                Limitations
            6614.1.3.   
                Payment for Consents
            6614.2.
            
            Indemnity
            6614.3.
            
            Notices
                and Communications
            6614.3.1.   
                Notice Address
            6614.3.2.   
                Electronic Communications; Voice Mail
            6614.3.3.   
                Non-Conforming Communications
            6714.4.
            
            Performance
                of Obligated Parties’ Obligations
            6714.5.
            
            Credit
                Inquiries
            67




vi




14.6.
            
            Severability
            6714.7.
            
            Cumulative
                Effect; Conflict of Terms
            6714.8.
            
            Counterparts
            6714.9.
            
            Entire
                Agreement
            6714.10.
            
            Relationship
                with Lenders
            6814.11.
            
            No
                Advisory or Fiduciary Responsibility
            6814.12.
            
            Confidentiality
            6814.13.
            
            Intentionally
                Omitted
            6914.14.
            
            GOVERNING
                LAW
            6914.15.
            
            Consent
                to Forum; Arbitration
            6914.15.1.  
                Forum
            6914.15.2.  
                Arbitration
            6914.16.
            
            Waivers
                by Obligated Parties
            7014.17.
            
            Patriot
                Act Notice
            7014.18.
            
            Amendment
                and Restatement; Waiver of Claims
            70




vii


**LIST
      OF EXHIBITS**





Exhibit
                A
            Revolver
                NoteExhibit
                B
            Form
                of Compliance CertificateExhibit
                C
            Assignment
                and AcceptanceExhibit
                D
            Assignment
                NoticeExhibit
                E
            Commitments
                of LendersExhibit
                F
            Form
                of GuarantyExhibit
                G
            Form
                of Security AgreementExhibit
                H
            Form
                of Pledge AgreementExhibit
                I
            Form
                of Post Closing AgreementExhibit
                J
            Form
                of Trademark Security AgreementExhibit
                K
            Form
                of Website Security Agreement and Power of AttorneyExhibit
                L
            Form
                of Deposit Account Control
                Agreement




viii





**AMENDED
      AND RESTATED**


**LOAN
      AND SECURITY AGREEMENT**




This
      AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of June 20, 2008,
      among SPORT CHALET, INC., a Delaware corporation, (“ **Borrower** ”),
      each
      of Borrower’s Subsidiaries party hereto from time to time as Obligated Parties,
      the financial institutions party to this Agreement from time to time as lenders
      (collectively, “ **Lenders** ”),
      and
      BANK OF AMERICA, N.A., a national banking association, as administrative agent
      for the Lenders (“ **Agent** ”).





R
      E C
      I T A L S :





Borrower,
      Bank of America, N.A., and certain other financial institutions entered into
      that certain Loan Agreement and that certain Security Agreement, each dated
      as
      of August 31, 2007 (collectively, the “ **Original
      Loan Agreement** ”),
      whereby certain credit facilities were made available to Borrower on the terms
      and conditions set forth therein;




Obligated
      Parties have requested that Lenders amend and restate the Original Loan
      Agreement to provide an increased credit facility to Borrower to finance its
      business enterprise on the terms and conditions more particularly set forth
      herein. Lenders are willing to so amend and restate the Original Loan Agreement
      on the terms and conditions set forth in this Agreement.




NOW,
      THEREFORE, for valuable consideration hereby acknowledged, the parties agree
      that the Original Loan Agreement shall be amended and restated as set forth
      herein and further agree as follows:




SECTION
      1.  DEFINITIONS;
      RULES OF CONSTRUCTION




1.1.  Definitions .
      As used
      herein, the following terms have the meanings set forth below:




**Account** :
      as
      defined in the UCC, including all rights to payment for goods sold or leased,
      or
      for services rendered.




**Account
      Debtor** :
      a
      Person who is obligated under an Account, Chattel Paper or General
      Intangible.




**Affiliate** :
      with
      respect to any Person (the “subject Person”), another Person that directly, or
      indirectly through one or more intermediaries, Controls or is Controlled by
      or
      is under common Control with the subject Person. “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
      correlative meanings.




**Agent
      Indemnitees** :
      Agent
      and its officers, directors, employees, Affiliates, agents and
      attorneys.




**Agent
      Professionals** :
      attorneys, accountants, appraisers, auditors, business valuation experts,
      environmental engineers or consultants, turnaround consultants, and other
      professionals and experts retained by Agent.




**Allocable
      Amount** :
      as
      defined in Section 5.11.3 .




**Anti-Terrorism
      Laws** :
      any
      laws relating to terrorism or money laundering, including the Patriot
      Act.









**Applicable
      Law** :
      all
      laws, rules, regulations and governmental guidelines applicable to the Person,
      conduct, transaction, agreement or matter in question, including all applicable
      statutory law, common law and equitable principles, and all provisions of
      constitutions, treaties, statutes, rules, regulations, orders and decrees of
      Governmental Authorities.




**Applicable
      Margin** :
      with
      respect to any Type of Loan, the margin set forth below, as determined by the
      Fixed Charge Coverage Ratio for the last Fiscal Quarter:




Level
            
            Fixed
                Charge Coverage Ratio
            
            Base
                Rate Loans
            
            LIBOR
                LoansI
            
            Greater
                than
              1.60
                to 1.00
            
            0.00
                %
            
            1.50%II
            
            Greater
                than
              1.20
                to 1.00 but
              less
                than or equal to
              1.60
                to 1.00
            
            0.00
                %
            
            1.75%III
            
            Greater
                than
              0.80
                to 1.00 but
              less
                than or equal to
              1.20
                to 1.00
            
            0.00
                %
            
            2.00%IV
            
            Greater
                than
              0.40
                to 1.00 but
              less
                than or equal to
              0.80
                to 1.00
            
            0.25%
            
            2.25%V
            
            Less
                than
              0.40
                to 1.00
            
            0.50%
            
            2.50%




Through
      November 30, 2008, margins shall be determined as if Level III were applicable.
      Effective December 1, 2008, and thereafter, the margins shall be subject to
      increase or decrease upon receipt by Agent of the financial statements and
      corresponding Compliance Certificate for the most recently ended Fiscal Year
      or
      Fiscal Quarter, as applicable, pursuant to Section 10.1.2(a) and
      (b) ,
      which
      change shall be effective on the first day of the calendar month following
      receipt. If, by the first day of a Fiscal Quarter, any financial statements
      and
      Compliance Certificate due in the preceding Fiscal Quarter have not been
      received, then the margins shall be determined as if Level V were applicable,
      from such day until the first day of the Fiscal Quarter following actual
      receipt.




**Approved
      Fund** :
      any
      Person (other than a natural person) that is engaged in making, purchasing,
      holding or otherwise investing in commercial loans and similar extensions of
      credit in its ordinary course of activities, and is administered or managed
      by a
      Lender, an entity that administers or manages a Lender, or an Affiliate of
      either.




**Asset
      Disposition** :
      a sale,
      lease, license, consignment, transfer or other disposition of Property of an
      Obligated Party, including a disposition of Property in connection with a
      sale-leaseback transaction or synthetic lease.




**Assignment
      and Acceptance** :
      an
      assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit
      C ,
      appropriately completed.




**Availability** :
      the
      Borrowing Base, minus the
      principal balance of all Revolver Loans.




2




**Availability
      Reserve** :
      the sum
      (without duplication) of (a) the Inventory Reserve; (b) the
      Collateral Access Reserve; (c) the Charges Reserve; (d) the LC
      Reserve; (e) the Bank Product Reserve; (f) Gift Card Liability
      Reserve; (g) the aggregate amount of liabilities secured by Liens upon
      Collateral that are senior to Agent’s Liens (but imposition of any such reserve
      shall not waive an Event of Default arising therefrom); and (h) such
      additional reserves, in such amounts and with respect to such matters, as Agent
      in its discretion may elect to impose from time to time. As of the Closing
      Date,
      the reserves under clauses
      (a) , (c) , (e) , (g) ,
      and (h) above
      will be zero, subject to Agent’s right to increase such reserves in accordance
      with this Agreement.




**Bank
      of America** :
      Bank of
      America, N.A., a national banking association, and its successors and
      assigns.




**Bank
      of America Indemnitees** :
      Bank of
      America and its officers, directors, employees, Affiliates, agents and
      attorneys.




**Bank
      Product** :
      any of
      the following products, services or facilities extended to any Obligated Party
      or its Subsidiaries by Bank of America or any of its Affiliates: (a) Cash
      Management Services; (b) products under Hedging Agreements;
      (c) commercial credit card and merchant card services; and (d) leases
      and other banking products or services as may be requested by Obligated Parties
      or their respective Subsidiaries, other than Letters of Credit.




**Bank
      Product Debt** :
      Debt
      and other obligations of an Obligated Party relating to Bank
      Products.




**Bank
      Product Reserve** :
      the
      aggregate amount of reserves established by Agent from time to time in its
      discretion in respect of Bank Product Debt.




**Bankruptcy
      Code** :
      Title
      11 of the United States Code.




**Base
      Rate** :
      the
      rate of interest announced by Bank of America from time to time as its prime
      rate. Such rate is a rate set by Bank of America based upon various factors
      including its costs and desired return, general economic conditions and other
      factors, and is used as a reference point for pricing some loans, which may
      be
      priced at, above or below such announced rate. Any change in such rate announced
      by Bank of America shall take effect at the opening of business on the day
      specified in the public announcement of such change.




**Base
      Rate Loan** :
      any
      Loan that bears interest based on the Base Rate.




**Base
      Rate Revolver Loan** :
      a
      Revolver Loan that bears interest based on the Base Rate.




**Board
      of Governors** :
      the
      Board of Governors of the Federal Reserve System.




**Borrowed
      Money** :
      with
      respect to any Obligated Party, without duplication, its (a) Debt that
      (i) arises from the lending of money by any Person to such Obligated Party,
      (ii) is evidenced by notes, drafts, bonds, debentures, credit documents or
      similar instruments, (iii) accrues interest or is a type upon which
      interest charges are customarily paid (excluding trade payables owing in the
      Ordinary Course of Business), or (iv) was issued or assumed as full or
      partial payment for Property; (b) Capital Leases; (c) reimbursement
      obligations with respect to letters of credit; and (d) guaranties of any
      Debt of the foregoing types owing by another Person.




**Borrowing** :
      a group
      of Loans of one Type that are made on the same day or are converted into Loans
      of one Type on the same day.




3




**Borrowing
      Base** :
      on any
      date of determination, an amount equal to the lesser of (a) the Seasonal
      Revolver Limit, minus the LC
      Reserve; or (b) the result of the Inventory Formula Amount, minus the
      Availability Reserve.




**Borrowing
      Base Certificate** :
      a
      certificate, in form and substance satisfactory to Agent, by which Borrower
      certifies calculation of the Borrowing Base.




**Business
      Day** :
      any day
      other than a Saturday, Sunday or other day on which commercial banks are
      authorized to close under the laws of, or are in fact closed in, North Carolina
      and California, and if such day relates to a LIBOR Loan, any such day on which
      dealings in Dollar deposits are conducted between banks in the London interbank
      Eurodollar market.




**Capital
      Expenditures** :
      all
      liabilities incurred, expenditures made or payments due (whether or not
      made) by Borrower or its Subsidiaries for the acquisition of any fixed
      assets, or any improvements, replacements, substitutions or additions thereto
      with a useful life of more than one year, including the principal portion of
      Capital Leases.




**Capital
      Lease** :
      any
      lease that is required to be capitalized for financial reporting purposes in
      accordance with GAAP.




**Cash
      Collateral** :
      cash,
      and any interest or other income earned thereon, that is delivered to Agent
      to
      Cash Collateralize any Obligations.




**Cash
      Collateral Account** :
      a
      demand deposit, money market or other account established by Agent at such
      financial institution as Agent may select in its discretion, which account
      shall
      be subject to Agent’s Liens for the benefit of Secured Parties.




**Cash
      Collateralize** :
      the
      delivery of cash to Agent, as security for the payment of Obligations, in an
      amount equal to (a) with respect to LC Obligations, 105% of the aggregate
      LC Obligations, and (b) with respect to any inchoate, contingent or other
      Obligations (including Obligations arising under Bank Products), Agent’s good
      faith estimate of the amount due or to become due, including all fees and other
      amounts relating to such Obligations. “ **Cash
      Collateralization** ”
has
      a
      correlative meaning.




**Cash
      Equivalents** :
      (a) marketable obligations issued or unconditionally guaranteed by, and
      backed by the full faith and credit of, the United States government, maturing
      within 12 months of the date of acquisition; (b) certificates of deposit,
      time deposits and bankers’ acceptances maturing within 12 months of the date of
      acquisition, and overnight bank deposits, in each case which are issued by
      a
      commercial bank organized under the laws of the United States or any state
      or
      district thereof, rated A-1 (or better) by S&P or P-1 (or
      better) by Moody’s at the time of acquisition, and (unless issued by a
      Lender) not subject to offset rights; (c) repurchase obligations with
      a term of not more than 30 days for underlying investments of the types
      described in clauses (a) and (b) entered into with any bank meeting
      the qualifications specified in clause (b); (d) commercial paper rated A-1
      (or better) by S&P or P-1 (or better) by Moody’s, and maturing
      within nine months of the date of acquisition; and (e) shares of any money
      market fund that has substantially all of its assets invested continuously
      in
      the types of investments referred to above, has net assets of at least
      $500,000,000 and has the highest rating obtainable from either Moody’s or
      S&P.




**Cash
      Management Services** :
      any
      services provided from time to time by Bank of America ****** or
      any of
      its Affiliates to any Obligated Party or any of their respective Subsidiaries
      in
      connection with operating, collections, payroll, trust, or other depository
      or
      disbursement accounts, including automated clearinghouse, e-payable, electronic
      funds transfer, wire transfer, controlled disbursement, overdraft, depository,
      information reporting, lockbox and stop payment services.




4




**CERCLA** :
      the
      Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C.
§
9601 *et
      seq* .).




**Change
      in Law** :
      the
      occurrence, after the date hereof, of (a) the adoption or taking effect of
      any law, rule, regulation or treaty; (b) any change in any law, rule,
      regulation or treaty or in the administration, interpretation or application
      thereof by any Governmental Authority; or (c) the making or issuance of any
      request, guideline or directive (whether or not having the force of law) by
      any Governmental Authority.




**Change
      of Control** :
      an
      event or series of events by which any of the following occurs:




(a)  Craig
      L.
      Levra and Howard K. Kaminsky shall both cease to be executive officers of
      Borrower; or




(b)  any
      “person” or “group” (as such terms are used in Sections 13(d) and
      14(d) of the Securities Exchange Act of 1934, but excluding any employee
      benefit plan of such person or its subsidiaries, and any person or entity acting
      in its capacity as trustee, agent or other fiduciary or administrator of any
      such plan) other than the Permitted Holders becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
      except that a person or group shall be deemed to have “beneficial ownership” of
      all securities that such person or group has the right to acquire, whether
      such
      right is exercisable immediately or only after the passage of time (such right,
      an “option right”)), directly or indirectly, of 25% or more of the power to vote
      for members of the board of directors or equivalent governing body of Borrower
      on a fully-diluted basis (and taking into account all such securities that
      such
“person” or “group” has the right to acquire pursuant to any option right);
      or




(c)  during
      any period of 24 consecutive months, a majority of the members of the board
      of
      directors or other equivalent governing body of Borrower cease to be composed
      of
      individuals (i) who were members of that board or equivalent governing body
      on the first day of such period, (ii) whose election or nomination to that
      board or equivalent governing body was approved by individuals referred to
      in clause
      (i) above
      constituting at the time of such election or nomination at least a majority
      of
      that board or equivalent governing body or (iii) whose election or
      nomination to that board or other equivalent governing body was approved by
      individuals referred to in clauses
      (i) and (ii) above
      constituting at the time of such election or nomination at least a majority
      of
      that board or equivalent governing body (excluding, in the case of both clause
      (ii) and clause
      (iii) ,
      any
      individual whose initial nomination for, or assumption of office as, a member
      of
      that board or equivalent governing body occurs as a result of an actual or
      threatened solicitation of proxies or consents for the election or removal
      of
      one or more directors by any person or group other than a solicitation for
      the
      election of one or more directors by or on behalf of the board of directors);
      or




(d)  any
      Person or two or more Persons acting in concert shall have acquired by contract
      or otherwise, or shall have entered into a contract or arrangement that, upon
      consummation thereof, will result in its or their acquisition of the power
      to
      exercise, directly or indirectly, a controlling influence over the management
      or
      policies of Borrower, or control over the equity securities of Borrower entitled
      to vote for members of the board of directors or equivalent governing body
      of
      Borrower on a fully-diluted basis (and taking into account all such securities
      that such Person or Persons have the right to acquire pursuant to any option
      right) representing 25% or more of the combined voting power of such
      securities; or




5




(e)  Borrower
      shall cease, directly or indirectly, to own and control legally and beneficially
      all of the Equity Interests in any other Obligated Party without the prior
      written consent of Agent, such consent not to be unreasonably withheld so long
      as no Default or Event of Default has occurred and is continuing;
      or




(f)  all
      or
      substantially all of the assets of any Obligated Party are sold or transferred,
      other than a sale or transfer to Borrower without the prior written consent
      of
      Agent, such consent not to be unreasonably withheld with respect to the assets
      of any Obligated Party other than Borrower so long as no Default or Event of
      Default has occurred and is continuing.




**Charges
      Reserve** :
      the
      aggregate of (a) all past due rent and other amounts owing by an Obligated
      Party to any landlord, warehouseman, processor, repairman, mechanic, shipper,
      freight forwarder, broker or other Person who possesses any Collateral or could
      assert a Lien on any Collateral, plus (b) a reserve at least equal to three months charges that could be payable
      to any such Person (other than a landlord), unless it has executed a Lien
      Waiver, plus (c) a reserve equal to all accrued Royalties, whether or not then due and
      payable by any Obligated Party.




**Claims** :
      all
      liabilities, obligations, losses, damages, penalties, judgments, proceedings,
      interest, costs and expenses of any kind (including remedial response costs,
      reasonable attorneys’ fees and Extraordinary Expenses) at any time
      (including after Full Payment of the Obligations, resignation or replacement
      of
      Agent, or replacement of any Lender) incurred by or asserted against any
      Indemnitee in any way relating to (a) any Loans, Letters of Credit, Loan
      Documents, or the use thereof or transactions relating thereto, (b) any
      action taken or omitted to be taken by any Indemnitee in connection with any
      Loan Documents, (c) the existence or perfection of any Liens, or
      realization upon any Collateral, (d) exercise of any rights or remedies
      under any Loan Documents or Applicable Law, or (e) failure by any Obligated
      Party to perform or observe any terms of any Loan Document, in each case
      including all costs and expenses relating to any investigation, litigation,
      arbitration or other proceeding (including an Insolvency Proceeding or appellate
      proceedings), whether or not the applicable Indemnitee is a party
      thereto.




**Closing
      Date** :
      the
      date of this Agreement.




**Code** :
      the
      Internal Revenue Code of 1986.




**Collateral** :
      all
      Property described in Section 7.1 ,
      all
      Property described in any Security Documents as security for any Obligations,
      and all other Property that now or hereafter secures (or is intended to
      secure) any Obligations.




**Collateral
      Access Reserve** :
      a
      reserve equal to $100,000 for each location leased by Borrower unless the
      landlord therefor has executed a Lien Waiver. Notwithstanding the foregoing,
      (a) the Collateral Access Reserve shall be $2,600,00 from the Closing Date
      until the earlier of September 30, 2008, or the date on which Borrower has
      delivered to Agent Lien Waivers for all but 25 (or fewer) of its leased
      locations (at which time the Collateral Access Reserve will be adjusted to
      equal
      $100,000 for the actual number of leased locations for which no Lien Waiver
      has
      been executed and delivered to Agent), (b) at any time following the
      Closing Date (including prior to September 30, 2008) the Collateral Access
      Reserve will be increased by $100,000 for each of Borrower’s store locations
      opened since the Closing Date and for which Agent has not received an executed
      Lien Waiver, and (c) the Collateral Access Reserve may be increased by
      Agent in its sole discretion during the continuation of an Event of
      Default.




**Commitment** :
      for any
      Lender, the aggregate amount of such Lender’s Revolver Commitment. “ **Commitments** ”
means
      the aggregate amount of all Revolver Commitments.




6




**Commitment
      Termination Date** :
      the
      earliest to occur of (a) the Revolver Termination Date; (b) the date
      on which Borrower terminates the Revolver Commitments pursuant to Section 2.1.4 ;
      or
      (c) the date on which the Revolver Commitments are terminated pursuant to Section 11.2 .




**Compliance
      Certificate** :
      a
      certificate, in the form of Exhibit
      B ,
      appropriately completed.




**Contingent
      Obligation** :
      any
      obligation of a Person arising from a guaranty, indemnity or other assurance
      of
      payment or performance of any Debt, lease, dividend or other obligation
      (“primary obligations”) of another obligor (“primary obligor”) in any
      manner, whether directly or indirectly, including any obligation of such Person
      under any (a) guaranty, endorsement, co-making or sale with recourse of an
      obligation of a primary obligor; (b) obligation to make take-or-pay or
      similar payments regardless of nonperformance by any other party to an
      agreement; and (c) arrangement (i) to purchase any primary obligation
      or security therefor, (ii) to supply funds for the purchase or payment of
      any primary obligation, (iii) to maintain or assure working capital, equity
      capital, net worth or solvency of the primary obligor, (iv) to purchase
      Property or services for the purpose of assuring the ability of the primary
      obligor to perform a primary obligation, or (v) otherwise to assure or hold
      harmless the holder of any primary obligation against loss in respect thereof.
      The amount of any Contingent Obligation shall be deemed to be the stated or
      determinable amount of the primary obligation (or, if less, the maximum amount
      for which such Person may be liable under the instrument evidencing the
      Contingent Obligation) or, if not stated or determinable, the maximum
      reasonably anticipated liability with respect thereto.




**Covenant
      Testing Period** :
      each
      period beginning on each Covenant Testing Trigger Date and ending on the first
      day of the second calendar month following the month in which such Covenant
      Testing Trigger Date occurs. For the avoidance of doubt, any two or more
      Covenant Testing Periods may run concurrently and/or consecutively and a
      Covenant Testing Period shall be deemed to remain in effect until all Covenant
      Testing Periods have ended.




**Covenant
      Testing Trigger Date** :
      each
      date, if any, upon which Formula Availability is less than the Covenant Testing
      Trigger Amount as of such date.




**Covenant
      Testing Trigger Amount** :
      (a) on any date of determination from January 1 of each year through August
      31 of each year, $6,750,000, and (ii) on any date of determination from
      September 1 of each year through December 31 of each year,
      $10,500,000.




**CWA** :
      the
      Clean Water Act (33 U.S.C. §§ 1251 *et
      seq* .).




**Debt** :
      as
      applied to any Person, without duplication, (a) all items that would be
      included as liabilities on a balance sheet in accordance with GAAP, including
      Capital Leases, but excluding trade payables incurred and being paid in the
      Ordinary Course of Business; (b) all Contingent Obligations; (c) all
      reimbursement obligations in connection with letters of credit issued for the
      account of such Person; and (d) in the case of Obligated Parties, the
      Obligations. The Debt of a Person shall include any recourse Debt of any
      partnership in which such Person is a general partner or joint
      venturer.




**Default** :
      an
      event or condition that, with the lapse of time or giving of notice, would
      constitute an Event of Default.




**Default
      Rate** :
      for any
      Obligation (including, to the extent permitted by law, interest not paid when
      due), 2% plus the
      interest rate otherwise applicable thereto.




7




**Deposit
      Account Control Agreements** :
      the
      Deposit Account control agreements to be executed by each institution
      maintaining a Deposit Account for each Obligated Party, in favor of Agent,
      for
      the benefit of Secured Parties, as security for the Obligations.




**Disclosure
      Schedules** :
      the
      disclosure schedules to this Agreement delivered by Borrower to Agent on the
      Closing Date.




**Distribution** :
      any
      declaration or payment of a distribution, interest or dividend on any Equity
      Interest (other than payment-in-kind); any distribution, advance or repayment
      of
      Debt to a holder of Equity Interests; or any purchase, redemption, or other
      acquisition or retirement for value of any Equity Interest.




**Dollars** :
      lawful
      money of the United States.




**Dominion
      Account** :
      a
      special account established by Borrower at Bank of America, over which Agent
      has
      exclusive control for withdrawal purposes.




**EBITDA** :
      determined on a consolidated basis for Borrower and its Subsidiaries, net
      income, calculated before interest expense, provision for income taxes,
      depreciation and amortization expense, gains or losses arising from the sale
      of
      capital assets, gains arising from the write-up of assets, and any extraordinary
      gains (in each case, to the extent included in determining net
      income).




**Eligible
      Assignee** :
      a
      Person that is (a) a Lender, U.S.-based Affiliate of a Lender or Approved
      Fund; (b) any other financial institution approved by Agent and Borrower
      (which approval by Borrower shall not be unreasonably withheld or delayed,
      and
      shall be deemed given if no objection is made within two Business Days after
      notice of the proposed assignment), that is organized under the laws of the
      United States or any state or district thereof, has total assets in excess
      of $5
      billion, extends asset-based lending facilities in its ordinary course of
      business and whose becoming an assignee would not constitute a prohibited
      transaction under Section 4975 of the Code or any other Applicable Law; and
      (c) during any Event of Default, any Person acceptable to Agent in its
      discretion.




**Eligible
      Base Inventory** :
      on any
      date of determination, that portion of Borrower’s Eligible Inventory other than
      Eligible Surplus Inventory.




**Eligible
      Inventory** :
      Inventory owned by Borrower that Agent, in its discretion, deems to be Eligible
      Inventory. Without limiting the foregoing, (a) no Inventory shall be
      Eligible Inventory unless it (i) is finished goods (other than food,
      magazines or books), and is not raw materials, work-in-process, packaging or
      shipping materials, labels, samples, display items, bags, replacement parts
      or
      manufacturing supplies; (ii) is not held on consignment, nor subject to any
      deposit or down payment; (iii) is in new and saleable condition and is not
      damaged, defective, shopworn or otherwise unfit for sale; (iv) is not
      slow-moving, defective, obsolete or unmerchantable, and does not constitute
      returned or repossessed goods; (v) meets all standards imposed by any
      Governmental Authority, does not constitute hazardous materials under any
      Environmental Law, and has not been produced in violation of the FLSA (as may
      be
      reasonably determined by Agent) if such violation could reasonably be expected
      to result in any prohibition on the sale of such Inventory by Borrower or Agent;
      (vi) conforms with the covenants and representations herein; (vii) is
      subject to Agent’s duly perfected, first priority Lien, and no other Lien;
      (viii) is within the continental United States or Canada, is not in transit
      except between locations of Borrower, and is not consigned to any Person;
      (ix) is not subject to any warehouse receipt or negotiable Document;
      (x) is not subject to any License or other arrangement that restricts
      Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has
      received an appropriate Lien Waiver; (xi) is not located on leased premises
      or in the possession of a warehouseman, processor, repairman, mechanic, shipper,
      freight forwarder or other Person, unless the lessor or such Person has
      delivered a Lien Waiver or an appropriate Collateral Access Reserve and/or
      Charges Reserve has been established, as appropriate; and (xii) is
      reflected in the details of a current perpetual inventory report.




8




**Eligible
      Surplus Inventory** :
      on any
      date of determination, that portion of Borrower’s Eligible Inventory that
      consists of stockkeeping units on hand for which Borrower has not made any
      purchases of such units (determined on a SKU number-by-SKU number
      basis) during the immediately preceding six month period.




**Enforcement
      Action** :
      any
      action to enforce any Obligations or Loan Documents or to realize upon any
      Collateral (whether by judicial action, self-help, notification of Account
      Debtors, exercise of setoff or recoupment, or otherwise).




**Environmental
      Laws** :
      all
      Applicable Laws (including all programs, permits and guidance promulgated by
      regulatory agencies), relating to public health (but excluding occupational
      safety and health, to the extent regulated by OSHA) or the protection or
      pollution of the environment, including CERCLA, RCRA and CWA.




**Environmental
      Notice** :
      a
      notice (whether written or oral) from any Governmental Authority or other
      Person of any possible noncompliance with, investigation of a possible violation
      of, litigation relating to, or potential fine or liability under any
      Environmental Law, or with respect to any Environmental Release, environmental
      pollution or hazardous materials, including any complaint, summons, citation,
      order, claim, demand or request for correction, remediation or
      otherwise.




**Environmental
      Release** :
      a
      release as defined in CERCLA or under any other Environmental Law.




**Equity
      Interest** :
      the
      interest of any (a) shareholder in a corporation; (b) partner in a
      partnership (whether general, limited, limited liability or joint venture);
      (c) member in a limited liability company; or (d) other Person having
      any other form of equity security or ownership interest.




**ERISA** :
      the
      Employee Retirement Income Security Act of 1974.




**ERISA
      Affiliate** :
      any
      trade or business (whether or not incorporated) under common control with
      an Obligated Party within the meaning of Section 414(b) or (c) of
      the Code (and Sections 414(m) and (o) of the Code for purposes of
      provisions relating to Section 412 of the Code).




**ERISA
      Event** :
      (a) a Reportable Event with respect to a Pension Plan; (b) a
      withdrawal by any Obligated Party or ERISA Affiliate from a Pension Plan subject
      to Section 4063 of ERISA during a plan year in which it was a substantial
      employer (as defined in Section 4001(a)(2) of ERISA) or a
      cessation of operations that is treated as such a withdrawal under
      Section 4062(e) of ERISA; (c) a complete or partial withdrawal by
      any Obligated Party or ERISA Affiliate from a Multiemployer Plan or notification
      that a Multiemployer Plan is in reorganization; (d) the filing of a notice
      of intent to terminate, the treatment of a Plan amendment as a termination
      under
      Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
      PBGC to terminate a Pension Plan or Multiemployer Plan; (e) the failure by
      any Obligated Party or ERISA Affiliate to meet any funding obligations with
      respect to any Pension Plan or Multiemployer Plan; (f) an event or
      condition which constitutes grounds under Section 4042 of ERISA for the
      termination of, or the appointment of a trustee to administer, any Pension
      Plan
      or Multiemployer Plan; or (g) the imposition of any liability under Title
      IV of ERISA, other than for PBGC premiums due but not delinquent under
      Section 4007 of ERISA, upon any Obligated Party or ERISA
      Affiliate.




9




**Event
      of Default** :
      as
      defined in **** Section 11 .




**Excluded
      Tax** :
      with
      respect to Agent, any Lender, Issuing Bank or any other recipient of a payment
      to be made by or on account of any Obligation, (a) taxes imposed on or
      measured by its overall net income (however denominated), and franchise taxes
      imposed on it (in lieu of net income taxes), by the jurisdiction (or any
      political subdivision thereof) 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; and (b) in the
      case of a Foreign Lender, any withholding tax attributable to such Foreign
      Lender’s failure or inability (other than as a result of a Change in
      Law) to comply with Section 5.10 ,
      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 Borrower with respect to such withholding
      tax.




**Extraordinary
      Expenses** :
      all
      costs, expenses or advances that Agent may incur during a Default or Event
      of
      Default, or during the pendency of an Insolvency Proceeding of an Obligated
      Party, including those relating to (a) any audit, inspection, repossession,
      storage, repair, appraisal, insurance, manufacture, preparation or advertising
      for sale, sale, collection, or other preservation of or realization upon any
      Collateral; (b) any action, arbitration or other proceeding (whether
      instituted by or against Agent, any Lender, any Obligated Party, any
      representative of creditors of an Obligated Party or any other Person) in
      any way relating to any Collateral (including the validity, perfection, priority
      or avoidability of Agent’s Liens with respect to any Collateral), Loan
      Documents, Letters of Credit or Obligations, including any lender liability
      or
      other Claims; (c) the exercise, protection or enforcement of any rights or
      remedies of Agent in, or the monitoring of, any Insolvency Proceeding;
      (d) settlement or satisfaction of any taxes, charges or Liens with respect
      to any Collateral; (e) any Enforcement Action; (f) negotiation and
      documentation of any modification, waiver, workout, restructuring or forbearance
      with respect to any Loan Documents or Obligations; and (g) Protective
      Advances. Such costs, expenses and advances include transfer fees, Other Taxes,
      storage fees, insurance costs, permit fees, utility reservation and standby
      fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’
fees and commissions, accountants’ fees, environmental study fees, wages and
      salaries paid to employees of any Obligated Party or independent contractors
      in
      liquidating any Collateral, and travel expenses.




**Extraordinary
      Receipts** :
      any net
      cash amounts received by Obligated Parties not in the Ordinary Course of
      Business, including: (a) the Net Proceeds of each Permitted Asset
      Disposition; (b) any issuance of Equity Interests by any Obligated Party,
      (c) foreign, United States, state or local tax refunds; (d) pension
      plan reversions; (e) proceeds of insurance on Collateral or business
      interruption insurance (but excluding in any event any proceeds from workers’
compensation or D&O insurance); (f) judgments, proceeds of settlements
      or other consideration of any kind in connection with any cause of action;
      (g) indemnity payments; and (h) any purchase price adjustment received
      in connection with any purchase agreement. As used above, “net cash amount”
means the cash amount of such receipts, net of *bona
      fide* direct
      costs incurred to non-Affiliates of any Obligated Party in connection with
      obtaining such cash receipts, including (i) reasonable and customary costs
      and expenses actually incurred in connection therewith, including legal fees
      and
      fees of accountants and consultants, and (ii) transfer or similar
      taxes.




**Fiscal
      Quarter** :
      each
      period of three months, commencing on the first day of a Fiscal
      Year.




**Fiscal
      Year** :
      the
      fiscal year of Borrower and its Subsidiaries for accounting and tax purposes,
      ending on the Sunday of each year occurring closest to the last day of
      March.




**Fixed
      Charge Coverage Ratio** :
      the
      ratio, determined on a consolidated basis for Borrower and its Subsidiaries
      for
      the most recent twelve consecutive month period then ended, of (a) EBITDA
      to (b) Fixed Charges.




10




**Fixed
      Charges** :
      the sum
      of (a) interest expense (other than payment-in-kind), (b) principal
      payments made on Borrowed Money, (c) Capital Expenditures (except those
      Capital Expenditures financed with Borrowed Money permitted hereunder other
      than
      Revolver Loans and Net Store Opening Capital Expenditures), (d) Net Store
      Opening Capital Expenditures to the extent in excess of $10,000,000 in any
      fiscal year, (e) cash taxes paid, and (f) Distributions made.




**FLSA** :
      the
      Fair Labor Standards Act of 1938.




**Foreign
      Lender** :
      any
      Lender that is organized under the laws of a jurisdiction other than the laws
      of
      the United States, or any state or district thereof.




**Foreign
      Plan** :
      any
      employee benefit plan or arrangement (a) maintained or contributed to by
      any Obligated Party or any of its Subsidiaries that is not subject to the laws
      of the United States; or (b) mandated by a government other than the United
      States for employees of any Obligated Party or any of its
      Subsidiaries.




**Foreign
      Subsidiary** :
      a
      Subsidiary that is a “controlled foreign corporation” under Section 957 of
      the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien
      on the assets of such Subsidiary to secure the Obligations would result in
      material tax liability to Borrower.




**Formula
      Availability** :
      an
      amount equal to the Inventory Formula Amount, minus the
      Availability Reserve, minus the
      principal balance of all Revolver Loans.




**Full
      Payment** :
      with
      respect to any Obligations, (a) the full and indefeasible cash payment
      thereof, including any interest, fees and other charges accruing during an
      Insolvency Proceeding or that would have accrued but for the commencement of
      any
      Insolvency Proceeding (whether or not allowed or allowable in the proceeding);
      (b) if such Obligations are LC Obligations or inchoate or contingent in
      nature, Cash Collateralization thereof (or delivery of a standby letter of
      credit acceptable to Agent in its discretion, in the amount of required Cash
      Collateral); and (c) a release of any Claims of Obligated Parties against
      each Indemnitee arising on or before the payment date. The Obligations shall
      not
      be deemed to have been paid in full until all Commitments have expired or been
      terminated.




**GAAP** :
      generally accepted accounting principles in effect in the United States from
      time to time.




**Gift
      Card Liability Reserve** :
      a
      reserve in a percentage determined by Agent in its discretion (not to exceed
      100%) of liabilities associated with issued and outstanding gift cards as
      reflected on Borrower’s general ledger maintained in the Ordinary Course of
      Business. As of the Closing Date, the percentage used in the foregoing reserve
      will be 40% (subject to adjustment thereafter from time to time by Agent in
      its
      credit judgment, reasonably exercised).




**Governmental
      Approvals** :
      all
      authorizations, consents, approvals, licenses and exemptions of, registrations
      and filings with, and required reports to, all Governmental
      Authorities.




**Governmental
      Authority** :
      any
      federal, state, municipal, foreign or other governmental department, agency,
      commission, board, bureau, court, tribunal, instrumentality, political
      subdivision, or other entity or officer exercising executive, legislative,
      judicial, regulatory or administrative functions for or pertaining to any
      government or court, in each case whether associated with the United States,
      a
      state, district or territory thereof, or a foreign entity or
      government.




**Guarantor** :
      each
      Person who guarantees payment or performance of any Obligations.




11




**Guarantor
      Payment** :
      as
      defined in Section 5.11.3 .




**Guaranty** :
      each
      guaranty agreement executed by a Guarantor in favor of Agent.




**Hedging
      Agreement** :
      an
      agreement relating to any swap, cap, floor, collar, option, forward, cross
      right
      or obligation, or combination thereof or similar transaction, with respect
      to
      interest rate, foreign exchange, currency, commodity, credit or equity
      risk.




**Indemnified
      Taxes** :
      Taxes
      other than Excluded Taxes.




**Indemnitees** :
      Agent
      Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and Bank of America
      Indemnitees.




**Insolvency
      Proceeding** :
      any
      case or proceeding commenced by or against a Person under any state, federal
      or
      foreign law for, or any agreement of such Person to, (a) the entry of an
      order for relief under the Bankruptcy Code, or any other insolvency, debtor
      relief or debt adjustment law; (b) the appointment of a receiver, trustee,
      liquidator, administrator, conservator or other custodian for such Person or
      any
      part of its Property; or (c) an assignment or trust mortgage for the
      benefit of creditors.




**Intellectual
      Property** :
      all
      intellectual and similar Property of a Person, including inventions, designs,
      patents, copyrights, trademarks, service marks, trade names, trade secrets,
      confidential or proprietary information, customer lists, know-how, software
      and
      databases; all embodiments or fixations thereof and all related documentation,
      applications, registrations and franchises; all licenses or other rights to
      use
      any of the foregoing; and all books and records relating to the
      foregoing.




**Intellectual
      Property Claim** :
      any
      claim or assertion (whether in writing, by suit or otherwise) that any
      Obligated Party’s or any of its Subsidiary’s ownership, use, marketing, sale or
      distribution of any Inventory, Equipment, Intellectual Property or other
      Property violates another Person’s Intellectual Property.




**Interest
      Period** :
      as
      defined in Section 3.1.3 .




**Interest
      Rate Contract** :
      any
      interest rate swap, collar or cap agreement, or other agreement or arrangement
      by any Obligated Party or any of its Subsidiaries with Bank of America that
      is
      designed to protect against fluctuations in interest rates.




**Inventory** :
      as
      defined in the UCC, including all goods intended for sale, lease, display or
      demonstration; all work in process; and all raw materials, and other materials
      and supplies of any kind that are or could be used in connection with the
      manufacture, printing, packing, shipping, advertising, sale, lease or furnishing
      of such goods, or otherwise used or consumed in any Obligated Party’s business
      (but excluding Equipment).




**Inventory
      Formula Amount** :
      the
      lesser of (i) the sum of 70% of the Value of Eligible Base Inventory, plus 50% of
      the Value of Eligible Surplus Inventory; or (ii) 85% of the NOLV Percentage
      of Eligible Inventory. As of the Closing Date, based on the Inventory appraisal
      dated May 20, 2008, the Inventory Formula Amount shall be calculated pursuant
      to clause
      (i) above.
      Upon receipt of each subsequent Inventory appraisal requested by Agent, the
      NOLV
      Percentage will thereafter be updated to reflect the findings of such appraiser
      and Agent will apply either clause
      (i) or clause
      (ii) above
      (whichever yields the lesser amount) in calculating the Inventory Formula
      Amount.




12




**Inventory
      Reserve** :
      reserves established by Agent to reflect factors that may negatively impact
      the
      Value of Inventory, including change in salability, obsolescence, seasonality,
      theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor
      chargebacks.




**Investment** :
      any
      acquisition of all or substantially all assets of a Person; any acquisition
      of
      record or beneficial ownership of any Equity Interests of a Person; or any
      advance or capital contribution to or other investment in a Person.




**IRS** :
      the
      United States Internal Revenue Service.




**Issuing
      Bank** :
      Bank of
      America or an Affiliate of Bank of America.




**Issuing
      Bank Indemnitees** :
      Issuing
      Bank and its officers, directors, employees, Affiliates, agents and
      attorneys.




**LC
      Application** :
      an
      application by Borrower to Issuing Bank for issuance of a Letter of Credit,
      in
      form and substance satisfactory to Issuing Bank.




**LC
      Conditions** :
      the
      following conditions necessary for issuance of a Letter of Credit: (a) each
      of the conditions set forth in Section 6 ;
      (b) after giving effect to such issuance, total LC Obligations do not
      exceed the Letter of Credit Subline, no Overadvance exists and, if no Revolver
      Loans are outstanding, the LC Obligations do not exceed the Borrowing Base
      (without giving effect to the LC Reserve for purposes of this calculation);
      (c) the expiration date of such Letter of Credit is (i) no more than
      365 days from issuance, in the case of standby Letters of Credit, (ii) no
      more than 120 days from issuance, in the case of documentary Letters of Credit,
      and (iii) at least 20 Business Days prior to the Revolver Termination Date;
      (d) the Letter of Credit and payments thereunder are denominated in
      Dollars; and (e) the purpose and form of the proposed Letter of Credit is
      satisfactory to Agent and Issuing Bank in their discretion.




**LC
      Documents** :
      all
      documents, instruments and agreements (including LC Requests and LC
      Applications) delivered by Borrower or any other Person to Issuing Bank or
      Agent in connection with issuance, amendment or renewal of, or payment under,
      any Letter of Credit.




**LC
      Obligations** :
      the sum
      (without duplication) of (a) all amounts owing by Borrower for any
      drawings under Letters of Credit; (b) the stated amount of all outstanding
      Letters of Credit; and (c) all fees and other amounts owing with respect to
      Letters of Credit.




**LC
      Request** :
      a
      request for issuance of a Letter of Credit, to be provided by Borrower to
      Issuing Bank, in form satisfactory to Agent and Issuing Bank.




**LC
      Reserve** :
      the
      aggregate of all LC Obligations, other than (a) those that have been Cash
      Collateralized; and (b) if no Default or Event of Default exists, those
      constituting charges owing to the Issuing Bank.




**Lender
      Indemnitees** :
      Lenders
      and their officers, directors, employees, Affiliates, agents and
      attorneys.




**Lenders** :
      as
      defined in the preamble to this Agreement, including Agent in its capacity
      as a
      provider of Swingline Loans and any other Person who hereafter becomes a
“Lender” pursuant to an Assignment and Acceptance.




13




**Lending
      Office** :
      the
      office designated as such by the applicable Lender at the time it becomes party
      to this Agreement or thereafter by notice to Agent and Borrower.




**Letter
      of Credit** :
      any
      standby or documentary letter of credit issued by Issuing Bank for the account
      of Borrower, or any indemnity, guarantee, exposure transmittal memorandum or
      similar form of credit support issued by Agent or Issuing Bank for the benefit
      of Borrower.




**Letter
      of Credit Subline** :
      $10,000,000.




**LIBOR** :
      for any
      Interest Period with respect to a LIBOR Loan, the per annum rate of interest
      (rounded upward, if necessary, to the nearest 1/8th of 1%), determined by Agent
      at approximately 11:00 a.m. (London time) two Business Days prior to
      commencement of such Interest Period, for a term comparable to such Interest
      Period, equal to (a) the British Bankers Association LIBOR Rate (“BBA
      LIBOR”), as published by Reuters (or other commercially available source
      designated by Agent); or (b) if BBA LIBOR is not available for any reason,
      the interest rate at which Dollar deposits in the approximate amount of the
      LIBOR Loan would be offered by Bank of America’s London branch to major banks in
      the London interbank Eurodollar market. If the Board of Governors imposes a
      Reserve Percentage with respect to LIBOR deposits, then LIBOR shall be the
      foregoing rate, divided by 1 minus the
      Reserve Percentage.




**LIBOR
      Loan** :
      each
      set of LIBOR Revolver Loans having a common length and commencement of Interest
      Period.




**LIBOR
      Revolver Loan** :
      a
      Revolver Loan that bears interest based on LIBOR.




**License** :
      any
      license or agreement under which an Obligated Party is authorized to use
      Intellectual Property in connection with any manufacture, marketing,
      distribution or disposition of Collateral, any use of Property or any other
      conduct of its business.




**Licensor** :
      any
      Person from whom an Obligated Party obtains the right to use any Intellectual
      Property.




**Lien** :
      any
      Person’s interest in Property securing an obligation owed to, or a claim by,
      such Person, whether such interest is based on common law, statute or contract,
      including liens, security interests, pledges, hypothecations, statutory trusts,
      reservations, exceptions, encroachments, easements, rights-of-way, covenants,
      conditions, restrictions, leases, and other title exceptions and encumbrances
      affecting Property.




**Lien
      Waiver** :
      an
      agreement, in form and substance satisfactory to Agent, by which (a) for
      any material Collateral located on leased premises, the lessor waives or
      subordinates any Lien it may have on the Collateral, and agrees to permit Agent
      to enter upon the premises and remove the Collateral or to use the premises
      to
      store or dispose of the Collateral and conduct a going out of business and
      public auction thereon; (b) for any Collateral held by a warehouseman,
      processor, shipper, customs broker or freight forwarder, such Person waives
      or
      subordinates any Lien it may have on the Collateral, agrees to hold any
      Documents in its possession relating to the Collateral as agent for Agent,
      and
      agrees to deliver the Collateral to Agent upon request; (c) for any
      Collateral held by a repairman, mechanic or bailee, such Person acknowledges
      Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and
      agrees to deliver the Collateral to Agent upon request; and (d) for any
      Collateral subject to a Licensor’s Intellectual Property rights, the Licensor
      grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens
      with respect to the Collateral, including the right to dispose of it with the
      benefit of the Intellectual Property, whether or not a default exists under
      any
      applicable License.




14




**Loan** :
      a
      Revolver Loan.




**Loan
      Account** :
      the
      loan account established by each Lender on its books pursuant to Section 5.8 .




**Loan
      Documents** :
      this
      Agreement, the Other Agreements and the Security Documents.




**Loan
      Year** :
      each 12
      consecutive month period commencing on the Closing Date and on each anniversary
      of the Closing Date.




**Margin
      Stock** :
      as
      defined in Regulation U of the Board of Governors.




**Material
      Adverse Effect** :
      the
      effect of any event or circumstance that, taken alone or in conjunction with
      other events or circumstances, (a) has or could be reasonably expected to
      have a material adverse effect on the business, operations, Properties,
      prospects or condition (financial or otherwise) of Borrower or of the
      Obligated Parties taken as a whole, on the value of any material Collateral,
      on
      the enforceability of any Loan Documents, or on the validity or priority of
      Agent’s Liens on any Collateral; (b) impairs the ability of any Obligated
      Party to perform any obligations under the Loan Documents, including repayment
      of any Obligations; or (c) otherwise impairs the ability of Agent or any
      Lender to enforce or collect any Obligations or to realize upon any material
      portion of the Collateral.




**Material
      Contract** :
      any
      agreement or arrangement to which any Obligated Party or any of its Subsidiaries
      is party (other than the Loan Documents) (a) that is deemed to be a
      material contract under any securities law applicable to such Obligated Party,
      including the Securities Act of 1933; (b) for which breach, termination,
      nonperformance or failure to renew could reasonably be expected to have a
      Material Adverse Effect; or (c) that relates to Subordinated Debt, or Debt
      in an aggregate amount of $1,000,000 or more.




**Moody’s** :
      Moody’s
      Investors Service, Inc., and its successors.




**Mortgage** :
      each
      mortgage, deed of trust or deed to secure debt pursuant to which any Obligated
      Party grants to Agent, for the benefit of Secured Parties, Liens upon the Real
      Estate owned by such Obligated Party, as security for the
      Obligations.




**Multiemployer
      Plan** :
      any
      employee benefit plan of the type described in Section 4001(a)(3) of
      ERISA, to which any Obligated Party or ERISA Affiliate makes or is obligated
      to
      make contributions, or during the preceding five plan years, has made or been
      obligated to make contributions.




**Net
      Proceeds** :
      with
      respect to an Asset Disposition, proceeds (including, when received, any
      deferred or escrowed payments) received by any Obligated Party or any of
      its Subsidiaries in cash from such disposition, net of (a) reasonable and
      customary costs and expenses actually incurred in connection therewith,
      including legal fees and sales commissions; (b) amounts applied to
      repayment of Debt secured by a Permitted Lien senior to Agent’s Liens on
      Collateral sold; (c) transfer or similar taxes; and (d) reserves for
      indemnities, until such reserves are no longer needed.




**Net
      Store Opening Capital Expenditures** :
      All
      Capital Expenditures made by Borrower and its Subsidiaries for the opening
      of
      new retail store locations, such amounts to be calculated on a Fiscal Year
      to
      date basis net of any amounts actually reimbursed to Borrower during such Fiscal
      Year by the landlord for any such new store location, whether or not such
      reimbursement may be deducted from such Capital Expenditure (in such or any
      other Fiscal Year) on the books and records of Borrower in accordance with
      GAAP.




15




**NOLV
      Percentage** :
      the net
      orderly liquidation value of Inventory, expressed as a percentage of the Value
      of Eligible Inventory, expected to be realized at an orderly, negotiated sale
      held within a reasonable period of time, net of all liquidation expenses, as
      determined from the most recent appraisal of Borrower’s Inventory performed by
      an appraiser and on terms satisfactory to Agent.




**Notes** :
      each
      Revolver Note or other promissory note executed by Borrower to evidence any
      Obligations.




**Notice
      of Borrowing** :
      a
      Notice of Borrowing to be provided by Borrower to request a Borrowing of
      Revolver Loans, in form satisfactory to Agent.




**Notice
      of Conversion/Continuation** :
      a
      Notice of Conversion/Continuation to be provided by Borrower to request a
      conversion or continuation of any Loans as LIBOR Loans, in form satisfactory
      to
      Agent.




**Obligated
      Party** :
      each of
      Borrower and each of Borrower’s Subsidiaries that has signed this Agreement (or
      a joinder hereto in form and substance satisfactory to Agent).




**Obligations** :
      all
      (a) principal of and premium, if any, on the Loans, (b) LC Obligations
      and other obligations of Borrower with respect to Letters of Credit,
      (c) interest, expenses, fees and other sums payable by Obligated Parties
      under Loan Documents, (d) obligations of Obligated Parties under any
      indemnity for Claims, (e) Extraordinary Expenses, (f) Bank Product
      Debt, and (g) other Debts, obligations and liabilities of any kind owing by
      Obligated Parties pursuant to the Loan Documents, whether now existing or
      hereafter arising, whether evidenced by a note or other writing, whether allowed
      in any Insolvency Proceeding, whether arising from an extension of credit,
      issuance of a letter of credit, acceptance, loan, guaranty, indemnification
      or
      otherwise, and whether direct or indirect, absolute or contingent, due or to
      become due, primary or secondary, or joint or several.




**Ordinary
      Course of Business** :
      the
      ordinary course of business of Borrower and its Subsidiaries, consistent with
      past practices and undertaken in good faith.




**Organic
      Documents** :
      with
      respect to any Person, its charter, certificate or articles of incorporation,
      bylaws, articles of organization, limited liability agreement, operating
      agreement, members agreement, shareholders agreement, partnership agreement,
      certificate of partnership, certificate of formation, voting trust agreement,
      or
      similar agreement or instrument governing the formation or operation of such
      Person.




**Original
      Loan Agreement** :
      as
      defined in the recitals to this Agreement.




**OSHA** :
      the
      Occupational Safety and Hazard Act of 1970.




**Other
      Agreement** :
      each
      Note; Disclosure Schedule; LC Document; Lien Waiver; Borrowing Base Certificate,
      Compliance Certificate, financial statement or report delivered hereunder;
      or
      other document, instrument or agreement (other than this Agreement or a Security
      Document) now or hereafter delivered by an Obligated Party or another
      Guarantor to Agent or a Lender in connection with any transactions relating
      hereto or other document, instrument or agreement (other than this Agreement
      or
      a Security Document) contemplated hereby that is now or hereafter delivered
      by any other Person to Agent or a Lender.




16




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




**Overadvance** :
      as
      defined in Section 2.1.5 .




**Overadvance
      Loan** :
      a Base
      Rate Revolver Loan made when an Overadvance exists or is caused by the funding
      thereof.




**Participant** :
      as
      defined in Section 13.2 .




**Patent
      Assignment** :
      each
      patent collateral assignment agreement pursuant to which an Obligated Party
      assigns to Agent, for the benefit of Secured Parties, such Obligated Party’s
      interests in its patents, as security for the Obligations.




**Patriot
      Act** :
      the
      Uniting and Strengthening America by Providing Appropriate Tools Required to
      Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat.
      272
      (2001).




**Payment
      Item** :
      each
      check, draft or other item of payment payable to any Obligated Party, including
      those constituting proceeds of any Collateral.




**PBGC** :
      the
      Pension Benefit Guaranty Corporation.




**Pension
      Plan** :
      any
      employee pension benefit plan (as such term is defined in
      Section 3(2) of ERISA), other than a Multiemployer Plan, that is
      subject to Title IV of ERISA and is sponsored or maintained by any Obligated
      Party or ERISA Affiliate or to which the Obligated Party or ERISA Affiliate
      contributes or has an obligation to contribute, or in the case of a multiple
      employer or other plan described in Section 4064(a) of ERISA, has made
      contributions at any time during the preceding five plan years.




**Permitted
      Asset Disposition** :
      as long
      as no Default or Event of Default exists and all Net Proceeds are remitted
      to
      Agent, an Asset Disposition that is (a) a sale of Inventory in the Ordinary
      Course of Business; (b) a disposition of Equipment that, in the aggregate
      during any 12 month period, has a fair market or book value (whichever is
      more) of $1,000,000 or less; (c) a disposition of Inventory that is
      obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of
      Business; (d) termination of a lease of real or personal Property that is
      not necessary for the Ordinary Course of Business, could not reasonably be
      expected to have a Material Adverse Effect and does not result from an Obligated
      Party’s default; (e) any all cash sale(s) by Borrower of the Equity Interests of
      any of its Subsidiaries or any sale(s) of the assets of any Obligated Party
      other than Borrower that, in the aggregate during any 12 month period, has
      (or
      have) a fair market or book value (whichever is more) of $3,000,000 or
      less; or (e) approved in writing by Agent and Required
      Lenders.




**Permitted
      Contingent Obligations** :
      Contingent Obligations (a) arising from endorsements of Payment Items for
      collection or deposit in the Ordinary Course of Business; (b) arising from
      Hedging Agreements permitted hereunder; (c) existing on the Closing Date,
      and any extension or renewal thereof that does not increase the amount of such
      Contingent Obligation when extended or renewed; (d) incurred in the
      Ordinary Course of Business with respect to surety, appeal or performance bonds,
      or other similar obligations; (e) arising from customary indemnification
      obligations in favor of purchasers in connection with dispositions of Equipment
      permitted hereunder; (f) arising under the Loan Documents; or (g) in
      an aggregate amount of $1,000,000 or less at any time.




17




**Permitted
        Holders** :
        any of
        Craig L. Levra, Howard K. Kaminsky, Norbert J. Olberz, or any family trusts
        of
        which any of the foregoing are the settlors, trustees, or
        beneficiaries.
  **Permitted
        Lien** :
        as
        defined in Section 10.2.2 .
  **Permitted
        Purchase Money Debt** :
        Purchase Money Debt of Borrower and its Subsidiaries that is unsecured or
        secured only by a Purchase Money Lien, as long as the aggregate amount does
        not
        exceed $5,000,000 at any time and its incurrence does not violate Section 10.3.2 .
  **Person** :
        any
        individual, corporation, limited liability company, partnership, joint venture,
        joint stock company, land trust, business trust, unincorporated organization,
        Governmental Authority or other entity.
  **Plan** :
        any
        employee benefit plan (as such term is defined in Section 3(3) of
        ERISA) established by an Obligated Party or, with respect to any such plan
        that is subject to Section 412 of the Code or Title IV of ERISA, an ERISA
        Affiliate.
  **Pro
        Rata** :
        with
        respect to any Lender, a percentage (carried out to the ninth decimal
        place) determined (a) while Revolver Commitments are outstanding, by
        dividing the amount of such Lender’s Revolver Commitment by the aggregate amount
        of all Revolver Commitments; and (b) at any other time, by dividing the
        amount of such Lender’s Loans and LC Obligations by the aggregate amount of all
        outstanding Loans and LC Obligations.
  **Properly
        Contested** :
        with
        respect to any obligation of an Obligated Party, (a) the obligation is
        subject to a bona fide dispute regarding amount or the Obligated Party’s
        liability to pay; (b) the obligation is being properly contested in good
        faith by appropriate proceedings promptly instituted and diligently pursued;
        (c) appropriate reserves have been established in accordance with GAAP;
        (d) non-payment could not have a Material Adverse Effect, nor result in
        forfeiture or sale of any assets of the Obligated Party; (e) no Lien is
        imposed on assets of the Obligated Party, unless bonded and stayed to the
        satisfaction of Agent; and (f) if the obligation results from entry of a
        judgment or other order, such judgment or order is stayed pending appeal
        or
        other judicial review.
  **Property** :
        any
        interest in any kind of property or asset, whether real, personal or mixed,
        or
        tangible or intangible.
  **Protective
        Advances** :
        as
        defined in Section 2.1.6 .
  **Purchase
        Money Debt** :
        (a) Debt (other than the Obligations) for payment of any of the
        purchase price of fixed assets; (b) Debt (other than the
        Obligations) incurred within 10 days before or after acquisition of any
        fixed assets, for the purpose of financing any of the purchase price thereof;
        and (c) any renewals, extensions or refinancings (but not
        increases) thereof.
  **Purchase
        Money Lien** :
        a Lien
        that secures Purchase Money Debt, encumbering only the fixed assets acquired
        with such Debt and constituting a Capital Lease or a purchase money security
        interest under the UCC.
  **RCRA** :
        the
        Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).
  **Real
        Estate** :
        all
        right, title and interest (whether as owner, lessor or lessee) in any real
        Property or any buildings, structures, parking areas or other improvements
        thereon.


18


**Refinancing
        Conditions** :
        the
        following conditions for Refinancing Debt: (a) it is in an aggregate
        principal amount that does not exceed the principal amount of the Debt being
        extended, renewed or refinanced; (b) it has a final maturity no sooner
        than, a weighted average life no less than, and an interest rate no greater
        than, the Debt being extended, renewed or refinanced; (c) it is
        subordinated to the Obligations at least to the same extent as the Debt being
        extended, renewed or refinanced; (d) the representations, covenants and
        defaults applicable to it are no less favorable to Obligated Parties than
        those
        applicable to the Debt being extended, renewed or refinanced; (e) no
        additional Lien is granted to secure it; (f) no additional Person is
        obligated on such Debt; and (g) upon giving effect to it, no Default or
        Event of Default exists.
  **Refinancing
        Debt** :
        Borrowed Money that is the result of an extension, renewal or refinancing
        of
        Debt permitted under Sections 10.2.1(b) , (d) or (f) .
  **Reimbursement
        Date** :
        as
        defined in Section 2.3.2 .
  **Report** :
        as
        defined in Section 12.2.3 .
  **Reportable
        Event** :
        any of
        the events set forth in Section 4043(c) of ERISA, other than events
        for which the 30 day notice period has been waived.
  **Required
        Lenders** :
        Lenders
        (subject to Section 4.2 ) having
        (a) Revolver Commitments in excess of 50% of the aggregate Revolver
        Commitments; and (b) if the Revolver Commitments have terminated, Loans and
        LC Obligations in excess of 50% of all outstanding Loans and LC
        Obligations.
  **Reserve
        Percentage** :
        the
        reserve percentage (expressed as a decimal, rounded upward to the nearest
        1/8th
        of 1%) applicable to member banks under regulations issued from time to
        time by the Board of Governors for determining the maximum reserve requirement
        (including any emergency, supplemental or other marginal reserve
        requirement) with respect to Eurocurrency funding (currently referred to as
“Eurocurrency liabilities”).
  **Restricted
        Investment** :
        any
        Investment by Borrower or any of its Subsidiaries, other than
        (a) Investments in Subsidiaries to the extent existing on the Closing Date;
        (b) Cash Equivalents that are subject to Agent’s Lien and control, pursuant
        to documentation in form and substance satisfactory to Agent; (c) Investments
        made in Team Sales in the Ordinary Course of Business when no Covenant Testing
        Period is in effect or would result therefrom and when no Event of Default
        has
        occurred and is continuing or would result therefrom; (d) Investments made
        in
        Value Services in the Ordinary Course of Business consisting of purchases
        and
        redemptions of gift card liabilities without the transfer of cash; and
        (e) loans and advances permitted under Section 10.2.7 .
  **Restrictive
        Agreement** :
        an
        agreement (other than a Loan Document) that conditions or restricts the
        right of any Obligated Party or any of its Subsidiaries to incur or repay
        Borrowed Money, to grant Liens on any assets, to declare or make Distributions,
        to modify, extend or renew any agreement evidencing Borrowed Money, or to
        repay
        any intercompany Debt.
  **Revolver
        Commitment** :
        for any
        Lender, its obligation to make Revolver Loans and to participate in LC
        Obligations up to the maximum principal amount shown on Exhibit
        E ,
        or as
        hereafter determined pursuant to each Assignment and Acceptance to which
        it is a
        party. “ **Revolver
        Commitments** ”
means
        the aggregate amount of such commitments of all Lenders.
  **Revolver
        Loan** :
        a loan
        made pursuant to Section 2.1 ,
        and any
        Swingline Loan, Overadvance Loan or Protective Advance.
  19
  **Revolver
        Note** :
        a
        promissory note to be executed by Borrower in favor of a Lender in the form
        of Exhibit
        A ,
        which
        shall be in the amount of such Lender’s Revolver Commitment and shall evidence
        the Revolver Loans made by such Lender.
  **Revolver
        Termination Date** :
        June
        20, 2012.
  **Royalties** :
        all
        royalties, fees, expense reimbursement and other amounts payable by Obligated
        Parties under a License.
  **S&P** :
        Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
        Inc., and its successors.
  **Seasonal
        Revolver Limit** :
        the
        lesser of (a) the Revolver Commitments or (b) (i) on any date of
        determination from January 1 of each year through August 31 of each year,
        $45,000,000, and (ii) on any date of determination from September 1 of each
        year through December 31 of each year, $70,000,000.
  **Secured
        Parties** :
        Agent,
        Issuing Bank, Lenders and providers of Bank Products.
  **Security
        Documents** :
        the
        Guaranties (if any), Mortgages (if any), Patent Assignments (if any), Trademark
        Security Agreements (if any), Deposit Account Control Agreements, ****** and
        all
        other documents, instruments and agreements now or hereafter securing (or
        given
        with the intent to secure) any Obligations.
  **Senior
        Officer** :
        the
        chairman of the board, president, chief executive officer or chief financial
        officer of Borrower or, if the context requires, another Obligated
        Party.
  **Settlement
        Report** :
        a
        report delivered by Agent to Lenders summarizing the Revolver Loans and
        participations in LC Obligations outstanding as of a given settlement date,
        allocated to Lenders on a Pro Rata basis in accordance with their Revolver
        Commitments.
  **Solvent** :
        as to
        any Person, such Person (a) owns Property whose fair salable value is
        greater than the amount required to pay all of its debts (including contingent,
        subordinated, unmatured and unliquidated liabilities); (b) owns Property
        whose present fair salable value (as defined below) is greater than the
        probable total liabilities (including contingent, subordinated, unmatured
        and
        unliquidated liabilities) of such Person as they become absolute and
        matured; (c) is able to pay all of its debts as they mature; (d) has
        capital that is not unreasonably small for its business and is sufficient
        to
        carry on its business and transactions and all business and transactions
        in
        which it is about to engage; (e) is not “insolvent” within the meaning of
        Section 101(32) of the Bankruptcy Code; and (f) has not incurred
        (by way of assumption or otherwise) any obligations or liabilities
        (contingent or otherwise) under any Loan Documents, or made any conveyance
        in connection therewith, with actual intent to hinder, delay or defraud either
        present or future creditors of such Person or any of its Affiliates. “Fair
        salable value” means the amount that could be obtained for assets within a
        reasonable time, either through collection or through sale under ordinary
        selling conditions by a capable and diligent seller to an interested buyer
        who
        is willing (but under no compulsion) to purchase.
  **Subordinated
        Debt** :
        Debt
        incurred by any Obligated Party that is expressly subordinate and junior
        in
        right of payment to Full Payment of all Obligations, and is on terms (including
        maturity, interest, fees, repayment, covenants and
        subordination) satisfactory to Agent.
  **Subsidiary** :
        with
        respect to any Person (the “subject Person”), any entity at least 50% of whose
        voting securities or Equity Interests is owned by the subject Person (including
        indirect ownership by the subject Person through other entities in which
        the
        subject Person directly or indirectly owns 50% of the voting securities or
        Equity Interests).
  20
  **Swingline
        Loan** :
        any
        Borrowing of Base Rate Revolver Loans funded with Agent’s funds, until such
        Borrowing is settled among Lenders pursuant to Section 4.1.3 .
  **Taxes** :
        all
        present or future taxes, levies, imposts, duties, deductions, withholdings,
        assessments, fees or other charges imposed by any Governmental Authority,
        including any interest, additions to tax or penalties applicable
        thereto.
  **Team
        Sales** :
        Sport
        Chalet Team Sales, Inc., a California corporation.
  **Trademark
        Security Agreement** :
        each
        trademark security agreement pursuant to which an Obligated Party grants
        to
        Agent, for the benefit of Secured Parties, a Lien on such Obligated Party’s
        interests in trademarks, as security for the Obligations.
  **Transferee** :
        any
        actual or potential Eligible Assignee, Participant or other Person acquiring
        an
        interest in any Obligations.
  **Type** :
        any
        type of a Loan ( *i.e.* ,
        Base
        Rate Loan or LIBOR Loan) that has the same interest option and, in the case
        of LIBOR Loans, the same Interest Period.
  **UCC** :
        the
        Uniform Commercial Code as in effect in the State of California or, when
        the
        laws of any other jurisdiction govern the perfection or enforcement of any
        Lien,
        the Uniform Commercial Code of such jurisdiction.
  **Unfunded
        Pension Liability** :
        the
        excess of a Pension Plan’s benefit liabilities under
        Section 4001(a)(16) of ERISA, over the current value of that Pension
        Plan’s assets, determined in accordance with the assumptions used for funding
        the Pension Plan pursuant to Section 412 of the Code for the applicable
        plan year.
  **Upstream
        Payment** :
        a
        Distribution by a Subsidiary of Borrower to Borrower.
  **Value** :
        for
        Inventory, its value determined on the basis of the lower of cost or market,
        calculated on a first-in, first-out basis, and excluding any portion of cost
        attributable to intercompany profit among Borrower and its
        Affiliates.
  **Value
        Services** :
        Sport
        Chalet Value Services, LLC, a Virginia limited liability company.
  1.2.  Accounting
        Terms .
        Under
        the Loan Documents (except as otherwise specified herein), all accounting
        terms
        shall be interpreted, all accounting determinations shall be made, and all
        financial statements shall be prepared, in accordance with GAAP applied on
        a
        basis consistent with the most recent audited financial statements of Borrower
        and its Subsidiaries delivered to Agent before the Closing Date and using
        the
        same inventory valuation method as used in such financial statements, except
        for
        any change required or permitted by GAAP if Borrower’s certified public
        accountants concur in such change, the change is disclosed to Agent, and Section 10.3 is
        amended in a manner satisfactory to Required Lenders to take into account
        the
        effects of the change.
  1.3.  Uniform
        Commercial Code .
        As used
        herein, the following terms are defined in accordance with the UCC in effect
        in
        the State of California from time to time: “ **Chattel
        Paper** ”,
        “ **Commercial
        Tort Claim** ”,
        “ **Deposit
        Account** ”,
        “ **Document** ”,
        “ **Equipment** ”,
        “ **General
        Intangibles** ”,
        “ **Goods** ”,
        “ **Instrument** ”,
        “ **Investment
        Property** ”,
        “ **Letter-of-Credit
        Right** ”
and
        “ **Supporting
        Obligation** ”.
  21
  1.4.  Certain
        Matters of Construction .
        The
        terms “herein,” “hereof,” “hereunder” and other words of similar import refer to
        this Agreement as a whole and not to any particular section, paragraph or
        subdivision. Any pronoun used shall be deemed to cover all genders. In the
        computation of periods of time from a specified date to a later specified
        date,
“from” means “from and including,”, “through” means “through and including,” and
“to” and “until” each mean “to but excluding,”. The terms “including” and
“include” shall mean “including, without limitation,” and, for purposes of each
        Loan Document, the parties agree that the rule of *ejusdem
        generis* shall
        not be applicable to limit any provision. Section titles appear as a matter
        of convenience only and shall not affect the interpretation of any Loan
        Document. All references to (a) laws or statutes include all related rules,
        regulations, interpretations, amendments and successor provisions; (b) any
        document, instrument or agreement include any amendments, waivers and other
        modifications, extensions or renewals (to the extent permitted by the Loan
        Documents); (c) any Section mean, unless the context otherwise
        requires, a Section of this Agreement; (d) any exhibits mean, unless
        the context otherwise requires, exhibits attached hereto, and any schedules
        mean, unless the context otherwise requires, the Disclosure Schedules, all
        of
        which are hereby incorporated by reference; (e) any Person include
        successors and assigns; (f) time of day mean time of day at Agent’s notice
        address under Section 14.3.1 ;
        or
        (g) unless otherwise specified, discretion of Agent, Issuing Bank or any
        Lender mean the sole and absolute discretion of such Person. All calculations
        of
        Value, fundings of Loans, issuances of Letters of Credit and payments of
        Obligations shall be in Dollars and, unless the context otherwise requires,
        all
        determinations (including calculations of Borrowing Base and financial
        covenants) made from time to time under the Loan Documents shall be made in
        light of the circumstances existing at such time. Borrowing Base calculations
        shall be consistent with historical methods of valuation and calculation,
        and
        otherwise satisfactory to Agent (and not necessarily calculated in accordance
        with GAAP). Obligated Parties shall have the burden of establishing any alleged
        negligence, misconduct or lack of good faith by Agent, Issuing Bank or any
        Lender under any Loan Documents. No provision of any Loan Documents shall
        be
        construed against any party by reason of such party having, or being deemed
        to
        have, drafted the provision. Whenever the phrase “to the best of Borrower’s
        knowledge”, “to the best of Obligated Parties’ knowledge” or words of similar
        import are used in any Loan Documents, it means actual knowledge of a Senior
        Officer, or knowledge that a Senior Officer would have obtained if he or
        she had
        engaged in good faith and diligent performance of his or her duties, including
        reasonably specific inquiries of employees or agents and a good faith attempt
        to
        ascertain the matter to which such phrase relates. Any Event of Default shall
        be
        deemed to be continuing until waived in writing by the Agent and the requisite
        Lenders.
  SECTION
        2.  CREDIT
        FACILITIES
  2.1.  Revolver
        Commitment .
  2.1.1.  Revolver
        Loans .
        Each
        Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment,
        on
        the terms set forth herein, to make Revolver Loans to Borrower from time
        to time
        through the Commitment Termination Date. The Revolver Loans may be repaid
        and
        re-borrowed as provided herein. In no event shall Lenders have any obligation
        to
        honor a request for a Revolver Loan if the unpaid balance of Revolver Loans
        outstanding at such time (including the requested Loan) would exceed the
        Borrowing Base.
  2.1.2.  Revolver
        Notes .
        The
        Revolver Loans made by each Lender and interest accruing thereon shall be
        evidenced by the records of Agent and such Lender. At the request of any
        Lender,
        Borrower shall deliver a Revolver Note to such Lender.
  22
  2.1.3.  Use
        of
        Proceeds .
        The
        proceeds of Revolver Loans shall be used by Borrower solely (a) to satisfy
        existing Debt; (b) to pay fees and transaction expenses associated with the
        closing of this credit facility; (c) to pay Obligations in accordance with
        this Agreement; and (d) for working capital and other lawful corporate
        purposes of Borrower.
  2.1.4.  Termination
        of Revolver Commitments .
        The
        Revolver Commitments shall terminate on the Revolver Termination Date, unless
        sooner terminated in accordance with this Agreement. Upon at least 90 days
        prior
        written notice to Agent at any time after the first Loan Year, Borrower may,
        at
        its option, terminate the Revolver Commitments and this credit facility.
        Any
        notice of termination given by Borrower shall be irrevocable. On the termination
        date, Borrower shall make Full Payment of all Obligations. Concurrently with
        any
        termination of the Revolver Commitments, for whatever reason (including an
        Event
        of Default), Borrower shall pay to Agent as liquidated damages for loss of
        bargain (and not as a penalty), an amount equal to (a) if the termination
        occurs
        during the first Loan Year, 1.50% of the Revolver Commitments being terminated;
        (b) if the termination occurs during the second Loan Year, 0.75% of the Revolver
        Commitments being terminated; (iii) if the termination occurs during the
        third
        Loan Year, 0.25% of the Revolver Commitments being terminated and (iv) if
        the
        termination occurs thereafter, zero. No termination charge shall be payable
        if
        termination occurs on the Revolver Termination Date or in connection with
        a
        refinancing of this credit facility by Bank of America or any of its
        Affiliates.
  2.1.5.  Overadvances .
        If the
        aggregate Revolver Loans exceed the Borrowing Base (“ **Overadvance** ”) or
        the aggregate Revolver Commitments at any time, the excess amount shall be
        payable by Borrower on demand by Agent, but all such Revolver Loans shall
        nevertheless constitute Obligations secured by the Collateral and entitled
        to
        all benefits of the Loan Documents. Unless its authority has been revoked
        in
        writing by Required Lenders, Agent may require Lenders to honor requests
        for
        Overadvance Loans and to forbear from requiring Borrower to cure an Overadvance,
        (a) when no other Event of Default is known to Agent, as long as
        (i) the Overadvance does not continue for more than 30 consecutive days
        (and no Overadvance may exist for at least five consecutive days thereafter
        before further Overadvance Loans are required), and (ii) the Overadvance is
        not known by Agent to exceed 10% of the Borrowing Base; and (b) regardless
        of whether an Event of Default exists, if Agent discovers an Overadvance
        not
        previously known by it to exist, as long as from the date of such discovery
        the
        Overadvance (i) is not increased by more than an amount equal to 10% of the
        Seasonal Revolver Amount, and (ii) does not continue for more than 30
        consecutive days. In no event shall Overadvance Loans be required that would
        cause the outstanding Revolver Loans and LC Obligations to exceed the Seasonal
        Revolver Amount. Any funding of an Overadvance Loan or sufferance of an
        Overadvance shall not constitute a waiver by Agent or Lenders of the Event
        of
        Default caused thereby. In no event shall Borrower or any other Obligated
        Party
        be deemed a beneficiary of this Section 2.1.5 nor
        authorized to enforce any of its terms.
  2.1.6.  Protective
        Advances .
        Agent
        shall be authorized, in its discretion, at any time that any conditions in Section 6 are not
        satisfied, and without regard to the Seasonal Revolver Amount or the aggregate
        Commitments, to make Base Rate Revolver Loans (“ **Protective
        Advances** ”) (a) up
        to an aggregate amount equal to 10% of the Seasonal Revolver Amount, if Agent
        deems such Loans necessary or desirable to preserve or protect Collateral,
        or to
        enhance the collectibility or repayment of Obligations; or (b) to pay any
        other amounts chargeable to any Obligated Party under any Loan Documents,
        including costs, fees and expenses. Each Lender shall participate in each
        Protective Advance on a Pro Rata basis. Required Lenders may at any time
        revoke
        Agent’s authority to make further Protective Advances by written notice to
        Agent. Absent such revocation, Agent’s determination that funding of a
        Protective Advance is appropriate shall be conclusive.
  2.2.  Intentionally
        Omitted .
  23
  2.3.  Letter
        of Credit Facility .
  2.3.1.  Issuance
        of Letters of Credit .
        Issuing
        Bank agrees to issue Letters of Credit from time to time until 30 days prior
        to
        the Revolver Termination Date (or until the Commitment Termination Date,
        if
        earlier), on the terms set forth herein, including the following:
  (a)  Borrower
        acknowledges that Issuing Bank’s willingness to issue any Letter of Credit is
        conditioned upon Issuing Bank’s receipt of a LC Application with respect to the
        requested Letter of Credit, as well as such other instruments and agreements
        as
        Issuing Bank may customarily require for issuance of a letter of credit of
        similar type and amount. Issuing Bank shall have no obligation to issue any
        Letter of Credit unless (i) Issuing Bank receives a LC Request and LC
        Application at least three Business Days prior to the requested date of
        issuance; and (ii) each LC Condition is satisfied. If Issuing Bank receives
        written notice from a Lender at least five Business Days before issuance
        of a
        Letter of Credit that any LC Condition has not been satisfied, Issuing Bank
        shall have no obligation to issue the requested Letter of Credit (or any
        other) until such notice is withdrawn in writing by that Lender or until
        Required Lenders have waived such condition in accordance with this Agreement.
        Prior to receipt of any such notice, Issuing Bank shall not be deemed to
        have
        knowledge of any failure of LC Conditions.
  (b)  Letters
        of Credit may be requested by Borrower only (i) to support obligations of
        Borrower incurred in the Ordinary Course of Business; or (ii) for other
        purposes as Agent and Lenders may approve from time to time in writing. The
        renewal or extension of any Letter of Credit shall be treated as the issuance
        of
        a new Letter of Credit, except that delivery of a new LC Application shall
        be
        required at the discretion of Issuing Bank.
  (c)  Borrower
        assumes all risks of the acts, omissions or misuses of any Letter of Credit
        by
        the beneficiary. In connection with issuance of any Letter of Credit, none
        of
        Agent, Issuing Bank or any Lender shall be responsible for the existence,
        character, quality, quantity, condition, packing, value or delivery of any
        goods
        purported to be represented by any Documents; any differences or variation
        in
        the character, quality, quantity, condition, packing, value or delivery of
        any
        goods from that expressed in any Documents; the form, validity, sufficiency,
        accuracy, genuineness or legal effect of any Documents or of any endorsements
        thereon; the time, place, manner or order in which shipment of goods is made;
        partial or incomplete shipment of, or failure to ship, any goods referred
        to in
        a Letter of Credit or Documents; any deviation from instructions, delay,
        default
        or fraud by any shipper or other Person in connection with any goods, shipment
        or delivery; any breach of contract between a shipper or vendor and Borrower;
        errors, omissions, interruptions or delays in transmission or delivery of
        any
        messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or
        otherwise; errors in interpretation of technical terms; the misapplication
        by a
        beneficiary of any Letter of Credit or the proceeds thereof; or any consequences
        arising from causes beyond the control of Issuing Bank, Agent or any Lender,
        including any act or omission of a Governmental Authority. The rights and
        remedies of Issuing Bank under the Loan Documents shall be cumulative. Issuing
        Bank shall be fully subrogated to the rights and remedies of each beneficiary
        whose claims against Borrower are discharged with proceeds of any Letter
        of
        Credit.
  (d)  In
        connection with its administration of and enforcement of rights or remedies
        under any Letters of Credit or LC Documents, Issuing Bank shall be entitled
        to
        act, and shall be fully protected in acting, upon any certification,
        documentation or communication in whatever form reasonably believed by Issuing
        Bank to be genuine and correct and to have been signed, sent or made by a
        proper
        Person. Issuing Bank may consult with and employ legal counsel, accountants
        and
        other experts to advise it concerning its obligations, rights and remedies,
        and
        shall be entitled to act upon, and shall be fully protected in any action
        taken
        in good faith reliance upon, any advice given by such experts. Issuing Bank
        may
        employ agents and attorneys-in-fact in connection with any matter relating
        to
        Letters of Credit or LC Documents, and shall not be liable for the negligence
        or
        misconduct of agents and attorneys-in-fact selected with reasonable
        care.
  24
  2.3.2.  Reimbursement;
        Participations .
  (a)  If
        Issuing Bank honors any request for payment under a Letter of Credit, Borrower
        shall pay to Issuing Bank, on the same day (“ **Reimbursement
        Date** ”),
        the
        amount paid by Issuing Bank under such Letter of Credit, together with interest
        at the interest rate for Base Rate Revolver Loans from the Reimbursement
        Date
        until payment by Borrower. The obligation of Borrower to reimburse Issuing
        Bank
        for any payment made under a Letter of Credit shall be absolute, unconditional,
        irrevocable, and joint and several, and shall be paid without regard to any
        lack
        of validity or enforceability of any Letter of Credit or the existence of
        any
        claim, setoff, defense or other right that Borrower may have at any time
        against
        the beneficiary. Whether or not Borrower submits a Notice of Borrowing, Borrower
        shall be deemed to have requested a Borrowing of Base Rate Revolver Loans
        in an
        amount necessary to pay all amounts due Issuing Bank on any Reimbursement
        Date
        and each Lender agrees to fund its Pro Rata share of such Borrowing whether
        or
        not the Commitments have terminated, an Overadvance exists or is created
        thereby, or the conditions in Section 6 are
        satisfied.
  (b)  Upon
        issuance of a Letter of Credit, each Lender shall be deemed to have irrevocably
        and unconditionally purchased from Issuing Bank, without recourse or warranty,
        an undivided Pro Rata interest and participation in all LC Obligations relating
        to the Letter of Credit. If Issuing Bank makes any payment under a Letter
        of
        Credit and Borrower does not reimburse such payment on the Reimbursement
        Date,
        Agent shall promptly notify Lenders and each Lender shall promptly (within
        one
        Business Day) and unconditionally pay to Agent, for the benefit of Issuing
        Bank, the Lender’s Pro Rata share of such payment. Upon request by a Lender,
        Issuing Bank shall furnish copies of any Letters of Credit and LC Documents
        in
        its possession at such time.
  (c)  The
        obligation of each Lender to make payments to Agent for the account of Issuing
        Bank in connection with Issuing Bank’s payment under a Letter of Credit shall be
        absolute, unconditional and irrevocable, not subject to any counterclaim,
        setoff, qualification or exception whatsoever, and shall be made in accordance
        with this Agreement under all circumstances, irrespective of any lack of
        validity or unenforceability of any Loan Documents; any draft, certificate
        or
        other document presented under a Letter of Credit having been determined
        to be
        forged, fraudulent, invalid or insufficient in any respect or any statement
        therein being untrue or inaccurate in any respect; or the existence of any
        setoff or defense that any Obligated Party may have with respect to any
        Obligations. Issuing Bank does not assume any responsibility for any failure
        or
        delay in performance or any breach by Borrower or any other Person of any
        obligations under any LC Documents. Issuing Bank does not make to Lenders
        any
        express or implied warranty, representation or guaranty with respect to the
        Collateral, LC Documents or any Obligated Party. Issuing Bank shall not be
        responsible to any Lender for any recitals, statements, information,
        representations or warranties contained in, or for the execution, validity,
        genuineness, effectiveness or enforceability of any LC Documents; the validity,
        genuineness, enforceability, collectibility, value or sufficiency of any
        Collateral or the perfection of any Lien therein; or the assets, liabilities,
        financial condition, results of operations, business, creditworthiness or
        legal
        status of any Obligated Party.
  (d)  No
        Issuing Bank Indemnitee shall be liable to any Lender or other Person for
        any
        action taken or omitted to be taken in connection with any LC Documents except
        as a result of its actual gross negligence or willful misconduct. Issuing
        Bank
        shall not have any liability to any Lender if Issuing Bank refrains from
        any
        action under any Letter of Credit or LC Documents until it receives written
        instructions from Required Lenders.
  25
  2.3.3.  Cash
        Collateral .
        If any
        LC Obligations, whether or not then due or payable, shall for any reason
        be
        outstanding at any time (a) that an Event of Default exists, (b) that
        Availability is less than zero, (c) after the Commitment Termination Date,
        or (d) within 20 Business Days prior to the Revolver Termination Date, then
        Borrower shall, at Issuing Bank’s or Agent’s request, Cash Collateralize the
        stated amount of all outstanding Letters of Credit and pay to Issuing Bank
        the
        amount of all other LC Obligations. If Borrower fails to provide Cash Collateral
        as required herein, Lenders may (and shall upon direction of
        Agent) advance, as Revolver Loans, the amount of the Cash Collateral
        required (whether or not the Commitments have terminated, an Overadvance
        exists
        or the conditions in Section 6 are
        satisfied).
  2.3.4.  Existing
        Letters of Credit .
        The
        following letters of credit are outstanding from Bank of America under the
        Original Loan Agreement for the account of Borrower:
  Letter
                  of Credit Number
              Undrawn
                  Amount3055786
              $343,0003063442
              $1,500,000
  As
        of the
        Closing Date, these letters of credit shall be deemed to be Letters of Credit
        outstanding under this Agreement, constitute Obligations, and are subject
        to all
        the terms and conditions set forth herein.
  SECTION
        3.  INTEREST,
        FEES AND CHARGES
  3.1.  Interest .
  3.1.1.  Rates
        and Payment of Interest .
  (a)  The
        Obligations shall bear interest (i) if a Base Rate Loan, at the Base Rate
        in effect from time to time, plus the
        Applicable Margin; (ii) if a LIBOR Loan, at LIBOR for the applicable
        Interest Period, plus the
        Applicable Margin; and (iii) if any other Obligation (including, to the
        extent permitted by law, interest not paid when due), at the Base Rate in
        effect
        from time to time, plus the
        Applicable Margin for Base Rate Revolver Loans. Interest shall accrue from
        the
        date the Loan is advanced or the Obligation is incurred or becomes payable
        until
        such Obligation is paid in full. If a Loan is repaid on the same day made,
        one
        day’s interest shall accrue.
  (b)  During
        an
        Insolvency Proceeding with respect to any Obligated Party, or during any
        other
        Event of Default if Agent or Required Lenders in their discretion so elect,
        Obligations shall bear interest at the Default Rate (whether before or after
        any
        judgment). Obligated Parties acknowledge that the cost and expense to Agent
        and
        Lenders due to an Event of Default are difficult to ascertain and that the
        Default Rate is a fair and reasonable estimate to compensate Agent and Lenders
        for such additional costs and expenses.
  (c)  Interest
        accrued on the Loans shall be due and payable in arrears, (i) on the first
        day of each month with respect to Base Rate loans and, for any LIBOR Loan,
        on
        the last day of its Interest Period; (ii) on any date of prepayment, with
        respect to the principal amount of Loans being prepaid; and (iii) on the
        Commitment Termination Date. Interest accrued on any other Obligations shall
        be
        due and payable as provided in the Loan Documents and, if no payment date
        is
        specified, shall be due and payable on demand. Notwithstanding the foregoing,
        interest accrued at the Default Rate shall be due and payable on
        demand.
  26
  3.1.2.  Application
        of LIBOR to Outstanding Loans .
  (a)  Borrower
        may on any Business Day, subject to delivery of a Notice of
        Conversion/Continuation, elect to convert any portion of the Base Rate Loans
        to,
        or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
        Loan. During any Default or Event of Default, Agent may (and shall at the
        direction of Required Lenders) declare that no Loan may be made, converted
        or continued as a LIBOR Loan.
  (b)  Whenever
        Borrower desires to convert or continue Loans as LIBOR Loans, Borrower shall
        give Agent a Notice of Conversion/Continuation, no later than 11:00 a.m.
        at
        least three Business Days before the requested conversion or continuation
        date.
        Promptly after receiving any such notice, Agent shall notify each Lender
        thereof. Each Notice of Conversion/Continuation shall be irrevocable, and
        shall
        specify the amount of Loans to be converted or continued, the conversion
        or
        continuation date (which shall be a Business Day), and the duration of the
        Interest Period (which shall be deemed to be 30 days if not specified). If,
        upon
        the expiration of any Interest Period in respect of any LIBOR Loans, Borrower
        fails to deliver a Notice of Conversion/Continuation, it shall be deemed
        to have
        elected to convert such Loans into Base Rate Loans.
  3.1.3.  Interest
        Periods .
        In
        connection with the making, conversion or continuation of any LIBOR Loans,
        Borrower shall select an interest period (“ **Interest
        Period** ”) to
        apply, which interest period shall be 7, 14, 21, 30, 60 or 90 days; *provided* , *however* ,
        that:
  (a)  the
        Interest Period shall commence on the date the Loan is made or continued
        as, or
        converted into, a LIBOR Loan, and shall expire on the numerically corresponding
        day in the calendar month at its end;
  (b)  if
        any
        Interest Period commences on a day for which there is no corresponding day
        in
        the calendar month at its end or if such corresponding day falls after the
        last
        Business Day of such month, then the Interest Period shall expire on the
        last
        Business Day of such month; and if any Interest Period would expire on a
        day
        that is not a Business Day, the period shall expire on the next Business
        Day;
        and
  (c)  no
        Interest Period shall extend beyond the Revolver Termination Date.
  3.1.4.  Interest
        Rate Not Ascertainable .
        If
        Agent shall determine that on any date for determining LIBOR, due to any
        circumstance affecting the London interbank market, adequate and fair means
        do
        not exist for ascertaining such rate on the basis provided herein, then Agent
        shall immediately notify Borrower of such determination. Until Agent notifies
        Borrower that such circumstance no longer exists, the obligation of Lenders
        to
        make LIBOR Loans shall be suspended, and no further Loans may be converted
        into
        or continued as LIBOR Loans.
  3.2.  Fees .
        Borrower shall pay to Agent the following fees:
  (a)  Commitment
        Fee .
        On the
        Closing Date, Agent shall have fully earned, for Agent’s own account, an
        irrevocable, non-refundable commitment fee equal to $350,000. The foregoing
        fee
        will be due and payable by Borrower in four equal installments of $87,500, as
        set forth below in consideration of Agent’s commitments under this Agreement.
        The first $87,500 installment of the foregoing commitment fee shall be due
        and
        payable on the Closing Date with the remaining installments of $87,500 each
        due
        and payable on September 30, 2008, December 31, 2008, and March 27, 2009,
        until
        paid in full. The entire unpaid balance of the foregoing commitment fee,
        if any,
        shall be due and payable in full on the Commitment Termination Date.
  27
  (b)  Letter
        of Credit Fees .
        Borrower shall pay (i) to Agent a fee equal to the Applicable Margin in effect
        for LIBOR Revolver Loans times the average daily stated amount of issued
        and
        outstanding Letters of Credit, which fee shall be payable monthly in arrears,
        on
        the first day of each month; (ii) to Agent a fronting fee equal to .125% *per
        annum* on
        the
        stated amount of each Letter of Credit, which fee shall be payable monthly
        in
        arrears, on the first day of each month; and (iii) to Issuing Bank, for its
        own
        account, all customary charges associated with the issuance, amending,
        negotiating, payment, processing, transfer and administration of Letters
        of
        Credit, which charges shall be paid as and when incurred. During the
        continuation of an Event of Default, the fee payable under clause (i) shall
        be
        increased by 2% *per
        annum* .
  (c)  Unused
        Line Fee .
        Borrower shall pay to Agent a fee equal to 0.25% *per
        annum* times
        the
        amount by which the Seasonal Revolver Limit exceeds the average daily balance
        of
        Revolver Loans and stated amount of Letters of Credit during any month. Such
        fee
        shall be payable in arrears, on the first day of each month and on the
        Commitment Termination Date.
  The
        fees
        payable as set forth above shall be in addition to any other fees, costs,
        or
        expenses payable pursuant to this Agreement and the other Loan Documents
        and
        shall be non-refundable for any reason whatsoever. Such fees constitute
        compensation for services rendered and do not constitute interest or charges
        for
        the use of money. Agent reserves the right to allocate, in whole or in part,
        to
        Agent’s affiliates or one or more of Lenders any fees payable to Agent in such
        manner as Agent may agree in its sole discretion. Sharing of fees with other
        Lenders shall be at the sole discretion of Agent.
  3.3.  Computation
        of Interest, Fees, Yield Protection **.** All
        interest, as well as fees and other charges calculated on a per annum basis,
        shall be computed for the actual days elapsed, based on a year of 360 days.
        Each
        determination by Agent of any interest, fees or interest rate hereunder shall
        be
        final, conclusive and binding for all purposes, absent manifest error. All
        fees
        shall be fully earned when due and shall not be subject to rebate, refund
        or
        proration. All fees payable under Sections 3.2 are
        compensation for services and are not, and shall not be deemed to be, interest
        or any other charge for the use, forbearance or detention of money. A
        certificate as to amounts payable by Borrower under Section 3.4 , 3.6 , 3.7 , 3.9 or 5.9 ,
        submitted to Borrower by Agent or the affected Lender, as applicable, shall
        be
        final, conclusive and binding for all purposes, absent manifest error, and
        Borrower shall pay such amounts to the appropriate party within 10 days
        following receipt of the certificate.
  3.4.  Reimbursement
        Obligations .
        Obligated Parties shall reimburse Agent for all Extraordinary Expenses.
        Obligated Parties shall also reimburse Agent for all legal, accounting,
        appraisal, consulting, and other fees, costs and expenses incurred by it
        in
        connection with (a) negotiation and preparation of any Loan Documents,
        including any amendment or other modification thereof; (b) administration
        of and actions relating to any Collateral, Loan Documents and transactions
        contemplated thereby, including any actions taken to perfect or maintain
        priority of Agent’s Liens on any Collateral, to maintain any insurance required
        hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b) ,
        each
        inspection, audit or appraisal with respect to any Obligated Party or
        Collateral, whether prepared by Agent’s personnel or a third party. All legal,
        accounting and consulting fees shall be charged to Obligated Parties by Agent’s
        professionals at their full hourly rates, regardless of any reduced or
        alternative fee billing arrangements that Agent, any Lender or any of their
        Affiliates may have with such professionals with respect to this or any other
        transaction. If, for any reason (including inaccurate reporting on financial
        statements or a Compliance Certificate), it is determined that a higher
        Applicable Margin should have applied to a period than was actually applied,
        then the proper margin shall be applied retroactively and Obligated Parties
        shall immediately pay to Agent, for the Pro Rata benefit of Lenders, an amount
        equal to the difference between the amount of interest and fees that would
        have
        accrued using the proper margin and the amount actually paid. All amounts
        payable by Obligated Parties under this Section 3.4 shall be
        due on demand.
  28
  3.5.  Illegality .
        If any
        Lender determines that any Applicable Law has made it unlawful, or that any
        Governmental Authority has asserted that it is unlawful, for any Lender or
        its
        applicable Lending Office to make, maintain or fund LIBOR Loans, or to determine
        or charge interest rates based upon LIBOR, or any Governmental Authority
        has
        imposed material restrictions on the authority of such Lender to purchase
        or
        sell, or to take deposits of, Dollars in the London interbank market, then,
        on
        notice thereof by such Lender to Agent, any obligation of such Lender to
        make or
        continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans shall be
        suspended until such Lender notifies Agent that the circumstances giving
        rise to
        such determination no longer exist. Upon delivery of such notice, Borrower
        shall
        prepay or, if applicable, convert all LIBOR Loans of such Lender to Base
        Rate
        Loans, either on the last day of the Interest Period therefor, if such Lender
        may lawfully continue to maintain such LIBOR Loans to such day, or immediately,
        if such Lender may not lawfully continue to maintain such LIBOR Loans. Upon
        any
        such prepayment or conversion, Borrower shall also pay accrued interest on
        the
        amount so prepaid or converted.
  3.6.  Inability
        to Determine Rates .
        If
        Required Lenders notify Agent for any reason in connection with a request
        for a
        Borrowing of, or conversion to or continuation of, a LIBOR Loan that
        (a) Dollar deposits are not being offered to banks in the London interbank
        Eurodollar market for the applicable amount and Interest Period of such Loan,
        (b) adequate and reasonable means do not exist for determining LIBOR for
        the requested Interest Period, or (c) LIBOR for the requested Interest
        Period does not adequately and fairly reflect the cost to such Lenders of
        funding such Loan, then Agent will promptly so notify Borrower and each Lender.
        Thereafter, the obligation of Lenders to make or maintain LIBOR Loans shall
        be
        suspended until Agent (upon instruction by Required Lenders) revokes such
        notice. Upon receipt of such notice, Borrower may revoke any pending request
        for
        a Borrowing of, conversion to or continuation of a LIBOR Loan or, failing
        that,
        will be deemed to have submitted a request for a Base Rate Loan.
  3.7.  Increased
        Costs; Capital Adequacy .
  3.7.1.  Change
        in Law .
        If any
        Change in Law shall:
  (a)  impose
        modify or deem applicable any reserve, special deposit, compulsory loan,
        insurance charge or similar requirement against assets of, deposits with
        or for
        the account of, or credit extended or participated in by, any Lender (except
        any
        reserve requirement reflected in LIBOR) or Issuing Bank;
  (b)  subject
        any Lender or Issuing Bank to any Tax with respect to any Loan, Loan Document,
        Letter of Credit or participation in LC Obligations, or change the basis
        of
        taxation of payments to such Lender or Issuing Bank in respect thereof (except
        for Indemnified Taxes or Other Taxes covered by Section 5.9 and the
        imposition of, or any change in the rate of, any Excluded Tax payable by
        such
        Lender or Issuing Bank); or
  (c)  impose
        on
        any Lender or Issuing Bank or the London interbank market any other condition,
        cost or expense affecting any Loan, Loan Document, Letter of Credit or
        participation in LC Obligations;
  and
        the
        result thereof shall be to increase the cost to such Lender of making or
        maintaining any LIBOR Loan (or of maintaining its obligation to make any
        such
        Loan), or to increase the cost to such Lender or Issuing Bank of participating
        in, issuing or maintaining any Letter of Credit (or of maintaining its
        obligation to participate in or to issue any Letter of Credit), or to reduce
        the
        amount of any sum received or receivable by such Lender or Issuing Bank
        hereunder (whether of principal, interest or any other amount) then, upon
        request of such Lender or Issuing Bank, Borrower will pay to such Lender
        or
        Issuing Bank, as applicable, such additional amount or amounts as will
        compensate such Lender or Issuing Bank, as applicable, for such additional
        costs
        incurred or reduction suffered.
  29
  3.7.2.  Capital
        Adequacy .
        If any
        Lender or Issuing Bank determines that any Change in Law affecting such Lender
        or Issuing Bank or any Lending Office of such Lender or such Lender’s or Issuing
        Bank’s holding company, if any, regarding capital requirements has or would have
        the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or
        holding company’s capital as a consequence of this Agreement, or such Lender’s
        or Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC
        Obligations, to a level below that which such Lender, Issuing Bank or holding
        company could have achieved but for such Change in Law (taking into
        consideration such Lender’s, Issuing Bank’s and holding company’s policies with
        respect to capital adequacy), then from time to time Borrower will pay to
        such
        Lender or Issuing Bank, as the case may be, such additional amount or amounts
        as
        will compensate it or its holding company for any such reduction
        suffered.
  3.7.3.  Compensation .
        Failure
        or delay on the part of any Lender or Issuing Bank to demand compensation
        pursuant to this Section 3.7 shall
        not constitute a waiver of its right to demand such compensation, but Borrower
        shall not be required to compensate a Lender or Issuing Bank for any increased
        costs incurred or reductions suffered more than nine months prior to the
        date
        that the Lender or Issuing Bank notifies Borrower of the Change in Law giving
        rise to such increased costs or reductions and of such Lender’s or Issuing
        Bank’s intention to claim compensation therefor (except that, if the Change in
        Law giving rise to such increased costs or reductions is retroactive, then
        the
        nine-month period referred to above shall be extended to include the period
        of
        retroactive effect thereof).
  3.8.  Mitigation .
        If any
        Lender gives a notice under Section 3.5 or
        requests compensation under Section 3.7 ,
        or if
        Borrower is required to pay additional amounts with respect to a Lender under Section 5.9 ,
        then
        such Lender shall use reasonable efforts to designate a different Lending
        Office
        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 (a) would eliminate the need for such notice or reduce amounts
        payable in the future, as applicable; and (b) in each case, would not
        subject such Lender to any unreimbursed cost or expense and would not otherwise
        be disadvantageous to such Lender. Borrower agrees to pay all reasonable
        costs
        and expenses incurred by any Lender in connection with any such designation
        or
        assignment.
  3.9.  Funding
        Losses .
        If for
        any reason (other than default by a Lender) (a) any Borrowing of, or
        conversion to or continuation of, a LIBOR Loan does not occur on the date
        specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation
        (whether or not withdrawn), (b) any repayment or conversion of a LIBOR Loan
        occurs on a day other than the end of its Interest Period, or (c) Borrower
        fails to repay a LIBOR Loan when required hereunder, then Borrower shall
        pay to
        Agent its customary administrative charge and to each Lender all losses and
        expenses that it sustains as a consequence thereof, including loss of
        anticipated profits and any loss or expense arising from liquidation or
        redeployment of funds or from fees payable to terminate deposits of matching
        funds. Lenders shall not be required to purchase Dollar deposits in the London
        interbank market or any other offshore Dollar market to fund any LIBOR Loan,
        but
        the provisions hereof shall be deemed to apply as if each Lender had purchased
        such deposits to fund its LIBOR Loans.
  3.10.  Maximum
        Interest .
        Notwithstanding anything to the contrary contained in any Loan Document,
        the
        interest paid or agreed to be paid under the Loan Documents shall not exceed
        the
        maximum rate of non-usurious interest permitted by Applicable Law (“maximum
        rate”). If Agent or any Lender shall receive interest in an amount that exceeds
        the maximum rate, the excess interest shall be applied to the principal of
        the
        Obligations or, if it exceeds such unpaid principal, refunded to Borrower.
        In
        determining whether the interest contracted for, charged or received by Agent
        or
        a Lender exceeds the maximum rate, such Person may, to the extent permitted
        by
        Applicable Law, (a) characterize any payment that is not principal as an
        expense, fee or premium rather than interest; (b) exclude voluntary
        prepayments and the effects thereof; and (c) amortize, prorate, allocate
        and spread in equal or unequal parts the total amount of interest throughout
        the
        contemplated term of the Obligations hereunder.
  30
  SECTION
        4.  LOAN
        ADMINISTRATION
  4.1.  Manner
        of Borrowing and Funding Revolver Loans .
  4.1.1.  Notice
        of Borrowing .
  (a)  Whenever
        Borrower desires funding of a Borrowing of Revolver Loans, Borrower shall
        give
        Agent a Notice of Borrowing. Such notice must be received by Agent no later
        than
        11:00 a.m. (i) on the Business Day of the requested funding date, in the
        case of Base Rate Loans, and (ii) at least three Business Days prior to the
        requested funding date, in the case of LIBOR Loans. Notices received after
        11:00
        a.m. shall be deemed received on the next Business Day. Each Notice of Borrowing
        shall be irrevocable and shall specify (A) the amount of the Borrowing,
        (B) the requested funding date (which must be a Business Day),
        (C) whether the Borrowing is to be made as Base Rate Loans or LIBOR Loans,
        and (D) in the case of LIBOR Loans, the duration of the applicable Interest
        Period (which shall be deemed to be 30 days if not specified).
  (b)  Unless
        payment is otherwise timely made by Borrower, the becoming due of any
        Obligations (whether principal, interest, fees or other charges, including
        Extraordinary Expenses, LC Obligations, Cash Collateral and Bank Product
        Debt) shall be deemed to be a request for Base Rate Revolver Loans on the
        due date, in the amount of such Obligations. The proceeds of such Revolver
        Loans
        shall be disbursed as direct payment of the relevant Obligation. In addition,
        Agent may, at its option, charge such Obligations against any operating,
        investment or other account of Borrower maintained with Agent or any of its
        Affiliates.
  (c)  If
        Borrower establishes a controlled disbursement account with Agent or any
        Affiliate of Agent, then the presentation for payment of any check or other
        item
        of payment drawn on such account at a time when there are insufficient funds
        to
        cover it shall be deemed to be a request for Base Rate Revolver Loans on
        the
        date of such presentation, in the amount of the check and items presented
        for
        payment. The proceeds of such Revolver Loans may be disbursed directly to
        the
        controlled disbursement account or other appropriate account.
  4.1.2.  Fundings
        by Lenders .
        Each
        Lender shall timely honor its Revolver Commitment by funding its Pro Rata
        share
        of each Borrowing of Revolver Loans that is properly requested hereunder.
        Except
        for Borrowings to be made as Swingline Loans, Agent shall endeavor to notify
        Lenders of each Notice of Borrowing (or deemed request for a Borrowing) by
        12:00 noon on the proposed funding date for Base Rate Loans or by 3:00 p.m.
        at
        least two Business Days before any proposed funding of LIBOR Loans. Each
        Lender
        shall fund to Agent such Lender’s Pro Rata share of the Borrowing to the account
        specified by Agent in immediately available funds not later than 2:00 p.m.
        on
        the requested funding date, unless Agent’s notice is received after the times
        provided above, in which event Lender shall fund its Pro Rata share by 11:00
        a.m. on the next Business Day. Subject to its receipt of such amounts from
        Lenders, Agent shall disburse the proceeds of the Revolver Loans as directed
        by
        Borrower. Unless Agent shall have received (in sufficient time to
        act) written notice from a Lender that it does not intend to fund its Pro
        Rata share of a Borrowing, Agent may assume that such Lender has deposited
        or
        promptly will deposit its share with Agent, and Agent may disburse a
        corresponding amount to Borrower. If a Lender’s share of any Borrowing is not in
        fact received by Agent, then Borrower agrees to repay to Agent on demand
        the
        amount of such share, together with interest thereon from the date disbursed
        until repaid, at the rate applicable to such Borrowing.
  31
  4.1.3.  Swingline
        Loans; Settlement .
  (a)  Agent
        may, but shall not be obligated to, advance Swingline Loans to Borrower,
        up to
        an aggregate outstanding amount of $10,000,000, unless the funding is
        specifically required to be made by all Lenders hereunder. Each Swingline
        Loan
        shall constitute a Revolver Loan for all purposes, except that payments thereon
        shall be made to Agent for its own account. The obligation of Borrower to
        repay
        Swingline Loans shall be evidenced by the records of Agent and need not be
        evidenced by any promissory note.
  (b)  To
        facilitate administration of the Revolver Loans, Lenders and Agent agree
        (which
        agreement is solely among them, and not for the benefit of or enforceable
        by
        Borrower) that settlement among them with respect to Swingline Loans and
        other Revolver Loans may take place periodically on a date determined from
        time
        to time by Agent, which shall occur at least once each week. On each settlement
        date, settlement shall be made with each Lender in accordance with the
        Settlement Report delivered by Agent to Lenders. Between settlement dates,
        Agent
        may in its discretion apply payments on Revolver Loans to Swingline Loans,
        regardless of any designation by Borrower or any provision herein to the
        contrary. Each Lender’s obligation to make settlements with Agent is absolute
        and unconditional, without offset, counterclaim or other defense, and whether
        or
        not the Commitments have terminated, an Overadvance exists or the conditions
        in Section 6 are
        satisfied. If, due to an Insolvency Proceeding with respect to Borrower or
        otherwise, any Swingline Loan may not be settled among Lenders hereunder,
        then
        each Lender shall be deemed to have purchased from Agent a Pro Rata
        participation in each unpaid Swingline Loan and shall transfer the amount
        of
        such participation to Agent, in immediately available funds, within one Business
        Day after Agent’s request therefor.
  4.1.4.  Notices .
        Borrower authorizes Agent and Lenders to extend, convert or continue Loans,
        effect selections of interest rates, and transfer funds to or on behalf of
        Borrower based on telephonic or e-mailed instructions. Borrower shall confirm
        each such request by prompt delivery to Agent of a Notice of Borrowing or
        Notice
        of Conversion/Continuation, if applicable, but if it differs in any material
        respect from the action taken by Agent or Lenders, the records of Agent and
        Lenders shall govern. Neither Agent nor any Lender shall have any liability
        for
        any loss suffered by Borrower as a result of Agent or any Lender acting upon
        its
        understanding of telephonic or e-mailed instructions from a person reasonably
        believed by Agent or any Lender to be a person authorized to give such
        instructions on Borrower’s behalf.
  4.2.  Defaulting
        Lender .
        If a
        Lender fails to make any payment to Agent that is required hereunder, Agent
        may
        (but shall not be required to), in its discretion, retain payments that would
        otherwise be made to such defaulting Lender hereunder, apply the payments
        to
        such Lender’s defaulted obligations or re-advance the funds to Borrower in
        accordance with this Agreement. The failure of any Lender to fund a Loan
        or to
        make a payment in respect of a LC Obligation ** shall
        not
        relieve any other Lender of its obligations hereunder, and no Lender shall
        be
        responsible for default by another Lender. Lenders and Agent agree (which
        agreement is solely among them, and not for the benefit of or enforceable
        by any
        Obligated Party) that, solely for purposes of determining a defaulting
        Lender’s right to vote on matters relating to the Loan Documents and to share in
        payments, fees and Collateral proceeds thereunder, a defaulting Lender shall
        not
        be deemed to be a “Lender” until all its defaulted obligations have been
        cured.
  32
  4.3.  Number
        and Amount of LIBOR Loans; Determination of Rate .
        For
        ease of administration, all LIBOR Revolver Loans having the same length and
        beginning date of their Interest Periods shall be aggregated together, and
        such
        Borrowings shall be allocated among Lenders on a Pro Rata basis. No more
        than 2
        Borrowings of LIBOR Loans having an Interest Period of less than 30 days
        and no
        more than 8 Borrowings of LIBOR Loans having an Interest Period of 30 days
        or
        greater may be outstanding at any time, and each Borrowing of LIBOR Loans
        when
        made shall be in a minimum amount of $1,000,000, or an increment of $500,000
        in
        excess thereof. Upon determining LIBOR for any Interest Period requested
        by
        Borrower, Agent shall promptly notify Borrower thereof by telephone or
        electronically and, if requested by Borrower, shall confirm any telephonic
        notice in writing.
  4.4.  Borrower
        as Agent for Obligated Parties .
        Each
        Obligated Party hereby designates Borrower as its representative and agent
        for
        all purposes under the Loan Documents, including delivery or receipt of
        communications, preparation and delivery of financial reports, requests for
        waivers, amendments or other accommodations, actions under the Loan Documents
        (including in respect of compliance with covenants), and all other dealings
        with
        Agent, Issuing Bank or any Lender. Borrower hereby accepts such appointment.
        Agent and Lenders shall be entitled to rely upon, and shall be fully protected
        in relying upon, any notice or communication (including any notice of
        borrowing) delivered by Borrower on behalf of any Obligated Party. Agent
        and
        Lender s
        may
        give any notice or communication with any Obligated Party hereunder to Borrower
        on behalf of such Obligated Party. Each of Agent, Issuing Bank and Lenders
        shall
        have the right, in its discretion, to deal exclusively with Borrower for
        any or
        all purposes under the Loan Documents. Each Obligated Party agrees that any
        notice, election, communication, representation, agreement or undertaking
        made
        on its behalf by Borrower shall be binding upon and enforceable against
        it.
  4.5.  One
        Obligation .
  (a)  The
        Loans, LC Obligations and other Obligations shall constitute one general
        obligation of each Obligated Party and (unless otherwise expressly provided
        in
        any Loan Document) shall be secured by Agent’s Lien upon all Collateral; *provided* , *however* ,
        that
        Agent and each Lender shall be deemed to be a creditor of, and the holder
        of a
        separate claim against, each Obligated Party to the extent of any Obligations
        jointly or severally owed by such Obligated Party.
  (b)  Notwithstanding
        anything herein or in any Guaranty to the contrary, each Guarantor’s liability
        in respect of the Obligations shall be limited to the greater of (i) all
        amounts
        for which such Guarantor is primarily liable, and (ii) such Guarantor’s
        Allocable Amount.
  (c)  If
        any
        Guarantor makes a payment under its Guaranty of any Obligations (other than
        amounts for which such Guarantor is primarily liable) (each, a “ **Guarantor
        Payment** ”)
        that,
        taking into account all other Guarantor Payments previously or concurrently
        made
        by any other Guarantor, exceeds the amount that such Guarantor would otherwise
        have paid if each Guarantor had paid the aggregate Obligations satisfied
        by such
        Guarantor Payments in the same proportion that such Guarantor’s Allocable Amount
        bore to the total Allocable Amounts of all Guarantors, then such Guarantor
        shall
        be entitled to receive contribution and indemnification payments from, and
        to be
        reimbursed by, each other Guarantor for the amount of such excess, *pro
        rata* based
        upon their respective Allocable Amounts in effect immediately prior to such
        Guarantor Payment. The “ **Allocable
        Amount** ”
for
        any
        Guarantor shall be the maximum amount that could then be recovered from such
        Guarantor under its Guaranty without rendering such payment voidable under
        Section 548 of the Bankruptcy Code or under any applicable state fraudulent
        transfer or conveyance act, or similar statute or common law.
  (d)  Nothing
        contained herein or in any Guaranty shall limit the liability of Borrower
        to pay
        Loans made directly or indirectly to it, LC Obligations relating to Letters
        of
        Credit, and all accrued interest, fees, expenses and other related Obligations
        with respect thereto.
  33
  4.6.  Effect
        of Termination .
        On the
        effective date of any termination of the Commitments, all Obligations shall
        be
        immediately due and payable, and any Lender may terminate its and its
        Affiliates’ Bank Products (including, only with the consent of Agent, any Cash
        Management Services). All undertakings of Obligated Parties contained in
        the
        Loan Documents shall survive any termination, and Agent shall retain its
        Liens
        in the Collateral and all of its rights and remedies under the Loan Documents
        until Full Payment of the Obligations. Notwithstanding Full Payment of the
        Obligations, Agent shall not be required to terminate its Liens in any
        Collateral unless, with respect to any damages Agent may incur as a result
        of
        the dishonor or return of Payment Items applied to Obligations, Agent receives
        (a) a written agreement, executed by Obligated Parties and any Person whose
        advances are used in whole or in part to satisfy the Obligations, indemnifying
        Agent and Lenders from any such damages; or (b) such Cash Collateral as
        Agent, in its discretion, deems necessary to protect against any such damages.
        The provisions of Sections 2.3 , 3.4 , 3.6 , 3.7 , 3.9 , 5.5 , 5.9 , 12 , 14.2 and this Section
        4.6 ,
        and the
        obligation of each Obligated Party and Lender with respect to each indemnity
        given by it in any Loan Document, shall survive Full Payment of the Obligations
        and any release relating to this credit facility.
  SECTION
        5.  PAYMENTS
  5.1.  General
        Payment Provisions .
        All
        payments of Obligations shall be made in Dollars, without offset, counterclaim
        or defense of any kind, free of (and without deduction for) any Taxes, and
        in immediately available funds, not later than 12:00 noon on the due date.
        Any
        payment after such time shall be deemed made on the next Business Day. Borrower
        may, at the time of payment, specify to Agent the Obligations to which such
        payment is to be applied, but Agent shall in all events retain the right
        to
        apply such payment in such manner as Agent, subject to the provisions hereof,
        may determine to be appropriate. If any payment under the Loan Documents
        shall
        be stated to be due on a day other than a Business Day, the due date shall
        be
        extended to the next Business Day and such extension of time shall be included
        in any computation of interest and fees. Any payment of a LIBOR Loan prior
        to
        the end of its Interest Period shall be accompanied by all amounts due under Section 3.9 .
        Any
        prepayment of Loans shall be applied first to Base Rate Loans and then to
        LIBOR
        Loans; *provided* , *however* ,
        that as
        long as no Event of Default exists, prepayments of LIBOR Loans may, at the
        option of Borrower and Agent, be held by Agent as Cash Collateral and applied
        to
        such Loans at the end of their Interest Periods.
  5.2.  Repayment
        of Revolver Loans .
        Revolver Loans shall be due and payable in full on the Revolver Termination
        Date, unless payment is sooner required hereunder. Revolver Loans may be
        prepaid
        from time to time, without penalty or premium.
  5.3.  Mandatory
        Prepayments .
  5.3.1.  Extraordinary
        Receipts .
        Immediately upon the receipt by any Obligated Party or any of its Subsidiaries
        of any Extraordinary Receipts, Borrower shall prepay the outstanding principal
        amount of the Obligations in an amount equal to 100% of such Extraordinary
        Receipts. Immediately upon the issuance or incurrence by any Obligated Party
        or
        any of its Subsidiaries of any Indebtedness (other than as permitted hereunder,
        Borrower shall prepay the outstanding principal amount of the Obligations
        in an
        amount equal to 100% of the cash proceeds received in connection with such
        issuance or incurrence. The provisions of this Section
        5.3.2 shall
        not be deemed to be implied consent to any such issuance or incurrence otherwise
        prohibited by the terms and conditions of this Agreement.
  5.3.2.  Overadvances .
        Notwithstanding anything herein to the contrary, if an Overadvance exists,
        Borrower shall, on the sooner of Agent’s demand or the first Business Day after
        Borrower has knowledge thereof, repay the outstanding Revolver Loans in an
        amount sufficient to reduce the principal balance of Revolver Loans to the
        Borrowing Base.
  34
  5.3.3.  Seasonal
        Revolver Limit .
        Notwithstanding anything herein to the contrary and without limiting the
        provisions of Section
        5.3.2 above,
        on the first Business Day of each calendar year, Borrower shall repay the
        outstanding Revolver Loans in an amount sufficient to reduce the outstanding
        principal balance of Revolver Loans to the Borrowing Base (after giving effect
        to the reduction of the Seasonal Revolver Limit effective on January 1 of
        each
        year).
  5.4.  Payment
        of Other Obligations .
        Obligations other than Loans, including LC Obligations and Extraordinary
        Expenses, shall be paid by Borrower as provided in the Loan Documents or,
        if no
        payment date is specified, on demand.
  5.5.  Marshaling;
        Payments Set Aside .
        None of
        Agent or Lenders shall be under any obligation to marshal any assets in favor
        of
        any Obligated Party or against any Obligations. If any payment by or on behalf
        of any Obligated Party is made to Agent, Issuing Bank or any Lender, or Agent,
        Issuing Bank or any Lender exercises a right of setoff, and such payment
        or the
        proceeds of such setoff or any part thereof is subsequently invalidated,
        declared to be fraudulent or preferential, set aside or required (including
        pursuant to any settlement entered into by Agent, Issuing Bank or such Lender
        in
        its discretion) to be repaid to a trustee, receiver or any other Person,
        then to the extent of such recovery, the Obligation originally intended to
        be
        satisfied, and all Liens, rights and remedies relating thereto, shall be
        revived
        and continued in full force and effect as if such payment had not been made
        or
        such setoff had not occurred.
  5.6.  Post-Default
        Allocation of Payments .
  5.6.1.  Allocation .
        Notwithstanding anything herein to the contrary, during an Event of Default,
        monies to be applied to the Obligations, whether arising from payments by
        Obligated Parties, realization on Collateral, setoff or otherwise, shall
        be
        allocated as follows:
  (a)  FIRST ,
        to all
        costs and expenses, including Extraordinary Expenses, owing to
        Agent;
  (b)  SECOND ,
        to all
        amounts owing to Agent on Swingline Loans;
  (c)  THIRD ,
        to all
        amounts owing to Issuing Bank on LC Obligations and Bank Product
        Debt;
  (d)  FOURTH ,
        to all
        Obligations constituting fees (excluding amounts relating to Bank
        Products);
  (e)  FIFTH ,
        to all
        Obligations constituting interest (excluding amounts relating to Bank
        Products);
  (f)  SIXTH ,
        to
        provide Cash Collateral for outstanding Letters of Credit; and
  (g)  SEVENTH ,
        to all
        other Obligations.
  Amounts
        shall be applied to each category of Obligations set forth above until Full
        Payment thereof and then to the next category. If amounts are insufficient
        to
        satisfy a category, they shall be applied on a pro rata basis among the
        Obligations in the category. The allocations set forth in this Section 5.6.1 are
        solely to determine the rights and priorities of Agent and Lenders as among
        themselves, and may be changed by agreement among them without the consent
        of
        any Obligated Party. This Section 5.6.1 is not
        for the benefit of or enforceable by Obligated Parties.
  35
  5.6.2.  Erroneous
        Application .
        Agent
        shall not be liable for any application of amounts made by it in error and,
        if
        any such application is subsequently determined to have been made in error,
        the
        sole recourse of any Lender or other Person to which such amount should have
        been made shall be to recover the amount from the Person that actually received
        it (and, if such amount was received by any Lender, such Lender hereby agrees
        to
        return it).
  5.7.  Application
        of Payments .
        The
        ledger balance in the main Dominion Account as of the end of a Business Day
        shall be applied to the Obligations at the beginning of the next Business
        Day.
        Obligated Parties irrevocably waive the right to direct the application of
        any
        payments or Collateral proceeds, and agree that Agent shall have the continuing,
        exclusive right to apply and reapply same against the Obligations, in such
        manner as Agent deems advisable, notwithstanding any entry by Agent in its
        records. If, as a result of Agent’s receipt of Payment Items or other proceeds
        of Collateral, a credit balance exists, the balance shall not accrue interest
        in
        favor of Borrower or any other Obligated Party and shall be made available
        to
        Borrower as long as no Default or Event of Default exists.
  5.8.  Loan
        Account; Account Stated .
  5.8.1.  Loan
        Account .
        Agent
        shall maintain in accordance with its usual and customary practices an account
        or accounts (“ **Loan
        Account** ”) evidencing
        the Debt of Borrower resulting from each Loan or issuance of a Letter of
        Credit
        from time to time. Any failure of Agent to record anything in the Loan Account,
        or any error in doing so, shall not limit or otherwise affect the obligation
        of
        Borrower to pay any amount owing hereunder.
  5.8.2.  Entries
        Binding .
        Entries
        made in the Loan Account shall constitute presumptive evidence of the
        information contained therein. If any information contained in the Loan Account
        is provided to or inspected by any Person, then such information shall be
        conclusive and binding on such Person for all purposes absent manifest error,
        except to the extent such Person notifies Agent in writing within 30 days
        after
        receipt or inspection that specific information is subject to
        dispute.
  5.9.  Taxes .
  5.9.1.  Payments
        Free of Taxes .
        Any and
        all payments by any Obligated Party on account of any Obligations shall be
        made
        free and clear of and without reduction or withholding for any Indemnified
        Taxes
        or Other Taxes, *provided* that if
        an Obligated Party shall be required by Applicable Law to deduct any Indemnified
        Taxes (including any Other Taxes) from such payments, then (a) 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 5.9.1 ) 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; (b) such Obligated
        Party shall make such deductions; and (c) such Obligated Party shall timely
        pay the full amount deducted to the relevant Governmental Authority in
        accordance with Applicable Law. Without limiting the foregoing, Obligated
        Parties shall timely pay all Other Taxes to the relevant Governmental
        Authorities.
  5.9.2.  Payment .
        Obligated Parties shall indemnify, hold harmless and reimburse Agent, Lenders
        and Issuing Bank, within 10 days after demand therefor, for the full amount
        of
        any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
        Taxes
        imposed or asserted on or attributable to amounts payable under this Section 5.9 ) paid
        by Agent, any Lender or Issuing Bank with respect to any Obligations, Letters
        of
        Credit or Loan Documents, and any penalties, interest and reasonable expenses
        arising therefrom or with respect thereto, whether or not such Indemnified
        Taxes
        or Other Taxes were correctly or legally imposed or asserted by the relevant
        Governmental Authority. A certificate as to the amount of such payment or
        liability delivered to Borrower by a Lender or Issuing Bank (with a copy
        to
        Agent), or by Agent, shall be conclusive absent manifest error. As soon as
        practicable after any payment of Indemnified Taxes or Other Taxes by any
        Obligated Party, such Obligated Party shall deliver to Agent a receipt issued
        by
        the Governmental Authority evidencing such payment or other evidence of payment
        satisfactory to Agent.
  36
  5.10.  Foreign
        Lenders .
  5.10.1.  Exemption .
        Any
        Foreign Lender that is entitled to an exemption from or reduction of withholding
        tax under the law of the jurisdiction in which an Obligated Party is resident
        for tax purposes, or any treaty to which such jurisdiction is a party, with
        respect to payments under any Loan Document shall deliver to Agent and Borrower,
        at the time or times prescribed by Applicable Law or reasonably requested
        by
        Agent or Borrower, such properly completed and executed documentation prescribed
        by Applicable Law as will permit such payments to be made without withholding
        or
        at a reduced rate of withholding. In addition, any Lender, if requested by
        Agent
        or Borrower, shall deliver such other documentation prescribed by Applicable
        Law
        or reasonably requested by Agent or Borrower as will enable Agent and Borrower
        to determine whether or not such Lender is subject to backup withholding
        or
        information reporting requirements.
  5.10.2.  Documentation .
        Without
        limiting the generality of the foregoing, if Borrower is resident for tax
        purposes in the United States, a Foreign Lender shall deliver to Agent and
        Borrower (in such number of copies as shall be requested by the
        recipient) on or prior to the date on which such Foreign Lender becomes a
        Lender hereunder (and from time to time thereafter upon the request of Agent
        or
        Borrower, but only if such Foreign Lender is legally entitled to do so),
        (a) duly completed copies of IRS Form W-8BEN claiming eligibility for
        benefits of an income tax treaty to which the United States is a party;
        (b) duly completed copies of IRS Form W-8ECI; (c) in the case of a
        Foreign Lender claiming the benefits of the exemption for portfolio interest
        under section 881(c) of the Code, (i) a certificate to the effect that
        such Foreign Lender is not (A) a “bank” within the meaning of
        section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of any Obligated Party within the meaning of section 881(c)(3)(B) of
        the Code, or (C) a “controlled foreign corporation” described in
        section 881(c)(3)(C) of the Code, and (ii) duly completed copies
        of IRS Form W-8BEN; or (d) any other form prescribed by Applicable Law as a
        basis for claiming exemption from or a reduction in United States federal
        withholding tax, duly completed together with such supplementary documentation
        as may be prescribed by Applicable Law to permit Borrower to determine the
        withholding or deduction required to be made.
  SECTION
        6.  CONDITIONS
        PRECEDENT
  6.1.  Conditions
        Precedent to Initial Loans .
        In
        addition to the conditions set forth in Section 6.2 ,
        Lenders
        shall not be required to fund any requested Loan, issue any Letter of Credit,
        or
        otherwise extend credit to Borrower hereunder, until the date that each of
        the
        following conditions has been satisfied:
  (a)  Notes
        shall have been executed by Borrower and delivered to each Lender that requests
        issuance of a Note. Each other Loan Document shall have been duly executed
        and
        delivered to Agent by each of the signatories thereto, and each Obligated
        Party
        shall be in compliance with all terms thereof, including:
  (i)  a
        Guaranty executed by Value Services in the form of Exhibit
        F attached
        hereto;
  37
  (ii)  a
        security agreement executed by Value Services in the form of Exhibit
        G attached
        hereto;
  (iii)  a
        pledge
        agreement executed by Borrower in the form of Exhibit
        H attached
        hereto;
  (iv)  a
        post
        closing agreement executed by Borrower in the form of Exhibit
        I attached
        hereto;
  (v)  a
        Trademark Security Agreement executed by Borrower in the form of Exhibit
        J attached
        hereto; and
  (vi)  a
        website
        security agreement and power of attorney executed by Borrower in the form
        of Exhibit
        k attached
        hereto;
  (b)  Agent
        shall have received acknowledgments of all filings or recordations necessary
        to
        perfect its Liens in the Collateral, as well as UCC and Lien searches and
        other
        evidence satisfactory to Agent that such Liens are the only Liens upon the
        Collateral, except Permitted Liens.
  (c)  Agent
        shall have received duly executed agreements establishing each Dominion Account,
        in form and substance, and with financial institutions, satisfactory to
        Agent.
  (d)  Agent
        shall have received certificates, in form and substance satisfactory to it,
        from
        a knowledgeable Senior Officer of each Obligated Party certifying that, after
        giving effect to the initial Loans and transactions hereunder, (i) such
        Obligated Party is Solvent; (ii) no Default or Event of Default exists;
        (iii) the representations and warranties set forth in Section 9 are true
        and correct; and (iv) such Obligated Party has complied with all agreements
        and conditions to be satisfied by it under the Loan Documents.
  (e)  Agent
        shall have received a certificate of a duly authorized officer of each Obligated
        Party, certifying (i) that attached copies of such Obligated Party’s
        Organic Documents are true and complete, and in full force and effect, without
        amendment except as shown; (ii) that an attached copy of resolutions
        authorizing execution and delivery of the Loan Documents is true and complete,
        and that such resolutions are in full force and effect, were duly adopted,
        have
        not been amended, modified or revoked, and constitute all resolutions adopted
        with respect to this credit facility; and (iii) to the title, name and
        signature of each Person authorized to sign the Loan Documents. Agent may
        conclusively rely on this certificate until it is otherwise notified by the
        applicable Obligated Party in writing.
  (f)  Agent
        shall have received a written opinion of Sheppard Mullin Richter & Hampton
        LLP, as well as any local counsel to Obligated Parties, in form and substance
        satisfactory to Agent and its counsel.
  (g)  Agent
        shall have received copies of the charter documents of each Obligated Party,
        certified by the Secretary of State or other appropriate official of such
        Obligated Party’s jurisdiction of organization. Agent shall have received good
        standing certificates for each Obligated Party, issued by the Secretary of
        State
        or other appropriate official of such Obligated Party’s jurisdiction of
        organization and each jurisdiction where such Obligated Party’s conduct of
        business or ownership of Property necessitates qualification.
  (h)  Agent
        shall have received copies of policies or certificates of insurance for the
        insurance policies carried by Obligated Parties, all in compliance with the
        Loan
        Documents.
  38
  (i)  Agent
        shall have completed its business, financial and legal due diligence of
        Obligated Parties, including a roll-forward of its previous field examination,
        with results satisfactory to Agent. No material adverse change in the financial
        condition of any Obligated Party or in the quality, quantity or value of
        any
        Collateral shall have occurred since March 30, 2008.
  (j)  Obligated
        Parties shall have paid all fees and expenses to be paid to Agent and Lenders
        on
        the Closing Date.
  (k)  Agent
        shall have received a Borrowing Base Certificate prepared as of May 25, 2008.
        Upon giving effect to the initial funding of Loans and issuance of Letters
        of
        Credit, and the payment by Borrower of all fees and expenses incurred in
        connection herewith as well as any payables stretched beyond their customary
        payment practices, Formula Availability shall be at least
        $7,000,000.
  (l)  Agent
        shall have received the Disclosure Schedules in form and substance satisfactory
        to Agent in its discretion.
  (m)  Each
        of
        the other documents set forth on the “Closing Checklist” prepared by Agent’s
        counsel and made available to Obligated Parties has been duly-executed and
        delivered, and all other items set forth on such Closing Checklist have been
        verified or delivered, as applicable, in each case to the satisfaction of
        Agent
        and its counsel.
  6.2.  Conditions
        Precedent to All Credit Extensions .
        Agent,
        Issuing Bank and Lenders shall not be required to fund any Loans, arrange
        for
        issuance of any Letters of Credit or grant any other accommodation to or
        for the
        benefit of Borrower, including the initial funding, unless the following
        conditions are satisfied:
  (a)  No
        Default or Event of Default shall exist at the time of, or result from, such
        funding, issuance or grant;
  (b)  The
        representations and warranties of each Obligated Party in the Loan Documents
        shall be true and correct on the date of, and upon giving effect to, such
        funding, issuance or grant (except for representations and warranties that
        expressly relate to an earlier date);
  (c)  All
        conditions precedent in any other Loan Document shall be satisfied;
  (d)  No
        event
        shall have occurred or circumstance exist that has or could reasonably be
        expected to have a Material Adverse Effect; and
  (e)  With
        respect to issuance of a Letter of Credit, the LC Conditions shall be
        satisfied.
  Each
        request (or deemed request) by Borrower for funding of a Loan, issuance of
        a Letter of Credit or grant of an accommodation shall constitute a
        representation by Obligated Parties that the foregoing conditions are satisfied
        on the date of such request and on the date of such funding, issuance or
        grant.
        As an additional condition to any funding, issuance or grant, Agent shall
        have
        received such other information, documents, instruments and agreements as
        it
        deems appropriate in connection therewith.
  6.3.  Limited
        Waiver of Conditions Precedent .
        If
        Agent, Issuing Bank or Lenders fund any Loans, arrange for issuance of any
        Letters of Credit or grant any other accommodation when any conditions precedent
        are not satisfied (regardless of whether the lack of satisfaction was known
        or
        unknown at the time), it shall not operate as a waiver of (a) the right of
        Agent, Issuing Bank and Lenders to insist upon satisfaction of all conditions
        precedent with respect to any subsequent funding, issuance or grant; nor
        (b) any Default or Event of Default due to such failure of conditions or
        otherwise.
  39
  SECTION
        7.  COLLATERAL
  7.1.  Grant
        of Security Interest .
        To
        secure the prompt payment and performance of all Obligations, Borrower hereby
        grants to Agent, for the benefit of Secured Parties, a continuing security
        interest in and Lien upon all Property of Borrower, including all of the
        following Property, whether now owned or hereafter acquired, and wherever
        located:
  (a)  all
        Accounts;
  (b)  all
        Chattel Paper, including electronic chattel paper;
  (c)  all
        Commercial Tort Claims;
  (d)  all
        Deposit Accounts;
  (e)  all
        Documents;
  (f)  all
        General Intangibles, including Intellectual Property;
  (g)  all
        Goods, including Inventory, Equipment and fixtures;
  (h)  all
        Instruments;
  (i)  all
        Investment Property;
  (j)  all
        Letter-of-Credit Rights;
  (k)  all
        Supporting Obligations;
  (l)  all
        cash
        and other monies, whether or not in the possession or under the control of
        Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, including
        any
        Cash Collateral;
  (m)  all
        accessions to, substitutions for, and all replacements, products, and cash
        and
        non-cash proceeds of the
        foregoing ,
        including proceeds of and unearned premiums with respect to insurance policies,
        and claims against any Person for loss, damage or destruction of any Collateral;
        and
  (n)  all
        books
        and records (including customer lists, files, correspondence, tapes, computer
        programs, print-outs and computer records) pertaining to the
        foregoing.
  7.2.  Lien
        on Deposit Accounts; Cash Collateral .
  7.2.1.  Deposit
        Accounts .
        To
        further secure the prompt payment and performance of all Obligations, Borrower
        hereby grants to Agent, for the benefit of Secured Parties, a continuing
        security interest in and Lien upon all amounts credited to any Deposit Account
        of Borrower, including any sums in any blocked accounts or in any accounts
        into
        which such sums are swept. Borrower authorizes and directs each bank or other
        depository to deliver to Agent, on a daily basis, all balances in each Deposit
        Account maintained by Borrower with such depository for application to the
        Obligations then outstanding. Borrower irrevocably appoints Agent as Borrower’s
        attorney-in-fact to collect such balances to the extent any such delivery
        is not
        so made.
  40
  7.2.2.  Cash
        Collateral .
        Any
        Cash Collateral may be invested, at Agent’s discretion, in Cash Equivalents, but
        Agent shall have no duty to do so, regardless of any agreement or course
        of
        dealing with Borrower, and shall have no responsibility for any investment
        or
        loss. Borrower hereby grants to Agent, for the benefit of Secured Parties,
        a
        security interest in all Cash Collateral held from time to time and all proceeds
        thereof, as security for the Obligations, whether such Cash Collateral is
        held
        in a Cash Collateral Account or elsewhere. Agent may apply Cash Collateral
        to
        the payment of any Obligations, in such order as Agent may elect, as they
        become
        due and payable. Each Cash Collateral Account and all Cash Collateral shall
        be
        under the sole dominion and control of Agent. Neither Borrower nor other
        Person
        claiming through or on behalf of Borrower shall have any right to any Cash
        Collateral, until Full Payment of all Obligations.
  7.3.  Intentionally
        Omitted .
  7.4.  Other
        Collateral .
  7.4.1.  Commercial
        Tort Claims .
        Borrower shall promptly notify Agent in writing if Borrower has a Commercial
        Tort Claim (other than, as long as no Default or Event of Default exists,
        a
        Commercial Tort Claim for less than $100,000) and, upon Agent’s request,
        shall promptly take such actions as Agent deems appropriate to confer upon
        Agent
        (for the benefit of Secured Parties) a duly perfected, first priority Lien
        upon such claim.
  7.4.2.  Certain
        After-Acquired Collateral .
        Borrower shall promptly notify Agent in writing if, after the Closing Date,
        Borrower obtains any interest in any Collateral consisting of Deposit Accounts,
        Chattel Paper, Documents, Instruments, Intellectual Property, Investment
        Property or Letter-of-Credit Rights and, upon Agent’s request, shall promptly
        take such actions as Agent deems appropriate to effect Agent’s duly perfected,
        first priority Lien upon such Collateral, including obtaining any appropriate
        possession, control agreement or Lien Waiver. If any Collateral is in the
        possession of a third party, at Agent’s request, Borrower shall obtain an
        acknowledgment that such third party holds the Collateral for the benefit
        of
        Agent.
  7.5.  No
        Assumption of Liability . **** The
        Lien
        on Collateral granted hereunder is given as security only and shall not subject
        Agent or any Lender to, or in any way modify, any obligation or liability
        of
        Borrower relating to any Collateral.
  7.6.  Further
        Assurances . **** Promptly
        upon request, Borrower shall deliver such instruments, assignments, title
        certificates, or other documents or agreements, and shall take such actions,
        as
        Agent deems appropriate under Applicable Law to evidence or perfect its Lien
        on
        any Collateral, or otherwise to give effect to the intent of this Agreement.
        Borrower authorizes Agent to file any financing statement that indicates
        the
        Collateral as “all assets” or “all personal property” of Borrower, or words to
        similar effect, and ratifies any action taken by Agent before the Closing
        Date
        to effect or perfect its Lien on any Collateral.
  7.7.  Foreign
        Subsidiary Stock . **** Notwithstanding Section
        2.1 ,
        not
        more than 65% of the voting stock of any Foreign Subsidiary and 100% of all
        non-voting stock (if any) of each Foreign Subsidiary shall be included in
        the Collateral.
  SECTION
        8.  COLLATERAL
        ADMINISTRATION
  8.1.  Borrowing
        Base Certificates .
        Borrower shall deliver to Agent (and Agent shall promptly deliver same to
        Lenders) a Borrowing Base Certificate (a) during each period of
        January 1 through August 31 of each year, by the 15 th day of
        each month, prepared as of the close of business of the previous
        month, ****** (b) during
        each period of September 1 through December 31 of each year, by Wednesday
        of
        each week, prepared as of the close of business on Sunday of the previous
        week,
        and (c) at such other times as Agent may request. All calculations of
        Availability in any Borrowing Base Certificate shall originally be made by
        Borrower and certified by a Senior Officer, *provided* that
        Agent may from time to time review and adjust any such calculation (i) to
        reflect its reasonable estimate of declines in value of any Collateral;
        (ii) to adjust advance rates to reflect changes in shrinkage, quality, mix
        and other factors affecting Collateral; and (iii) to the extent the
        calculation is not made in accordance with this Agreement or does not accurately
        reflect the Availability Reserve or otherwise reflect changes in the
        Availability Reserve.
  41
  8.2.  Administration
        of Accounts and Receipts .
  8.2.1.  Records
        and Schedules of Sales and Accounts .
        Borrower shall keep accurate and complete records of its Accounts and receipts
        from sales of Inventory in the Ordinary Course of Business, including all
        payments and collections thereon, and shall submit to Agent sales, collection,
        reconciliation and other reports in form satisfactory to Agent, together
        with
        such other information pertaining to Accounts and sales as Agent may reasonably
        request, all on such periodic basis as Agent may request.
  8.2.2.  Taxes .
        If an
        Account of Borrower includes a charge for any Taxes, Agent is authorized,
        in its
        discretion, to pay the amount thereof to the proper taxing authority for
        the
        account of Borrower and to charge Borrower therefor; *provided* , *however* ,
        that
        neither Agent nor Lenders shall be liable for any Taxes that may be due from
        Borrower or with respect to any Collateral.
  8.2.3.  Intentionally
        Omitted .
  8.2.4.  Maintenance
        of Dominion Account .
        Borrower shall maintain Dominion Accounts pursuant to arrangements acceptable
        to
        Agent. Borrower shall obtain an agreement (in form and substance satisfactory
        to
        Agent) from the Dominion Account bank, establishing Agent’s control over
        and Lien in the Dominion Account, requiring immediate deposit of all Payment
        Items, deposits and other remittances received in the Dominion Account and,
        if
        such Dominion Account is not the main Dominion Account, requiring immediate
        transfer of all funds therein to the main Dominion Account, and waiving offset
        rights of such bank against any funds in the Dominion Account, except offset
        rights for customary administrative charges. Neither Agent nor Lenders assume
        any responsibility to Borrower for any Dominion Account, including any claim
        of
        accord and satisfaction or release with respect to any Payment Items accepted
        by
        any bank.
  8.2.5.  Deposits
        and Other Proceeds of Collateral .
        All
        checks or cash received from the sale of Inventory shall be held by Borrower
        in
        trust for Agent and promptly (not later than the next Business
        Day) deposited into a Dominion Account. Borrower shall request in writing
        and otherwise take all necessary steps to ensure that all amounts due under
        credit card sales are remitted by the credit card companies and all other
        payments on Accounts or otherwise relating to Collateral are made directly
        to a
        Dominion Account. If Borrower or any of its Subsidiaries receives cash or
        Payment Items with respect to any other Collateral, such amounts shall also
        be
        held by Borrower in trust for Agent and promptly (not later than the next
        Business Day) deposited into a Dominion Account.
  8.3.  Administration
        of Inventory .
  8.3.1.  Records
        and Reports of Inventory .
        Borrower shall keep accurate and complete records of its Inventory, including
        costs and daily withdrawals and additions, and shall submit to Agent inventory
        and reconciliation reports in form satisfactory to Agent, on such periodic
        basis
        as Agent may request. Borrower shall conduct a physical inventory at least
        once
        per calendar year (and on a more frequent basis if requested by Agent when
        an
        Event of Default exists) and periodic cycle counts consistent with
        historical practices, and shall provide to Agent a report based on each such
        inventory and count promptly upon completion thereof, together with such
        supporting information as Agent may request. Agent may participate in and
        observe each physical count.
  42
  8.3.2.  Returns
        of Inventory .
        Borrower shall not return any Inventory to a supplier, vendor or other Person,
        whether for cash, credit or otherwise, unless (a) such return is in the
        Ordinary Course of Business; (b) no Default, Event of Default or
        Overadvance exists or would result therefrom; (c) Agent is promptly
        notified if the aggregate Value of all Inventory returned in any month (other
        than defective Inventory or Inventory returned by customers) exceeds
        $2,500,000; and (d) any payment received by Borrower for a return is
        promptly remitted to Agent for application to the Obligations.
  8.3.3.  Acquisition,
        Sale and Maintenance .
        Borrower shall not acquire or accept any Inventory on consignment or approval,
        and shall take all commercially reasonable steps to assure that all Inventory
        produced by or under the direction or control of Borrower or its Subsidiaries
        is
        produced in accordance with Applicable Law, including the FLSA. Borrower
        and its
        Subsidiaries shall not acquire or accept any Inventory that is known to any
        of
        them to have been produced in violation of Applicable Law, including the
        FLSA.
        Borrower shall not sell any Inventory on consignment or approval or any other
        basis under which the customer may return or require Borrower to repurchase
        such
        Inventory (excepting Borrower’s retail policies concerning the return of
        purchases of Inventory). Borrower shall use, store and maintain all Inventory
        with reasonable care and caution, in accordance with applicable standards
        of any
        insurance and in conformity with all Applicable Law, and shall make current
        rent
        payments (within applicable grace periods provided for in leases) at all
        locations where any Collateral is located.
  8.4.  Administration
        of Equipment .
  8.4.1.  Records
        and Schedules of Equipment .
        Borrower shall keep accurate and complete records of its Equipment, including
        kind, quality, quantity, cost, acquisitions and dispositions thereof, and
        shall
        submit to Agent, on such periodic basis as Agent may request, a current schedule
        thereof, in form satisfactory to Agent. Promptly upon request, Borrower shall
        deliver to Agent evidence of its ownership or interests in any
        Equipment.
  8.4.2.  Dispositions
        of Equipment .
        Borrower shall not sell, lease or otherwise dispose of any Equipment, without
        the prior written consent of Agent, other than (a) a Permitted Asset
        Disposition; and (b) replacement of Equipment that is worn, damaged or
        obsolete with Equipment of like function and value, if the replacement Equipment
        is acquired substantially contemporaneously with such disposition and is
        free of
        Liens.
  8.4.3.  Condition
        of Equipment .
        The
        Equipment is in good operating condition and repair, and all necessary
        replacements and repairs have been made so that the value and operating
        efficiency of the Equipment is preserved at all times, reasonable wear and
        tear
        excepted. Borrower shall ensure that the Equipment is mechanically and
        structurally sound, and capable of performing the functions for which it
        was
        designed, in accordance with manufacturer specifications. Borrower shall
        not
        permit any Equipment to become affixed to real Property unless any landlord
        or
        mortgagee delivers a Lien Waiver.
  8.5.  Administration
        of Deposit Accounts . Disclosure
        Schedule 8.5 sets
        forth all Deposit Accounts maintained by Borrower, including all Dominion
        Accounts. Borrower shall take all actions necessary to establish Agent’s control
        of each such Deposit Account (other than an account exclusively used for
        payroll, payroll taxes or employee benefits, or an account containing not
        more
        that $10,000 at any time). Borrower shall be the sole account holder of each
        Deposit Account and shall not allow any other Person (other than Agent) to
        have control over a Deposit Account or any Property deposited therein. Borrower
        shall promptly notify Agent of any opening or closing of a Deposit Account
        and,
        with the consent of Agent, will amend Disclosure
        Schedule 8.5 to
        reflect same.
  43
  8.6.  General
        Provisions .
  8.6.1.  Location
        of Collateral .
        All
        tangible items of Collateral, other than Inventory in transit, shall at all
        times be kept by Borrower at the business locations set forth in Disclosure Schedule 8.6.1 ,
        except
        that Borrower may (a) make sales or other dispositions of Collateral in
        accordance with Section 10.2.6 ;
        (b)
        move Equipment between (or, upon purchase, to) business locations set forth
        in Disclosure Schedule 8.6.1 ;
        (c)
        permit Equipment to be in transit to and from, and in possession of, any
        Person
        in the business of repairing or maintaining such Equipment for the purpose
        of
        maintenance and repair in the Ordinary Course of Business; and (d) move
        Collateral to another location in the United States, upon 30 Business Days
        prior
        written notice to Agent.
  8.6.2.  Insurance
        of Collateral; Condemnation Proceeds .
  (a)  Borrower
        shall maintain insurance with respect to the Collateral, covering casualty,
        hazard, public liability, theft, malicious mischief, flood (to the extent
        reasonably required by Agent) and other risks, in amounts, with endorsements
        and
        with insurers (with a Best Rating of at least A7, unless otherwise approved
        by
        Agent) satisfactory to Agent. All proceeds under each policy shall be
        payable to Agent. From time to time upon Agent’s request therefor, Borrower
        shall deliver to Agent the originals or certified copies of its insurance
        policies and any updated flood plain searches conducted by Borrower or at
        Borrower’s request, if any. Unless Agent shall agree otherwise, each policy
        shall include satisfactory endorsements (i) showing Agent as sole loss
        payee or additional insured, as appropriate; (ii) requiring 30 days prior
        written notice to Agent in the event of cancellation of the policy for any
        reason whatsoever; and (iii) specifying that the interest of Agent shall
        not be impaired or invalidated by any act or neglect of Borrower or the owner
        of
        the Property, nor by the occupation of the premises for purposes more hazardous
        than are permitted by the policy. If Borrower fails to provide and pay for
        any
        insurance, Agent may, at its option, but shall not be required to, procure
        the
        insurance and charge Borrower therefor. Borrower agrees to deliver to Agent,
        promptly as rendered, copies of all reports made to insurance companies.
        While
        no Event of Default exists, Borrower may settle, adjust or compromise any
        insurance claim, as long as the proceeds are delivered to Agent. If an Event
        of
        Default exists, only Agent shall be authorized to settle, adjust and compromise
        such claims.
  (b)  Any
        proceeds of insurance (other than proceeds from workers’ compensation or D&O
        insurance) and any awards arising from condemnation of any Collateral shall
        be paid to Agent. Any such proceeds or awards that relate to Inventory shall
        be
        applied to payment of the Revolver Loans, and then to any other Obligations
        outstanding. Subject to clause (c) below, any proceeds or awards that
        relate to Equipment or Real Estate shall be applied first to Revolver Loans
        and
        then to other Obligations.
  (c)  If
        requested by Borrower in writing within 15 days after Agent’s receipt of any
        insurance proceeds or condemnation awards relating to any loss or destruction
        of
        Equipment or Real Estate, Borrower may use such proceeds or awards to repair
        or
        replace such Equipment or Real Estate (and until so used, the proceeds shall
        be
        held by Agent as Cash Collateral) as long as (i) no Default or Event
        of Default exists; (ii) such repair or replacement is promptly undertaken
        and concluded, in accordance with plans satisfactory to Agent;
        (iii) replacement buildings are constructed on the sites of the original
        casualties and are of comparable size, quality and utility to the destroyed
        buildings; (iv) the repaired or replaced Property is free of Liens, other
        than Permitted Liens that are not Purchase Money Liens; (v) Borrower
        complies with disbursement procedures for such repair or replacement as Agent
        may reasonably require; and (vi) the aggregate amount of such proceeds or
        awards from any single casualty or condemnation does not exceed
        $1,000,000.
  44
  8.6.3.  Protection
        of Collateral .
        All
        expenses of protecting, storing, warehousing, insuring, handling, maintaining
        and shipping any Collateral, all Taxes payable with respect to any Collateral
        (including any sale thereof), and all other payments required to be made
        by
        Agent to any Person to realize upon any Collateral, shall be borne and paid
        by
        Borrower. Agent shall not be liable or responsible in any way for the
        safekeeping of any Collateral, for any loss or damage thereto (except for
        reasonable care in its custody while Collateral is in Agent’s actual
        possession), for any diminution in the value thereof, or for any act or default
        of any warehouseman, carrier, forwarding agency or other Person whatsoever,
        but
        the same shall be at Borrower’s sole risk.
  8.6.4.  Defense
        of Title to Collateral .
        Borrower shall at all times defend its title to Collateral and Agent’s Liens
        therein against all Persons, claims and demands whatsoever, except Permitted
        Liens.
  8.7.  Power
        of Attorney .
        Borrower hereby irrevocably constitutes and appoints Agent (and all Persons
        designated by Agent) as Borrower’s true and lawful attorney (and
        agent-in-fact) for the purposes provided in this Section 8.7 .
        Agent,
        or Agent’s designee, may, without notice and in either its or Borrower’s name,
        but at the cost and expense of Borrower:
  (a)  Endorse
        Borrower’s name on any Payment Item or other proceeds of Collateral (including
        proceeds of insurance) that come into Agent’s possession or control;
        and
  (b)  During
        the continuation of an Event of Default, (i) notify any Account Debtors of
        the assignment of their Accounts, demand and enforce payment of Accounts,
        by
        legal proceedings or otherwise, and generally exercise any rights and remedies
        with respect to Accounts; (ii) settle, adjust, modify, compromise,
        discharge or release any Accounts or other Collateral, or any legal proceedings
        brought to collect Accounts or Collateral; (iii) sell or assign any
        Accounts and other Collateral upon such terms, for such amounts and at such
        times as Agent deems advisable; (iv) take control, in any manner, of any
        proceeds of Collateral; (v) prepare, file and sign Borrower’s name to a
        proof of claim or other document in a bankruptcy of an Account Debtor, or
        to any
        notice, assignment or satisfaction of Lien or similar document;
        (vi) receive, open and dispose of mail addressed to Borrower, and notify
        postal authorities to change the address for delivery thereof to such address
        as
        Agent may designate; (vii) endorse any Chattel Paper, Document, Instrument,
        invoice, freight bill, bill of lading, or similar document or agreement relating
        to any Accounts, Inventory or other Collateral; (viii) use Borrower’s
        stationery and sign its name to verifications of Accounts and notices to
        Account
        Debtors; (ix) use the information recorded on or contained in any data
        processing equipment and computer hardware and software relating to any
        Collateral; (x) make and adjust claims under policies of insurance;
        (xi) take any proper action as may be necessary or appropriate to obtain
        payment under any letter of credit or banker’s acceptance for which Borrower is
        a beneficiary; and (xii) take all other actions as Agent deems appropriate
        to fulfill Borrower’s obligations under the Loan Documents.
  SECTION
        9.  REPRESENTATIONS
        AND WARRANTIES
  9.1.  General
        Representations and Warranties .
        To
        induce Agent and Lenders to enter into this Agreement and to make available
        the
        Commitments, Loans and Letters of Credit, Obligated Parties represent and
        warrant that:
  9.1.1.  Organization
        and Qualification .
        Each
        Obligated Party is duly organized, validly existing and in good standing
        under
        the laws of the jurisdiction of its organization. Each Obligated Party and
        each
        of its Subsidiaries is duly qualified, authorized to do business and in good
        standing as a foreign corporation in each jurisdiction where failure to be
        so
        qualified could reasonably be expected to have a Material Adverse
        Effect.
  45
  9.1.2.  Power
        and Authority .
        Each
        Obligated Party is duly authorized to execute, deliver and perform its Loan
        Documents. The execution, delivery and performance of the Loan Documents
        have
        been duly authorized by all necessary action, and do not (a) require any
        consent or approval of any holders of Equity Interests of any Obligated Party,
        other than those already obtained; (b) contravene the Organic Documents of
        any Obligated Party; (c) violate or cause a default under any Applicable
        Law or Material Contract; or (d) result in or require the imposition of any
        Lien (other than Permitted Liens) on any Property of any Obligated
        Party.
  9.1.3.  Enforceability .
        Each
        Loan Document is a legal, valid and binding obligation of each Obligated
        Party
        party thereto, enforceable in accordance with its terms, except as
        enforceability may be limited by bankruptcy, insolvency or similar laws
        affecting the enforcement of creditors’ rights generally.
  9.1.4.  Capital
        Structure . Disclosure
        Schedule 9.1.4 shows,
        for each Obligated Party and its Subsidiaries, its name, its jurisdiction
        of
        organization, its authorized and issued Equity Interests, the holders of
        its
        Equity Interests, and all agreements binding on such holders with respect
        to
        their Equity Interests. Each Obligated Party has good title to its Equity
        Interests in its Subsidiaries, subject only to Agent’s Lien, and all such Equity
        Interests are duly issued, fully paid and non-assessable. There are no
        outstanding options to purchase, warrants, subscription rights, agreements
        to
        issue or sell, convertible interests, phantom rights or powers of attorney
        relating to any Equity Interests of any Obligated Party or any of its
        Subsidiaries.
  9.1.5.  Corporate
        Names; Locations .
        During
        the five years preceding the Closing Date, except as shown on Disclosure
        Schedule 9.1.5 ,
        neither
        any Obligated Party nor any of its Subsidiaries has been known as or used
        any
        corporate, fictitious or trade names, has been the surviving corporation
        of a
        merger or combination, or has acquired any substantial part of the assets
        of any
        Person. The chief executive offices and other places of business of each
        Obligated Party and each of its Subsidiaries are shown on Disclosure
        Schedule 8.6.1 .
        During
        the five years preceding the Closing Date, neither any Obligated Party nor
        any
        of its Subsidiaries has had any other office or place of business.
  9.1.6.  Title
        to Properties; Priority of Liens .
        Each
        Obligated Party and its Subsidiaries has good and marketable title to (or
        valid
        leasehold interests in) all of its Real Estate, and good title to all of
        its personal Property, including all Property reflected in any financial
        statements delivered to Agent or Lenders, in each case free of Liens except
        Permitted Liens. Each Obligated Party and its Subsidiaries has paid and
        discharged all lawful claims that, if unpaid, could become a Lien on its
        Properties, other than Permitted Liens. All Liens of Agent in the Collateral
        are
        duly perfected, first priority Liens, subject only to Permitted Liens that
        are
        expressly allowed to have priority over Agent’s Liens.
  (a)  Accounts .
        Borrower represents and warrants, with respect to each Account, that such
        Account arises out of a completed, *bona
        fide* sale and
        delivery of goods in the Ordinary Course of Business, and substantially in
        accordance with any purchase order, contract or other document relating thereto,
        if applicable, and is for a sum certain, maturing as stated in the invoice
        covering such sale, a copy of which has been furnished or is available to
        Agent
        on request.
  46
  9.1.7.  Financial
        Statements .
        The
        consolidated balance sheets, and related statements of income, cash flow
        and
        shareholder’s equity, of Borrower and its Subsidiaries that have been and are
        hereafter delivered to Agent and Lenders, are prepared in accordance with
        GAAP,
        and fairly present the financial positions and results of operations of Borrower
        and its Subsidiaries at the dates and for the periods indicated. All projections
        delivered from time to time to Agent and Lenders have been prepared in good
        faith, based on reasonable assumptions in light of the circumstances at such
        time. Since March 30, 2008, there has been no change in the condition, financial
        or otherwise, of Borrower or its Subsidiaries that could reasonably be expected
        to have a Material Adverse Effect. No financial statement delivered to Agent
        or
        Lenders at any time contains any untrue statement of a material fact, nor
        fails
        to disclose any material fact necessary to make such statement not materially
        misleading. Borrower and each of its Subsidiaries is Solvent.
  9.1.8.  Surety
        Obligations .
        Neither
        any Obligated Party nor any of its Subsidiaries is obligated as surety or
        indemnitor under any bond or other contract that assures payment or performance
        of any obligation of any Person, except as permitted hereunder.
  9.1.9.  Taxes .
        Each
        Obligated Party has filed all federal, state and local tax returns and other
        reports that it is required by law to file, and has paid, or made provision
        for
        the payment of, all Taxes upon it, its income and its Properties that are
        due
        and payable, except to the extent being Properly Contested. The provision
        for
        Taxes on the books of each Obligated Party and its Subsidiaries is adequate
        for
        all years not closed by applicable statutes, and for its current Fiscal
        Year.
  9.1.10.  Brokers .
        There
        are no brokerage commissions, finder’s fees or investment banking fees payable
        in connection with any transactions contemplated by the Loan
        Documents.
  9.1.11.  Intellectual
        Property .
        Each
        Obligated Party and its Subsidiaries owns or has the lawful right to use
        all
        Intellectual Property necessary for the conduct of its business, without
        conflict with any rights of others. There is no pending or, to any Obligated
        Party’s knowledge, threatened Intellectual Property Claim with respect to any
        Obligated Party, any of its Subsidiaries or any of their respective Property
        (including any Intellectual Property). Except as disclosed on Disclosure Schedule 9.1.12 ,
        neither
        any Obligated Party nor any of its Subsidiaries pays or owes any Royalty
        or
        other compensation to any Person with respect to any Intellectual Property.
        All
        Intellectual Property owned, used or licensed by, or otherwise subject to
        any
        interests of, any Obligated Party and each of its Subsidiaries is shown on Disclosure
        Schedule 9.1.12 .
  9.1.12.  Governmental
        Approvals .
        Each
        Obligated Party has, is in compliance with, and is in good standing with
        respect
        to, all Governmental Approvals necessary to conduct its business and to own,
        lease and operate its Properties. All necessary import, export or other
        licenses, permits or certificates for the import or handling of any goods
        or
        other Collateral have been procured and are in effect, and Obligated Party
        and
        its Subsidiaries have complied with all foreign and domestic laws with respect
        to the shipment and importation of any goods or Collateral, except where
        noncompliance could not reasonably be expected to have a Material Adverse
        Effect.
  9.1.13.  Compliance
        with Laws .
        Each
        Obligated Party and its Subsidiaries has duly complied, and its Properties
        and
        business operations are in compliance, in all material respects with all
        Applicable Law, except where noncompliance could not reasonably be expected
        to
        have a Material Adverse Effect. There have been no citations, notices or
        orders
        of material noncompliance issued to any Obligated Party or any of its
        Subsidiaries under any Applicable Law except as may have been disclosed to
        Agent
        in writing prior to the Closing Date. No Inventory has been produced by or
        under
        the direction or control of Borrower or its Subsidiaries in violation of
        the
        FLSA and, to the knowledge of Obligated Parties, no other Inventory has been
        produced in violation of the FLSA.
  47
  9.1.14.  Compliance
        with Environmental Laws .
        Except
        as disclosed on Disclosure Schedule 9.1.15 ,
        neither
        Obligated Party’s nor any of its Subsidiary’s past or present operations, Real
        Estate or other Properties are subject to any federal, state or local
        investigation to determine whether any remedial action is needed to address
        any
        environmental pollution, hazardous material or environmental clean-up. Neither
        Obligated Party’s nor any of its Subsidiaries has received any Environmental
        Notice. Neither Obligated Party’s nor any of its Subsidiaries has any contingent
        liability with respect to any Environmental Release, environmental pollution
        or
        hazardous material on any Real Estate now or previously owned, leased or
        operated by it.
  9.1.15.  Burdensome
        Contracts .
        Neither
        Obligated Party nor any of its Subsidiaries is a party or subject to any
        contract, agreement or charter restriction that could reasonably be expected
        to
        have a Material Adverse Effect. Neither Obligated Party nor any of its
        Subsidiaries is party or subject to any Restrictive Agreement, except as
        shown
        on Disclosure
        Schedule 9.1.16 ,
        none of
        which prohibit the execution or delivery of any Loan Documents by an Obligated
        Party nor the performance by an Obligated Party of any obligations
        thereunder.
  9.1.16.  Litigation .
        Except
        as shown on Disclosure
        Schedule 9.1.17 ,
        there
        are no proceedings or investigations pending or, to Obligated Parties’
knowledge, threatened against any Obligated Party or any of its Subsidiaries,
        or
        any of their businesses, operations, Properties, prospects or conditions,
        that
        (a) relate to any Loan Documents or transactions contemplated thereby; or
        (b) could reasonably be expected to have a Material Adverse Effect if
        determined adversely to any Obligated Party or any of its Subsidiaries. Neither
        any Obligated Party nor any of its Subsidiaries is in default with respect
        to
        any order, injunction or judgment of any Governmental Authority.
  9.1.17.  No
        Defaults .
        No
        event or circumstance has occurred or exists that constitutes a Default or
        Event
        of Default. Neither any Obligated Party nor any of its Subsidiaries is in
        default, and no event or circumstance has occurred or exists that with the
        passage of time or giving of notice would constitute a default, under any
        Material Contract or in the payment of any Borrowed Money. There is no basis
        upon which any party (other than any Obligated Party or its
        Subsidiaries) could terminate a Material Contract prior to its scheduled
        termination date.
  9.1.18.  ERISA .
        Except
        as disclosed on Disclosure
        Schedule 9.1.19 :
  (a)  Each
        Plan
        is in compliance in all material respects with the applicable provisions
        of
        ERISA, the Code, and other federal and state laws. Each Plan that is intended
        to
        qualify under Section 401(a) of the Code has received a favorable
        determination letter from the IRS or an application for such a letter is
        currently being processed by the IRS with respect thereto and, to the knowledge
        of Obligated Parties, nothing has occurred which would prevent, or cause
        the
        loss of, such qualification. Each Obligated Party and ERISA Affiliate has
        made
        all required contributions to each Plan subject to Section 412 of the Code,
        and no application for a funding waiver or an extension of any amortization
        period pursuant to Section 412 of the Code has been made with respect to
        any Plan.
  (b)  There
        are
        no pending or, to the knowledge of Obligated Parties, threatened claims,
        actions
        or lawsuits, or action by any Governmental Authority, with respect to any
        Plan
        that could reasonably be expected to have a Material Adverse Effect. There
        has
        been no prohibited transaction or violation of the fiduciary responsibility
        rules with respect to any Plan that has resulted in or could reasonably be
        expected to have a Material Adverse Effect.
  (c)  (i) No
        ERISA Event has occurred or is reasonably expected to occur; (ii) no
        Pension Plan has any Unfunded Pension Liability; (iii) no Obligated Party
        or ERISA Affiliate has incurred, or reasonably expects to incur, any liability
        under Title IV of ERISA with respect to any Pension Plan (other than premiums
        due and not delinquent under Section 4007 of ERISA); (iv) no Obligated
        Party or ERISA Affiliate has incurred, or reasonably expects to incur, any
        liability (and no event has occurred which, with the giving of notice under
        Section 4219 of ERISA, would result in such liability) under
        Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
        (v) no Obligated Party or ERISA Affiliate has engaged in a transaction that
        could be subject to Section 4069 or 4212(c) of ERISA.
  48
  (d)  With
        respect to any Foreign Plan, (i) all employer and employee contributions
        required by law or by the terms of the Foreign Plan have been made, or, if
        applicable, accrued, in accordance with normal accounting practices;
        (ii) the fair market value of the assets of each funded Foreign Plan, the
        liability of each insurer for any Foreign Plan funded through insurance,
        or the
        book reserve established for any Foreign Plan, together with any accrued
        contributions, is sufficient to procure or provide for the accrued benefit
        obligations with respect to all current and former participants in such Foreign
        Plan according to the actuarial assumptions and valuations most recently
        used to
        account for such obligations in accordance with applicable generally accepted
        accounting principles; and (iii) it has been registered as required and has
        been maintained in good standing with applicable regulatory
        authorities.
  9.1.19.  Trade
        Relations .
        There
        exists no actual or threatened termination, limitation or modification of
        any
        business relationship between any Obligated Party or its Subsidiaries and
        any
        customer or supplier, or any group of customers or suppliers, who individually
        or in the aggregate are material to the business of such Obligated Party
        or any
        such Subsidiary, except as may have been disclosed to Agent in writing prior
        to
        the Closing Date. There exists no condition or circumstance that could
        reasonably be expected to impair the ability of any Obligated Party or its
        Subsidiaries to conduct its business at any time hereafter in substantially
        the
        same manner as conducted on the Closing Date.
  9.1.20.  Labor
        Relations .
        Except
        as described on Disclosure
        Schedule 9.1.21 ,
        neither
        any Obligated Party nor its Subsidiaries is party to or bound by any collective
        bargaining agreement, management agreement or consulting agreement. There
        are no
        material grievances, disputes or controversies with any union or other
        organization of any Obligated Party’s or its Subsidiaries’ employees, or, to
        Obligated Party’s knowledge, any asserted or threatened strikes, work stoppages
        or demands for collective bargaining.
  9.1.21.  Payable
        Practices .
        Neither
        Obligated Party nor its Subsidiaries has made any material change in its
        historical accounts payable practices from those in effect on the Closing
        Date.
  9.1.22.  Not
        a
        Regulated Entity .
        No
        Obligated Party is (a) an “investment company” or a “person directly or
        indirectly controlled by or acting on behalf of an investment company” within
        the meaning of the Investment Company Act of 1940; or (b) subject to
        regulation under the Federal Power Act, the Interstate Commerce Act, any
        public
        utilities code or any other Applicable Law regarding its authority to incur
        Debt.
  9.1.23.  Margin
        Stock .
        Neither
        any Obligated Party nor its Subsidiaries is engaged, principally or as one
        of
        its important activities, in the business of extending credit for the purpose
        of
        purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit
        will be used to purchase or carry, or to reduce or refinance any Debt incurred
        to purchase or carry, any Margin Stock or for any related purpose governed
        by
        Regulations T, U or X of the Board of Governors.
  9.2.  Complete
        Disclosure .
        No Loan
        Document contains any untrue statement of a material fact, nor fails to disclose
        any material fact necessary to make the statements contained therein not
        materially misleading. There is no fact or circumstance that any Obligated
        Party
        has failed to disclose to Agent in writing that could reasonably be expected
        to
        have a Material Adverse Effect.
  49
  SECTION
        10.  COVENANTS
        AND CONTINUING AGREEMENTS
  10.1.  Affirmative
        Covenants .
        As long
        as any Commitments or Obligations are outstanding, each Obligated Party shall,
        and shall cause each of its Subsidiaries to:
  10.1.1.  Inspections;
        Appraisals .
  (a)  Permit
        Agent from time to time, subject (except when a Default or Event of Default
        exists) to reasonable notice and normal business hours, to visit and
        inspect the Properties of such Obligated Party’s and its Subsidiaries, inspect,
        audit and make extracts from such Obligated Party’s and its Subsidiaries’ books
        and records, and discuss with its officers, employees, agents, advisors and
        independent accountants Borrower’s or its Subsidiaries’ business, financial
        condition, assets, prospects and results of operations. Lenders may participate
        in any such visit or inspection, at their own expense. Neither Agent nor
        any
        Lender shall have any duty to any Obligated Party to make any inspection,
        nor to
        share any results of any inspection, appraisal or report with any Obligated
        Party. Obligated Parties acknowledge that all inspections, appraisals and
        reports are prepared by Agent and Lenders for their purposes, and Obligated
        Parties shall not be entitled to rely upon them.
  (b)  Reimburse
        Agent for all charges, costs and expenses of Agent in connection with
        (i) examinations of any Obligated Party’s or its Subsidiaries books and
        records or any other financial or Collateral matters as Agent deems appropriate;
        and (ii) appraisals of Inventory. Subject to and without limiting the
        foregoing, Obligated Parties specifically agree to pay Agent’s then standard
        charges for each day that an employee of Agent or its Affiliates is engaged
        in
        any examination activities, and shall pay the standard charges of Agent’s
        internal appraisal group. This Section 10.1.1 shall
        not be construed to limit Agent’s right to conduct examinations or to obtain
        appraisals at any time in its discretion, nor to use third parties for such
        purposes.
  10.1.2.  Financial
        and Other Information .
        Keep
        adequate records and books of account with respect to its business activities,
        in which proper entries are made in accordance with GAAP reflecting all
        financial transactions; and furnish to Agent and Lenders:
  (a)  as
        soon
        as available, and in any event within 90 days after the close of each Fiscal
        Year, copies of the annual filings of Borrower and its Subsidiaries required
        to
        be filed with the Securities Exchange Commission, together with balance sheets
        as of the end of such Fiscal Year and the related statements of income, cash
        flow and shareholders’ equity for such Fiscal Year, on a consolidated basis for
        Borrower and its Subsidiaries, which consolidated statements shall be audited
        and certified (without qualification as to scope, “going concern” or similar
        items) by a firm of independent certified public accountants of recognized
        standing selected by Borrower and acceptable to Agent, and shall set forth
        in
        comparative form corresponding figures for the preceding Fiscal Year and
        other
        information acceptable to Agent. Simultaneously with retaining accountants
        for
        its annual audit, Borrower shall send a letter to the accountants, with a
        copy
        to Agent and Lenders, notifying the accountants that one of the primary purposes
        for retaining their services and obtaining audited financial statements is
        for
        use by Agent and Lenders. Agent is authorized to send such notice if Borrower
        fails to do so for any reason;
  (b)  as
        soon
        as available, and in any event within 45 days after the end of each Fiscal
        Quarter (but within 60 days after the last Fiscal Quarter in a Fiscal Year),
        unaudited balance sheets as of the end of such Fiscal Quarter and the related
        statements of income and cash flow for such Fiscal Quarter and for the portion
        of the Fiscal Year then elapsed, on a consolidated basis for Borrower and
        its
        Subsidiaries, setting forth in comparative form corresponding figures for
        the
        preceding Fiscal Year and certified by the chief financial officer of Borrower
        as prepared in accordance with GAAP and fairly presenting the financial position
        and results of operations for such Fiscal Quarter and period, subject to
        normal
        year-end adjustments and the absence of footnotes;
  50
  (c)  as
        soon
        as available, and in any event within 30 days after the end of each month
        (other
        than the last month in a Fiscal Quarter), unaudited balance sheets as of
        the end
        of such month and the related statements of income and cash flow for such
        month
        and for the portion of the Fiscal Year then elapsed, on a consolidated basis
        for
        Borrower and its Subsidiaries, setting forth in comparative form corresponding
        figures for the preceding Fiscal Year and certified by the chief financial
        officer of Borrower as prepared in accordance with GAAP and fairly presenting
        the financial position and results of operations for such month and period,
        subject to normal year-end adjustments and the absence of
        footnotes;
  (d)  concurrently
        with delivery of financial statements under clauses (a) and (b) above,
        or more frequently if requested by Agent while a Default or Event of Default
        exists, a Compliance Certificate executed by the chief financial officer
        of
        Borrower;
  (e)  concurrently
        with delivery of financial statements under clause (a) above, copies of all
        management letters and other material reports submitted to Borrower by its
        accountants in connection with such financial statements;
  (f)  not
        later
        than 30 days after the beginning of each Fiscal Year, projections of Borrower’s
        consolidated balance sheets, results of operations, cash flow and Availability
        for such Fiscal Year, month by month and for the next Fiscal Year;
  (g)  at
        Agent’s request, a listing of each Obligated Party’s trade payables, specifying
        the trade creditor and balance due, and a detailed trade payable aging, all
        in
        form satisfactory to Agent;
  (h)  promptly
        after the sending or filing thereof, copies of any proxy statements, financial
        statements or reports that Borrower has made generally available to its
        shareholders; copies of any regular, periodic and special reports or
        registration statements or prospectuses that any Obligated Party files with
        the
        Securities and Exchange Commission or any other Governmental Authority, or
        any
        securities exchange; and copies of any press releases or other statements
        made
        available by any Obligated Party to the public concerning material changes
        to or
        developments in the business of such any Obligated Party;
  (i)  promptly
        after the sending or filing thereof, copies of any annual report to be filed
        in
        connection with each Plan or Foreign Plan;
  (j)  such
        other reports and information (financial or otherwise) as Agent may request
        from time to time in connection with any Collateral or any Obligated Party’s or
        its Subsidiaries’ financial condition or business; and
  (k)  as
        soon
        as available, and in any event within 120 days after the close of each Fiscal
        Year, financial statements for each Guarantor that is not an Obligated Party,
        if
        any, in form and substance satisfactory to Agent.
  10.1.3.  Notices .
        Notify
        Agent and Lenders in writing, promptly after any Obligated Party’s obtaining
        knowledge thereof, of any of the following that affects an Obligated Party
        or
        its Subsidiaries: (a) the threat or commencement of any proceeding or
        investigation, whether or not covered by insurance, if an adverse determination
        could have a Material Adverse Effect; (b) any pending or threatened labor
        dispute, strike or walkout, or the expiration of any material labor contract;
        (c) any default under or termination of a Material Contract; (d) the
        existence of any Default or Event of Default; (e) any judgment in an amount
        exceeding $1,000,000; (f) the assertion of any Intellectual Property Claim,
        if an adverse resolution could have a Material Adverse Effect; (g) any
        violation or asserted violation of any Applicable Law (including ERISA, OSHA,
        FLSA, or any Environmental Laws), if an adverse resolution could have a Material
        Adverse Effect; (h) any Environmental Release by an Obligated Party or on
        any Property owned, leased or occupied by an Obligated Party; or receipt
        of any
        Environmental Notice; (i) the occurrence of any ERISA Event; (j) the
        discharge of or any withdrawal or resignation by Borrower’s independent
        accountants; or (k) any opening of a new office or place of business, at
        least 30 days prior to such opening.
  51
  10.1.4.  Landlord
        and Storage Agreements .
        Upon
        request, provide Agent with copies of all existing agreements, and promptly
        after execution thereof provide Agent with copies of all future agreements,
        between an Obligated Party and any landlord, warehouseman, processor, shipper,
        bailee or other Person that owns any premises at which any Collateral may
        be
        kept or that otherwise may possess or handle any Collateral.
  10.1.5.  Compliance
        with Laws .
        Comply
        with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA,
        Anti-Terrorism Laws, and laws regarding collection and payment of Taxes,
        and
        maintain all Governmental Approvals necessary to the ownership of its Properties
        or conduct of its business, unless failure to comply (other than failure
        to
        comply with Anti-Terrorism Laws) or maintain could not reasonably be
        expected to have a Material Adverse Effect. Without limiting the generality
        of
        the foregoing, if any Environmental Release occurs at or on any Properties
        of
        any Obligated Party or its Subsidiaries, it shall act promptly and diligently
        to
        investigate and report to Agent and all appropriate Governmental Authorities
        the
        extent of, and to make appropriate remedial action to eliminate, such
        Environmental Release, whether or not directed to do so by any Governmental
        Authority.
  10.1.6.  Taxes .
        Pay and
        discharge all Taxes prior to the date on which they become delinquent or
        penalties attach, unless such Taxes are being Properly Contested.
  10.1.7.  Insurance .
        In
        addition to the insurance required hereunder with respect to Collateral,
        maintain insurance with insurers (with a Best Rating of at least A7, unless
        otherwise approved by Agent) satisfactory to Agent, (a) with respect
        to the Properties and business of Obligated Parties and their respective
        Subsidiaries of such type (including product liability, workers’ compensation,
        larceny, embezzlement, or other criminal misappropriation insurance), in
        such
        amounts, and with such coverages and deductibles as are customary for companies
        similarly situated; and (b) business interruption insurance in an amount
        not less than $1,000,000, with deductibles and subject to an Insurance
        Assignment satisfactory to Agent.
  10.1.8.  Licenses .
        Keep
        each License affecting any Collateral (including the manufacture, distribution
        or disposition of Inventory) or any other material Property of each
        Obligated Party and its Subsidiaries in full force and effect; promptly notify
        Agent of any proposed modification to any such License, or entry into any
        new
        License, in each case at least 30 days prior to its effective date; pay all
        Royalties when due; and notify Agent of any default or breach asserted by
        any
        Person to have occurred under any License.
  10.1.9.  Future
        Subsidiaries .
        Promptly notify Agent upon any Person becoming a Subsidiary and, if such
        Person
        is not a Foreign Subsidiary, cause it to guaranty the Obligations in a manner
        satisfactory to Agent, became an Obligated Party hereunder, and to execute
        and
        deliver such documents, instruments and agreements and to take such other
        actions as Agent shall require to evidence and perfect a Lien in favor of
        Agent
        (for the benefit of Secured Parties) on all assets of such Person,
        including delivery of such legal opinions, in form and substance satisfactory
        to
        Agent, as it shall deem appropriate.
  52
  10.2.  Negative
        Covenants .
        As long
        as any Commitments or Obligations are outstanding, Obligated Parties shall
        not,
        and shall cause each of their respective Subsidiaries not to:
  10.2.1.  Permitted
        Debt .
        Create,
        incur, guarantee or suffer to exist any Debt, except:
  (a)  the
        Obligations;
  (b)  Subordinated
        Debt;
  (c)  Permitted
        Purchase Money Debt;
  (d)  Borrowed
        Money (other than the Obligations, Subordinated Debt and Permitted Purchase
        Money Debt), but only to the extent outstanding on the Closing Date and not
        satisfied with proceeds of the initial Loans;
  (e)  Bank
        Product Debt;
  (f)  Debt
        that
        is in existence when a Person becomes a Subsidiary or that is secured by
        an
        asset when acquired by an Obligated Party or any of its Subsidiaries, as
        long as
        such Debt was not incurred in contemplation of such Person becoming a Subsidiary
        or such acquisition, and does not exceed $1,000,000 in the aggregate at any
        time;
  (g)  Permitted
        Contingent Obligations;
  (h)  Refinancing
        Debt as long as each Refinancing Condition is satisfied; and
  (i)  Debt
        that
        is not included in any of the preceding clauses of this Section 10.2.1 ,
        is not
        secured by a Lien and does not exceed $5,000,000 in the aggregate at any
        time.
  10.2.2.  Permitted
        Liens .
        Create
        or suffer to exist any Lien upon any of its Property, except the following
        (collectively, “ **Permitted
        Liens** ”):
  (a)  Liens
        in
        favor of Agent;
  (b)  Purchase
        Money Liens securing Permitted Purchase Money Debt;
  (c)  Liens
        for
        Taxes not yet due or being Properly Contested;
  (d)  statutory
        Liens (other than Liens for Taxes or imposed under ERISA) arising in the
        Ordinary Course of Business, but only if (i) payment of the obligations
        secured thereby is not yet due or is being Properly Contested, and
        (ii) such Liens do not materially impair the value or use of the Property
        or materially impair operation of the business of any Obligated Party or
        its
        Subsidiaries;
  (e)  Liens
        incurred or deposits made in the Ordinary Course of Business to secure the
        performance of tenders, bids, leases, contracts (except those relating to
        Borrowed Money), statutory obligations and other similar obligations, or
        arising
        as a result of progress payments under government contracts, as long as such
        Liens are at all times junior to Agent’s Liens;
  53
  (f)  Liens
        arising in the Ordinary Course of Business that are subject to Lien
        Waivers;
  (g)  Liens
        arising by virtue of a judgment or judicial order against any Obligated Party
        or
        its Subsidiaries, or any Property of an Obligated Party or its Subsidiaries,
        as
        long as such Liens are (i) in existence for less than 20 consecutive days
        or being Properly Contested, and (ii) at all times junior to Agent’s
        Liens;
  (h)  easements,
        rights-of-way, zoning and other restrictions, covenants or other agreements
        of
        record, and other similar charges or encumbrances on Real Estate, that do
        not
        secure any monetary obligation and do not interfere with the Ordinary Course
        of
        Business;
  (i)  normal
        and customary rights of setoff upon deposits in favor of depository
        institutions, and Liens of a collecting bank on Payment Items in the course
        of
        collection; and
  (j)  existing
        Liens shown on Disclosure
        Schedule 10.2.2 .
  10.2.3.  Intentionally
        Omitted .
  10.2.4.  Distributions;
        Upstream Payments .
        Declare
        or make any Distributions, except Upstream Payments; or create or suffer
        to
        exist any encumbrance or restriction on the ability of a Subsidiary to make
        any
        Upstream Payment, except for restrictions under the Loan Documents, under
        Applicable Law or in effect on the Closing Date as shown on Disclosure
        Schedule 9.1.16 .
  10.2.5.  Restricted
        Investments .
        Make
        any Restricted Investment.
  10.2.6.  Disposition
        of Assets .
        Make
        any Asset Disposition, except a Permitted Asset Disposition, a disposition
        of
        Equipment under Section 8.4.2 ,
        or a
        transfer of Property by a Subsidiary or other Obligated Party to
        Borrower.
  10.2.7.  Loans .
        Make
        any loans or other advances of money to any Person, except (a) advances to
        an officer or employee for salary, travel expenses, commissions and similar
        items in the Ordinary Course of Business; (b) prepaid expenses and
        extensions of trade credit made in the Ordinary Course of Business; and
        (c) deposits with financial institutions permitted hereunder.
  10.2.8.  Restrictions
        on Payment of Certain Debt .
        Make
        any payments (whether voluntary or mandatory, or a prepayment, redemption,
        retirement, defeasance or acquisition) with respect to any
        (a) Subordinated Debt, except regularly scheduled payments of principal,
        interest and fees, but only to the extent permitted under any subordination
        agreement relating to such Debt (and a Senior Officer of Borrower shall certify
        to Agent, not less than five Business Days prior to the date of payment,
        that
        all conditions under such agreement have been satisfied); or (b) Borrowed
        Money (other than the Obligations) prior to its due date under the
        agreements evidencing such Debt as in effect on the Closing Date (or as amended
        thereafter with the consent of Agent).
  10.2.9.  Fundamental
        Changes .
        Merge,
        combine or consolidate with any Person, or liquidate, wind up its affairs
        or
        dissolve itself, in each case whether in a single transaction or in a series
        of
        related transactions, except for mergers or consolidations of a wholly-owned
        Subsidiary of Borrower with another wholly-owned Subsidiary of Borrower or
        into
        Borrower (with Borrower being the surviving entity); change its name or conduct
        business under any fictitious name; change its tax, charter or other
        organizational identification number; or change its form or state of
        organization.
  54
  10.2.10.  Subsidiaries . ****** Form
        or
        acquire any Subsidiary after the Closing Date, except in accordance with Sections
        10.1.9 **** and **** 10.2.5 ;
        or
        permit any existing Subsidiary to issue any additional Equity Interests except
        director’s qualifying shares.
  10.2.11.  Organic
        Documents .
        Amend,
        modify or otherwise change any of its Organic Documents as in effect on the
        Closing Date.
  10.2.12.  Tax
        Consolidation .
        File or
        consent to the filing of any consolidated income tax return with any Person
        other than Borrower and its Subsidiaries.
  10.2.13.  Accounting
        Changes .
        Make
        any material change in accounting treatment or reporting practices, except
        as
        required by GAAP and in accordance with Section 1.2 ;
        or
        change its Fiscal Year.
  10.2.14.  Restrictive
        Agreements .
        Become
        a party to any Restrictive Agreement, except (a) a Restrictive Agreement as
        in effect on the Closing Date and shown on Disclosure
        Schedule 9.1.16 ;
        (b) a Restrictive Agreement relating to secured Debt permitted hereunder,
        if such restrictions apply only to the collateral for such Debt; and
        (c) customary provisions in leases and other contracts restricting
        assignment thereof.
  10.2.15.  Hedging
        Agreements .
        Enter
        into any Hedging Agreement, except to hedge risks arising in the Ordinary
        Course
        of Business and not for speculative purposes.
  10.2.16.  Conduct
        of Business .
        Engage
        in any business, other than its business as conducted on the Closing Date
        and
        any activities incidental thereto.
  10.2.17.  Affiliate
        Transactions .
        Enter
        into or be party to any transaction with an Affiliate, except
        (a) transactions contemplated by the Loan Documents; (b) payment of
        reasonable compensation to officers and employees for services actually
        rendered, and loans and advances permitted by Section 10.2.7 ;
        (c) payment of customary directors’ fees and indemnities;
        (d) transactions with Affiliates that were consummated prior to the Closing
        Date, as shown on Disclosure
        Schedule 10.2.17 ;
        and
        (e) transactions with Affiliates in the Ordinary Course of Business, upon
        fair and reasonable terms fully disclosed to Agent and no less favorable
        than
        would be obtained in a comparable arm’s-length transaction with a
        non-Affiliate.
  10.2.18.  Plans .
        Become
        party to any Multiemployer Plan or Foreign Plan, other than any in existence
        on
        the Closing Date.
  10.3.  Financial
        Covenants .
        As long
        as any Commitments or Obligations are outstanding, Borrower shall:
  10.3.1.  Fixed
        Charge Coverage Ratio .
        Maintain a Fixed Charge Coverage Ratio of at least 1.00 to 1.00 at all times
        during each Covenant Testing Period.
  SECTION
        11.  EVENTS
        OF
        DEFAULT; REMEDIES ON DEFAULT
  11.1.  Events
        of Default .
        Each of
        the following shall be an “ **Event
        of Default** ”
        hereunder, if the same shall occur for any reason whatsoever, whether voluntary
        or involuntary, by operation of law or otherwise:
  55
  (a)  Any
        Obligated Party fails to pay any Obligations when due (whether at stated
        maturity, on demand, upon acceleration or otherwise);
  (b)  Any
        representation, warranty or other written statement of an Obligated Party
        made
        in connection with any Loan Documents or transactions contemplated thereby
        is
        incorrect or misleading in any material respect when given or deemed given
        pursuant to the terms of this Agreement;
  (c)  Any
        Obligated Party breaches or fail to perform any covenant contained in any
        of Sections 7.2 , 7.4 , 7.6 , 8.1 , 8.2.4 , 8.2.5 , 8.6.2 , 10.1.1 , 10.1.2 , 10.2 or 10.3 ;
  (d)  An
        Obligated Party breaches or fails to perform any other covenant contained
        in any
        Loan Document, and such breach or failure is not cured within 15 days after
        a
        Senior Officer of such Obligated Party or Borrower has knowledge thereof
        or
        receives notice thereof from Agent, whichever is sooner; *provided* , *however* ,
        that
        such notice and opportunity to cure shall not apply if the breach or failure
        to
        perform is not capable of being cured within such period or is a willful
        breach
        by an Obligated Party;
  (e)  A
        Guarantor repudiates, revokes or attempts to revoke its Guaranty; an Obligated
        Party denies or contests the validity or enforceability of any Loan Documents
        or
        Obligations, or the perfection or priority of any Lien granted to Agent;
        or any
        Loan Document ceases to be in full force or effect for any reason (other
        than a
        waiver or release by Agent and Lenders);
  (f)  Any
        breach or default of an Obligated Party occurs under any document, instrument
        or
        agreement to which it is a party or by which it or any of its Properties
        is
        bound, relating to any Debt (other than the Obligations) in excess of
        $1,000,000, if the maturity of or any payment with respect to such Debt may
        be
        accelerated or demanded due to such breach;
  (g)  Any
        judgment or order for the payment of money is entered against an Obligated
        Party
        in an amount that exceeds, individually or cumulatively with all unsatisfied
        judgments or orders against all Obligated Parties, $3,000,000 (net of any
        insurance coverage therefor acknowledged in writing by the insurer without
        a
        reservation of rights), unless a stay of enforcement of such judgment or
        order
        is in effect, by reason of a pending appeal or otherwise;
  (h)  A
        loss,
        theft, damage or destruction occurs with respect to any Collateral if the
        amount
        not covered by insurance exceeds $3,000,000;
  (i)  An
        Obligated Party is enjoined, restrained or in any way prevented by any
        Governmental Authority from conducting any material part of its business;
        an
        Obligated Party suffers the loss, revocation or termination of any material
        license, permit, lease or agreement necessary to its business; there is a
        cessation of any material part of an Obligated Party’s business for a material
        period of time; any material Collateral or Property of an Obligated Party
        is
        taken or impaired through condemnation; an Obligated Party agrees to or
        commences any liquidation, dissolution or winding up of its affairs; or an
        Obligated Party ceases to be Solvent;
  (j)  An
        Insolvency Proceeding is commenced by an Obligated Party; an Obligated Party
        makes an offer of settlement, extension or composition to its unsecured
        creditors generally; a trustee is appointed to take possession of any
        substantial Property of or to operate any of the business of an Obligated
        Party;
        or an Insolvency Proceeding is commenced against an Obligated Party and:
        the
        Obligated Party consents to institution of the proceeding, the petition
        commencing the proceeding is not timely controverted by the Obligated Party,
        the
        petition is not dismissed within 60 days after filing, or an order for relief
        is
        entered in the proceeding;
  56
  (k)  An
        ERISA
        Event occurs with respect to a Pension Plan or Multiemployer Plan that has
        resulted or could reasonably be expected to result in liability of an Obligated
        Party to a Pension Plan, Multiemployer Plan or PBGC, or that constitutes
        grounds
        for appointment of a trustee for or termination by the PBGC of any Pension
        Plan
        or Multiemployer Plan; an Obligated Party or ERISA Affiliate fails to pay
        when
        due any installment payment with respect to its withdrawal liability under
        Section 4201 of ERISA under a Multiemployer Plan; or any event similar to
        the foregoing occurs or exists with respect to a Foreign Plan;
  (l)  An
        Obligated Party or any of its Senior Officers is criminally indicted or
        convicted for (i) a felony committed in the conduct of any Obligated
        Party’s business, or (ii) violating any state or federal law (including the
        Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal
        Exportation of War Materials Act) that could lead to forfeiture of any
        material Property or any Collateral; or
  (m)  A
        Change
        of Control occurs; or any event occurs or condition exists that has a Material
        Adverse Effect.
  11.2.  Remedies
        upon Default .
        If an
        Event of Default described in Section 11.1(j) occurs
        with respect to any Obligated Party, then to the extent permitted by Applicable
        Law, all Obligations shall become automatically due and payable and all
        Commitments shall terminate, without any action by Agent or notice of any
        kind.
        In addition, or if any other Event of Default has occurred and is continuing,
        Agent may in its discretion (and shall upon written direction of Required
        Lenders) do any one or more of the following from time to
        time:
  (a)  declare
        any Obligations immediately due and payable, whereupon they shall be due
        and
        payable without diligence, presentment, demand, protest or notice of any
        kind,
        including notice of intent to accelerate and notice of acceleration, all
        of
        which are hereby waived by Obligated Parties to the fullest extent permitted
        by
        law;
  (b)  terminate,
        reduce or condition any Commitment, or make any adjustment to the Borrowing
        Base;
  (c)  require
        Obligated Parties to Cash Collateralize LC Obligations, Bank Product Debt
        and
        other Obligations that are contingent or not yet due and payable, and, if
        Obligated Parties fail promptly to deposit such Cash Collateral, Agent may
        (and
        shall upon the direction of Required Lenders) advance the required Cash
        Collateral as Revolver Loans (whether or not an Overadvance exists or is
        created
        thereby, or the conditions in Section 6 are
        satisfied); and
  (d)  exercise
        any other default rights or remedies afforded under any agreement, by law,
        at
        equity or otherwise, including the rights and remedies of a secured party
        under
        the UCC. Such rights and remedies include the rights to (i) take possession
        of any Collateral; (ii) require Obligated Parties to assemble Collateral,
        at Obligated Parties’ expense, and make it available to Agent at a place
        designated by Agent; (iii) enter any premises where Collateral is located
        and store Collateral on such premises until sold (and if the premises are
        owned
        or leased by any Obligated Party, Obligated Parties agree not to charge for
        such
        storage); and (iv) sell or otherwise dispose of any Collateral in its then
        condition, or after any further manufacturing or processing thereof, at public
        or private sale, with such notice as may be required by Applicable Law, in
        lots
        or in bulk, at such locations, all as Agent, in its discretion, deems advisable.
        Obligated Parties agree that 10 days notice of any proposed sale or other
        disposition of Collateral by Agent shall be reasonable. Agent shall have
        the
        right to conduct such sales on any Obligated Party’s or its Subsidiaries’
premises, without charge, and such sales may be adjourned from time to time
        in
        accordance with Applicable Law. Agent shall have the right to sell, lease
        or
        otherwise dispose of any Collateral for cash, credit or any combination thereof,
        and Agent may purchase any Collateral at public or, if permitted by law,
        private
        sale and, in lieu of actual payment of the purchase price, may set off the
        amount of such price against the Obligations.
  57
  11.3.  License .
        Agent
        is hereby granted an irrevocable, non-exclusive license or other right to
        use,
        license or sub-license (without payment of royalty or other compensation
        to any
        Person) any or all Intellectual Property of Obligated Parties, computer
        hardware and software, trade secrets, brochures, customer lists, promotional
        and
        advertising materials, labels, packaging materials and other Property, in
        advertising for sale, marketing, selling, collecting, completing manufacture
        of,
        or otherwise exercising any rights or remedies with respect to, any Collateral.
        Each Obligated Party’s rights and interests under Intellectual Property shall
        inure to Agent’s benefit.
  11.4.  Setoff .
        At any
        time during an Event of Default, Agent, Issuing Bank, Lenders, and any of
        their
        Affiliates are authorized, to the fullest extent permitted by Applicable
        Law, to
        set off and apply any and all deposits (general or special, time or demand,
        provisional or final, in whatever currency) at any time held and other
        obligations (in whatever currency) at any time owing by Agent, Issuing
        Bank, such Lender or such Affiliate to or for the credit or the account of
        an
        Obligated Party against any Obligations, irrespective of whether or not Agent,
        Issuing Bank, such Lender or such Affiliate shall have made any demand under
        this Agreement or any other Loan Document and although such Obligations may
        be
        contingent or unmatured or are owed to a branch or office of Agent, Issuing
        Bank, such Lender or such Affiliate different from the branch or office holding
        such deposit or obligated on such indebtedness. The rights of Agent, Issuing
        Bank, each Lender and each such Affiliate under this Section 11.4 are in
        addition to other rights and remedies (including other rights of
        setoff) that such Person may have.
  11.5.  Remedies
        Cumulative; No Waiver .
  11.5.1.  Cumulative
        Rights .
        All
        covenants, conditions, provisions, warranties, guaranties, indemnities and
        other
        undertakings of Obligated Parties contained in the Loan Documents are cumulative
        and not in derogation or substitution of each other. In particular, the rights
        and remedies of Agent and Lenders are cumulative, may be exercised at any
        time
        and from time to time, concurrently or in any order, and shall not be exclusive
        of any other rights or remedies that Agent and Lenders may have, whether
        under
        any agreement, by law, at equity or otherwise.
  11.5.2.  Waivers .
        The
        failure or delay of Agent or any Lender to require strict performance by
        Obligated Parties with any terms of the Loan Documents, or to exercise any
        rights or remedies with respect to Collateral or otherwise, shall not operate
        as
        a waiver thereof nor as establishment of a course of dealing. All rights
        and
        remedies shall continue in full force and effect until Full Payment of all
        Obligations. No modification of any terms of any Loan Documents (including
        any
        waiver thereof) shall be effective, unless such modification is
        specifically provided in a writing directed to Borrower and executed by Agent
        or
        the requisite Lenders, and such modification shall be applicable only to
        the
        matter specified. No waiver of any Default or Event of Default shall constitute
        a waiver of any other Default or Event of Default that may exist at such
        time,
        unless expressly stated. If Agent or any Lender accepts performance by any
        Obligated Party under any Loan Documents in a manner other than that specified
        therein, or during any Default or Event of Default, or if Agent or any Lender
        shall delay or exercise any right or remedy under any Loan Documents, such
        acceptance, delay or exercise shall not operate to waive any Default or Event
        of
        Default nor to preclude exercise of any other right or remedy. It is expressly
        acknowledged by Obligated Party’s that any failure to satisfy a financial
        covenant on a measurement date shall not be cured or remedied by satisfaction
        of
        such covenant on a subsequent date.
  58
  SECTION
        12.  AGENT
  12.1.  Appointment,
        Authority and Duties of Agent .
  12.1.1.  Appointment
        and Authority .
        Each
        Lender irrevocably appoints and designates Bank of America as Agent hereunder.
        Agent may, and each Lender authorizes Agent to, enter into all Loan Documents
        to
        which Agent is intended to be a party and accept all Security Documents,
        for
        Agent’s benefit and the Pro Rata benefit of Lenders. Each Lender agrees that any
        action taken by Agent or Required Lenders in accordance with the provisions
        of
        the Loan Documents, and the exercise by Agent or Required Lenders of any
        rights
        or remedies set forth therein, together with all other powers reasonably
        incidental thereto, shall be authorized by and binding upon all Lenders.
        Without
        limiting the generality of the foregoing, Agent shall have the sole and
        exclusive authority to (a) act as the disbursing and collecting agent for
        Lenders with respect to all payments and collections arising in connection
        with
        the Loan Documents; (b) execute and deliver as Agent each Loan Document,
        including any intercreditor or subordination agreement, and accept delivery
        of
        each Loan Document from any Obligated Party or other Person; (c) act as
        collateral agent for Secured Parties for purposes of perfecting and
        administering Liens under the Loan Documents, and for all other purposes
        stated
        therein; (d) manage, supervise or otherwise deal with Collateral; and
        (e) take any Enforcement Action or otherwise exercise any rights or
        remedies with respect to any Collateral under the Loan Documents, Applicable
        Law
        or otherwise. The duties of Agent shall be ministerial and administrative
        in
        nature, and Agent shall not have a fiduciary relationship with any Lender,
        Secured Party, Participant or other Person, by reason of any Loan Document
        or
        any transaction relating thereto. Agent alone shall be authorized to determine
        whether any Inventory constitutes Eligible Inventory, or whether to impose
        or
        release any reserve, which determinations and judgments, if reasonably
        exercised, shall exonerate Agent from liability to any Lender or other Person
        for any error in judgment.
  12.1.2.  Duties .
        Agent
        shall not have any duties except those expressly set forth in the Loan
        Documents. The conferral upon Agent of any right shall not imply a duty on
        Agent’s part to exercise such right, unless instructed to do so by Required
        Lenders in accordance with this Agreement.
  12.1.3.  Agent
        Professionals .
        Agent
        may perform its duties through agents and employees. Agent may consult with
        and
        employ Agent Professionals, and shall be entitled to act upon, and shall
        be
        fully protected in any action taken in reasonable reliance upon, any advice
        given by an Agent Professional. Agent shall not be responsible for the
        negligence or misconduct of any agents, employees or Agent Professionals
        selected by it with reasonable care.
  12.1.4.  Instructions
        of Required Lenders .
        The
        rights and remedies conferred upon Agent under the Loan Documents may be
        exercised without the necessity of joinder of any other party, unless required
        by Applicable Law. Agent may request instructions from Required Lenders with
        respect to any act (including the failure to act) in connection with any
        Loan Documents, and may seek assurances to its satisfaction from Lenders
        of
        their indemnification obligations under Section 12.6 against
        all Claims that could be incurred by Agent in connection with any act. Solely
        as
        between Agent and Lenders, Agent shall be entitled to refrain from any act
        until
        it has received such instructions or assurances, and Agent shall not incur
        liability to any Secured Party or any Indemnitee by reason of so refraining.
        Instructions of Required Lenders shall be binding upon all Lenders, and no
        Lender shall have any right of action whatsoever against Agent as a result
        of
        Agent acting or refraining from acting in accordance with the instructions
        of
        Required Lenders. Notwithstanding the foregoing, instructions by and consent
        of
        all Lenders shall be required in the circumstances described in Section 14.1.1 ,
        and in
        no event shall Required Lenders, without the prior written consent of each
        Lender, direct Agent to accelerate and demand payment of Loans held by one
        Lender without accelerating and demanding payment of all other Loans, nor
        to
        terminate the Commitments of one Lender without terminating the Commitments
        of
        all Lenders. In no event shall Agent be required to take any action that,
        in its
        opinion, is contrary to Applicable Law or any Loan Documents or could subject
        any Agent Indemnitee to personal liability.
  59
  12.2.  Agreements
        Regarding Collateral and Field Examination Reports .
  12.2.1.  Lien
        Releases; Care of Collateral .
        Lenders
        authorize Agent to release any Lien with respect to any Collateral (a) upon
        Full Payment of the Obligations; (b) that is the subject of an Asset
        Disposition which Borrower certifies in writing to Agent is a Permitted Asset
        Disposition or a Lien which Borrower certifies is a Permitted Lien entitled
        to
        priority over Agent’s Liens (and Agent may rely conclusively on any such
        certificate without further inquiry); (c) that does not constitute a
        material part of the Collateral; or (d) with the written consent of all
        Lenders. Agent shall have no obligation whatsoever to any Lenders to assure
        that
        any Collateral exists or is owned by an Obligated Party, or is cared for,
        protected, insured or encumbered, nor to assure that Agent’s Liens have been
        properly created, perfected or enforced, or are entitled to any particular
        priority, nor to exercise any duty of care with respect to any
        Collateral.
  12.2.2.  Possession
        of Collateral .
        Agent
        and Lenders appoint each other Lender as agent for the purpose of perfecting
        Liens (for the benefit of Secured Parties) in any Collateral that, under
        the UCC or other Applicable Law, can be perfected by possession. If any Lender
        obtains possession of any such Collateral, it shall notify Agent thereof
        and,
        promptly upon Agent’s request, deliver such Collateral to Agent or otherwise
        deal with such Collateral in accordance with Agent’s instructions.
  12.2.3.  Reports .
        Agent
        shall promptly, upon receipt thereof, forward to each Lender copies of the
        results of any field audit, examination or appraisal prepared by or on behalf
        of
        Agent with respect to any Obligated Party or Collateral (“ **Report** ”).
        Each
        Lender agrees (a) that neither Bank of America nor Agent makes any
        representation or warranty as to the accuracy or completeness of any Report,
        and
        shall not be liable for any information contained in or omitted from any
        Report;
        (b) that the Reports are not intended to be comprehensive audits or
        examinations, and that Agent or any other Person performing any audit or
        examination will inspect only specific information regarding Obligations
        or the
        Collateral and will rely significantly upon Obligated Parties’ books and records
        as well as upon representations of Obligated Parties’ officers and employees;
        and (c) to keep all Reports confidential and strictly for such Lender’s
        internal use, and not to distribute any Report (or the contents thereof) to
        any Person (except to such Lender’s Participants, attorneys and
        accountants) or use any Report in any manner other than administration of
        the Loans and other Obligations. Each Lender agrees to indemnify and hold
        harmless Agent and any other Person preparing a Report from any action such
        Lender may take as a result of or any conclusion it may draw from any Report,
        as
        well as any Claims arising in connection with any third parties that obtain
        any
        part or contents of a Report through such Lender.
  12.3.  Reliance
        By Agent .
        Agent
        shall be entitled to rely, and shall be fully protected in relying, upon
        any
        certification, notice or other communication (including those by telephone,
        telex, telegram, telecopy or e-mail) believed by it to be genuine and
        correct and to have been signed, sent or made by the proper Person, and upon
        the
        advice and statements of Agent Professionals.
  12.4.  Action
        Upon Default .
        Agent
        shall not be deemed to have knowledge of any Default or Event of Default
        unless
        it has received written notice from a Lender or Borrower specifying the
        occurrence and nature thereof. If any Lender acquires knowledge of a Default
        or
        Event of Default, it shall promptly notify Agent and the other Lenders thereof
        in writing. Each Lender agrees that, except as otherwise provided in any
        Loan
        Documents or with the written consent of Agent and Required Lenders, it will
        not
        take any Enforcement Action, accelerate Obligations under any Loan Documents,
        or
        exercise any right that it might otherwise have under Applicable Law to credit
        bid at foreclosure sales, UCC sales or other similar dispositions of Collateral.
        Notwithstanding the foregoing, however, a Lender may take action to preserve
        or
        enforce its rights against an Obligated Party where a deadline or limitation
        period is applicable that would, absent such action, bar enforcement of
        Obligations held by such Lender, including the filing of proofs of claim
        in an
        Insolvency Proceeding.
  60
  12.5.  Ratable
        Sharing .
        If any
        Lender shall obtain any payment or reduction of any Obligation, whether through
        set-off or otherwise, in excess of its share of such Obligation, determined
        on a
        Pro Rata basis or in accordance with Section 5.6.1 ,
        as
        applicable, such Lender shall forthwith purchase from Agent, Issuing Bank
        and
        the other Lenders such participations in the affected Obligation as are
        necessary to cause the purchasing Lender to share the excess payment or
        reduction on a Pro Rata basis or in accordance with Section 5.6.1 ,
        as
        applicable. If any of such payment or reduction is thereafter recovered from
        the
        purchasing Lender, the purchase shall be rescinded and the purchase price
        restored to the extent of such recovery, but without interest. No Lender
        shall
        set off against any Dominion Account without the prior consent of
        Agent.
  12.6.  Indemnification
        of Agent Indemnitees . **EACH
        LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT
        NOT
        REIMBURSED BY OBLIGATED PARTIES (BUT WITHOUT LIMITING THE INDEMNIFICATION
        OBLIGATIONS OF OBLIGATED PARTIES UNDER ANY LOAN DOCUMENTS), ON A PRO RATA
        BASIS,
        AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY AGENT
        INDEMNITEE,** ***PROVIDED*** **THE CLAIM RELATES TO OR ARISES FROM AN AGENT INDEMNITEE ACTING AS OR FOR
        AGENT
        (IN ITS CAPACITY AS AGENT).** In
        Agent’s discretion, it may reserve for any such Claims made against an Agent
        Indemnitee, and may satisfy any judgment, order or settlement relating thereto,
        from proceeds of Collateral prior to making any distribution of Collateral
        proceeds to Lenders. If Agent is sued by any receiver, bankruptcy trustee,
        debtor-in-possession or other Person for any alleged preference or fraudulent
        transfer, then any monies paid by Agent in settlement or satisfaction of
        such
        proceeding, together with all interest, costs and expenses (including attorneys’
fees) incurred in the defense of same, shall be promptly reimbursed to
        Agent by each Lender to the extent of its Pro Rata share.
  12.7.  Limitation
        on Responsibilities of Agent .
        Agent
        shall not be liable to Lenders for any action taken or omitted to be taken
        under
        the Loan Documents, except for losses directly and solely caused by Agent’s
        gross negligence or willful misconduct. Agent does not assume any responsibility
        for any failure or delay in performance or any breach by any Obligated Party
        or
        Lender of any obligations under the Loan Documents. Agent does not make to
        Lenders any express or implied warranty, representation or guarantee with
        respect to any Obligations, Collateral, Loan Documents or Obligated Party.
        No
        Agent Indemnitee shall be responsible to Lenders for any recitals, statements,
        information, representations or warranties contained in any Loan Documents;
        the
        execution, validity, genuineness, effectiveness or enforceability of any
        Loan
        Documents; the genuineness, enforceability, collectibility, value, sufficiency,
        location or existence of any Collateral, or the validity, extent, perfection
        or
        priority of any Lien therein; the validity, enforceability or collectibility
        of
        any Obligations; or the assets, liabilities, financial condition, results
        of
        operations, business, creditworthiness or legal status of any Obligated Party
        or
        Account Debtor. No Agent Indemnitee shall have any obligation to any Lender
        to
        ascertain or inquire into the existence of any Default or Event of Default,
        the
        observance or performance by any Obligated Party of any terms of the Loan
        Documents, or the satisfaction of any conditions precedent contained in any
        Loan
        Documents.
  61
  12.8.  Successor
        Agent and Co-Agents .
  12.8.1.  Resignation;
        Successor Agent .
        Subject
        to the appointment and acceptance of a successor Agent as provided below,
        Agent
        may resign at any time by giving at least 30 days written notice thereof
        to
        Lenders and Borrower. Upon receipt of such notice, Required Lenders shall
        have
        the right to appoint a successor Agent which shall be (a) a Lender or an
        Affiliate of a Lender; or (b) a commercial bank that is organized under the
        laws of the United States or any state or district thereof, has a combined
        capital surplus of at least $200,000,000 and ( *provided* no
        Default or Event of Default exists) is reasonably acceptable to Borrower.
        If no successor agent is appointed prior to the effective date of the
        resignation of Agent, then Agent may appoint a successor agent from among
        Lenders. Upon acceptance by a successor Agent of an appointment to serve
        as
        Agent hereunder, such successor Agent shall thereupon succeed to and become
        vested with all the powers and duties of the retiring Agent without further
        act,
        and the retiring Agent shall be discharged from its duties and obligations
        hereunder but shall continue to have the benefits of the indemnification
        set
        forth in Sections
        12.6 and 14.2 .
        Notwithstanding any Agent’s resignation, the provisions of this Section 12 shall
        continue in effect for its benefit with respect to any actions taken or omitted
        to be taken by it while Agent. Any successor to Bank of America by merger
        or
        acquisition of stock or this loan shall continue to be Agent hereunder without
        further act on the part of the parties hereto, unless such successor resigns
        as
        provided above.
  12.8.2.  Separate
        Collateral Agent .
        It is
        the intent of the parties that there shall be no violation of any Applicable
        Law
        denying or restricting the right of financial institutions to transact business
        in any jurisdiction. If Agent believes that it may be limited in the exercise
        of
        any rights or remedies under the Loan Documents due to any Applicable Law,
        Agent
        may appoint an additional Person who is not so limited, as a separate collateral
        agent or co-collateral agent. If Agent so appoints a collateral agent or
        co-collateral agent, each right and remedy intended to be available to Agent
        under the Loan Documents shall also be vested in such separate agent. Every
        covenant and obligation necessary to the exercise thereof by such agent shall
        run to and be enforceable by it as well as Agent. Lenders shall execute and
        deliver such documents as Agent deems appropriate to vest any rights or remedies
        in such agent. If any collateral agent or co-collateral agent shall die or
        dissolve, become incapable of acting, resign or be removed, then all the
        rights
        and remedies of such agent, to the extent permitted by Applicable Law, shall
        vest in and be exercised by Agent until appointment of a new agent.
  12.9.  Due
        Diligence and Non-Reliance .
        Each
        Lender acknowledges and agrees that it has, independently and without reliance
        upon Agent or any other Lenders, and based upon such documents, information
        and
        analyses as it has deemed appropriate, made its own credit analysis of each
        Obligated Party and its own decision to enter into this Agreement and to
        fund
        Loans and participate in LC Obligations hereunder. Each Lender has made such
        inquiries concerning the Loan Documents, the Collateral and each Obligated
        Party
        as such Lender feels necessary. Each Lender further acknowledges and agrees
        that
        the other Lenders and Agent have made no representations or warranties
        concerning any Obligated Party, any Collateral or the legality, validity,
        sufficiency or enforceability of any Loan Documents or Obligations. Each
        Lender
        will, independently and without reliance upon the other Lenders or Agent,
        and
        based upon such financial statements, documents and information as it deems
        appropriate at the time, continue to make and rely upon its own credit decisions
        in making Loans and participating in LC Obligations, and in taking or refraining
        from any action under any Loan Documents. Except for notices, reports and
        other
        information expressly requested by a Lender, Agent shall have no duty or
        responsibility to provide any Lender with any notices, reports or certificates
        furnished to Agent by any Obligated Party or any credit or other information
        concerning the affairs, financial condition, business or Properties of any
        Obligated Party (or any of its Affiliates) which may come into possession
        of Agent or any of Agent’s Affiliates.
  12.10.  Replacement
        of Certain Lenders .
        If a
        Lender (a) fails to fund its Pro Rata share of any Loan or LC Obligation
        hereunder, and such failure is not cured within two Business Days,
        (b) defaults in performing any of its obligations under the Loan Documents,
        or (c) fails to give its consent to any amendment, waiver or action for
        which consent of all Lenders was required and Required Lenders consented,
        then,
        in addition to any other rights and remedies that any Person may have, Agent
        may, by notice to such Lender within 120 days after such event, require such
        Lender to assign all of its rights and obligations under the Loan Documents
        to
        Eligible Assignee(s) specified by Agent, pursuant to appropriate Assignment
        and Acceptance(s) and within 20 days after Agent’s notice. Agent is
        irrevocably appointed as attorney-in-fact to execute any such Assignment
        and
        Acceptance if the Lender fails to execute same. Such Lender shall be entitled
        to
        receive, in cash, concurrently with such assignment, all amounts owed to
        it
        under the Loan Documents, including all principal, interest and fees through
        the
        date of assignment (but excluding any prepayment charge).
  62
  12.11.  Remittance
        of Payments .
  12.11.1.  Remittances
        Generally .
        All
        payments by any Lender to Agent shall be made by the time and on the day
        set
        forth in this Agreement, in immediately available funds. If no time for payment
        is specified or if payment is due on demand by Agent and request for payment
        is
        made by Agent by 11:00 a.m. on a Business Day, payment shall be made by Lender
        not later than 2:00 p.m. on such day, and if request is made after 11:00
        a.m.,
        then payment shall be made by 11:00 a.m. on the next Business Day. Payment
        by
        Agent to any Lender shall be made by wire transfer, in the type of funds
        received by Agent. Any such payment shall be subject to Agent’s right of offset
        for any amounts due from such Lender under the Loan Documents.
  12.11.2.  Failure
        to Pay .
        If any
        Lender fails to pay any amount when due by it to Agent pursuant to the terms
        hereof, such amount shall bear interest from the due date until paid at the
        rate
        determined by Agent as customary in the banking industry for interbank
        compensation. In no event shall Obligated Parties be entitled to receive
        credit
        for any interest paid by a Lender to Agent.
  12.11.3.  Recovery
        of Payments .
        If
        Agent pays any amount to a Lender in the expectation that a related payment
        will
        be received by Agent from an Obligated Party and such related payment is
        not
        received, then Agent may recover such amount from each Lender that received
        it.
        If Agent determines at any time that an amount received under any Loan Document
        must be returned to an Obligated Party or paid to any other Person pursuant
        to
        Applicable Law or otherwise, then, notwithstanding any other term of any
        Loan
        Document, Agent shall not be required to distribute such amount to any Lender.
        If any amounts received and applied by Agent to any Obligations are later
        required to be returned by Agent pursuant to Applicable Law, each Lender
        shall
        pay to Agent, on demand, such Lender’s Pro Rata share of the amounts required to
        be returned.
  12.12.  Agent
        in its Individual Capacity .
        As a
        Lender, Bank of America shall have the same rights and remedies under the
        other
        Loan Documents as any other Lender, and the terms “Lenders,” “Required Lenders”
or any similar term shall include Bank of America in its capacity as a Lender.
        Each of Bank of America and its Affiliates may accept deposits from, maintain
        deposits or credit balances for, invest in, lend money to, provide Bank Products
        to, act as trustee under indentures of, serve as financial or other advisor
        to,
        and generally engage in any kind of business with, Obligated Parties and
        their
        Affiliates, as if Bank of America were any other bank, without any duty to
        account therefor (including any fees or other consideration received in
        connection therewith) to the other Lenders. In their individual capacity,
        Bank of America and its Affiliates may receive information regarding Obligated
        Parties, their Affiliates and their Account Debtors (including information
        subject to confidentiality obligations), and each Lender agrees that Bank
        of
        America and its Affiliates shall be under no obligation to provide such
        information to Lenders, if acquired in such individual capacity and not as
        Agent
        hereunder.
  12.13.  Agent
        Titles .
        Each
        Lender, other than Bank of America, that is designated (on the cover page
        of
        this Agreement or otherwise) by Bank of America as an “Agent” or “Arranger”
of any type shall not have any right, power, responsibility or duty under
        any
        Loan Documents other than those applicable to all Lenders, and shall in no
        event
        be deemed to have any fiduciary relationship with any other
        Lender.
  63
  12.14.  No
        Third Party Beneficiaries .
        This Section 12 is an
        agreement solely among Lenders and Agent, and shall survive Full Payment
        of the
        Obligations. This Section 12 does not
        confer any rights or benefits upon any Obligated Party or any other Person.
        As
        between Obligated Parties and Agent, any action that Agent may take under
        any
        Loan Documents or with respect to any Obligations shall be conclusively presumed
        to have been authorized and directed by Lenders.
  SECTION
        13.  BENEFIT
        OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
  13.1.  Successors
        and Assigns .
        This
        Agreement shall be binding upon and inure to the benefit of Obligated Parties,
        Agent, Lenders, and their respective successors and assigns, except that
        (a) Obligated Parties shall not have the right to assign its rights or
        delegate its obligations under any Loan Documents; and (b) any assignment
        by a Lender must be made in compliance with Section 13.3 .
        Agent
        may treat the Person which made any Loan as the owner thereof for all purposes
        until such Person makes an assignment in accordance with **** Section 13.3 .
        Any
        authorization or consent of a Lender shall be conclusive and binding on any
        subsequent transferee or assignee of such Lender.
  13.2.  Participations .
  13.2.1.  Permitted
        Participants; Effect .
        Any
        Lender may, in the ordinary course of its business and in accordance with
        Applicable Law, at any time sell to a financial institution (“ **Participant** ”) a
        participating interest in the rights and obligations of such Lender under
        any
        Loan Documents. Despite any sale by a Lender of participating interests to
        a
        Participant, such Lender’s obligations under the Loan Documents shall remain
        unchanged, such Lender shall remain solely responsible to the other parties
        hereto for performance of such obligations, such Lender shall remain the
        holder
        of its Loans and Commitments for all purposes, all amounts payable by Obligated
        Parties shall be determined as if such Lender had not sold such participating
        interests, and Obligated Parties and Agent shall continue to deal solely
        and
        directly with such Lender in connection with the Loan Documents. Each Lender
        shall be solely responsible for notifying its Participants of any matters
        under
        the Loan Documents, and Agent and the other Lenders shall not have any
        obligation or liability to any such Participant. A Participant that would
        be a
        Foreign Lender if it were a Lender shall not be entitled to the benefits
        of Section 5.9 unless
        Borrower agrees otherwise in writing.
  13.2.2.  Voting
        Rights .
        Each
        Lender shall retain the sole right to approve, without the consent of any
        Participant, any amendment, waiver or other modification of any Loan Documents
        other than that which forgives principal, interest or fees, reduces the stated
        interest rate or fees payable with respect to any Loan or Commitment in which
        such Participant has an interest, postpones the Commitment Termination Date
        or
        any date fixed for any regularly scheduled payment of principal, interest
        or
        fees on such Loan or Commitment, or releases any Obligated Party, any other
        Guarantor or substantial portion of the Collateral.
  13.2.3.  Benefit
        of Set-Off .
        Obligated Parties agree that each Participant shall have a right of set-off
        in
        respect of its participating interest to the same extent as if such interest
        were owing directly to a Lender, and each Lender shall also retain the right
        of
        set-off with respect to any participating interests sold by it. By exercising
        any right of set-off, a Participant agrees to share with Lenders all amounts
        received through its set-off, in accordance with Section 12.5 as if
        such Participant were a Lender.
  64
  13.3.  Assignments .
  13.3.1.  Permitted
        Assignments .
        A
        Lender may assign to an Eligible Assignee any of its rights and obligations
        under the Loan Documents, as long as (a) each assignment is of a constant,
        and not a varying, percentage of the transferor Lender’s rights and obligations
        under the Loan Documents and, in the case of a partial assignment, is in
        a
        minimum principal amount of $5,000,000 (unless otherwise agreed by Agent
        in its
        discretion) and integral multiples of $1,000,000 in excess of that amount;
        (b) except in the case of an assignment in whole of a Lender’s rights and
        obligations, the aggregate amount of the Commitments retained by the transferor
        Lender is at least $5,000,000 (unless otherwise agreed by Agent in its
        discretion); and (c) the parties to each such assignment shall execute and
        deliver to Agent, for its acceptance and recording, an Assignment and
        Acceptance. Nothing herein shall limit the right of a Lender to pledge or
        assign
        any rights under the Loan Documents to (i) any Federal Reserve Bank or the
        United States Treasury as collateral security pursuant to Regulation A of
        the
        Board of Governors and any Operating Circular issued by such Federal Reserve
        Bank, or (ii) counterparties to swap agreements relating to any Loans; *provided* , *however* ,
        that
        any payment by any Obligated Party to the assigning Lender in respect of
        any
        Obligations assigned as described in this sentence shall satisfy Obligated
        Parties’ obligations hereunder to the extent of such payment, and no such
        assignment shall release the assigning Lender from its obligations
        hereunder.
  13.3.2.  Effect;
        Effective Date .
        Upon
        delivery to Agent of an assignment notice in the form of Exhibit
        D ,
        appropriately completed, and a processing fee of $3,500 (unless otherwise
        agreed
        by Agent in its discretion), the assignment shall become effective as specified
        in the notice, if it complies with this Section 13.3 .
        From
        such effective date, the Eligible Assignee shall for all purposes be a Lender
        under the Loan Documents, and shall have all rights and obligations of a
        Lender
        thereunder. Upon consummation of an assignment, the transferor Lender, Agent
        and
        Borrower shall make appropriate arrangements for issuance of replacement
        and/or
        new Notes, as applicable, and for cancellation and return to Borrower of
        any
        Notes held by the transferor Lender (except as to any Notes no portion of
        which
        relates to the assignment). The transferee Lender shall comply with Section 5.10 and
        deliver, upon request, an administrative questionnaire satisfactory to
        Agent.
  SECTION
        14.  MISCELLANEOUS
  14.1.  Consents,
        Amendments and Waivers .
  14.1.1.  Amendment .
        No
        modification of any Loan Document, including any extension or amendment of
        a
        Loan Document or any waiver of a Default or Event of Default, shall be effective
        without the prior written agreement of Agent (with the consent of Required
        Lenders) and each Obligated Party party to such Loan Document; *provided* , *however* ,
        that
  (a)  without
        the prior written consent of Agent, no modification shall be effective with
        respect to any provision in a Loan Document that relates to any rights, duties
        or discretion of Agent;
  (b)  without
        the prior written consent of Issuing Bank, no modification shall be effective
        with respect to any LC Obligations or Section 2.3 ;
  (c)  without
        the prior written consent of each affected Lender, no modification shall
        be
        effective that would (i) increase the Seasonal Revolver Amount or increase
        the Commitment of such Lender; or (ii) reduce the amount of, or waive or
        delay payment of, any principal, interest or fees payable to such Lender;
        and
  (d)  without
        the prior written consent of all Lenders (except a defaulting Lender as provided
        in Section 4.2 ),
        no
        modification shall be effective that would (i) extend the Revolver
        Termination Date; (ii) alter Section 5.6 , 7.1 (except
        to add Collateral) or 14.1.1 ;
        (iii) amend the definitions of Borrowing Base (and the defined terms used
        in such definition), Pro Rata or Required Lenders; (iv) increase any
        advance rate or increase total Commitments; (vi) release Collateral with a
        book value greater than $1,000,000 during any calendar year, except as currently
        contemplated by the Loan Documents; or (vii) release any Obligated Party
        from liability for any Obligations, if such Obligated Party is Solvent at
        the
        time of the release.
  65
  14.1.2.  Limitations .
        The
        agreement of Obligated Parties shall not be necessary to the effectiveness
        of
        any modification of a Loan Document that deals solely with the rights and
        duties
        of Lenders, Agent and/or Issuing Bank as among themselves. Only the consent
        of
        the parties to the Fee Letter or any agreement relating to a Bank Product
        shall
        be required for any modification of such agreement, and no Affiliate of a
        Lender
        that is party to a Bank Product agreement shall have any other right to consent
        to or participate in any manner in modification of any other Loan Document.
        The
        making of any Loans during the existence of a Default or Event of Default
        shall
        not be deemed to constitute a waiver of such Default or Event of Default,
        nor to
        establish a course of dealing. Any waiver or consent granted by Lenders
        hereunder shall be effective only if in writing, and then only in the specific
        instance and for the specific purpose for which it is given.
  14.1.3.  Payment
        for Consents .
        Obligated Parties and their respective Subsidiaries will not, directly or
        indirectly, pay any remuneration or other thing of value, whether by way
        of
        additional interest, fee or otherwise, to any Lender (in its capacity as
        a
        Lender hereunder) as consideration for agreement by such Lender with any
        modification of any Loan Documents, unless such remuneration or value is
        concurrently paid, on the same terms, on a Pro Rata basis to all Lenders
        providing their consent.
  14.2.  Indemnity . **OBLIGATED
        PARTIES**  **SHALL
        INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE
        INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING
        FROM
        THE NEGLIGENCE OF AN INDEMNITEE.** In no
        event shall any party to a Loan Document have any obligation thereunder to
        indemnify or hold harmless an Indemnitee with respect to a Claim that is
        determined in a final, non-appealable judgment by a court of competent
        jurisdiction to result from the gross negligence or willful misconduct of
        such
        Indemnitee.
  14.3.  Notices
        and Communications .
  14.3.1.  Notice
        Address .
        Subject
        to Section 4.1.4 ,
        all
        notices and other communications by or to a party hereto shall be in writing
        and
        shall be given to Obligated Parties, at Borrower’s address shown on the
        signature pages hereof, and to any other Person at its address shown on the
        signature pages hereof (or, in the case of a Person who becomes a Lender
        after
        the Closing Date, at the address shown on its Assignment and Acceptance),
        or at
        such other address as a party may hereafter specify by notice in accordance
        with
        this Section 14.3 .
        Each
        such notice or other communication shall be effective only (a) if given by
        facsimile transmission, when transmitted to the applicable facsimile number,
        if
        confirmation of receipt is received; (b) if given by mail, three Business
        Days after deposit in the U.S. mail, with first-class postage pre-paid,
        addressed to the applicable address; or (c) if given by personal delivery,
        when duly delivered to the notice address with receipt acknowledged.
        Notwithstanding the foregoing, no notice to Agent pursuant to any of Sections 2.1.4 , 2.3 , 3.1.2 ,
        or 4.1.1 shall be
        effective until actually received by the individual to whose attention at
        Agent
        such notice is required to be sent. Any written notice or other communication
        that is not sent in conformity with the foregoing provisions shall nevertheless
        be effective on the date actually received by the noticed party. Any notice
        received by Borrower shall be deemed received by all Obligated
        Parties.
  14.3.2.  Electronic
        Communications; Voice Mail .
        Electronic mail and internet websites may be used only for routine
        communications, such as financial statements, Borrowing Base Certificates
        and
        other information required by Section 10.1.2 ,
        administrative matters, distribution of Loan Documents for execution, and
        matters permitted under Section 4.1.4 .
        Agent
        and Lenders make no assurances as to the privacy and security of electronic
        communications. Electronic and voice mail may not be used as effective notice
        under the Loan Documents.
  66
  14.3.3.  Non-Conforming
        Communications .
        Agent
        and Lenders may rely upon any notices purportedly given by or on behalf of
        any
        Obligated Party even if such notices were not made in a manner specified
        herein,
        were incomplete or were not confirmed, or if the terms thereof, as understood
        by
        the recipient, varied from a later confirmation; *provided* that
        any
        change to Borrower’s account into which Loans are made must be in writing
        delivered to Agent. Each Obligated Party shall indemnify and hold harmless
        each
        Indemnitee from any liabilities, losses, costs and expenses arising from
        any
        telephonic communication purportedly given by or on behalf of any Obligated
        Party.
  14.4.  Performance
        of Obligated Parties’ Obligations .
        Agent
        may, in its discretion at any time and from time to time, at Obligated Parties’
expense, pay any amount or do any act required of Borrower under any Loan
        Documents or otherwise lawfully requested by Agent to (a) enforce any Loan
        Documents or collect any Obligations; (b) protect, insure, maintain or
        realize upon any Collateral; or (c) defend or maintain the validity or
        priority of Agent’s Liens in any Collateral, including any payment of a
        judgment, insurance premium, warehouse charge, finishing or processing charge,
        or landlord claim, or any discharge of a Lien. All payments, costs and expenses
        (including Extraordinary Expenses) of Agent under this Section 14.4 shall be
        reimbursed to Agent by Obligated Parties, on demand, with interest from the
        date
        incurred to the date of payment thereof at the Default Rate applicable to
        Base
        Rate Revolver Loans. Any payment made or action taken by Agent under this Section 14.4 shall be
        without prejudice to any right to assert an Event of Default or to exercise
        any
        other rights or remedies under the Loan Documents.
  14.5.  Credit
        Inquiries .
        Each
        Obligated Party hereby authorizes Agent and Lenders (but they shall have
        no
        obligation) to respond to usual and customary credit inquiries from third
        parties concerning any Obligated Party or its Subsidiaries.
  14.6.  Severability .
        Wherever possible, each provision of the Loan Documents shall be interpreted
        in
        such manner as to be valid under Applicable Law. If any provision is found
        to be
        invalid under Applicable Law, it shall be ineffective only to the extent
        of such
        invalidity and the remaining provisions of the Loan Documents shall remain
        in
        full force and effect.
  14.7.  Cumulative
        Effect; Conflict of Terms .
        The
        provisions of the Loan Documents are cumulative. The parties acknowledge
        that
        the Loan Documents may use several limitations, tests or measurements to
        regulate similar matters, and they agree that these are cumulative and that
        each
        must be performed as provided. Except as otherwise provided in another Loan
        Document (by specific reference to the applicable provision of this Agreement),
        if any provision contained herein is in direct conflict with any provision
        in
        another Loan Document, the provision herein shall govern and
        control.
  14.8.  Counterparts .
        Any
        Loan Document may be executed in counterparts, each of which shall constitute
        an
        original, but all of which when taken together shall constitute a single
        contract. This Agreement shall become effective when Agent has received
        counterparts bearing the signatures of all parties hereto. Delivery of a
        signature page of any Loan Document by telecopy shall be effective as delivery
        of a manually executed counterpart of such agreement.
  14.9.  Entire
        Agreement .
        Time is
        of the essence of the Loan Documents. The Loan Documents 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.
  67
  14.10.  Relationship
        with Lenders .
        The
        obligations of each Lender hereunder are several, and no Lender shall be
        responsible for the obligations or Commitments of any other Lender. Amounts
        payable hereunder to each Lender shall be a separate and independent debt,
        and
        each Lender shall be entitled, to the extent not otherwise restricted hereunder,
        to protect and enforce its rights arising out of the Loan Documents. It shall
        not be necessary for Agent or any other Lender to be joined as an additional
        party in any proceeding for such purposes. Nothing in this Agreement and
        no
        action of Agent or Lenders pursuant to the Loan Documents shall be deemed
        to
        constitute Agent and Lenders to be a partnership, association, joint venture
        or
        any other kind of entity, nor to constitute control of any Obligated
        Party.
  14.11.  No
        Advisory or Fiduciary Responsibility .
        In
        connection with all aspects of each transaction contemplated by any Loan
        Document, Obligated Parties acknowledge and agree that (a)(i) this credit
        facility and any related arranging or other services by Agent, any Lender,
        any
        of their Affiliates or any arranger are arm’s-length commercial transactions
        between Obligated Parties and such Person; (ii) Obligated Parties have
        consulted their own legal, accounting, regulatory and tax advisors to the
        extent
        they have deemed appropriate; and (iii) Obligated Parties are capable of
        evaluating and understanding, and do understand and accept, the terms, risks
        and
        conditions of the transactions contemplated by the Loan Documents; (b) each
        of Agent, Lenders, their Affiliates and any arranger is and has been acting
        solely as a principal in connection with this credit facility, is not the
        financial advisor, agent or fiduciary for any Obligated Party or its
        Subsidiaries, any of their Affiliates or any other Person, and has no obligation
        with respect to the transactions contemplated by the Loan Documents except
        as
        expressly set forth therein; and (c) Agent, Lenders, their Affiliates and
        any arranger may be engaged in a broad range of transactions that involve
        interests that differ from Obligated Parties and their Affiliates, and have
        no
        obligation to disclose any of such interests to Obligated Parties or their
        Affiliates. To the fullest extent permitted by Applicable Law, each Obligated
        Party hereby waives and releases any claims that it may have against Agent,
        Lenders, their Affiliates and any arranger with respect to any breach or
        alleged
        breach of agency or fiduciary duty in connection with any aspect of any
        transaction contemplated by a Loan Document.
  14.12.  Confidentiality .
        Each of
        Agent, Lenders and Issuing Bank agrees to maintain the confidentiality of
        all
        Information (as defined below), except that Information may be disclosed
        (a) to its Affiliates and to its and its Affiliates’ respective partners,
        directors, officers, employees, agents, advisors and representatives (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 purporting to have jurisdiction over it (including any self-regulatory
        authority, such as the National Association of Insurance Commissioners);
        (c) to the extent required by Applicable Law or by any subpoena or similar
        legal process; (d) to any other party hereto; (e) in connection with
        the exercise of any remedies, the enforcement of any rights, or any action
        or
        proceeding relating to any Loan Documents; (f) subject to an agreement
        containing provisions substantially the same as those of this Section 14.12 ,
        to any
        Transferee or any actual or prospective party (or its advisors) to any Bank
        Product; (g) with the consent of the Borrower; or (h) to the extent
        such Information (i) becomes publicly available other than as a result of a
        breach of this Section 14.12 or
        (ii) becomes available to Agent, any Lender, Issuing Bank or any of their
        Affiliates on a non-confidential basis from a source other than Obligated
        Parties. Notwithstanding the foregoing, Agent and Lenders may issue and
        disseminate to the public general information describing this credit facility,
        including the names and addresses of Obligated Parties and a general description
        of Obligated Parties’ businesses, and may use Obligated Parties’ names in
        advertising and other promotional materials. For purposes of this Section 14.12 ,
        “ **Information** ”
means
        all information received from an Obligated Party or its Subsidiaries relating
        to
        it or its business, other than any information that is available to Agent,
        any
        Lender or Issuing Bank on a non-confidential basis prior to disclosure by
        an
        Obligated Party or Subsidiary, *provided* that, in
        the case of information received from an Obligated Party or Subsidiary after
        the
        date hereof, such information is clearly identified at the time of delivery
        as
        confidential. Any Person required to maintain the confidentiality of Information
        pursuant to this Section 14.12 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.
        Each of Agent, Lenders and Issuing Bank acknowledges that (i) Information
        may include material non-public information concerning an Obligated Party
        or
        Subsidiary; (ii) it has developed compliance procedures regarding the use
        of material non-public information; and (iii) it will handle such material
        non-public information in accordance with Applicable Law, including federal
        and
        state securities laws.
  68


14.13.  Intentionally
      Omitted .




14.14.  GOVERNING
      LAW .
      THIS
      AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE
      GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY
      CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO
      NATIONAL BANKS).




14.15.  Consent
      to Forum; Arbitration .




14.15.1.  Forum **.
      EACH OBLIGATED PARTY HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
      FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER LOS ANGELES,
      CALIFORNIA, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN
      DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY
      IN
      ANY SUCH COURT. EACH OBLIGATED PARTY IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS
      AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER
      JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY
      CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN** **SECTION 14.3.1** **.** Nothing
      herein shall limit the right of Agent or any Lender to bring proceedings against
      any Obligated Party in any other court, nor limit the right of any party to
      serve process in any other manner permitted by Applicable Law. Nothing in this
      Agreement shall be deemed to preclude enforcement by Agent of any judgment
      or
      order obtained in any forum or jurisdiction.




14.15.2.  Arbitration . **** Notwithstanding
      any other provision of this Agreement to the contrary, any controversy or claim
      among the parties relating in any way to any Obligations or Loan Documents,
      including any alleged tort, shall at the request of any party hereto be
      determined by binding arbitration conducted in accordance with the United States
      Arbitration Act (Title 9 U.S. Code). Arbitration proceedings will be determined
      in accordance with the Act, the then-current rules and procedures for the
      arbitration of financial services disputes of the American Arbitration
      Association (“ **AAA** ”),
      and
      the terms of this Section 14.15.2 .
      In the
      event of any inconsistency, the terms of this Section 14.15.2 shall
      control. If AAA is unwilling or unable to serve as the provider of arbitration
      or to enforce any provision of this Section 14.15.2 ,
      Agent
      may designate another arbitration organization with similar procedures to serve
      as the provider of arbitration. The arbitration proceedings shall be conducted
      in Los Angeles or Pasadena, California. The arbitration hearing shall commence
      within 90 days of the arbitration demand and close within 90 days thereafter.
      The arbitration award must be issued within 30 days after close of the hearing
      (subject to extension by the arbitrator for up to 60 days upon a showing of
      good
      cause), and shall include a concise written statement of reasons for the award.
      The arbitrator shall give effect to applicable statutes of limitation in
      determining any controversy or claim, and for these purposes, service on AAA
      under applicable AAA rules of a notice of claim is the equivalent of the filing
      of a lawsuit. Any dispute concerning this Section 14.15.2 or
      whether a controversy or claim is arbitrable shall be determined by the
      arbitrator. The arbitrator shall have the power to award legal fees to the
      extent provided by this Agreement. Judgment upon an arbitration award may be
      entered in any court having jurisdiction. The institution and maintenance of
      an
      action for judicial relief or pursuant to a provisional or ancillary remedy
      shall not constitute a waiver of the right of any party, including the
      plaintiff, to submit the controversy or claim to arbitration if any other party
      contests such action for judicial relief. No controversy or claim shall be
      submitted to arbitration without the consent of all parties if, at the time
      of
      the proposed submission, such controversy or claim relates to an obligation
      secured by Real Estate, but if all parties do not consent to submission of
      such
      a controversy or claim to arbitration, it shall be determined as provided in
      the
      next sentence. At the request of any party, a controversy or claim that is
      not
      submitted to arbitration as provided above shall be determined by judicial
      reference; and if such an election is made, the parties shall designate to
      the
      court a referee or referees selected under the auspices of the AAA in the same
      manner as arbitrators are selected in AAA sponsored proceedings and the
      presiding referee of the panel (or the referee if there is a single
      referee) shall be an active attorney or retired judge; and judgment upon
      the award rendered by such referee or referees shall be entered in the court
      in
      which proceeding was commenced. None of the foregoing provisions of this Section 14.15.2 shall
      limit the right of Agent or Lenders to exercise self-help remedies, such as
      setoff, foreclosure or sale of any Collateral or to obtain provisional or
      ancillary remedies from a court of competent jurisdiction before, after or
      during any arbitration proceeding. The exercise of a remedy does not waive
      the
      right of any party to resort to arbitration or reference. At Agent’s option,
      foreclosure under a Mortgage may be accomplished either by exercise of power
      of
      sale thereunder or by judicial foreclosure.


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14.16.  Waivers
      by Obligated Parties . **To
      the fullest extent permitted by Applicable Law, each Obligated Party waives
      (a) the right to trial by jury (which Agent and each Lender hereby also
      waives) in any proceeding or dispute of any kind relating in any way to any
      Loan Documents, Obligations or Collateral; (b) presentment, demand,
      protest, notice of presentment, default, non-payment, maturity, release,
      compromise, settlement, extension or renewal of any commercial paper, accounts,
      documents, instruments, chattel paper and guaranties at any time held by Agent
      on which an Obligated Party may in any way be liable, and hereby ratifies
      anything Agent may do in this regard; (c) notice prior to taking possession
      or control of any Collateral; (d) any bond or security that might be
      required by a court prior to allowing Agent to exercise any rights or remedies;
      (e) the benefit of all valuation, appraisement and exemption laws;
      (f) any claim against Agent or any Lender, on any theory of liability, for
      special, indirect, consequential, exemplary or punitive damages (as opposed
      to
      direct or actual damages) in any way relating to any Enforcement Action,
      Obligations, Loan Documents or transactions relating thereto; and
      (g) notice of acceptance hereof.** Each
      Obligated Party acknowledges that the foregoing waivers are a material
      inducement to Agent and Lenders entering into this Agreement and that Agent
      and
      Lenders are relying upon the foregoing in their dealings with each Obligated
      Party. Each Obligated Party has reviewed the foregoing waivers with its legal
      counsel and has knowingly and voluntarily waived its jury trial and other rights
      following consultation with legal counsel. In the event of litigation, this
      Agreement may be filed as a written consent to a trial by the
      court.




14.17.  Patriot
      Act Notice .
      Agent
      and Lenders hereby notify Obligated Parties that pursuant to the requirements
      of
      the Patriot Act, Agent and Lenders are required to obtain, verify and record
      information that identifies each Obligated Party, including its legal name,
      address, tax ID number and other information that will allow Agent and Lenders
      to identify it in accordance with the Patriot Act. Agent and Lenders will also
      require information regarding each personal guarantor, if any, and may require
      information regarding Obligated Parties’ management and owners, such as legal
      name, address, social security number and date of birth.




14.18.  Amendment
      and Restatement; Waiver of Claims .
      This
      Agreement is an amendment and restatement of the Original Loan Agreement. All
      “Obligations” under the Original Loan Agreement, and all security interests,
      liens, and collateral assignments granted to Bank of America under the Original
      Loan Agreement or any of the other documents executed in connection therewith,
      hereby are renewed and continued in full force and effect, and hereafter shall
      be governed by this Agreement and the other Loan Documents. Obligated Parties
      hereby represent and warrant that as of the date of this Agreement there are
      no
      claims, offsets against, or defenses or counterclaims to the Obligations under
      the Original Loan Agreement or any other document. Obligated Parties hereby
      waive and release any and all such claims, offsets, defenses, or counterclaims,
      whether known or unknown, arising prior to the date of this Agreement. Obligated
      Parties intend the above release to cover, encompass, release, and extinguish, *inter
      alia* ,
      all
      claims, demands, and causes of action that might otherwise be reserved by the
      California Civil Code Section 1542, which provides as follows:


70


“A
      general release does not extend to claims which the creditor does not know
      or
      suspect to exist in his or her favor at the time of executing the release,
      which
      if known by him or her must have materially affected his or her settlement
      with
      the debtor.”




Obligated
      Parties acknowledge that they may hereafter discover facts different from or
      in
      addition to those now known or believed to be true with respect to such claims,
      demands, or causes of action, and agrees that this Agreement and the above
      release are and will remain effective in all respects notwithstanding any such
      differences or additional facts.




[Remainder
      of page intentionally left blank; signatures begin on following
      page]




71


IN
      WITNESS WHEREOF, this Agreement has been executed and delivered as of the date
      set forth above.




**BORROWER**:Address
                for notices to all Obligated Parties:
            
            SPORT
                CHALET, INC.,a
                Delaware corporationc/o
                Sport Chalet, Inc.One
                Sport Chalet DriveLa
                Canada, California 91011
            
            By:
            /s/
                Howard KaminskyAttention:
                Howard Kaminsky
            
            Name:
            Howard
                KaminskyFacsimile:
                (818) 949-5301
            
            Title:
            Executive
                Vice President and CFOwith
                copies (which shall
            
            **OBLIGATED
                PARTIES:**not
                constitute notice) to:Sheppard
                Mullin Richter & Hampton LLP
            
            SPORT
                CHALET VALUE SERVICES, LLC,1901
                Avenue of the Stars
            
            a
                Virginia limited liability companySuite
                1600Los
                Angeles, CA 90067
            
            By:
            /s/
                Howard KaminskyAttention:
                Thomas Glen Leo, Esq.
            
            Name:
            Howard
                KaminskyFacsimile:
                310.228.3909
            
            Title:
            Manager








Address
                for notices:
            
            **AGENT
                AND LENDERS**:Bank
                of America Business Capital
            
            **BANK
                OF AMERICA, N.A.**,55
                South Lake Avenue, Suite 900
            
            as
                Agent and LenderPasadena,
                CA 91107Attention: 
                Business Capital/URGENT;Portfolio
                Manager (Sport Chalet)
            
            By:
            /s/ Stephen KingFacsimile: (626) 584-4601
            
            Name:
            Stephen J. KingTitle:
            Vice Presidentwith
                a copy (which shall not constitute notice) to:McGuireWoods
                LLP1800
                Century Park East, 8th FloorLos
                Angeles, California 90067Attention:
                Gary Samson, Esq.Facsimile:
                (310) 315-8210