Document:

Agreement for sale and purchase of Contico Manufacturing Limited dated June
      6, 2007

    
      

      

    

     

     

    DATED
      6 June 2007

    

    
 

    (1)
      CEH LIMITED

    

    (2)
      KATY INDUSTRIES, INC.

    

    and

    

    (3)
      INVESCOTEC LIMITED

    

    

    

    

    

    

    

    

    

    
      	
              AGREEMENT

              for
                sale and purchase of

              Contico
                Manufacturing Limited

            

    

    

    

    

    

    

    

    

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    CONTENTS

     

     

    
      	 Clause	 	
               Page     

            
	 	 	 
	 1	 INTERPRETATION	 4
	 2	 SALE
              AND PURCHASE OF THE SHARES	 9
	 3	 CONSIDERATION	 9
	 4	 COMPLETION	 10
	 5	 WARRANTIES	 13
	 6	 LIMITATION
              ON LIABILITY	 13
	 7	 INDEMNITY	 15
	 8	 CONDUCT
              OF CLAIMS	 16
	 9	 PROTECTION
              OF GOODWILL	 17
	 10	 CONFIDENTIAL
              INFORMATION	 18
	 11	 ANNOUNCEMENTS	 19
	 12	 NOTICES	 19
	 13	 ENTIRE
              AGREEMENT	 20
	 14	 FURTHER
              ASSURANCE	 20
	 15	 EFFECT
              OF COMPLETION	 21
	 16	 WAIVER	 21
	 17	 COSTS	 21
	 18	 ASSIGNMENT	 21
	 19	 CONTRACTS
              (RIGHTS OF THIRD PARTIES) ACT 1999	 21
	 20	 COUNTERPARTS	 21
	 21	 LAW
              AND JURISDICTION	 21
	 SCHEDULE
              1 - THE COMPANY            	 	 23
	 	 Part
              1	 23
	 	 Part
              2	 24
	 SCHEDULE
              2	 	 25
	 	 Part
              1 - WARRANTIES	 25

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	 Part
              2 - BUYER'S WARRANTIES	 31
	 SCHEDULE
              3    	 	 32
	 	 Part
              1 - WORKING CAPITAL STATEMENT	 32
	 	 Part
              2 - WORKING CAPITAL STATEMENT	 35

    

     

     

     

     

     

     

     

     

     

     

     

    
      
         

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    THIS
      AGREEMENT
      is made
      on 6 June 2007

     

    BETWEEN:-

     

    (1) CEH
      LIMITED (No
      4992300) whose registered office is Cardrew Way, Redruth, Cornwall TR15 1ST
      (“CEH”);

     

    (2) KATY
      INDUSTRIES INC,
      of 2461
      South Clark Street, Suite 630, Arlington, Virginia 22202, USA (“KII”)

     

    (together
      “CEH”
and
      “KII”
being
      the “Sellers”)

     

    (3) INVESCOTEC
      LIMITED
      (No
      6207123) whose registered office is at 49 Rodney Street, Liverpool, L1 9EW
      (the
“Buyer”).

     

    IT
      IS AGREED
      as
      follows:-

     

    
      	1.  	
              INTERPRETATION

            

    

     

    
      	1.1  	
              In
                this Agreement, unless the context otherwise
                requires:-

            

    

     

    
      	
              “Accounts”

               

            	
              means
                the audited balance sheet of the Company as at the Accounts Date
                and the
                audited profit and loss account of the Company for the financial
                period
                ended on the Accounts Date, the notes and directors’ report and auditors’
                report and all other documents or statements annexed thereto or
                incorporated therein

               

            
	
              “Accounts
                Date”

               

            	
              means
                31 December 2006

               

            
	
              “Act”

               

            	
              means
                the Companies Act 1985 (or, where the context so requires, the Companies
                Act 2006)

               

            
	
              “Business”

               

            	
              means
                the business of the Company (as carried on in the period up to and
                including Completion)

               

            
	
              “Business
                Day”

               

            	
              means
                any day other than a Saturday, Sunday or public holiday in
                England

               

            
	
              “Buyer’s
                Solicitors”

               

            	
              means
                Pinsent Masons of 1 Park Row, Leeds, LS1 5AB

               

            
	
              “Claim”

               

            	
              a
                claim for breach of any of the Warranties or a claim under Clause
                7

               

            
	
              "Claim
                for Tax"

               

            	
              means
                any assessment, notice, demand, determination, letter or other document
                issued by or action taken by or on behalf of any Tax Authority or
                any
                circumstances indicating that a Group company is or may be placed
                or is
                sought to be placed under a Liability for Tax

               

            
	
              “Company”

               

            	
              means
                Contico Manufacturing Limited details of which are set out in Part
                1 of
                Schedule 1 (and for the purposes of Warranties 4.1, 5 to 9 (inclusive)
                and
                13 shall include the Subsidiary save that those Warranties so given
                in
                respect of the Subsidiary shall be deemed to be given only in respect
                of
                the period for which the Subsidiary has been a subsidiary undertaking
                of
                KII)

               

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              “Completion”

               

            	
              means
                completion of the sale and purchase of the Shares in accordance with
                this
                Agreement

               

            
	
              “Confidential
                Information”

               

            	
              means
                all information concerned with the operation of any process, trade
                secrets, the marketing of any products or services, drawings and
                designs,
                but specifically excluding (1) information that is or becomes public
                knowledge other than as a direct or indirect result of a breach of
                this
                Agreement, (2) information received from a source not connected with
                the
                party to whom the duty of confidence is owed acquired free from any
                obligation of confidence to any other person and (3) information
                that is
                independently developed without otherwise violating the terms of
                this
                Agreement

               

            
	
              “Consideration”

               

            	
              means
                the total consideration for the Shares payable pursuant to Clause
                3

               

            
	
              "CCP"

               

            	
              means
                Continental Commercial Products, LLC. a Delaware limited liability
                company

               

            
	
              “Disclosure
                Letter”

               

            	
              means
                the letter (together with all the documents attached to it) in the
                agreed
                form from the Sellers to the Buyer executed and delivered to the
                Buyer
                immediately prior to the execution of this Agreement

               

            
	
              “Employee”

               

            	
              means
                a director or officer (whether or not employed by the Company) or
                executive or managerial employee of the Company

               

            
	
              “Encumbrance”

               

            	
              means
                any encumbrance or security interest of any kind whatsoever including
                without limitation a mortgage, charge, pledge, lien, hypothecation,
                restriction, right to acquire, right of pre-emption, option, conversion
                right, third party right or interest, right of set-off or counterclaim,
                equities, trust arrangement or any other type of preferential agreement
                (such as a retention of title arrangement) having similar effect
                or any
                other rights exercisable by or claims by third parties 

               

            
	
              "Environment"

               

            	
              means
                all and any of the following media, being land, water and air (wherever
                situate) and includes all human or plant or animal life and living
                organisms

               

            
	
              "Environmental
                Law"

               

            	
              means
                all or any applicable law, including common law, statute, statutory
                instrument, regulation, codes of practice or guidance, European law,
                directives, regulations, decisions of the European Court and any
                by-law,
                order, notice, demand, decree, injunction, resolution or judgment
                of any
                competent authority which has as a purpose or effect the prevention
                of
                harm to the Environment including for the avoidance of doubt the
                health
                and safety of any person

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              "Environmental
                Liabilities"

               

            	
              means
                any demands, claims, actions, proceedings, orders (including any
                claim or
                order made by a regulatory authority or third party) damages, payments,
                losses, costs (including reasonable legal or other professional costs)
                expenses or other liabilities (including any works which are required
                to
                investigate, monitor, remove, remedy or clean up any hazardous or
                otherwise polluting substance) which are incurred, suffered or sustained
                by the Buyer and arise from relate to or are connected with:

               

              (a)  any
                breach of Environmental Law during the period prior to
                Completion;

               

              (b)  any
                failure to obtain or comply with any Environmental Permits prior
                to
                Completion; and/or 

               

              (c)  the
                presence of any hazardous or otherwise polluting substance in on
                at or
                under any premises in relation to the activities of the Company at
                any
                time at or prior to Completion and/or any discharge, release, escape,
                emission, leakage or spillage emanating from any such hazardous or
                otherwise polluting substance at any time whether before or after
                Completion.

               

            
	
              "Environmental
                Permits"

               

            	
              means
                all or any permits, licences, authorisations, consents, approvals,
                certificates, qualifications, including any conditions thereof required
                prior to Completion under any Environmental Law for the activities
                of the
                Company at any time or the occupation or use by the Company of any
                premises in relation to the activities of the Company at any time
                prior to
                Completion

               

            
	
              “Group”

               

            	
              means,
                in relation to a company (whenever incorporated) that company, any
                company
                or group of companies which is owned directly or indirectly by the
                same
                ultimate beneficial owners as that company, any company of which
                it is a
                subsidiary (its holding company) and any other subsidiaries of any
                such
                holding company; and each company in a group is a member of the
                group

               

            
	
              “ICTA”

               

            	
              means
                the Income and Corporation Taxes Act 1988

               

            
	
              “Intellectual
                Property”

               

            	
              means
                patents, trade marks, service marks, trade names, design rights,
                copyright
                (including rights in computer software), rights in know-how and other
                intellectual property rights, in each case whether registered or
                unregistered and including applications for the grant of any such
                rights,
                used, or required to be used, by the Company in, or in connection
                with,
                the business of the Company

               

            
	
              “ITEPA”

               

            	
              means
                the Income Tax (Earnings and Pensions) Act 2003

               

            
	
              “Lease”

               

            	
              means
                the lease of the Property dated 27 November 2006 between (1) Contico
                Europe Limited and (2) the Company

               

            
	
              “Licence”

               

            	
              means
                a licence, permit, certificate, consent, approval, filing of
                notifications, reports and assessments, registrations or authorisation
                required by law for the operation of the Company’s business, its
                ownership, use, possession or occupation of any asset or the performance
                of this Agreement

               

            
	
              "Liability
                for Tax"

               

            	
              has
                the meaning given in the Tax Deed

               

            
	
              “Management
                Accounts Date”

               

            	
              27
                April 2007

               

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              “Management
                Accounts”

               

            	
              the
                unaudited balance sheet of the Company as at, and the unaudited profit
                and
                loss account of the Company for the financial period of two (2) months
                ended on, the Management Accounts Date, the notes and all other documents
                annexed thereto

               

            
	
              “Pre-Completion
                Dividend Documentation”

               

            	
              means
                the documentation in the agreed form in relation to a pre-Completion
                dividend of £1,537,082.87

               

            
	
              “Property”

               

            	
              means
                that part of the property at Cardrew Way, Redruth, Cornwall TR5 1ST
                which
                is leased to the Company pursuant to the Lease

               

            
	
              “Reporting
                Accountants”

               

            	
              means
                such firm of accountants as is selected by agreement between the
                Sellers
                and the Buyer

               

            
	
              "Restricted
                Business"

               

            	
              means
                the business of the Company that consists of the marketing and sale
                of
                janitorial and sanitary products into the commercial distribution
                market
                (including wholesale customers). For the purposes of clarification,
                the
                "commercial distribution market" shall not include a business which
                markets and sells janitorial and sanitary products direct to members
                of
                the public

               

            
	
              “Sellers’
                Group”

               

            	
              means
                KII, CEH, any subsidiary undertaking or parent undertaking of KII
                or CEH
                for the time being and any subsidiary for the time being of a parent
                undertaking of KII or CEH, excluding the Company and the
                Subsidiary

               

            
	
              “Sellers’
                Solicitors

               

            	
              means
                Hunton & Williams LLP of Bank of America Plaza, Suite 4100, 600
                Peachtree Street NE, Atlanta, Georgia, 30308-2216 

               

            
	
              “Senior
                Management”

               

            	
              means
                Vernon Leslie Holmes and Philip Macey

               

            
	
              “Shares”

               

            	
              means
                the 222,758 fully paid ordinary shares of £1.00 each of the Company
                comprising the whole of the issued share capital of the
                Company

               

            
	
              “Subsidiary”
                

               

            	
              means
                Spraychem Limited (No. 01670517) details of which are set out in
                Part 2 of
                Schedule 1

               

            
	
              “Supply
                Agreement”

               

            	
              means
                the supply agreement in agreed form between (1) the Company and (2)
                CCP on
                the terms set forth therein

               

            
	
              “Target
                Working Capital”

               

            	
              means
                £1,737,813 (one million seven hundred and thirty seven thousand eight
                hundred and thirteen pounds) converted into US Dollars at the spot
                rate
                obtained by the Buyer at Completion from Royal Bank of Scotland plc
                (being
                the rate at which pounds sterling may be sold and US Dollars bought)
                (the
                “Exchange
                Rate”)

               

            
	
              “Tax
                Authority”

               

            	
              has
                the meaning given in the Tax Deed

               

            
	
              “Tax
                Deed”

               

            	
              means
                the deed in the agreed form executed by the parties and delivered
                immediately prior to Completion

               

            
	
              “Tax
                Warranties”

               

            	
              means
                the Warranties relating to Tax in Schedule 2, Part 1, Item 12

               

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              "Tax"

               

            	
              has
                the meaning given in the Tax Deed

               

            
	
              "TCGA"

               

            	
              means
                the Taxation of Chargeable Gains Act 1992

               

            
	
              "Trademark
                Licence"

               

            	
              means
                the licence of agreed trademarks in agreed form between (1) CCP and
                (2)
                the Company

               

            
	
              "Transaction
                Documents"

               

            	
              means
                the Tax Deed, the Supply Agreement, the Transition Services Agreement,
                the
                Trademark Licence and the Disclosure Letter

               

            
	
              "Transition
                Services Agreement"

               

            	
              means
                the transition services agreement in agreed form between (1) CCP
                and (2)
                the Company, pursuant to which CCP shall provide to the Company for
                a
                period of 12 months following Completion use of a computer system
                and
                software on the terms set forth therein

               

            
	
              "VAT"

               

            	
              means
                value added tax

               

            
	
              "VATA"

               

            	
              means
                the Value Added Tax Act 1994

               

            
	
              "Warranties"

               

            	
              means
                the warranties contained in Schedule 2 and references to a "Warranty"
                include a reference to each of the individual Warranties

               

            
	
              "Working
                Capital Adjustment"

               

            	
              means
                the amount by which the Working Capital exceeds the Target Working
                Capital, payable pursuant to Clause 3.3.1
                or
                the amount by which the Working Capital is less than the Target Working
                Capital, payable pursuant to Clause 3.3.2
                (such amount being expressed as a negative figure)

               

            
	
              "Working
                Capital Statement"

               

            	
              means
                the statement to be prepared by the Buyer in accordance with Clause
                3.2
                and Schedule 3

               

            
	
              "Working
                Capital"

               

            	
              means
                the amount of working capital of the Company as at the close of business
                on 1 June 2007, as set out in the Working Capital Statement

               

            

    

    
      	1.2  	
              In
                this Agreement, unless the context otherwise requires, reference
                to:-

            

    

     

    
      	1.2.1  	
              a
                document "in
                the agreed form"
                is a reference to a document in the form approved and, for the purposes
                of
                identification only, signed by or on behalf of the Buyer and the
                Sellers;

            

    

     

    
      	1.2.2  	
              a
                statutory provision includes a reference to that provision as modified,
                replaced, amended and/or re-enacted from time to time (before or
                after the
                date of this Agreement) and any prior or subsequent subordinate
                legislation made under it;

            

    

     

    
      	1.2.3  	
              a
                "person"
                includes a reference to an individual, partnership, association or
                body
                corporate and includes a reference to that person's legal personal
                representatives and successors;

            

    

     

    
      	1.2.4  	
              "costs"
                includes a reference to costs, charges and expenses of every
                description;

            

    

     

    
      	1.2.5  	
              a
                "company",
                "subsidiary"
                and "body
                corporate"
                have the respective meanings set out in sections 735, 736 and 740
                of the
                Act;

            

    

     

    
      	1.2.6  	
              a
                "subsidiary
                undertaking"
                or a "parent
                undertaking"
                has the meaning set out in sections 258 and 259 of the Act;
                and

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	1.2.7  	
              a
                "connected
                person"
                is a person connected with another within the meaning of section
                839 of
                ICTA.

            

    

     

    
      	1.3  	
              Schedules
                form part of this Agreement and shall be interpreted and construed
                as
                though they were set out in this
                Agreement.

            

    

     

    
      	1.4  	
              Any
                statement which refers to the knowledge or knowledge and belief of
                the
                Sellers or is expressed to be "so far as the Sellers are aware" or
                any
                similar expression shall be deemed to include an additional statement
                that
                it has been made after making due and careful enquiries, but shall
                not
                include any matter or information of which the Senior Management
                is aware
                after making due and careful
                enquiry.

            

    

     

    
      	1.5  	
              Any
                agreement, warranty, representation, indemnity, covenant or undertaking
                on
                the part of two or more persons shall, except where the contrary
                is
                stated, be deemed to be given or made by such persons jointly or
                severally.

            

    

     

    
      	1.6  	
              Any
                references in this Agreement to any monetary sum expressed in sterling
                shall, if required to aid the interpretation of any clause, be deemed
                to
                be translated into dollars at the spot rate of exchange (the closing
                mid-point) for sterling into dollars on the date of this Agreement.
                For
                the avoidance of doubt any amount payable pursuant to Clause 3.1.2
                shall be paid in sterling.

            

    

     

    
      	1.7  	
              Where
                it is necessary to determine whether a monetary limit or threshold
                set out
                in this Agreement which is expressed in dollars has been reached
                or
                exceeded (as the case may be) and the value of the relevant claim
                or any
                of the relevant claims is expressed in a currency other than dollars,
                the
                value of each such claim shall be translated into dollars at the
                spot rate
                of exchange (the closing mid-point) for the currency in question
                into
                dollars on the date of this
                Agreement.

            

    

     

    
      	1.8  	
              Where
                it is necessary to determine whether a monetary limit or threshold
                set out
                in this Agreement which is expressed in sterling has been reached
                or
                exceeded (as the case may be) and the value of the relevant claim
                or any
                of the relevant claims is expressed in a currency other than sterling,
                the
                value of each such claim shall be translated into sterling at the
                spot
                rate of exchange (the closing mid-point) for the currency in question
                into
                sterling on the date of this
                Agreement.

            

    

     

    
      	2.  	
              SALE
                AND PURCHASE OF THE SHARES

            

    

     

    
      	2.1  	
              On
                the terms of this Agreement:-

            

    

     

    
      	2.1.1  	
              CEH
                agrees to sell, and the Buyer agrees to buy, with effect from Completion,
                the whole of the legal interest in the Shares with all rights attached
                or
                accruing to them at the date of this Agreement; and
                

            

    

     

    
      	2.1.2  	
              KII
                agrees to sell and the Buyer agrees to buy, with effect from Completion,
                the whole of the beneficial interest in the
                Shares.

            

    

     

    
      	2.2  	
              The
                Sellers covenant to the Buyer that there are no unissued shares,
                debentures or other securities of the Company and no person has,
                or has
                claimed, the right (whether exercisable now or in the future and
                whether
                contingent or not) to call for the issue or transfer of any shares,
                debentures or other securities of the Company.

            

    

     

    
      	2.3  	
              The
                Sellers covenant to the Buyer that the Shares will on Completion
                be free
                from all Encumbrances.

            

    

     

    
      	2.4  	
              Part
                I of the Law of Property (Miscellaneous Provisions) Act 1994 shall
                not
                apply for the purpose of this
                Agreement.

            

    

     

    
      	3.  	
              CONSIDERATION

            

    

     

    
      	3.1  	
              The
                consideration for the purchase of the Shares
                is:-

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	3.1.1  	
              $10,000,000
                payable by the Buyer to CEH forthwith following Completion in accordance
                with Clause 4.6;
                and

            

    

     

    
      	3.1.2  	
              the
                Working Capital Adjustment payable (in pounds sterling) in accordance
                with
                Clauses 3.3
                and 3.4.

            

    

     

    
      	3.2  	
              The
                Working Capital Statement shall be prepared, and the Working Capital
                ascertained, in accordance with the provisions of Schedule 3.

            

    

     

    
      	3.3  	
              If
                the Working Capital:-

            

    

     

    
      	3.3.1  	
              exceeds
                the Target Working Capital the Buyer shall pay to CEH the amount
                of the
                excess, subject always to a maximum amount of £1,000,000;
                or

            

    

     

    
      	3.3.2  	
              is
                less than the Target Working Capital CEH shall repay to the Buyer
                so much
                of the Consideration as is equal to the
                deficiency.

            

    

     

    
      	3.4  	
              Any
                payment required to be made under Clause 3.3
                shall be made within 7 days of the Working Capital Statement being
                agreed,
                deemed agreed or certified in accordance with Schedule 3.

            

    

     

    
      	4.  	
              COMPLETION

            

    

     

    
      	4.1  	
              Completion
                shall take place at the offices of the Buyer immediately after signature
                and exchange of this Agreement.

            

    

     

    
      	4.2  	
              At
                Completion the Sellers shall deliver to the
                Buyer:-

            

    

     

    
      	4.2.1  	
              a
                copy of the Pre-Completion Dividend
                Documentation;

            

    

     

    
      	4.2.2  	
              duly
                executed transfers of the Shares to the Buyer together with the share
                certificates for all of the Shares (or an express indemnity in a
                form
                satisfactory to the Buyer in the case of any missing
                certificate);

            

    

     

    
      	4.2.3  	
              an
                executed power of attorney in favour of the Buyer or as it directs
                in the
                agreed form, and such duly executed waivers or consents as may be
                required
                to give a good title to the Shares to the Buyer or as it directs
                and to
                enable the Buyer or as it directs to be registered as the holder
                of the
                Shares and (pending registration) to exercise all voting and other
                rights
                attaching to the Shares;

            

    

     

    
      	4.2.4  	
              letters
                of resignation from each director of the Company (other than Vernon
                Holmes) in the agreed form;

            

    

     

    
      	4.2.5  	
              a
                letter of resignation from Alan Elkins as secretary of the Subsidiary
                in
                the agreed form;

            

    

     

    
      	4.2.6  	
              a
                letter of resignation from the auditors of the Company and the Subsidiary
                accompanied by a statement under section 394 of the Act in the agreed
                form
                together with evidence that any letter required by the Act to be
                deposited
                by the auditors at the registered office of the Company and the Subsidiary
                has been so deposited;

            

    

     

    
      	4.2.7  	
              all
                the financial and accounting books and records of the Company and
                the
                Subsidiary;

            

    

     

    
      	4.2.8  	
              the
                statutory books of the Company and the Subsidiary (duly written up
                to date
                as at immediately prior to Completion), the common seals, Certificates
                of
                Incorporation and Certificates of Incorporation on Change of
                Name;

            

    

     

    
      	4.2.9  	
              the
                Lease and all other title deeds relating to the
                Property;

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	4.2.10  	
              a
                legal opinion from Hunton & Williams LLP in the agreed form relating
                to KII and CCP confirming that:

            

    

     

    
      	(a)  	
              KII
                has the capacity to enter into this
                Agreement;

            

    

     

    
      	(b)  	
              CCP
                has the capacity to enter into the Transition Services Agreement,
                the
                Supply Agreement and the Trademark
                Licence;

            

    

     

    
      	4.2.11  	
              all
                documents of title relating to that portion of the Intellectual Property
                and Confidential Information the rights to which, at Completion,
                are owned
                by the Company or the Subsidiary;

            

    

     

    
      	4.2.12  	
              a
                deed of acknowledgement from each of the Sellers in a form satisfactory
                to
                the Buyer that all inter-group indebtedness to which the Company
                or the
                Subsidiary is a party has been discharged;

            

    

     

    
      	4.2.13  	
              the
                Tax Deed in the agreed form duly executed by each of the
                Sellers;

            

    

     

    
      	4.2.14  	
              a
                deed of release from Lloyds Bank plc in a form satisfactory to the
                Buyer
                evidencing the release and discharge of the debenture to Lloyds Bank
                plc
                dated 23 December 1998;

            

    

     

    
      	4.2.15  	
              a
                deed releasing the Company from all of its obligations pursuant to
                the KII
                amended and restated loan agreement with Bank of America,
                N.A.;

            

    

     

    
      	4.2.16  	
              a
                copy, certified to be a true copy by a director or secretary of CEH
                of a
                resolution of CEH's board of directors (or an authorised committee
                of that
                board) authorising the execution and completion of this Agreement
                and the
                documents referred to in Clause 4
                by
                CEH;

            

    

     

    
      	4.2.17  	
              a
                copy, certified to be a true copy by a director or secretary of KII
                of a
                resolution of KII's board of directors (or an authorised committee
                of that
                board) authorising the execution and completion of this Agreement
                and any
                documents referred to in Clause 4
                that are to be entered into by KII;

            

    

     

    
      	4.2.18  	
              a
                copy, certified to be a true copy by a director or secretary of CCP
                of a
                resolution of CCP's board of directors (or an authorised committee
                of that
                board) authorising the execution and completion of the Transition
                Services
                Agreement, the Trademark Licence and the Supply
                Agreement;

            

    

     

    
      	4.2.19  	
              the
                Transition Services Agreement duly executed by CCP (and the third
                party
                system access agreement duly executed by Infor Global Solutions (Chicago),
                Inc.);

            

    

     

    
      	4.2.20  	
              the
                Trademark Licence duly executed by (1) CCP and (2) the Company;
                and

            

    

     

    
      	4.2.21  	
              the
                Supply Agreement duly executed by
                CCP.

            

    

     

    
      	4.3  	
              At
                Completion CEH shall procure that a board meeting of the Company
                is held
                at which the directors, in respect of the Company as appropriate,
                approve
                the following matters, or that the following matters are otherwise
                approved by the board of the
                Company:-

            

    

     

    
      	4.3.1  	
              approve
                the registration of the transfers in respect of the Shares referred
                to in
                Clause 4.2.2
                (subject only to stamping at the cost of the
                Buyer);

            

    

     

    
      	4.3.2  	
              accept
                the resignations referred to in Clause 4.2.4
                and appoint the persons nominated by the Buyer as directors and secretary
                with effect from the end of the
                meeting;

            

    

     

    
      	4.3.3  	
              accept
                the resignation referred to in Clause 4.2.6
                and appoint PKF (UK) LLP as
                auditors;

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	4.3.4  	
              revoke
                all existing authorities to bankers and give authority in favour
                of
                persons nominated by the Buyer to operate such
                accounts;

            

    

     

    
      	4.3.5  	
              change
                the registered office address as the Buyer directs;
                and

            

    

     

    
      	4.3.6  	
              change
                the accounting reference date as the Buyer directs.
                

            

    

     

    
      	4.4  	
              At
                Completion CEH shall procure that a board meeting of the Subsidiary
                is
                held at which the directors, in respect of the Subsidiary as appropriate,
                approve the following matters, or that the following matters are
                otherwise
                approved by the board of the
                Subsidiary:-

            

    

     

    
      	4.4.1  	
              accept
                the resignation referred to in Clause 4.2.4
                and appoint the persons nominated by the Buyer as director and secretary
                with effect from the end of the
                meeting;

            

    

     

    
      	4.4.2  	
              accept
                the resignation referred to in Clause 4.2.6
                and appoint PKF (UK) LLP as
                auditors;

            

    

     

    
      	4.4.3  	
              revoke
                all existing authorities to bankers and give authority in favour
                of
                persons nominated by the Buyer to operate such
                accounts;

            

    

     

    
      	4.4.4  	
              change
                the registered office address as the Buyer directs;
                and

            

    

     

    
      	4.4.5  	
              change
                the accounting reference date as the Buyer directs.
                

            

    

     

    
      	4.5  	
              At
                Completion the Buyer shall deliver to the
                Sellers:

            

    

     

    
      	4.5.1  	
              a
                copy, certified to be a true copy by a director or secretary of the
                Buyer,
                of a resolution of the Buyer's board of directors (or an authorised
                committee of that board) authorising the execution and completion
                of this
                Agreement and the documents referred to in Clause 4 by the
                Buyer;

            

    

     

    
      	4.5.2  	
              an
                original of the Supply Agreement duly executed by the Company;
                

            

    

     

    
      	4.5.3  	
              an
                original of the Transition Services Agreement duly executed by the
                Company; and

            

    

     

    
      	4.5.4  	
              an
                original of the Trademark Licence duly executed by the
                Company.

            

    

     

    
      	4.6  	
              Forthwith
                following Completion, the Buyer shall pay
                (via the Buyer's Solicitors) that part of the Consideration referred
                to in
                Clause 3.1.1
                by
                telegraphic transfer to the account specified in the undertaking
                from the
                Buyer's Solicitors in the agreed
                form.

            

    

     

    
      	4.7  	
              The
                Buyer is not obliged to complete this Agreement unless each of the
                Sellers
                has fulfilled all its obligations under this
                Clause.

            

    

     

    
      	4.8  	
              The
                Sellers are not obliged to complete this Agreement unless the Buyer
                has
                fulfilled all its obligations under this Clause (other than the obligation
                under Clause 4.6, which will be fulfilled by the Buyer forthwith
                following
                Completion).

            

    

     

    
      	4.9  	
              The
                Sellers covenant that, with effect from the giving of the undertaking
                by
                the Buyer's Solicitors referred to in Clause 4.6, the Company shall
                have
                no liability (whether actual or contingent) under (and shall have
                been
                released from any obligations under) any loan, facility, overdraft
                or
                other financing agreements or arrangements in the nature of bank
                (or other
                professional lending) financing (or under any security agreements
                or
                security arrangements in connection with bank (or other professional
                lending) financing) which have been entered into by (or which are
                or were
                for the benefit of):

            

    

     

    
      	4.9.1  	
              one
                or more members of the Sellers' Group;
                or

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	4.9.2  	
              one
                or more former members (other than the Company and the Subsidiary)
                of the
                Sellers' Group). 

            

    

     

    For
      the
      avoidance of doubt "bank
      (or other professional lending) financing"
      does not
      include commercial terms of trade (including periods for settlement of invoices
      or retention of title provisions) agreed on a bi-lateral basis between the
      Company and a member of the Sellers' Group in relation to the supply of products
      between those companies in the ordinary course of business. 

    

    
      	5.  	
              WARRANTIES

            

    

     

    
      	5.1  	
              The
                Sellers warrant to the Buyer that (subject to Clause 5.2)
                each Warranty is accurate on the date of this
                Agreement.

            

    

     

    
      	5.2  	
              The
                Warranties are subject only to:-

            

    

     

    
      	5.2.1  	
              any
                matter which is fairly disclosed in the Disclosure Letter;
                and

            

    

     

    
      	5.2.2  	
              the
                provisions of Clause 6.

            

    

     

    
      	5.3  	
              The
                Buyer acknowledges that (1) it accepts responsibility for determining
                the
                scope of its investigations of the Company and for the manner in
                which
                such investigations have been conducted, (2) the Sellers are not
                making
                any warranties, express or implied, of any nature whatsoever with
                respect
                to the Company other than the Warranties.

            

    

     

    
      	5.4  	
              Each
                of the Warranties shall be interpreted as a separate and independent
                Warranty so that the Buyer shall have a separate claim and right
                of action
                in respect of every breach of each
                Warranty.

            

    

     

    
      	5.5  	
              No
                information supplied by, or on behalf of, the Company (or any of
                the
                Employees) to the Sellers or their advisers in connection with the
                business and affairs of the Company constitutes a representation,
                warranty
                or undertaking as to its accuracy to the Sellers by the Company (or
                by any
                of the Employees) and each of the Sellers waives each and every claim
                which it may have against the Company or any of the employees in
                respect
                of such information, save that such a waiver will not apply in respect
                of
                a claim against an Employee in the event of (and to the extent of)
                any
                fraud or wilful misconduct (including wilful non-disclosure) by that
                Employee.

            

    

     

    
      	6.  	
              LIMITATION
                ON LIABILITY

            

    

     

    
      	6.1  	
              The
                Sellers' liability under the Warranties shall be limited as
                follows:-

            

    

     

    
      	6.1.1  	
              no
                Claim shall be made by the Buyer, and the Sellers shall not be liable
                in
                respect of any breach of the Warranties, unless the liability for
                that
                individual Claim shall equal or exceed US$10,000, and until the aggregate
                liability for all claims under this Agreement shall equal or exceed
                US$100,000 in which case the whole amount shall be capable of being
                claimed and not merely the excess;

            

    

     

    
      	6.1.2  	
              the
                Sellers' maximum aggregate liability in respect of Warranties 1.1
                to 1.5
                (inclusive), 1.7, 2.1, 2.2, 4.2.1, 4.2.2, 6.1 and 6.2 is limited
                to the
                Consideration;

            

    

     

    
      	6.1.3  	
              the
                Sellers' maximum aggregate liability in respect of the remainder
                of the
                Warranties not listed in Clause 6.1.2
                (other than the Tax Warranties) and in respect of any other Claim
                (as
                defined) is limited to 10% of the
                Consideration;

            

    

     

    
      	6.1.4  	
              the
                Sellers' maximum aggregate liability under the Tax Warranties and
                the Tax
                Deed (other than in relation to any claim that arises in connection
                with,
                as a result of or in consequence of any amounts surrendered or claimed
                by
                way of group relief) is limited to 10% of the
                Consideration;

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	6.1.5  	
              the
                Sellers' maximum aggregate liability under the Tax Warranties and
                the Tax
                Deed in relation to any claim that arises in connection with, as
                a result
                of or in consequence of any amounts surrendered or claimed by way
                of group
                relief is limited to £300,000;

            

    

     

    
      	6.1.6  	
              no
                claim:-

            

    

     

    
      	(a)  	
              for
                breach of the Warranties otherwise than in relation to Tax shall
                be made
                unless the Claim has been notified in writing to the Sellers summarising
                the nature of the Claim as far as it is known to the Buyer and a
                reasonable estimate of the amount claimed before 31 August 2008;
                and

            

    

     

    
      	(b)  	
              in
                relation to Tax or under the Tax Deed shall be made unless the claim
                has
                been notified in writing to the Sellers summarising the nature of
                the
                claim as far as it is known to the Buyer and a reasonable estimate
                of the
                amount claimed before the seventh anniversary of Completion (save
                that any
                claim that arises in connection with, as a result of or in consequence
                of
                any amounts surrendered or claimed by way of group relief must be
                notified
                prior to 1 January 2009 (unless a notice from HMRC in relation to
                any such
                matter is received on or after 1 December 2008, in which event such
                claim
                must be notified as soon as reasonably practicable thereafter and
                in any
                event prior to 31 January 2009));

            

    

     

    
      	6.1.7  	
              the
                Sellers shall not be liable in respect of any breach of the Warranties
                if
                and to the extent that the resulting loss has been recovered under
                the Tax
                Deed.

            

    

     

    
      	6.1.8  	
              no
                Claim shall be made and the Sellers shall not be liable under any
                Claim:

            

    

     

    
      	(a)  	
              to
                the extent that a provision, reserve or allowance relating to the
                subject
                matter of the Claim has been made in the Management Accounts or the
                Accounts in respect thereof; or

            

    

     

    
      	(b)  	
              to
                the extent that such liability arises or is increased as a direct
                result
                of any change or changes in legislation
                or
                published practice of a Tax Authority or generally accepted accounting
                practice
                after Completion (primary or delegated) and whether or not with
                retrospective effect; or

            

    

     

    
      	(c)  	
              to
                the extent that such liability occurs or arises as a direct result
                of or
                is otherwise attributable wholly or partly to any act, transaction
                or
                omission of the Company or the Buyer or their respective directors
                or
                employees on or after Completion (including any act, transaction
                or
                omission which does or might reasonably be expected to subject the
                Company
                to a greater risk of enforcement action or any investigation under
                Environmental Law) otherwise
                than: 

            

    

     

    
      	(i)  	
              in
                the ordinary and proper course of business; or

            

    

     

    
      	(ii)  	
              pursuant
                to the Buyer investigating the circumstances of a Claim or evaluating
                of
                the merits of a Claim; or

            

    

     

    
      	(iii)  	
              pursuant
                to a legally binding commitment created on or before Completion by
                the
                Company; or

            

    

     

    
      	(iv)  	
              required
                by law or any regulatory authority.

            

    

     

    
      	(d)  	
              to
                the extent that any Claim or the subject matter thereof has been
                or is
                made good or is otherwise compensated for (otherwise than by the
                Buyer or
                any member of the Buyer ́s Group);
                or

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	(e)  	
              to
                the extent that the Buyer has recovered a sum in respect of a Claim
                under
                any policy of insurance (which the Buyer will use reasonable endeavours
                to
                procure) provided that if the Buyer makes a claim against an insurance
                policy in connection with a Claim, then the Sellers undertake to
                indemnify
                the Buyer in full for any increase in the Buyer's insurance premium
                resulting from the Buyer making a claim on its insurance policy;
                or

            

    

     

    
      	(f)  	
              to
                the extent that a Claim results from, or is increased, or extended
                by, the
                change of the accounting reference date of the Company on Completion
                or
                any subsequent change thereafter or by any voluntary
                change
                in the accounting policies of the Company after Completion unless
                such
                change is necessary to comply with generally accepted accounting
                practice
                subsisting at Completion; or

            

    

     

    
      	(g)  	
              to
                the extent that the Buyer or the Senior Management have actual knowledge
                at the date of this Agreement of any actual breach of the Warranties
                by
                the Sellers which would enable a Claim to be
                brought.

            

    

     

    
      	6.2  	
              None
                of the limitations contained in Clause 6.1
                apply to any Claim that arises or is delayed as a result of fraud,
                dishonesty, wilful misconduct or wilful concealment by a Seller,
                its
                agents, officers or advisors except the Senior
                Management.

            

    

     

    
      	6.3  	
              In
                assessing the liability of the Sellers in respect of any Claim there
                shall
                be taken into account any benefit (including Taxation benefit) accruing
                to
                the Buyer or the Company solely and directly as a consequence of
                the
                matter or circumstances giving rise to the
                Claim.

            

    

     

    
      	6.4  	
              The
                Buyer shall not be entitled to recover any sum more than once in
                respect
                of any Claim under the Warranties or otherwise obtain reimbursement
                more
                than once in respect of any loss which arises out of the same act,
                matter
                or thing to the extent that the Buyer has already made a recovery
                or
                obtained reimbursement) under the Warranties in respect of that act,
                matter or thing.

            

    

     

    
      	6.5  	
              Where
                the Buyer and/or the Company is/are at any time entitled to recover
                from
                some other person any sum in respect of any matter giving rise to
                a Claim
                the Buyer shall and shall procure that the Company shall take all
                reasonable steps to enforce such recovery (and shall notify the Sellers
                of
                the Claim) and in the event that the Buyer or the Company shall recover
                any amount from such other person the amount of the Claim against
                the
                Sellers shall be reduced by the net amount (having deducted the reasonable
                and proper costs of recovery) recovered from such other
                person.

            

    

     

    
      	6.6  	
              If
                the Sellers pay at any time to the Buyer or to the Company an amount
                pursuant to a Claim and the Company subsequently becomes entitled
                to
                recover from some other person any sum in respect of any matter giving
                rise to such Claim, the Buyer shall procure that the Company shall
                take
                all reasonable steps to enforce such recovery and shall (as soon
                as
                reasonably practicable) repay to the Sellers so much of the amount
                paid by
                it to the Buyer or the Company as does not exceed the net sum (having
                deducted the reasonable and proper costs of recovery) recovered from
                such
                other person.

            

    

     

    
      	7.  	
              INDEMNITY

            

    

     

    
      	7.1  	
              The
                Sellers agree to indemnify and keep indemnified the Buyer against
                all
                actions, proceedings, demands, claims, costs and liabilities whatsoever
                in
                connection with:

            

    

     

    
      	7.1.1  	
              any
                and all Environmental Liabilities of the Company or the
                Subsidiary;

            

    

     

    
      	7.1.2  	
              the
                Subsidiary insofar as such actions, proceedings, demands, claims,
                costs
                and liabilities relate to any real property leased, occupied or owned
                by
                it at any time during which the Subsidiary has been a subsidiary
                undertaking of KII; and

            

    

     

    
      	7.1.3  	
              any
                Claim relating to Tax made pursuant to a deed of indemnity between
                inter
                alia the Company, Brendan Murphy and Carolyn
                Murphy.

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	8.  	
              CONDUCT
                OF CLAIMS

            

    

     

    
      	8.1  	
              If
                either the Buyer or the Company become aware of a matter which they
                reasonably consider might give rise to a Claim or a Claim for Tax
                or one
                of the Sellers becomes aware of a matter which it reasonably considers
                might give rise to a Claim pursuant to the Buyer’s Warranties then such
                party:

            

    

     

    
      	8.1.1  	
              shall
                (or, in the case of the Buyer, shall procure that the Company shall)
                as
                soon as reasonably practicable give notice to the Sellers or the
                Buyer as
                the case may be of the matter and shall consult with the Sellers
                or the
                Buyer as the case may be with respect to such matter but such notice
                shall
                not be a condition precedent to the liability of the Sellers or the
                Buyer
                as the case may be;

            

    

     

    
      	8.1.2  	
              shall
                provide to the Sellers or the Buyer as the case may be and its advisers
                reasonable access (at reasonable hours and with reasonable prior
                notice
                having been given) to premises and personnel and to relevant assets,
                documents and records within the Buyer’s or the Sellers’ Group (as the
                case may be) for the purposes of investigating the
                matter;

            

    

     

    
      	8.1.3  	
              (at
                the requesting Party's cost) may take copies of the documents or
                records
                relevant to the matter, and photograph the premises or assets, referred
                to
                in Clause 8.1.2;

            

    

     

    
      	8.1.4  	
              subject
                to the following provisions of this Clause 8, shall (and in the case
                of
                the Buyer shall procure that the Company shall) take such action
                and give
                such information and assistance in connection with the affairs of
                the
                Buyer or the Company or the Sellers as the requesting party may reasonably
                request in writing to negotiate, avoid, dispute, resist or defend
                against
                the matter;

            

    

     

    
      	8.1.5  	
              shall
                indemnify the other party against all costs and expenses reasonably
                incurred by that other party or any member of such party’s Group in
                complying with their obligations under this Clause 8.

            

    

     

    
      	8.2  	
              The
                Buyer and, as the case may be, the Sellers shall not be obliged to
                take or
                procure the taking of any of the following actions pursuant to its
                obligations contained in Clause 8.1.4:

            

    

     

    
      	8.2.1  	
              the
                submission of any proposal to settle or compromise the relevant matter
                made by the Sellers or the Buyer (as the case may be) of which the
                Buyer
                (or the Sellers as the case may be) (acting reasonably) does not
                approve;

            

    

     

    
      	8.2.2  	
              agreeing
                to the settlement or compromise of any claim or any proposal for
                the same
                which is likely to have an adverse effect on the future liability
                of the
                Company, the Buyer or any member of the Buyer’s Group or the Sellers or
                any member of the Sellers’ Group unless the Sellers (or the Buyer as the
                case may be) indemnify the Buyer (or the Sellers as the case may
                be), or
                the Company or the relevant member of the Buyer’s Group or the Sellers’
                Group (as the case may be) against any such future
                liability;

            

    

     

    
      	8.2.3  	
              complying
                with any unreasonable instruction of the Sellers or the Buyer as
                the case
                may be or taking any action or procuring the taking of any action
                which
                the Buyer or the Sellers (as the case may be) considers (acting
                reasonably) to be onerous or prejudicial to the Buyer or any member
                of the
                Buyer’s Group or the Sellers or any member of the Sellers’ Group (as the
                case may be).

            

    

     

    
      	8.3  	
              If
                a Party does not request the other to take action pursuant to Clause
                8.1.4
                or
                shall fail to indemnify the other Party or the Company concerned
                in
                accordance with Clause 8.1.5
                within 14 days of the written notice to the Sellers (or the Buyer
                as the
                case may be) served in accordance with Clause 8.1.1
                the Buyer (or the Sellers as the case may be) or the Company shall
                be free
                to pay or settle the relevant matter on such terms as it may in its
                absolute discretion think fit notwithstanding the provisions of Clause
                8.2.

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	8.4  	
              Any
                claim under the Warranties or the Buyer's Warranties shall (if it
                has not
                been previously satisfied, settled or withdrawn) be deemed to be
                irrevocably withdrawn and waived at the expiration of twelve months
                from
                the date of giving notice of such claim (or claim under the Buyer’s
                Warranties) unless legal proceedings in respect thereof have been
                commenced by the other party by issuing and serving such proceedings
                on
                the Sellers (or the Buyer as the case may be) and the loss giving
                rise to
                any such claim (or claim under the Buyer’s Warranties) which shall be so
                deemed withdrawn and waived shall not be capable of being the subject
                of a
                further claim (or claim under the Buyer’s
                Warranties).

            

    

     

    
      	8.5  	
              Subject
                to Clause 8.3
                notwithstanding any failure by the Buyer to notify the Sellers or
                of the
                Sellers to notify the Buyer (as the case may be) pursuant to Clause
                8.1.1
                the Buyer (or the Sellers as the case may be) shall not (and shall
                procure, only in the case of the Buyer, that the Company shall not)
                settle
                or compromise any such claim or make any admission of liability without
                the prior written consent of the Sellers or the Buyer (as the case
                may be)
                (which shall not be unreasonably withheld or
                delayed).

            

    

     

    
      	8.6  	
              If
                any Claim (or claim under the Buyer’s Warranties) shall arise by reason of
                some liability which, at the time the Claim (or claim under the Buyer’s
                Warranties) is notified to the Sellers (or the Buyer as the case
                may be),
                is contingent only, the Sellers (or the Buyer as the case may be)
                shall
                not be under any obligation to make any payment in respect of such
                Claim
                (or claim under the Buyer’s Warranties) unless and until the contingent
                liability crystallises as an actual liability. Provided that such
                Claim
                shall have been notified to the Sellers or the Buyer (as the case
                may be)
                in accordance with Clause 6.1.6
                then Clause 8.4
                shall be amended in relation to such Claim (or claim under the Buyer’s
                Warranties) so as to require that legal proceedings be commenced
                within
                twelve months from the date on which the said liability ceases to
                be
                contingent or becomes capable of being quantified, as the case may
                be.

            

    

     

    
      	8.7  	
              Nothing
                in this agreement shall be deemed to relieve the Buyer or of the
                Sellers
                (as the case may be) from any duty to mitigate any loss or damage
                incurred
                by it.

            

    

     

    
      	9.  	
              PROTECTION
                OF GOODWILL

            

    

     

    
      	9.1  	
              For
                the purposes of this Clause 9,
                the words "Restricted
                Person"
                means any member of the Sellers'
                Group.

            

    

     

    
      	9.2  	
              Subject
                to Clauses 9.3
                and 9.4,
                the Sellers undertake to the Buyer (for itself and as trustee for
                the
                holders for the time being of the Shares but so that the Buyer shall
                not
                as trustee be under any obligation to such holders to enforce the
                undertakings and may release or waive them in whole or in part as
                it, in
                its absolute discretion, thinks fit) that without the written consent
                of
                the Buyer:- 

            

    

     

    
      	9.2.1  	
              for
                a period of 2 years from Completion they will not in the United Kingdom,
                the European Union or Dubai in any capacity whatsoever directly or
                indirectly carry on or assist in carrying on or be engaged, concerned
                or
                interested in any business which competes with the Restricted Business
                (or
                with any part of the Restricted
                Business);

            

    

     

    
      	9.2.2  	
              for
                a period of 2 years from Completion they will not and will procure
                that no
                other Restricted Person will do any act or thing with the primary
                intention of causing any supplier of or other person in the habit
                of
                dealing with the Company (at Completion) to be unable or unwilling
                to deal
                with the Company either at all or in part or on the terms on which
                it had
                previously dealt with the Company or with the primary intention of
                causing
                any person having a contract or arrangement with the Company (at
                Completion) to breach, terminate or modify that contract or arrangement
                to
                exercise any right under it; and

            

    

     

    
      	9.2.3  	
              for
                a period of 2 years from Completion they will not and will procure
                that no
                other Restricted Person will solicit or endeavour to entice away
                from the
                Company any employee of the Company who is at the date of this Agreement
                and at the time of such attempt an Employee; and
                

            

    

     

    
      	9.2.4  	
              they
                will not at any time in connection with any business carried on by
                it or
                otherwise howsoever use directly or indirectly or authorise any person
                to
                use directly or indirectly any distinctive mark, style or logo the
                rights
                to which, at Completion, were owned by the Company or the Subsidiary
                (“Company Trademarks”) or any mark, style or logo confusingly similar to
                or likely to be confused with any Company Trademarks, nor use the
                name
                "Contico" (or any name confusingly similar thereto) in the UK, Europe
                or
                Dubai. 

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	9.3  	
              The
                restrictions in Clause 9.2
                shall terminate with regard to the obligations of KII, CEH or any
                Restricted Person (respectively) immediately upon a change of control
                of
                that particular company. For the purpose of this clause, "change
                of control"
                shall mean the acquisition by a third party and any connected person
                (in
                one transaction or a series of transactions) of (i) an interest in
                shares
                in the relevant company conferring in aggregate more that 50% of
                the total
                voting rights conferred by all of the issued shares in that company
                or any
                of its parents, taking account at the relevant time of provisions
                regarding voting rights contained in the articles of association
                of that
                company or its parents, as applicable, or (ii) substantially all
                (over 85
                per cent) of its assets.

            

    

     

    
      	9.4  	
              Nothing
                in Clause 9.2
                shall prevent KII or CEH or any other Restricted Person
                from:-

            

    

     

    
      	9.4.1  	
              owning
                not more than five per cent of any class of the issued share capital
                of a
                company which is dealt in on a recognised investment exchange (as
                defined
                in the Financial Services and Markets Act 2000); or
                

            

    

     

    
      	9.4.2  	
              employing
                any person who has approached the relevant party as a result of a
                general
                advertising campaign by or on behalf of KII, CEH or such other Restricted
                Person.

            

    

     

    
      	9.5  	
              KII
                and CEH have taken independent legal advice and acknowledge that
                they
                consider the undertakings contained in Clause 9.2
                reasonable for the proper protection of the business of the Company
                and
                the legitimate interests of the
                Buyer.

            

    

     

    
      	9.6  	
              Each
                of the undertakings contained in Clause 9.2
                is
                separate and severable and shall be construed on that basis. In the
                event
                that any of such undertakings is found to be void but would be valid
                if
                some part of it were deleted or if the period or extent of it were
                reduced
                such undertaking shall apply with such modification as may be necessary
                to
                make it valid and effective.

            

    

     

    
      	10.  	
              CONFIDENTIAL
                INFORMATION

            

    

     

    
      	10.1  	
              The
                Sellers shall
                not at any time make use of or disclose to any person Confidential
                Information belonging to the Company except for the purposes contemplated
                by this Agreement.

            

    

     

    
      	10.2  	
              The
                Buyer shall not at any time make use of or disclose to any person
                Confidential Information belonging to the Sellers or the Sellers’ Group
                (other than the Company) except for the purposes contemplated by
                this
                Agreement.

            

    

     

    
      	10.3  	
              Clause
                10.1
                does not apply to:-

            

    

     

    
      	10.3.1  	
              use
                or disclosure of Confidential Information required to be used or
                disclosed
                by law;

            

    

     

    
      	10.3.2  	
              disclosure
                of Confidential Information to a director, officer or employee of
                the
                Buyer or to an Employee of the Company whose function requires that
                he has
                possession of the Confidential
                Information;

            

    

     

    
      	10.3.3  	
              disclosure
                of Confidential Information to an adviser for the purpose of advising
                the
                Sellers in connection with this Agreement provided that such disclosure
                is
                subject to the terms set out in Clause 10.1;
                or

            

    

     

    
      	10.3.4  	
              Confidential
                Information which becomes publicly known except as a result of a
                breach of
                Clauses 10.1
                or
                10.2.

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	10.4  	
              The
                Sellers and the Buyer may disclose the Transaction Documents to bona
                fide
                third party purchasers of the entire issued share capital of, or
                substantially all (over 85 per cent) of the assets of, a Seller or
                the
                Buyer or members of their Group if the disclosing party procures
                that the
                people to whom the Transaction Documents are disclosed first enter
                into a
                non-disclosure agreement in a customary form and that such people
                keep the
                information confidential in accordance with the terms of such
                agreement

            

    

     

    
      	11.  	
              ANNOUNCEMENTS

            

    

     

    
      	11.1  	
              Subject
                to Clause 11.2,
                neither the Buyer nor the Sellers shall at any time make or send
                any
                announcement, communication or circular relating to the subject matter
                of
                this Agreement unless such party has first obtained the other party's
                written consent to the form and text of such announcement, such consent
                not to be unreasonably withheld.

            

    

     

    
      	11.2  	
              Clause
                11.1
                does not apply to an announcement, communication or
                circular:-

            

    

     

    
      	11.2.1  	
              required
                by law or by the London Stock Exchange or any other securities exchange
                or
                by any governmental authority, in which event the party required
                to make
                or send such announcement, communication or circular shall, where
                practicable, first consult with the other party as to the content
                of such
                announcement; or

            

    

     

    
      	11.2.2  	
              to
                confirm that the sale of the Company to the Buyer has taken place
                and the
                date of the sale.

            

    

     

    
      	12.  	
              NOTICES

            

    

     

    
      	12.1  	
              Subject
                to Clause 12.2,
                any notice or other communication pursuant to or in connection with
                this
                Agreement shall be in writing and delivered personally or sent by
                first
                class pre-paid recorded delivery post (air mail if overseas) to the
                party
                due to receive such notice or by sending it by fax to the fax number
                of
                the party concerned set out in this Clause, or such other fax number
                as
                may from time to time have been notified in writing to the other
                party in
                accordance with this Clause 12)
                (subject to the original notice or communication being sent in the
                post on
                the same day in the manner specified
                above):

            

    

     

    In
      the
      case of the Sellers, 2461 South Clark Avenue, Suite 630, Arlington, Virginia
      22022, for the attention of Amir Rosenthal, CFO, with fax no: +1 (703) 236
      3170,
      with a copy to Hunton & Williams LLP, Bank of America Plaza, Suite 4100,
      Atlanta, Georgia 30308-2216, for the attention of Joseph B. Alexander, Jr.,
      Esq., with fax no: +1 (404) 602-9004.

     

    In
      the
      case of the Buyer, 49 Rodney Street, Liverpool, L1 9EW, for the attention of
      David Chestnutt, Chief Executive, with fax no: +44 (0) 151 706 0627, with a
      copy
      to Pinsent Masons, 1 Park Row, Leeds LS1 5AB, for the attention of Rob
      Hutchings, with fax no. (+44) 113 244 8000.

     

    
      	12.2  	
              KII
                irrevocably appoints CEH as its agent for service of process in England,
                service upon whom shall be deemed completed whether or not forwarded
                to,
                or received by KII. If such process agent ceases to have an address
                in
                England, KII hereby irrevocably agrees to appoint a new process agent
                acceptable to the Buyer and to deliver to the Buyer within 14 days
                a copy
                of a written acceptance of appointment by such process
                agent.

            

    

     

    
      	12.3  	
              Any
                notice required to be served on the Sellers shall be effective if
                served
                on either KII or CEH in accordance with this
                Clause.

            

    

     

    
      	12.4  	
              Subject
                to Clause 12.5,
                any notice or other communication shall be deemed to have been
                served:-

            

    

     

    
      	12.4.1  	
              if
                delivered personally, when left at the address referred to in Clause
                12.1;

            

    

     

    
      	12.4.2  	
              if
                sent by pre-paid recorded delivery post (except air mail), two days
                after
                posting it;

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	12.4.3  	
              if
                sent by air mail, four days after posting
                it;

            

    

     

    
      	12.4.4  	
              if
                sent by fax (subject to the original notice or communication being
                sent by
                post on the same day in the manner specified in Clause 12.1)
                one hour after despatch subject to receipt during office
                hours.

            

    

     

    
      	12.5  	
              If
                a notice is given or deemed given at a time or on a date which is
                not a
                Business Day, it shall be deemed to have been given on the first
                Business
                Day thereafter.

            

    

     

    
      	13.  	
              ENTIRE
                AGREEMENT

            

    

     

    
      	13.1  	
              This
                Agreement and the Disclosure Letter sets out the entire agreement
                and
                understanding between the parties in respect of the subject matter
                of this
                Agreement. This Agreement supersedes and extinguishes all previous
                agreements between the parties relating to the subject matter thereof
                and
                any representations and warranties previously given or made, including,
                without limitation, the heads of agreement dated 29/30 April 2007
                which
                shall cease to have any further force or effect. It is agreed that:-
                

            

    

     

    
      	13.1.1  	
              the
                Buyer has not entered into this Agreement in reliance upon, nor relied
                upon, any representation, warranty or undertaking of any other party
                which
                is not expressly set out in this
                Agreement;

            

    

     

    
      	13.1.2  	
              no
                party shall have any remedy in respect of, and each party hereby
                irrevocably and unconditionally waives any right it may have to claim
                damages or to rescind this Agreement by reason of, any misrepresentation
                or any untrue statement made by any other party which is not contained
                in
                this Agreement nor for any breach of warranty which is not contained
                in
                this Agreement;

            

    

     

    
      	13.1.3  	
              no
                breach of this Agreement shall in any event give rise to a right
                on the
                party of the Buyer to rescind or terminate this
                Agreement;

            

    

     

    
      	13.1.4  	
              this
                Clause shall not exclude any liability for, or remedy in respect
                of fraud,
                or fraudulent misrepresentation;
                and

            

    

     

    
      	13.1.5  	
              the
                Buyer has no rights against and may not make a claim against any
                employee,
                director (save to the extent that such claim arises from any matters
                not
                disclosed in their letters of resignation, in the agreed form), agent
                or
                adviser of any member (other than the Company or the Subsidiary)
                of the
                Sellers’ Group.

            

    

     

    
      	13.2  	
              No
                variation of this Agreement shall be effective unless made in writing
                and
                signed by or on behalf of each
                party.

            

    

     

    
      	14.  	
              FURTHER
                ASSURANCE

            

    

     

    
      	14.1  	
              During
                the period which is two years from and after Completion, each of
                the Buyer
                and the Sellers shall:-

            

    

     

    
      	14.1.1  	
              at
                their own cost at any time after Completion do or procure the doing
                of all
                such acts and things and/or execute or procure the execution of all
                such
                documents as the other party may reasonably request for the purpose
                of
                vesting the Shares in the Buyer or giving full effect to all the
                provisions of this Agreement; and

            

    

     

    
      	14.1.2  	
              at
                the other party’s cost give to the other party such assistance as it may
                reasonably require in connection with any dispute or threatened dispute
                directly or indirectly relating to the Company, the Property, the
                Intellectual Property, (including the Company Trademarks) and/or
                the
                Confidential Information.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	14.2  	
              In
                the event that (following Completion) any sum is received by any
                member of
                the Seller's Group from a customer of the Company and which that
                customer
                despatched in intended payment of (all or part of) an invoice from
                the
                Company and for the Company's account, the Sellers shall procure
                that such
                sum is forwarded to the Company as soon as reasonably practicable
                after
                such receipt.

            

    

     

    
      	15.  	
              EFFECT
                OF COMPLETION

            

    

     

    This
      Agreement and in particular the Warranties and the Tax Deed insofar as any
      of
      its provisions remain to be, or are capable of being, performed or observed,
      shall remain in full force and effect after Completion.

     

    
      	16.  	
              WAIVER

            

    

     

    
      	16.1  	
              The
                failure to exercise or delay in exercising a right or remedy under
                this
                Agreement shall not constitute a waiver of the right or remedy or
                a waiver
                of any other rights or remedies and no single or partial exercise
                of any
                right or remedy under this Agreement shall prevent any further exercise
                of
                the right or remedy or the exercise of any other right or
                remedy.

            

    

     

    
      	16.2  	
              Unless
                specifically provided otherwise, the rights and remedies contained
                in this
                Agreement are in addition to, and not exclusive of, any other rights
                or
                remedies available at law.

            

    

     

    
      	17.  	
              COSTS

            

    

     

    The
      Buyer
      and the Sellers shall each pay their own costs in relation to the negotiation,
      preparation, execution and implementation of this Agreement and of each document
      referred to in this Agreement.

     

    
      	18.  	
              ASSIGNMENT

            

    

     

    Except
      as
      provided herein, no party may assign, or grant an Encumbrance or security
      interest over, any of its rights under this Agreement. Each party that has
      rights under this Agreement is acting for its own behalf. The Buyer may assign
      its rights under this Agreement but not its obligations to a member of its
      Group
      (“Permitted
      Assignee”).
      In
      the event of any Permitted Assignee itself subsequently becoming the subject
      of
      a sale or transfer other than to a Permitted Assignee then the Buyer shall
      procure that the rights assigned under this agreement are assigned to a
      Permitted Assignee prior to the completion of any such sale or transfer. For
      the
      avoidance of doubt nothing in this Agreement shall restrict or prohibit the
      ability of the Buyer or the Company to deal with the Shares or any assets of
      the
      Company.

     

    
      	19.  	
              CONTRACTS
                (RIGHTS OF THIRD PARTIES) ACT
                1999

            

    

     

    Subject
      to Clause 18
      (and
      save for the persons referred to in Clause 5.5),
      a
      person who is not a party to this Agreement shall have no rights under the
      Contracts (Rights of Third Parties) Act 1999 to rely upon or enforce any term
      of
      this Agreement provided that this does not affect any right or remedy of the
      third party which exists or is available apart from that Act. No party may
      declare itself as a trustee of the rights under this Agreement for the benefit
      of any third party save as expressly provided in this Agreement.

     

    
      	20.  	
              COUNTERPARTS

            

    

     

    This
      Agreement may be executed in any number of counterparts and by each of the
      parties on separate counterparts each of which when executed and delivered
      shall
      be deemed to be an original, but all the counterparts together shall constitute
      one and the same document.

     

    
      	21.  	
              LAW
                AND JURISDICTION

            

    

     

    
      	21.1  	
              This
                Agreement shall be governed by and construed in accordance with the
                laws
                of England.

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	21.2  	
              The
                parties hereby submit to the exclusive jurisdiction of the High Court
                of
                England in relation to any dispute or claim arising out of or in
                connection with this Agreement.

            

    

     

    EXECUTED
      AS A DEED
      by the
      parties on the date which first appears in this deed.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 1

    THE
      COMPANY

    PART 1  

     

    
      	
              1.

            	
              Registered
                number: 01338772

            

    

     

    
      	
              2.

            	
              Registered
                office: Cardrew Way, Redruth, Cornwall, TR15
                1ST

            

    

     

    
      	
              3.

            	
              Date
                and place of incorporation: 15/11/1977, United
                Kingdom

            

    

     

    
      	
              4.

            	
              Authorised
                share capital: 250,000 Ordinary Shares of
£1

            

    

     

    
      	
              5.

            	
              Issued
                share capital: 222,758 Ordinary Shares of
£1

            

    

     

    
      	
              6.

            	
              Shareholders:

            

    

     

    Shareholder                                    No
      of
      class shares

     

    CEH
      Limited, Cardrew Way, Redruth, Cornwall                222,758
      Ordinary Shares

     

    
      	
              7.

            	
              Loan
                capital: None

            

    

     

    
      	
              8.

            	
              Directors:

            

    

     

    Name                                                Address

     

    
      	
              Keith
                Mills

               

            	
              800
                Green Street, PO Box 166, Niagara on the Lake, Ontario, Losijo,
                Canada

               

            
	
              Christopher
                Anderson

               

            	
              111
                Radio Circle, Mount Kisco, NY 10549

               

            
	
              Anthony
                T Castor III

               

            	
              3625
                10th Street North, Apt. 904, Arlington, Virginia 22201, USA

               

            
	
              Vernon
                Leslie Holmes

               

            	
              12
                Warren Wood Drive, High Wycombe, Buckinghamshire HP11 1DZ

               

            
	
              Christopher
                Lacovara

               

            	
              65
                Central Park West, Penthouse G, New York, 10023, USA

               

            

    

    
      	
              9.

            	
              Secretary:
                

            

    

     

    
      	
              Alan
                Richard Elkins

               

            	
              1
                Garden Way, Little Trethiggey, Quintrell Downs, Newquay,
                Cornwall

               

            

    

    
      	
              10.

            	
              Accounting
                reference date: 31/12

            

    

     

    
      	
              11.

            	
              Auditors:
                PricewaterhouseCoopers LLP

            

    

     

    
      	
              12.

            	
              Charges:
                None

            

    

     

    
      	
              13.

            	
              Main
                activity: Manufacturing

            

    

     

    14.  Subsidiary:
      Spraychem
      Limited

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    THE
      SUBSIDIARY

     

    PART 2  

     

    
      	
              1.

            	
              Registered
                number: 01670517

            

    

     

    
      	
              2.

            	
              Registered
                office: Cardrew Way, Redruth, Cornwall, TR15
                1ST

            

    

     

    
      	
              3.

            	
              Date
                and place of incorporation: 07/10/1982, United
                Kingdom

            

    

     

    
      	
              4.

            	
              Authorised
                share capital: 20,000 Ordinary Shares of
£1

            

    

     

    
      	
              5.

            	
              Issued
                share capital: 1,000 Ordinary Shares of
£1

            

    

     

    
      	
              6.

            	
              Shareholders:

            

    

     

    Shareholder                                        No
      of
      class shares

     

    Contico
      Manufacturing Limited

    Cardrew
      Way Redruth, Cornwall                            1,000
      Ordinary Shares

    

    
      	
              7.

            	
              Loan
                capital: None

            

    

     

    
      	
              8.

            	
              Directors:

            

    

     

    Name                                                Address

     

    
      	
              Vernon
                Leslie Holmes

               

            	
              12
                Warren Wood Drive, High Wycombe, Buckinghamshire, HP11 1DZ

               

            

    

    
      	
              9.

            	
              Secretary:
                

            

    

     

    
      	
              Alan
                Elkins

               

            	
              1
                Garden Way, Little Trethiggey, Quintrell Downs, Newquay, Cornwall,
                TR8
                4LG

               

            

    

    
      	
              10.

            	
              Accounting
                reference date: 31/01

            

    

     

    
      	
              11.

            	
              Auditors:
                PricewaterhouseCoopers LLP

            

    

     

    
      	
              12.

            	
              Charges:
                None

            

    

     

    
      	
              13.

            	
              Main
                activity: Other manufacturing, other wholesale, non-trading
                company

            

    

     

    14.  Subsidiaries:
      None

     

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 2  

     

    PART 1  

     

    WARRANTIES

     

    (CLAUSE
      5)

     

    
      	1.  	
              SHARE
                CAPITAL AND SUBSIDIARIES

            

    

     

    Shares

     

    
      	1.1  	
              CEH
                is the legal owner of the Shares and KII is the beneficial owner
                of the
                Shares and are entitled to sell the Shares with full title guarantee
                on
                the terms of this Agreement without the consent of any third
                party.

            

    

     

    
      	1.2  	
              The
                Shares constitute the whole of the Company's allotted and issued
                share
                capital and are fully paid or credited as fully
                paid.

            

    

     

    
      	1.3  	
              There
                is no Encumbrance on, over or affecting any of the Shares or any
                shares,
                debentures or other securities of the Company and no person has the
                right
                to an Encumbrance in relation to any of the Shares or any shares,
                debentures or other securities of the
                Company.

            

    

     

    
      	1.4  	
              All
                dividends declared or due in respect of the Shares or the Shares
                of the
                Subsidiary have been paid in full.

            

    

     

    Subsidiaries

     

    
      	1.5  	
              The
                Company does not have and never has had any subsidiary (or any subsidiary
                undertaking) save for the Subsidiary and the Company has not agreed
                to
                acquire any interest in any body
                corporate.

            

    

     

    Shadow
      Director

     

    
      	1.6  	
              The
                Company has no liability as a former member, officer or shadow director
                of
                any person nor are there any circumstances in which such liability
                could
                arise.

            

    

     

    Company
      and Subsidiary Information

     

    
      	1.7  	
              The
                information contained in Parts 1 and 2 of Schedule 1 is accurate
                in all
                respects

            

    

     

    
      	2.  	
              CAPACITY

            

    

     

    
      	2.1  	
              The
                Sellers have the necessary power and authority and has taken all
                necessary
                action to enter into and perform this Agreement, the Tax Deed and
                each of
                the documents to be executed at or before Completion in accordance
                with
                this Agreement which will, when executed, become binding and enforceable
                obligations on the Sellers.

            

    

     

    
      	2.2  	
              The
                execution or the performance of this Agreement or any document to
                be
                executed at Completion in accordance with this Agreement will not
                result
                in a breach of any agreement or arrangement to which the Company
                is a
                party or by which the Company is bound or any Licence or statutory
                or
                regulatory provision.

            

    

     

    
      	3.  	
              RECORDS
                AND DOCUMENTS

            

    

     

    Storage
      of records

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	3.1  	
              All
                records or data relating to the Company are under the ownership and
                direct
                control of the Company, and all title deeds relating to the Company
                are
                under the exclusive ownership of the
                Company.

            

    

     

    
      	4.  	
              ACCOUNTS
                AND RECORDS

            

    

     

    Accuracy
      of the Accounts

     

    
      	4.1  	
              The
                Accounts:-

            

    

     

    
      	4.1.1  	
              give
                a true and fair view of the state of the Company's affairs and of
                its
                results for the financial year ended on the Accounts
                Date;

            

    

     

    
      	4.1.2  	
              have
                been prepared and audited in compliance with applicable law and generally
                accepted accounting conventions, standards, principles and practices
                ("Accounting
                Practice")
                on a consistent basis for each of the last three financial years
                ended on
                the Accounts Date.

            

    

     

    Events
      since the Accounts Date

     

    
      	4.2  	
              Since
                the Accounts Date:-

            

    

     

    
      	4.2.1  	
              no
                dividend or other distribution within the meaning of Part VIII of
                the Act
                or of ICTA has been declared, paid or made by the Company except
                as
                provided for in the Accounts;

            

    

     

    
      	4.2.2  	
              no
                share or loan capital of the Company has been or agreed to be issued,
                allotted, redeemed, purchased or repaid by the Company;
                and

            

    

     

    
      	4.2.3  	
              no
                resolution of the shareholders of the Company has been
                passed.

            

    

     

    Management
      Accounts

     

    
      	4.3  	
              The
                Management Accounts have:

            

    

     

    
      	4.3.1  	
              been
                prepared in accordance with accounting practice consistent with those
                used
                in preparing the Accounts;

            

    

     

    
      	4.3.2  	
              fairly
                represent the income and expenditure of the Company to the Management
                Accounts Date; and

            

    

     

    
      	4.3.3  	
              are
                not affected by any material unusual or non recurring
                items.

            

    

     

    
      	5.  	
              INSIDER
                CONTRACTS

            

    

     

    
      	5.1  	
              The
                Company is not, and during the three years preceding the date of
                this
                Agreement has not been, a party to any agreement or arrangement (whether
                legally enforceable or not) in which either of the Sellers or any
                member
                of the Sellers' Group or any director or former director of the Sellers'
                Group or any connected person of any of them is or was directly or
                indirectly interested.

            

    

     

    
      	5.2  	
              There
                is no claim or circumstance which may give rise to a claim against
                the
                Company by any member of the Sellers' Group or any director or former
                director of the Company or any connected person of any of them on
                any
                account whatsoever.

            

    

     

    
      	6.  	
              INSOLVENCY

            

    

     

    
      	6.1  	
              In
                relation to the Company:-

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	6.1.1  	
              no
                resolution has been passed (and no meeting has been convened, and
                no
                written resolution has been circulated with a view to any resolution),
                no
                petition has been presented and no order has been made, for winding
                up;
                and

            

    

     

    
      	6.1.2  	
              no
                administrative receiver, receiver, administrator, liquidator or
                provisional liquidator has been appointed and, no Encumbrance has
                been
                enforced.

            

    

     

    
      	6.2  	
              In
                relation to each of the Sellers (being bodies
                corporate):-

            

    

     

    
      	6.2.1  	
              no
                resolution has been passed, no petition has been presented and no
                order
                has been made, for winding up;

            

    

     

    
      	6.2.2  	
              no
                notice of intention to appoint an administrator has been filed and
                no
                application for the appointment of an administrator has been
                made;

            

    

     

    
      	6.2.3  	
              no
                administrative receiver, receiver, administrator, liquidator or
                provisional liquidator has been appointed and no Encumbrance has
                been
                enforced;

            

    

     

    
      	6.2.4  	
              no
                floating charge has crystallised and no holder of any floating charge
                (whether qualifying or not) has taken any steps to enforce such security;
                

            

    

     

    
      	6.2.5  	
              no
                distress, distraint, charging order, execution or other process has
                been
                levied, on or over any of the Shares;
                and

            

    

     

    
      	6.2.6  	
              no
                event analogous to any of the above has occurred in the US or any
                jurisdiction.

            

    

     

    
      	7.  	
              INSURANCE

            

    

     

    
      	7.1  	
              The
                Company has at all material times been and is now adequately covered
                against accident, damage, injury, third party loss and other risks
                normally insured against by persons operating the type of business
                operated by the Company.

            

    

     

    
      	8.  	
              PROPERTY
                MATTERS

            

    

     

    Title

     

    
      	8.1  	
              The
                Property comprises all the freehold and leasehold land and premises
                owned,
                used or occupied by the Company and the Company has never been a
                party to
                any lease other than the current leases of the Property in respect
                of
                which actual or contingent obligations may
                subsist.

            

    

     

    
      	8.2  	
              So
                far as the Sellers are aware, there has been no breach by the Company
                of
                the terms of the Lease.

            

    

     

    Liabilities

     

    
      	8.3  	
              The
                Company has not been the tenant, licensee, assignee or guarantor
                of any
                lease, licence or tenancy agreement other than in relation to the
                Property.

            

    

     

    
      	8.4  	
              The
                Company has not at any time acquired, assigned or otherwise disposed
                of
                any leasehold property in such a way that it retains any residual
                liability in respect of it.

            

    

     

    
      	8.5  	
              Since
                the Accounts Date the Company has not acquired or disposed of, or
                agreed
                to acquire or dispose of, or granted any option in respect of, any
                interest in any land or premises nor will it do so before Completion
                without the prior written consent of the
                Buyer.

            

    

     

    
      	8.6  	
              There
                is not outstanding any monetary claim or liability (contingent or
                otherwise) affecting the Property.

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	9.  	
              ENVIRONMENTAL
                MATTERS

            

    

     

    
      	
              "harm"

               

            	
              means
                harm to the health of living organisms or other interference with
                the
                ecological systems of which they form part and in the case of man
                includes
                any offence caused to any of his senses or harm to his
                property

               

            
	
              "Hazardous
                Substance"

               

            	
              means
                any natural or artificial substance or combination of substances
                (whether
                in solid or liquid form or in the form of a gas or vapour) capable
                of
                causing harm to the Environment including but not limited to waste
                of any
                nature and any hazardous, toxic or dangerous substance or
                article

               

            

    

    Hazardous
      Substances

     

    
      	9.1  	
              None
                of the activities of the Company at any time have, nor has any use
                of any
                asset or property owned, occupied or used by the Company or any other
                person in connection with the activities of the Company at any time,
                involved the use of, or the release or discharge into the Environment
                of,
                or contained, any Hazardous Substance prescribed or specified under
                any
                Environmental Laws as being prohibited or
                restricted.

            

    

     

    Contamination
      of land and other assets

     

    
      	9.2  	
              No
                land or other asset now or previously owned, occupied or used by
                the
                Company contains or has contained any storage tanks or any Hazardous
                Substance whether above or below
                ground.

            

    

     

    
      	10.  	
              GRANTS
                AND ALLOWANCES

            

    

     

    Full
      particulars of all grants, allowances, subsidies, loans or financial assistance
      paid or pledged to the Company during the last six years by any supranational,
      national or local authority or government agency are set out in the Disclosure
      Letter and no member of the Sellers' Group has done or failed to do any act
      or
      thing (including the entering into of this Agreement) which could result in
      such
      grant or allowance becoming repayable or forfeited in whole or in part or in
      a
      claim for such grant not being granted. 

     

    
      	11.  	
              INTELLECTUAL
                PROPERTY

            

    

     

    
      	11.1  	
              CCP
                is the sole legal and beneficial owner of the trademarks that are
                being
                licensed to the Company pursuant to the Trademark
                Licence.

            

    

     

    
      	12.  	
              TAX
                MATTERS

            

    

     

    
      	12.1  	
              The
                Company has, within the relevant time limits, correctly made all
                returns
                (including returns under Schedule 18 Finance Act 1998) required to
                be made
                and given all notices required to be given by the Company and maintained
                all records for any Tax purpose and the information contained in
                any such
                returns and notices and records was full and
                accurate.

            

    

     

    
      	12.2  	
              The
                Company has properly deducted and/or withheld from payments made
                by it all
                Tax required to be deducted and/or withheld and within the relevant
                time
                limits paid or accounted for all Tax which it is or was liable to
                pay or
                account for (including Tax required to be deducted or withheld from
                payments). 

            

    

     

    
      	12.3  	
              The
                Company is not a close company for the purposes of United Kingdom
                Tax.

            

    

     

    
      	12.4  	
              No
                employee or director or former employee or director of the Company
                or any
                person associated with any of them holds or has within the last six
                years
                held any shares or securities or options over or interests in any
                shares
                or securities of the Company and the Company will not, so far as
                the
                Sellers are aware, be liable after Completion to pay national insurance
                contributions or account for income tax or national insurance under
                the
                PAYE system in respect of, or in consequence of any event occurring
                in
                relation to, any such shares, securities, options or
                interests.

            

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	12.5  	
              The
                amount at which any asset is included in the Accounts and/or the
                amount of
                consideration given on the acquisition of any asset by the Company
                since
                the Accounts Date, is such that on the disposal of such asset for
                a
                consideration equal to such amount (disregarding any statutory right
                to
                make any election or to claim any allowance or relief other than
                one
                allowable under Section 38 TCGA), no liability to corporation tax in
                respect of any chargeable gain will arise.

            

    

     

    
      	12.6  	
              The
                value attributed in the Accounts to each asset, or the aggregates
                of the
                values attributed to the assets in each pool of assets in respect
                of which
                separate computations for capital allowances are required to be made
                or,
                as a result of any election, are made, is such that on a disposal
                of each
                such asset or pool of assets on the Accounts Date for a consideration
                equal to such a value or aggregate value no balancing charge would
                arise.
                

            

    

     

    
      	12.7  	
              The
                Company is not and has never been a member of a group for Tax purposes
                (other than being grouped with the
                Subsidiary).

            

    

     

    
      	12.8  	
              All
                instruments executed by the Company which are not subject to stamp
                duty
                land tax and by virtue of which the Company has any rights have been
                duly
                stamped and, where appropriate, stamped with the particulars delivered
                stamp by HM Revenue & Customs and the Company has not executed outside
                the United Kingdom any instrument relating to any property situated
                or to
                any matter or thing done, or to be done, in any part of the United
                Kingdom. 

            

    

     

    
      	12.9  	
              No
                relief from stamp duty or stamp duty land tax previously granted
                will be
                withdrawn on or in connection with the sale of the Company pursuant
                to
                this Agreement.

            

    

     

    
      	12.10  	
              The
                Company has not:-

            

    

     

    
      	12.10.1  	
              entered
                into a contract to purchase any land or an agreement to take a lease
                of
                any land which in either case has not been completed by a conveyance
                or
                the grant of a lease; or

            

    

     

    
      	12.10.2  	
              entered
                into a land transaction where there will or may be an obligation
                in the
                future to make a further land transaction return;
                or

            

    

     

    
      	12.10.3  	
              applied
                to defer payment of stamp duty land tax under section 90 Finance
                Act
                2003.

            

    

     

    
      	12.11  	
              The
                Company is, and always has been, resident only in the United Kingdom
                for
                Tax purposes (and has never been treated as resident outside the
                United
                Kingdom for the purposes of any double tax
                convention).

            

    

     

    
      	12.12  	
              The
                Company is not carrying on and has never carried on any trade or
                otherwise
                been liable to Tax other than in the United Kingdom, or is acting
                or has
                ever acted as the branch, agent, factor, or tax representative of
                any
                person resident outside the United Kingdom for Tax purposes and no
                such
                person carries on any trade or business through the
                Company.

            

    

     

    
      	12.13  	
              The
                Company has not been party to any transaction in respect of which
                the
                relevant Tax Authority may substitute for Tax purposes a different
                amount
                or value than the amount or value of the actual consideration given
                or
                received by the Company, including, for the avoidance of doubt, any
                transaction to which Schedule 28AA ICTA might
                apply.

            

    

     

    
      	13.  	
              GENERAL

            

    

     

    
      	13.1  	
              The
                Company has not incurred any liability of any nature in circumstances
                where such liability is known by the senior management of KII or
                CEH but
                is not known by the Senior
                Management.

            

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	13.2  	
              The
                details of the intra-Group services provided to the Company by other
                members of the Sellers' Group and set out in the Disclosure Letter
                is true
                and accurate and there are no other intra-Group services provided
                to the
                Company.

            

    

     

    
      	13.3  	
              Except
                in respect of trading in the ordinary course of business with the
                Sellers
                or any members of the Sellers'
                Group:

            

    

     

    
      	13.3.1  	
              there
                is no outstanding indebtedness or other liability between the Company
                and
                any member of the Sellers' Group (actual or contingent);
                

            

    

     

    
      	13.3.2  	
              there
                is no outstanding contract or commitment between the Company and
                any
                members of the Sellers' Group; and

            

    

     

    
      	13.3.3  	
              no
                members of the Sellers Group are entitled to a claim of any nature
                against
                the Company or have assigned to any person the benefit of a claim
                against
                the Company to which the Sellers or a member of the Sellers' Group
                would
                otherwise be entitled.

            

    

     

    
      	13.4  	
              All
                mortgages, guarantees, pledges or other security agreements or
                arrangements which have been given or entered into by the Company
                or any
                third party in respect of any borrowings or other obligations of
                the
                Company will be discharged on
                Completion.

            

    

     

    
      	13.5  	
              There
                are no outstanding bonuses or other benefits owed to Senior Management
                by
                the Sellers or any member of the Sellers'
                Group.

            

    

     

    
      	13.6  	
              The
                Subsidiary is dormant (or is capable of being declared dormant) within
                the
                meaning of Part VII of the Act and the Company has not given any
                form of
                guarantee or security (or letter of comfort) to any person or party
                in
                respect of any liability of (or any matter affecting) the
                Subsidiary.

            

    

     

    
      	13.7  	
              So
                far as the Sellers are aware, all of the assets included in the Accounts
                or acquired by the Company since the Accounts Date are legally and
                beneficially owned by the Company free from any Encumbrance, except
                for:

            

    

     

    
      	13.7.1  	
              title
                retention provisions in respect of goods and materials supplied to
                the
                Company in the ordinary course of business;
                and

            

    

     

    
      	13.7.2  	
              the
                security interests, if any, reflected in the Accounts and liens arising
                in
                the ordinary course of business by operation of law.
                

            

    

     

    
      	13.8  	
              The
                Company has no liability to make any contributions or payments to
                any
                pension or other benefit arrangements provided by any members of
                the
                Sellers' Group.

            

    

     

    
      	13.9  	
              So
                far as the Sellers are aware (and save as disclosed in the Disclosure
                Letter), the Company is not liable for (and has no contractual obligation
                to provide) any benefit to any employees (or former employees) of
                the
                Company by reference to old age, retirement or
                death.

            

    

     

    

     

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    PART 2  

     

    BUYER’S
      WARRANTIES

     

    (CLAUSE
      5)

     

    

     

    POWER
      TO BUY THE COMPANY

     

    
      	13.10  	
              The
                Buyer has taken all necessary action and has all requisite power
                and
                authority to enter into and perform this Agreement and the Transaction
                Documents.

            

    

     

    
      	13.11  	
              This
                Agreement and the Transaction Documents constitute (or shall constitute
                when executed) valid, legal and binding obligations on the Buyer
                in the
                terms of this Agreement and the Transaction
                Documents.

            

    

     

    
      	13.12  	
              Compliance
                with the terms of this Agreement and the Transaction Documents shall
                not
                breach or constitute a default under any of the
                following:

            

    

     

    
      	13.12.1  	
              any
                agreement or instrument to which the Buyer is a party or by which
                it is
                bound; or

            

    

     

    
      	13.12.2  	
              any
                order, judgment, decree or other restriction applicable to the
                Buyer.

            

    

     

    

     

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 3  

     

    PART 1  

     

    WORKING
      CAPITAL STATEMENT

     

    
      	1.  	
              FORM
                AND CONTENT OF WORKING CAPITAL
                STATEMENT

            

    

     

    The
      Working Capital Statement shall be drawn up by the Buyer at its cost as soon
      as
      practicable after Completion in accordance with this Schedule and the form
      set
      out in Part 2 of this Schedule 3.

     

    
      	2.  	
              Accounting
                Policies

            

    

     

    
      	2.1  	
              The
                Working Capital Statement shall be drawn up in accordance
                with:-

            

    

     

    
      	2.1.1  	
              the
                policies, procedures and practices set out in paragraphs 2.2 to 2.3
                below;

            

    

     

    
      	2.1.2  	
              to
                the extent not inconsistent with paragraph 2.1.1, the accounting
                policies,
                procedures and practices adopted in calculating the Target Working
                Capital, applied on a consistent
                basis;

            

    

     

    
      	2.1.3  	
              to
                the extent not inconsistent with paragraphs 2.1.1 and 2.1.2, the
                accounting policies, procedures and practices adopted in the Accounts,
                applied on a consistent basis; and 

            

    

     

    
      	2.1.4  	
              to
                the extent not inconsistent with paragraphs 2.1.1, 2.1.2 and 2.1.3,
                the
                accounting principles generally accepted in the United
                States.

            

    

     

    
      	2.2  	
              The
                Working Capital Statement shall be drawn up as at the close of business
                on
                1 June 2007. No account shall be taken of events taking place after
                the
                close of business on 1 June 2007.

            

    

     

    
      	2.3  	
              The
                Working Capital Statement shall be expressed in pounds sterling.
                Amounts
                in other currencies shall be translated into pounds sterling at the
                Exchange Rate.

            

    

     

    
      	3.  	
              Preparation

            

    

     

    
      	3.1  	
              No
                later than 20 days following Completion, the Buyer shall deliver
                to the
                Sellers a draft of the Working Capital Statement (the "Draft
                Working Capital Statement").
                Prior to such delivery the Buyer shall so far as is practicable consult
                with the Sellers with a view to reducing the potential areas of
                disagreement.

            

    

     

    
      	3.2  	
              In
                order to enable the Sellers to review and agree the Draft Working
                Capital
                Statement, the Buyer shall keep up to date and subject to reasonable
                notice, make available to the Sellers' representatives and to the
                Sellers'
                accountants all books and records relating to the Company during
                normal
                office house and co-operate with them with regard to the agreement
                of the
                Draft Working Capital Statement.

            

    

     

    
      	3.3  	
              If
                the Sellers do not within 20 days of presentation to it of the Draft
                Working Capital Statement give notice to the Buyer that it disagrees
                with
                the Draft Working Capital Statement or any item thereof, such notice
                stating the reasons for the disagreement in reasonable detail and
                specifying the adjustments which, in the Sellers’ opinion should be made
                to the Draft Working Capital Statement (the "Disagreement
                Notice"),
                the Draft Working Capital Statement shall be final and binding on
                the
                parties for all purposes. 

            

    

     

    
      	3.4  	
              If
                within the 20 day period referred to in paragraph 3.3, the Sellers’ give a
                Disagreement Notice, the Sellers and the Buyer shall attempt in good
                faith
                to reach agreement in respect of the Draft Working Capital Statement
                and,
                if they are unable to do so within 2 days of such notification the
                Sellers
                or the Buyer may by notice to the other require that the Draft Working
                Capital Statement be referred to the Reporting Accountants (an
                "Appointment
                Notice").

            

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
      	3.5  	
              The
                Reporting Accountants shall be engaged jointly by the Sellers and
                the
                Buyer on the terms set out in this paragraph 3 and otherwise on such
                terms
                as shall be agreed; provided that neither the Sellers nor the Buyer
                shall
                unreasonably (having regard, inter alia, to the provisions of this
                paragraph 3) refuse its agreement to terms proposed by the Reporting
                Accountants or by the other party. If the terms of engagement of
                the
                Reporting Accountants have not been settled within 5 Business Days
                of
                their identity having been determined (or such longer period as the
                Sellers and the Buyer may agree) then, unless the Sellers or the
                Buyer are
                unreasonably refusing its agreement to those terms, those accountants
                shall be deemed never to have become the Reporting Accountants and
                new
                Reporting Accountants shall be selected in accordance with the provisions
                of this Agreement.

            

    

     

    
      	3.6  	
              Except
                to the extent that the Sellers and the Buyer agree otherwise, the
                Reporting Accountants shall determine their own procedure
                but:-

            

    

     

    
      	3.6.1  	
              apart
                from procedural matters and as otherwise set out in this Agreement
                shall
                determine only:

            

    

     

    
      	(a)  	
              whether
                any of the arguments for an alternation to the Draft Working Capital
                Statement put forward in the Buyer's Disagreement Notice is correct
                in
                whole or in part; and

            

    

     

    
      	(b)  	
              if
                so, what alterations should be made to the Draft Working Capital
                Statement
                in order to correct the relevant inaccuracy in
                it;

            

    

     

    
      	3.6.2  	
              shall
                apply the principles set out in paragraph 2 of Part 1 of Schedule
                3;

            

    

     

    
      	3.6.3  	
              shall
                make their determination pursuant to paragraph 3.6.1 above, within
                5 days
                of their appointment in accordance with paragraph 3.5 of this Schedule
                (or
                failing this no later than 30 July
                2007);

            

    

     

    
      	3.6.4  	
              the
                procedure of the Reporting Accountants
                shall:

            

    

     

    
      	(a)  	
              give
                the Sellers and the Buyer a reasonable opportunity to make written
                representations to them;

            

    

     

    
      	(b)  	
              require
                that each party supply the other with a copy of any written
                representations at the same time as they are made to the Reporting
                Accountants; and

            

    

     

    
      	(c)  	
              for
                the avoidance of doubt, the Reporting Accountants shall not be entitled
                to
                determine the scope of their own
                jurisdiction.

            

    

     

    
      	3.7  	
              The
                determination of the Reporting Accountants pursuant to paragraph
                3.6.1
                shall:-

            

    

     

    
      	3.7.1  	
              be
                made in writing and made available for collection by the Sellers
                and the
                Buyer at the offices of the Reporting Accountants at such time as
                they
                shall determine; and

            

    

     

    
      	3.7.2  	
              unless
                otherwise agreed by the Sellers and the Buyer include reasons for
                each
                relevant determination.

            

    

     

    
      	3.8  	
              The
                Reporting Accountants shall act as experts and not as arbitrators
                and
                their determination of any matter falling within their jurisdiction
                shall
                be final and binding on the Sellers and the Buyer save in the event
                of
                manifest error (when the relevant part of their determination shall
                be
                void and the matter shall be remitted to the Reporting Accountants
                for
                correction). In particular, without limitation their determination
                shall
                be deemed to be incorporated into the Draft Working Capital
                Statement.

            

    

     

    
      	3.9  	
              The
                expenses (including VAT) of the Reporting Accountants shall be borne
                as
                they shall direct at the time they make any determination under paragraph
                3.6.1(a) or, failing such direction, equally between the Buyer, on
                the one
                hand, and the Sellers, on the
                other.

            

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    
      	3.10  	
              The
                Sellers and Buyer shall co-operate with the Reporting Accountants
                and
                comply with their reasonable requests made in connection with the
                carrying
                out of their duties under this Agreement. In particular, without
                limitation, the Buyer shall keep up to date and, subject to reasonable
                notice, make available to the Reporting Accountants all books and
                records
                relating to the Company during normal office hours during the period
                from
                the appointment of the Reporting Accountants down to the making of
                the
                relevant determination.

            

    

     

    
      	3.11  	
              Subject
                to paragraph 3.12, nothing in this Schedule shall entitle any party
                or the
                Reporting Accountants access to any information or document which
                is
                protected by legal professional privilege, or which has been prepared
                by
                the other party or its accountants and other professional advisors
                with a
                view to assessing the merits of any claim or
                argument.

            

    

     

    
      	3.12  	
              A
                party shall not be entitled by reason of paragraph 3.11 to refuse
                to
                supply such part or parts of documents as contain only the facts
                on which
                the relevant claim or argument is
                based.

            

    

     

    
      	3.13  	
              Each
                party and the Reporting Accountants shall, and shall procure that
                its
                accountants and other advisers shall, keep all information and documents
                provided to the pursuant to this paragraph 3 confidential and shall
                not
                use the same for any purpose, except for disclosure or use in connection
                with the preparation of the Draft Working Capital Statement, the
                proceedings of the Reporting Accountants or other matter arising
                out of
                this Agreement or in defending any claim or argument or alleged claim
                or
                argument relating to this Agreement or its subject
                matter.

            

    

     

    
      	4.  	
              Determination
                of Working Capital

            

    

     

    
      	4.1  	
              The
                Draft Working Capital Statement as agreed or determined in accordance
                with
                paragraph 3, shall:-

            

    

     

    
      	4.1.1  	
              constitute
                the Working Capital Statement for the purposes of this Agreement;
                and

            

    

     

    
      	4.1.2  	
              shall
                be final and binding on the Sellers and the
                Buyer.

            

    

     

    
      	4.2  	
              The
                Working Capital shall be derived from the Working Capital
                Statement.

            

    

     

     

    
      
         

        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    PART 2   -
      WORKING
      CAPITAL STATEMENT

     

    "Working
      Capital"
      shall
      mean the net total of the following line items for the Company as at Completion.
      For purposes of clarification, the table below includes the calculation as
      at
      28th
      February
      2007.

     

    
      	
              All
                amounts in pounds sterling

            	
              FEB-actual

            
	 	 
	 	
              £
                whole

            
	
              A/R
                (gross)

            	
              1959858

            
	
              reserves

            	
              -49576

            
	
              NET
                A/R

            	
              1910282

            
	 	 
	
              INV
                (gross)

            	
              1618423

            
	
              reserves

            	
              -6858

            
	
              NET
                INVENTORY

            	
              1611565

            
	 	 
	
              OTHER
                CURRENT ASSETS

            	 
	
              PREPAID

            	
              45597

            
	
              OTHER
                C/A ****

            	
              7532

            
	 	
              53129

            
	 	 
	
              TOTAL
                CURRENT ASSETS

            	
              3574976

            
	 	 
	 	 
	
              ACCOUNTS
                PAYABLE

            	 
	
              TRADE

            	
              659989

            
	
              VAT
                

            	
              103386

            
	
              ACCRUED
                A/P (unvouched invoices)

            	
              70035

            
	
              PAYROLL
                TAXES (Nat'l Ins)

            	
              351170

            
	 	
              1184580

            
	 	 
	
              ACCRUALS(
                payroll, commissions, bonus, sales programs)

            	
              293349

            
	 	 
	
              INCOME/
                CORPORATION TAX PAYABLE

            	
              149147

            
	 	 
	
              CURRENT
                LIAB(excl. interco)

            	
              1627076

            
	 	 
	
              INTERCO
                PAYABLE

            	 
	
              TRADE
                (royalty (acct no. 2175), trade (acct no. 2174) and mgm't chg from
                KII
                (account no. 2177))

            	
              210087

            
	 	 
	
              NET
                W/C

            	
              1737813

            

    

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

      

     

    
      	
              EXECUTED
                (but not delivered

              until
                the date hereof) AS
                A DEED
                by
                

              CEH
                LIMITED

               

              /s/
                Christopher W. Anderson

               

              /s/
                Anthony T. Castor III

            	
              )

              )

              )

               

              Director

               

              Director/Secretary

               

               

               

               

            
	
              EXECUTED
                (but not delivered

              until
                the date hereof) AS
                A DEED
                by
                

              KATY
                INDUSTRIES INC.

               

              
                /s/
                  Anthony T. Castor III

              

            	
              )

              )

              )

               

              Authorised
                Signatory

               

               

               

               

               

            
	
              EXECUTED
                (but not delivered

              until
                the date hereof) AS
                A DEED
                by
                

              INVESCOTEC
                LIMITED

               

              /s/
                David Chestnutt

               

              /s/
                Rebecca Smith

            	
              )

              )

              )

               

              Director

               

              Director/Secretary

               

               

               

            

    

    
 

     

     

     

     36Master Agreement

     

    

     

     

    $10,000,000

     

     

    TERM
      LOAN
      AGREEMENT

     

    Dated
      as
      of May 25, 2007

     

    among

     

    THE
      BOMBAY COMPANY, INC.

     

    EACH
      OF
      ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO,

     

    as
      Borrowers

     

    THE
      LENDERS PARTY HERETO,

     

    and

     

    GB
      MERCHANT PARTNERS, LLC

     

    as
      Administrative Agent

     

    

     

     

    ♦
♦
      ♦

     

    GE
      CAPITAL MARKETS, INC.

     

    as
      Sole
      Lead Arranger

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      Table
        of Contents

    

    

      
        	
                ARTICLE
                  I

              	
                DEFINITIONS,
                  INTERPRETATION AND ACCOUNTING TERMS

              	
                2

              
	
                    Section
                  1.1

              	
                Defined
                  Terms

              	
                2

              
	
                    Section
                  1.2

              	
                UCC
                  Terms

              	
                2

              
	
                    Section
                  1.3

              	
                Accounting
                  Terms and Principles.

              	
                2

              
	
                    Section
                  1.4

              	
                Interpretation.

              	
                2

              
	
                ARTICLE
                  II

              	
                THE
                  FACILITY

              	
                2

              
	
                    Section
                  2.1

              	
                Term
                  Loan

              	
                2

              
	
                    Section
                  2.2

              	
                Joint
                  and Several Liability.

              	
                2

              
	
                    Section
                  2.3

              	
                Repayment
                  of Term Loan

              	
                2

              
	
                    Section
                  2.4

              	
                Optional
                  Prepayments

              	
                2

              
	
                    Section
                  2.5

              	
                Mandatory
                  Prepayments.

              	
                2

              
	
                    Section
                  2.6

              	
                Interest.

              	
                2

              
	
                    Section
                  2.7

              	
                Fees.

              	
                2

              
	
                    Section
                  2.8

              	
                Application
                  of Payments

              	
                2

              
	
                    Section
                  2.9

              	
                Payments
                  and Computations

              	
                2

              
	
                    Section
                  2.10

              	
                Evidence
                  of Debt

              	
                2

              
	
                    Section
                  2.11

              	
                Breakage
                  Costs; Increased Costs; Capital Requirements

              	
                2

              
	
                    Section
                  2.12

              	
                Taxes.

              	
                2

              
	
                    Section
                  2.13

              	
                Substitution
                  of Lenders

              	
                2

              
	
                ARTICLE
                  III

              	
                CONDITIONS
                  TO LOANS

              	
                2

              
	
                    Section
                  3.1

              	
                Conditions
                  Precedent to the Term Loan

              	
                2

              
	
                ARTICLE
                  IV

              	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                2

              
	
                    Section
                  4.1

              	
                No
                  Encumbrances

              	
                2

              
	
                    Section
                  4.2

              	
                Accounts

              	
                2

              
	
                    Section
                  4.3

              	
                Inventory

              	
                2

              
	
                    Section
                  4.4

              	
                Location
                  of Inventory

              	
                2

              
	
                    Section
                  4.5

              	
                Inventory
                  Records

              	
                2

              
	
                    Section
                  4.6

              	
                Name,
                  Jurisdiction of Incorporation; Location of Chief Executive Office;
                  FEIN;
                  Organizational ID Number

              	
                2

              
	
                    Section
                  4.7

              	
                Due
                  Organization and Qualification; Subsidiaries

              	
                2

              
	
                    Section
                  4.8

              	
                Due
                  Authorization; No Conflict

              	
                2

              
	
                    Section
                  4.9

              	
                Litigation

              	
                2

              
	
                    Section
                  4.10

              	
                No
                  Material Adverse Effect

              	
                2

              
	
                    Section
                  4.11

              	
                Fraudulent
                  Transfer

              	
                2

              
	
                    Section
                  4.12

              	
                Canadian
                  Benefit Plans and Canadian Pension Plans

              	
                2

              
	
                    Section
                  4.13

              	
                ERISA

              	
                2

              
	
                    Section
                  4.14

              	
                Environmental
                  Condition

              	
                2

              

      

    

     

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    

     

    

      
        	
                    Section
                  4.15

              	
                Brokerage
                  Fees

              	
                2

              
	
                    Section
                  4.16

              	
                Intellectual
                  Property

              	
                2

              
	
                    Section
                  4.17

              	
                Leases

              	
                2

              
	
                    Section
                  4.18

              	
                Deposit
                  Accounts

              	
                2

              
	
                    Section
                  4.19

              	
                Complete
                  Disclosure

              	
                2

              
	
                    Section
                  4.20

              	
                Credit
                  Card Receipts

              	
                2

              
	
                    Section
                  4.21

              	
                Holding
                  Company and Investment Company Acts

              	
                2

              
	
                    Section
                  4.22

              	
                Absence
                  of Financing Statements, etc

              	
                2

              
	
                    Section
                  4.23

              	
                Certain
                  Transactions

              	
                2

              
	
                    Section
                  4.24

              	
                Regulations
                  U and X

              	
                2

              
	
                    Section
                  4.25

              	
                Labor
                  Relations

              	
                2

              
	
                    Section
                  4.26

              	
                Indebtedness

              	
                2

              
	
                    Section
                  4.27

              	
                Payment
                  of Taxes

              	
                2

              
	
                    Section
                  4.28

              	
                Foreign
                  Assets Control Regulations, Etc

              	
                2

              
	
                    Section
                  4.29

              	
                No
                  Burdensome Obligations; No Defaults

              	
                2

              
	
                ARTICLE
                  V

              	
                REPORTING
                  COVENANTS

              	
                2

              
	
                    Section
                  5.1

              	
                Accounting
                  System; Access

              	
                2

              
	
                    Section
                  5.2

              	
                Collateral
                  Reporting.

              	
                2

              
	
                    Section
                  5.3

              	
                Financial
                  Statements, Reports, Business Plan, Certificates

              	
                2

              
	
                    Section
                  5.4

              	
                Right
                  to Inspect; Inventories, Appraisals Audits and
                  Assessments.

              	
                2

              
	
                ARTICLE
                  VI

              	
                AFFIRMATIVE
                  COVENANTS

              	
                2

              
	
                    Section
                  6.1

              	
                Returns

              	
                2

              
	
                    Section
                  6.2

              	
                Maintenance
                  of Properties.

              	
                2

              
	
                    Section
                  6.3

              	
                Taxes

              	
                2

              
	
                    Section
                  6.4

              	
                Insurance

              	
                2

              
	
                    Section
                  6.5

              	
                Location
                  of Inventory

              	
                2

              
	
                    Section
                  6.6

              	
                Compliance
                  with Laws, Etc

              	
                2

              
	
                    Section
                  6.7

              	
                Leases

              	
                2

              
	
                    Section
                  6.8

              	
                Existence

              	
                2

              
	
                    Section
                  6.9

              	
                Environmental

              	
                2

              
	
                    Section
                  6.10

              	
                Disclosure
                  Updates

              	
                2

              
	
                    Section
                  6.11

              	
                Formation
                  of Subsidiaries; Further Assurances

              	
                2

              
	
                    Section
                  6.12

              	
                Additional
                  Collateral Covenants

              	
                2

              
	
                    Section
                  6.13

              	
                Investment
                  Proceeds, Etc

              	
                2

              
	
                    Section
                  6.14

              	
                Immediate
                  Notice to the Administrative Agent.

              	
                2

              
	
                    Section
                  6.15

              	
                Certain
                  Subsidiaries

              	
                2

              
	
                    Section
                  6.16

              	
                Further
                  Assurances

              	
                2

              
	
                    Section
                  6.17

              	
                Governing
                  Documents

              	
                2

              

      

    

     

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    

      
        	
                    Section
                  6.18

              	
                Deposit
                  Accounts; Securities Accounts and Cash Collateral
                  Accounts.

              	
                2

              
	
                    Section
                  6.19

              	
                Release
                  of Eligible Real Property

              	
                2

              
	
                    Section
                  6.20

              	
                Store
                  Closing Sale

              	
                2

              
	
                    Section
                  6.21

              	
                Grant
                  of Non-Exclusive License

              	
                2

              
	
                    Section
                  6.22

              	
                Use
                  of Proceeds

              	
                2

              
	
                ARTICLE
                  VII

              	
                NEGATIVE
                  COVENANTS

              	
                2

              
	
                    Section
                  7.1

              	
                Indebtedness

              	
                2

              
	
                    Section
                  7.2

              	
                Liens

              	
                2

              
	
                    Section
                  7.3

              	
                Restrictions
                  on Negative Pledges and Upstream Limitation.

              	
                2

              
	
                    Section
                  7.4

              	
                Restrictions
                  on Fundamental Changes

              	
                2

              
	
                    Section
                  7.5

              	
                Disposal
                  of Assets; Sale and Leaseback

              	
                2

              
	
                    Section
                  7.6

              	
                Change
                  Name; Change Governing Documents

              	
                2

              
	
                    Section
                  7.7

              	
                Prepayments
                  and Amendments

              	
                2

              
	
                    Section
                  7.8

              	
                Consignments

              	
                2

              
	
                    Section
                  7.9

              	
                Distributions

              	
                2

              
	
                    Section
                  7.10

              	
                Accounting
                  Methods

              	
                2

              
	
                    Section
                  7.11

              	
                Investments,
                  Acquisitions

              	
                2

              
	
                    Section
                  7.12

              	
                Transactions
                  with Affiliates

              	
                2

              
	
                    Section
                  7.13

              	
                Suspension

              	
                2

              
	
                    Section
                  7.14

              	
                Inventory
                  with Bailees

              	
                2

              
	
                    Section
                  7.15

              	
                Store
                  Openings and Closings

              	
                2

              
	
                    Section
                  7.16

              	
                Securities
                  Accounts

              	
                2

              
	
                    Section
                  7.17

              	
                Deposit
                  Accounts, Credit Card Agreements, etc

              	
                2

              
	
                    Section
                  7.18

              	
                Employee
                  Benefit Plans.

              	
                2

              
	
                    Section
                  7.19

              	
                Margin
                  Regulations

              	
                2

              
	
                    Section
                  7.20

              	
                Amendments
                  to First Lien Credit Agreement

              	
                2

              
	
                    Section
                  7.21

              	
                Acquisition
                  of First Lien Debt, Notes

              	
                2

              
	
                    Section
                  7.22

              	
                Potential
                  Conflicts of Interest

              	
                2

              
	
                    Section
                  7.23

              	
                Financial
                  Covenants.

              	
                2

              
	
                ARTICLE
                  VIII

              	
                EVENTS
                  OF DEFAULT

              	
                2

              
	
                    Section
                  8.1

              	
                Definition

              	
                2

              
	
                    Section
                  8.2

              	
                Remedies

              	
                2

              
	
                ARTICLE
                  IX

              	
                The
                  Administrative Agent

              	
                2

              
	
                    Section
                  9.1

              	
                Appointment
                  and Duties

              	
                2

              
	
                    Section
                  9.2

              	
                Binding
                  Effect

              	
                2

              
	
                    Section
                  9.3

              	
                Use
                  of Discretion

              	
                2

              
	
                    Section
                  9.4

              	
                Delegation
                  of Rights and Duties

              	
                2

              
	
                    Section
                  9.5

              	
                Reliance
                  and Liability

              	
                2

              

      

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    

      

        
          	
                      Section
                    9.6

                	
                  Agent
                    Individually

                	
                  2

                
	
                      Section
                    9.7

                	
                  Lender
                    Credit Decision

                	
                  2

                
	
                      Section
                    9.8

                	
                  Expenses;
                    Indemnities

                	
                  2

                
	
                      Section
                    9.9

                	
                  Resignation
                    of Administrative Agent.

                	
                  2

                
	
                      Section
                    9.10

                	
                  Release
                    of Collateral or Guarantors

                	
                  2

                
	
                      Section
                    9.11

                	
                  Additional
                    Secured Parties

                	
                  2

                
	
                  ARTICLE
                    X

                	
                  Miscellaneous

                	
                  2

                
	
                      Section
                    10.1

                	
                  Amendments,
                    Waivers, Etc

                	
                  2

                
	
                      Section
                    10.2

                	
                  Assignments
                    and Participations; Binding Effect

                	
                  2

                
	
                      Section
                    10.3

                	
                  Costs
                    and Expenses

                	
                  2

                
	
                      Section
                    10.4

                	
                  Indemnities

                	
                  2

                
	
                      Section
                    10.5

                	
                  Survival

                	
                  2

                
	
                      Section
                    10.6

                	
                  Limitation
                    of Liability for Certain Damages

                	
                  2

                
	
                      Section
                    10.7

                	
                  Lender-Creditor
                    Relationship

                	
                  2

                
	
                      Section
                    10.8

                	
                  Right
                    of Setoff

                	
                  2

                
	
                      Section
                    10.9

                	
                  Sharing
                    of Payments, Etc

                	
                  2

                
	
                      Section
                    10.10

                	
                  Marshaling;
                    Payments Set Aside

                	
                  2

                
	
                      Section
                    10.11

                	
                  Notices

                	
                  2

                
	
                      Section
                    10.12

                	
                  Electronic
                    Transmissions

                	
                  2

                
	
                      Section
                    10.13

                	
                  Governing
                    Law

                	
                  2

                
	
                      Section
                    10.14

                	
                  Jurisdiction

                	
                  2

                
	
                      Section
                    10.15

                	
                  Waiver
                    of Jury Trial

                	
                  2

                
	
                      Section
                    10.16

                	
                  Severability

                	
                  2

                
	
                      Section
                    10.17

                	
                  Execution
                    in Counterparts

                	
                  2

                
	
                      Section
                    10.18

                	
                  Entire
                    Agreement

                	
                  2

                
	
                      Section
                    10.19

                	
                  Use
                    of Name

                	
                  2

                
	
                      Section
                    10.20

                	
                  Non-Public
                    Information; Confidentiality

                	
                  2

                
	
                      Section
                    10.21

                	
                  Judgment
                    Currency

                	
                  2

                
	
                      Section
                    10.22

                	
                  Patriot
                    Act Notice

                	
                  2

                
	
                      Section
                    10.23

                	
                  Intercreditor
                    Agreement

                	
                  2

                

        

      

    

    

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

    SCHEDULES

                                       

     

    

                                          Schedule I - Term
        Loan
        Amount

                                          Schedule
        4.7 - 
        Subsidiaries

                                          Schedule 4.9 - Litigation

                                          Schedule 4.14 - Environmental
        Condition

                                          Schedule 4.20 - Credit
        Card Receipts

                                          Schedule 5.2 - Collateral
        Reporting

                                          Schedule
        7.1 - Existing
        Indebtedness

                                          Schedule
        7.2 - Existing
        Liens

                                          Schedule 7.13 - Affiliates

                                          Schedule 7.16 - Scheduled
        Store Closings

    

     

     

     

    

    EXHIBITS

     

                                        Exhibit A - Form
      of
      Assignment

                                        Exhibit B - Form
      of
      Note

                                        Exhibit C - Form
      of
      Compliance Certificate

                                        Exhibit D - Form
      of
      Guaranty and Security Agreement

                                        Exhibit E - Form
      of
      Pledge Agreement

    

     

    

     

    

    
      
        
        

      

      
        v

        
          

        

      

      
        
        

      

    

     

    This
      Term
      Loan Agreement, dated as of May 25, 2007, is entered into among THE
      BOMBAY COMPANY, INC.,
      a
      Delaware corporation (the “Parent”),
      each
      of Parent’s Subsidiaries identified on the signature pages hereof (such
      Subsidiaries, together with Parent, are referred to hereinafter each
      individually, as a “Borrower”,
      and
      collectively, as the “Borrowers”),
      the
      Lenders (as defined below), and GB
      MERCHANT PARTNERS, LLC
      (“GBMP”),
      as
      administrative agent and collateral agent for the Lenders (in such capacity,
      and
      together with its successors and permitted assigns, the
      “Administrative
      Agent”).

     

    The
      parties hereto agree as follows:

     

     

    ARTICLE
      I  

     

     

     

     

    DEFINITIONS,
      INTERPRETATION AND ACCOUNTING TERMS

     

     

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

     

    “Accounts”
means
      an “account” (as defined under the UCC) and any and all supporting obligations
      in respect thereof.

     

    “Account
      Debtor”
means
      any Person who is or who may become obligated under, with respect to, or on
      account of, an Account.

     

    “Adjusted
      Availability”
shall
      mean “Adjusted Availability” as such term is defined in the First Lien Credit
      Agreement as in effect on the date hereof, including the component definitions
      thereof as defined in the First Lien Credit Agreement as in effect on the date
      hereof.

     

    “Administrative
      Agent”
means
      GBMP, solely in its capacity at the administrative agent and collateral agent
      for the Lenders.

     

    “Affected
      Lender”
has
      the
      meaning specified in Section 2.18(b).

     

    “Affiliate”
means,
      as applied to any Person, any other Person who, directly or indirectly,
      controls, is controlled by, or is under common control with, such Person;
provided,
      however,
      no
      Secured Party shall be deemed an Affiliate of the Loan Parties. For purposes
      of
      this definition, “control” means the possession, directly or indirectly, of the
      power to direct the management and policies of a Person, whether through the
      ownership of Stock, by contract, or otherwise; provided,
      however,
      that,
      for purposes of Section
      7.12
      hereof:
      (a) any Person which owns directly or indirectly 20% or more of the Voting
      Stock
      of a Person or 20% or more of the partnership or other ownership interests
      of a
      Person (other than as a limited partner of such Person) shall be deemed to
      control such Person; and (b) each director (or comparable manager) of a Person
      shall be deemed to be an Affiliate of such Person.

     

    “Aggregate
      Borrowing Base”
shall
      mean “Aggregate Borrowing Base” as such term is defined in the First Lien Credit
      Agreement as in effect on the date hereof, including the component definitions
      thereof as defined in the First Lien Credit Agreement as in effect on the date
      hereof.

     

    
      
        
        

      

      
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      “Agreement”
means
      this Term Loan Agreement.

     

    “Applicable
      Margin”
means
      seven percent (7.00%).

     

    “Appraised
      Value”
means
      the fair market value as determined by an appraisal report conforming to the
      Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended,
      in form and substance and from independent appraisers satisfactory to the
      Administrative Agent in its Permitted Discretion.

     

    “Approved
      Fund”
means,
      with respect to any Lender, any Person (other than a natural Person) that (a)
      is
      or will be engaged in making, purchasing, holding or otherwise investing in
      commercial loans and similar extensions of credit in the ordinary course of
      its
      business and (b) is advised or managed by (i) such Lender, (ii) any Affiliate
      of
      such Lender or (iii) any Person (other than an individual) or any Affiliate
      of
      any Person (other than an individual) that administers or manages such
      Lender.

     

    “Approved
      Inventory Servicer”
means
      RGIS Inventory Specialists, Western Inventory Service, Washington Inventory
      Service and any other third parties acceptable to the Administrative Agent
      in
      its Permitted Discretion (and which may be affiliated with one of the
      Lenders).

     

    “Assignment”
means
      an assignment agreement entered into by a Lender, as assignor, and any
      prospective assignee thereof and accepted by the Administrative Agent, in
      substantially the form of Exhibit A.

     

    “Availability”
shall
      mean “Availability” as such term is defined in the First Lien Credit Agreement
      as in effect on the date hereof, including the component definitions thereof
      as
      defined in the First Lien Credit Agreement as in effect on the date
      hereof.

     

    “Availability
      Floor”
shall
      mean (i) $10,000,000, during the period from the Closing Date until November
      30,
      2007, and (ii) $15,000,000 thereafter, provided, that, each Fiscal Year, the
      Availability Floor may be adjusted, in the Administrative Agent’s Permitted
      Discretion, based upon the Business Plan for such Fiscal Year that has been
      accepted by the Administrative Agent in its Permitted Discretion.

     

    “Bailee
      Acknowledgment”
means
      a
      record in form and substance satisfactory to the Administrative Agent
      authenticated by any bailee, warehouseman or other third party in possession
      of
      any inventory acknowledging that it holds possession of the applicable inventory
      for the benefit of the Administrative Agent, on behalf of the Secured
      Parties.

     

    “Bankruptcy
      Code”
means
      title 11 of the United States Bankruptcy Code, as in effect from time to
      time.

     

    “Benefit
      Plan”
means
      a
“defined benefit plan” (as defined in Section 3(35) of ERISA) subject to
      Title IV of ERISA for which any Borrower or any Subsidiary or ERISA Affiliate
      of
      any Borrower has been an “employer” (as defined in Section 3(5) of ERISA)
      within the past six years.

     

    “Bombay
      Canada”
means
      The Bombay Furniture Company of Canada Inc., a corporation continued under
      the
      laws of the Province of Ontario.

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Bombay
      Kids Inventory”
means
      the inventory of the Borrowers’ marketed and sold under the “Bombay Kids”
logo.

     

    “Bombay
      Office Complex”
means
      Real Property located in Tarrant County, Texas with the legal description known
      as Lot 1, Block A, Bombay Addition to the City of Fort Worth, Tarrant County,
      Texas, according to plat recorded in Cabinet A, Page 10625, Plat Records of
      Tarrant County Texas, the office buildings and improvements thereon, the
      fixtures thereon and the related equipment.

     

    “Books”
means
      all of each Loan Party’s now owned or hereafter acquired books and records
      (including all of its Records indicating, summarizing, or evidencing its assets
      (including the Collateral) or liabilities, all of each Loan Party’s Records
      relating to its or their business operations or financial condition, and all
      of
      each Loan Party’s goods or general intangibles related to such
      information).

     

    “Borrower”
has
      the
      meaning specified in the preamble.

     

    “Borrowing
      Base Certificate”
shall
      mean a Borrowing Base Certificate, in the form set forth as Exhibit _ to the
      First Lien Credit Agreement, completed with appropriate figures and calculations
      for the applicable period covered therein and signed by a Responsible
      Officer.

     

    “Business
      Day”
means
      any day of the year that is not a Saturday, Sunday or a day on which banks
      are
      required or authorized to close in New York City, New York, the State of Texas
      or any day on which dealings in Dollar deposits are carried on in the London
      interbank market.

     

    “Business
      Plan”
means
      the business plan of the Borrowers submitted annually to the Administrative
      Agent, in form and substance reasonably acceptable to the Administrative Agent
      in its sole Permitted Discretion.

     

    “Canadian
      Benefit Plans”
means
      any plan, fund, program, or policy, whether oral or written, formal or informal,
      funded or unfunded, insured or uninsured, providing employee benefits, including
      medical, hospital care, dental, sickness, accident, disability, life insurance,
      pension, retirement or savings benefits, under which Bombay Canada has any
      liability with respect to any employee or former employee, but excluding any
      Canadian Pension Plans.

     

    “Canadian
      Pension Plans”
means
      each pension plan required to be registered under Canadian federal or provincial
      law that is maintained or contributed to by Bombay Canada for its employees
      or
      former employees, but does not include the Canada Pension Plan or the Quebec
      Pension Plan as maintained by the Government of Canada or the Province of
      Quebec, respectively.

     

    “Canadian
      Security Documents”
means
      each of the various Canadian security agreements by and among Bombay Canada
      and
      the Administrative Agent, and any and all acknowledgments of security, or
      similar agreements made in favor of the Administrative Agent by Bombay Canada,
      and any agreement delivered on or after the Closing Date (including by way
      of
      supplement to the foregoing) by any Person granting a Lien on the assets of
      such
      Person to secure all or any part of the Obligations of, or any bond issued
      by,
      Bombay Canada to the Administrative Agent, including, without limitation, any
      security granted by Bombay Canada pursuant to the laws of the Province of
      Quebec, in each case as amended, supplemented or modified from time to time
      in
      accordance with its terms.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Capital
      Lease”
means,
      with respect to any Person, any lease of, or other arrangement conveying the
      right to use, any property (whether real, personal or mixed) by such Person
      as
      lessee that has been or should be accounted for as a capital lease on a balance
      sheet of such Person prepared in accordance with GAAP.

     

    “Cash
      Collateral Account”
means
      a
      deposit account or securities account in the name of the Borrowers and under
      the
      control (as defined in the applicable UCC) of the Administrative Agent and
      (a)
      in the case of a deposit account, from which the Borrower may not make
      withdrawals except as permitted by the Administrative Agent and (b) in the
      case
      of a securities account, with respect to which the Administrative Agent shall
      be
      the entitlement holder and the only Person authorized to give entitlement orders
      with respect thereto.

     

    “Canadian
      Agent”
has
      the
      meaning ascribed to it in the First Lien Credit Agreement, as in effect on
      the
      date hereof.

     

    “Cash
      Dominion Event”
means
      (a) the occurrence and continuance of any Event of Default, or (b) the period
      commencing with each failure by the Borrowers to maintain Adjusted Availability
      in an amount greater than (i) ten percent (10%) of the Aggregate Borrowing
      Base
      for a period of 5 consecutive Business Days or (ii) five percent (5%) of the
      Aggregate Borrowing Base at any time and, in each case, ending with the
      occurrence of a Cash Dominion Reversion; provided,
      however
      that (y)
      no more than 2 Cash Dominion Reversions may occur in any 12 month period and
      (z)
      if an additional Cash Dominion Event occurs during such 12 month period, no
      further Cash Dominion Reversions may occur through and including the Maturity
      Date.

     

    “Cash
      Dominion Reversion”
means
      that the Borrowers shall have maintained Adjusted Availability in an amount
      of
      not less than fifteen percent (15%) of the Aggregate Borrowing Base for a period
      of 30 consecutive Business Days as evidenced by a Compliance Certificate
      delivered to the Administrative Agent; provided,
      however
      that (a)
      no more than 2 Cash Dominion Reversions may occur in any 12 month period and
      (b)
      if an additional Cash Dominion Event occurs during such 12 month period, no
      further Cash Dominion Reversions may occur through and including the Maturity
      Date.

     

    “Canadian
      Eligible In-Transit Inventory”
means
      inventory of Bombay Canada that does not qualify as Eligible Inventory under
      clause
      (b)
      of the
      definition of Eligible Inventory solely because it is not at a location in
      Canada set forth on Schedule
      4(b)
      of the
      Perfection Certificate or in transit among such locations in Canada and that
      meets the following criteria, which criteria may be revised by the
      Administrative Agent in its Permitted Discretion from time to time after the
      Closing Date:

     

    (a) the
      inventory was the subject of a Qualified Import Letter of Credit, or was paid
      for in full by Bombay Canada;

     

    (b) such
      inventory currently is in transit (whether by vessel, air, or land) to a
      location set forth on Schedule
      4(b)
      of the
      Perfection Certificate in Canada that is the subject of a Bailee Acknowledgment
      or a Collateral Access Agreement;

     

    (c) title
      to
      such inventory has passed to Bombay Canada;

     

    (d) such
      inventory is insured against types of loss, damage, hazards, and risks, and
      in
      amounts, satisfactory to the Administrative Agent in its Permitted
      Discretion;

     

    
      
        
        

      

      
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    (e) Bombay
      Canada has provided a certificate to the Canadian Agent that certifies that,
      to
      the best knowledge of Bombay Canada, such inventory meets all of Bombay Canada’s
      representations and warranties contained in the First Lien Credit Documents
      concerning Eligible Inventory, that Bombay Canada knows of no reason why such
      inventory would not be accepted by Bombay Canada when it arrives in Canada,
      and
      that the shipment as evidenced by the documents conforms to the related order
      documents; and

     

    (f) if
      subject to a Qualified Import Letter of Credit, the Underlying Letter of Credit
      has been drawn upon and the Underlying Issuer has honored such drawing and
      the
      Administrative Agent has honored its obligations to the Underlying Issuer under
      the applicable Qualified Import Letter of Credit.

     

    “Cash
      Equivalents”
means
      (a) marketable direct obligations issued or unconditionally guaranteed by the
      United States or issued by any agency thereof and backed by the full faith
      and
      credit of the United States, in each case maturing within 1 year from the date
      of acquisition thereof, (b) marketable direct obligations issued by any state
      of
      the United States or any political subdivision of any such state or any public
      instrumentality thereof maturing within 1 year from the date of acquisition
      thereof and, at the time of acquisition, having the highest rating obtainable
      from either S&P or Moody’s, (c) commercial paper maturing no more than 270
      days from the date of acquisition thereof and, at the time of acquisition,
      having a rating of A-2 or P-2, or better, from S&P or Moody’s, (d)
      commercial notes and bonds, or variable rate demand notes issued by any
      commercial institution with a rating of not less than A, as determined by
      S&P or Moody’s, (e) certificates of deposit or bankers’ acceptances maturing
      within 1 year from the date of acquisition thereof either (i) issued by any
      bank
      organized under the laws of the United States or any state thereof which bank
      has a rating of A or A2, or better, from S&P or Moody’s, or (ii)
      certificates of deposit less than or equal to $100,000 in the aggregate issued
      by any other bank insured by the Federal Deposit Insurance Corporation,
      (f) Eurodollar deposits, and (g) money market or other mutual funds
      substantially all of whose assets comprise securities of the types described
      in
      preceding clauses
      (a)-(f)
      above.

     

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

     

    “Change
      of Control”
means
      (a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of
      the United States Securities and Exchange Act of 1934, as amended), becomes
      the
      beneficial owner (as defined in Rule 13d-3 under such Exchange Act), directly
      or
      indirectly, of 50%, or more, of the Voting Stock of Parent, or (b) a majority
      of
      the members of the Board of Directors do not constitute Continuing
      Directors.

     

    “Closing
      Date”
means
      May 25, 2007.

     

    “Code”
means
      the U.S. Internal Revenue Code of 1986.

     

    “Collateral”
means
      all property and interests in property and proceeds thereof now owned or
      hereafter acquired by any Loan Party in or upon which a Lien is granted or
      purported to be granted pursuant to any Loan Document.

     

    “Collateral
      Access Agreement”
means
      a
      waiver or consent in form and substance satisfactory to the Administrative
      Agent
      executed by any lessor of Real Property leased by a Borrower (exclusive of
      retail store locations) or any other Person having a Lien upon, or having rights
      or interests in, the inventory pledged hereunder or a Bailee
      Acknowledgment.

     

    
      
        
        

      

      
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    “Collections”
means
      all cash, checks, credit card slips or receipts, notes, instruments, and other
      items of payment (including insurance proceeds, proceeds of cash sales, rental
      proceeds, and tax refunds) of the Borrowers.

     

    “Compliance
      Certificate”
means
      a
      certificate substantially in the form of Exhibit C.

     

    “Concentration
      Account”
means
      an account designated as such on Schedule
      8
      of the
      Perfection Certificate.

     

    “Continuing
      Director”
means
      (a) any member of the Board of Directors who was a director of Parent on the
      Closing Date, and (b) any individual who becomes a member of the Board of
      Directors after the Closing Date if such individual was appointed or nominated
      for election to the Board of Directors by a majority of the then Continuing
      Directors.

     

    “Contractual
      Obligation”
means,
      with respect to any Person, any provision of any Security issued by such Person
      or of any document or undertaking (other than a Loan Document) to which such
      Person is a party or by which it or any of its property is bound or to which
      any
      of its property is subject.

     

    “Control
      Agreement”
means,
      with respect to any deposit account, any securities account, commodity account,
      securities entitlement or commodity contract (except for accounts designated
      as
“Store Accounts” on Schedule
      8
      of the
      Perfection Certificate), an agreement, in form and substance satisfactory to
      the
      Administrative Agent, among the Administrative Agent, the financial institution
      or other Person at which such account is maintained or with which such
      entitlement or contract is carried and the Loan Party maintaining such account,
      effective to grant “control” (as defined under the applicable UCC) over such
      account to the Administrative Agent.

     

    “Controlled
      Deposit Account”
means
      each deposit account (including all funds on deposit therein) that is the
      subject of an effective Control Agreement and that is maintained by any Loan
      Party with a financial institution.

     

    “Controlled
      Securities Account”
means
      each securities account or commodity account (including all financial assets
      held therein and all certificates and instruments, if any, representing or
      evidencing such financial assets) that is the subject of an effective Control
      Agreement and that is maintained by any Loan Party with a securities
      intermediary or commodity intermediary.

     

    “Copyrights”
means
      all rights, title and interests (and all related IP Ancillary Rights) arising
      under any Requirement of Law in or relating to copyrights and all mask work,
      database and design rights, whether or not registered or published, all
      registrations and recordations thereof and all applications in connection
      therewith.

     

    “Corporate
      Chart”
means
      a
      document in form reasonably acceptable to the Administrative Agent and setting
      forth, as of a date set forth therein, for each Person that is a Loan Party,
      that is subject to Section 6.11
      or that
      is a Subsidiary or joint venture of any of them, (a) the full legal name of
      such
      Person, (b) the jurisdiction of organization and any organizational number
      and
      tax identification number of such Person, (c) the location of such Person’s
      chief executive office (or, if applicable, sole place of business) and (d)
      the
      number of shares of each class of Stock of such Person (other than Parent)
      authorized, the number outstanding and the number and percentage of such
      outstanding shares for each such class owned, directly or indirectly, by any
      Loan Party or any Subsidiary of any of them.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Cost”
means
      the calculated cost of purchases, as determined from invoices received by a
      Borrower, such Borrower’s purchase journal or stock ledger, based upon such
      Borrower’s accounting practices known to the Administrative Agent, which
      practices are in effect on the date on which this Agreement was executed or
      subsequently adopted with the written approval of the Administrative Agent.
      “Cost” does not include the value of any capitalized costs unrelated to the
      acquisitions of inventory used in the Borrowers’ calculation of cost of goods
      sold, but may include other charges used in such Borrower’s determination of
      cost of goods sold and bringing goods to market, all within the Administrative
      Agent’s Permitted Discretion and in accordance with GAAP.

     

    “Credit
      Card Agreements”
means
      those certain credit card receipts agreements, each in form and substance
      reasonably satisfactory to the Administrative Agent and each of which is among
      the Administrative Agent, the applicable Borrower and the applicable Credit
      Card
      Processors.

     

    “Credit
      Card Issuer”
means
      collectively (a) MasterCard or Visa bank credit or debit cards or other bank
      credit or debit cards issued through MasterCard International, Inc., Visa,
      U.S.A., Inc. or Visa International, American Express, Discover, and Diners
      Club
      (or their respective successors), and (b) private label credit cards of the
      Borrowers.

     

    “Credit
      Card Processor”
means
      any Person that acts as a credit card clearinghouse or processor with respect
      to
      any sales transactions involving credit card purchases by customers using credit
      cards issued by any Credit Card Issuer.

     

    “Default”
means
      any Event of Default and any event that, with the passing of time or the giving
      of notice or both, would become an Event of Default.

     

    “Disclosure
      Documents”
means,
      collectively, (a) all confidential information memoranda and related materials
      prepared in connection with the syndication of the Facilities and (b) all other
      documents filed by any Loan Party with the United States Securities and Exchange
      Commission.

     

    “Dollars”
and
      the
      sign “$”
each
      mean the lawful money of the United States of America.

     

    “Domestic
      Person”
means
      any “United
      States person”
under
      and as defined in Section 770l(a)(30) of the Code.

     

    “E-Fax”
means
      any system used to receive or transmit faxes electronically.

     

    “Electronic
      Transmission”
means
      each document, instruction, authorization, file, information and any other
      communication transmitted, posted or otherwise made or communicated by e-mail
      or
      E-Fax or other equivalent service.

     

    “Eligible
      Assignee”
      means
      a
      bank, insurance company, company, fund or other entity engaged in the business
      of making or acquiring commercial loans and/or investments, having assets in
      excess of $100,000,000, or any Affiliate of any member of the Lender Group,
      or
      any Approved Fund of any member of the Lender Group, or any Person to whom
      a
      Loan Party assigns its rights and obligations under this Agreement as part
      of an
      assignment and transfer of such Lender Group member’s rights in and to a
      material portion of such member of such Lender Group’s portfolio of asset based
      credit facilities.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Eligible
      Inventory”
means
      (a) Eligible In-Transit Inventory, and (b) inventory of the relevant Borrower
      consisting of finished goods held for sale in the ordinary course of such
      Borrowers’ business located at one of such Borrower’s business locations set
      forth on Schedule
      4(b)
      of the
      Perfection Certificate (or in-transit between any such locations), that complies
      with each of the representations and warranties respecting Eligible Inventory
      made by such Borrower in the Loan Documents, and that is not excluded as
      ineligible by virtue of one or more of the excluding criteria set forth below,
      which criteria may be fixed and revised from time to time by the Administrative
      Agent in its Permitted Discretion to address the results of any audit or
      appraisal performed by the Administrative Agent from time to time after the
      Closing Date. In determining the value of Eligible Inventory, inventory shall
      be
      valued at the lower of Cost or market on a basis consistent with the Borrower’s
      accounting practices.

     

    An
      item
      of inventory (that is not Eligible In-Transit Inventory) shall not be included
      in Eligible Inventory if:

     

    (a) a
      Borrower does not have good, valid and marketable title thereto (including
      inventory acquired on consignment);

     

    (b) (i)
      in
      the case of the U.S. Borrowers, it is not located at one of the locations in
      the
      United States set forth on Schedule
      4(b)
      of the
      Perfection Certificate or in transit from one such location to another such
      location, as such locations are updated by the U.S. Borrowers from time to
      time
      by written notice to the Administrative Agent, and (ii) in the case of Bombay
      Canada, it is not located at one of the locations in Canada set forth on
Schedule
      4(b)
      of the
      Perfection Certificate or in transit from one such location to another such
      location, as such locations are updated by Bombay Canada from time to time
      by
      written notice to the Administrative Agent;

     

    (c) except
      with respect to inventory described in clause
      (b)
      of
Section
      6.5,
      it is
      located at a warehouse, distribution center or other real property (other than
      a
      retail store location) leased by a Borrower or in a fulfillment center or
      contract warehouse, in each case, unless it is subject to a Collateral Access
      Agreement executed by the lessor, fulfillment services provider or other
      applicable third party;

     

    (d) it
      is
      located in a contract warehouse or is otherwise stored with a bailee,
      warehouseman or similar third party unless it is subject to a Bailee
      Acknowledgment executed by the bailee, warehouseman, or other third party,
      as
      the case may be, and unless it is segregated or otherwise separately
      identifiable from goods of others, if any, stored on the premises;

     

    (e) it
      is not
      subject to a valid and perfected first priority security the Administrative
      Agent’s Lien;

     

    (f) it
      consists of goods returned or rejected by a Borrower’s customers unless such
      goods are repackaged and saleable in the ordinary course of such Borrower’s
      business; or

     

    (g) other
      than saleable clearance goods arising in the ordinary course of business
      consistent with past practice, consists of goods that are obsolete or slow
      moving (for example, more than 18 months old), custom items, work-in-process,
      raw materials, or goods that constitute spare parts, packaging and shipping
      materials, supplies used or consumed in a Borrower’s business, bill and hold
      goods, defective goods, and “seconds,” or inventory acquired on
      consignment.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    “Eligible
      In-Transit Inventory”
means
      collectively, Canadian Eligible In-Transit Inventory and U.S. Eligible
      In-Transit Inventory.

     

    “Eligible
      Real Property”
means
      the Real Property consisting of the Bombay Office Complex and which is subject
      to the Mortgage and a Lien in favor of the Administrative Agent for the benefit
      of the relevant Secured Parties and upon which no other Liens exist, other
      than
      Permitted Liens.

     

    “Environmental
      Actions”
means
      any complaint, summons, citation, notice, directive, order, claim, litigation,
      investigation, judicial or administrative proceeding, judgment, letter, or
      other
      communication, each, by or from any Governmental Authority, or any third party
      involving (x) violations of Environmental Laws or (y) releases of Hazardous
      Materials from (a) any assets, properties, or businesses of any Borrower or
      any
      predecessor in interest, (b) from adjoining properties or businesses, or (c)
      from or onto any facilities which received Hazardous Materials generated by
      any
      Borrower or any predecessor in interest.

     

    “Environmental
      Law”
means
      any applicable federal, state, provincial, foreign or local statute, law, rule,
      regulation, ordinance, code, binding and enforceable guideline, binding and
      enforceable written policy or rule of common law now or hereafter in effect
      and
      in each case as amended, or any judicial or administrative interpretation
      thereof, including any judicial or administrative order, consent decree or
      judgment, to the extent binding on the Borrowers, relating to the environment,
      employee health and safety, or Hazardous Materials, including CERCLA; RCRA;
      the
      Federal Water Pollution Control Act, 33 USC §1251 et seq.
      the
      Toxic Substances Control Act, 15 USC §2601 et seq.
      the
      Clean Air Act, 42 USC §7401 et seq.;
      the
      Safe Drinking Water Act, 42 USC §3803 et seq.;
      the Oil
      Pollution Act of 1990, 33 USC §2701 et seq.;
      the
      Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC §11001
et seq.;
      the
      Hazardous Material Transportation Act, 49 USC §1801 et seq.;
      and the
      Occupational Safety and Health Act, 29 USC §651 et seq.
      (to the
      extent it regulates occupational exposure to Hazardous Materials); any state
      and
      local or foreign counterparts or equivalents, in each case as amended from
      time
      to time.

     

    “Environmental
      Liabilities and Costs”
means
      all liabilities, monetary obligations, Remedial Actions, losses, damages,
      punitive damages, consequential damages, treble damages, costs and expenses
      (including all reasonable fees, disbursements and expenses of counsel, experts,
      or consultants, and costs of investigation and feasibility studies), fines,
      penalties, sanctions, and interest incurred as a result of any claim or demand
      by any Governmental Authority or any third party, and which relate to any
      Environmental Action.

     

    “Environmental
      Lien”
means
      any Lien in favor of any Governmental Authority for Environmental Liabilities
      and Costs.

     

    “ERISA”
means
      the United States Employee Retirement Income Security Act of 1974.

     

    “ERISA
      Affiliate”
      means
      any
      Person which is
      under
      common control, or treated
      as a
      single employer,
      with a
      Borrower under §414 of the Code.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    “ERISA
      Reportable Event”
means
      a
      reportable event with respect to a Guaranteed Pension Plan within the meaning
      of
§4043 of ERISA and the regulations promulgated thereunder.

     

    “Event
      of Default”
has
      the
      meaning specified in Section 8.1.

     

    “Federal
      Reserve Board”
means
      the Board of Governors of the United States Federal Reserve System and any
      successor thereto.

     

    “Fee
      Letter”
means
      the letter agreement, dated as of May 25, 2007, addressed to the Parent from
      the
      Administrative Agent and accepted by the Parent, with respect to certain fees
      to
      be paid from time to time to the Administrative Agent and its Related
      Persons.

     

    “FEIN”
means
      Federal Employer Identification Number.

     

    “Financial
      Statement”
means
      each financial statement delivered pursuant to Sections
      4.10
      and
5.3.

     

    “First
      Lien Agent”
means
      General Electric Capital Corporation, in its capacity as Administrative Agent
      and Collateral Agent for the First Lien Lenders, or its successors in such
      capacities.

     

     “First
      Lien Debt”
means
      the Debt from time to time outstanding under the First Lien Credit Agreement
      and
      any other First Lien Credit Documents.

     

    “First
      Lien Lenders”
means
      the holders of the First Lien Debt.

     

    “First
      Lien Credit Agreement”
means
      that certain Credit Agreement, dated as of October 24, 2006, among the First
      Lien Agent, GE Canada Finance Holding Company, as Canadian Agent, GE Capital
      Markets, Inc., as Sole Lead Arranger and Bookrunner, the Borrowers, the facility
      guarantors party thereto and the lenders party thereto, as in effect on the
      date
      hereof and, except where the context otherwise so indicates, as amended,
      restated, supplemented, refinanced, replaced or otherwise modified from time
      to
      time in accordance with the terms of the Intercreditor Agreement.

     

    “First
      Lien Credit Documents”
means
      the First Lien Credit Agreement, together with all other documents and
      agreements contemplated thereunder and executed in connection
      therewith.

     

    “Fiscal
      Period”
means
      one of three fiscal periods in a Fiscal Quarter, the first of such periods
      comprised of four weeks, the second of such periods comprised of five weeks,
      and
      the third of such periods comprised of four weeks, with each of the weeks in
      a
      Fiscal Quarter ending on the close of business on a Saturday (except that the
      last fiscal period in the last Fiscal Quarter of a 53 week year shall be five
      weeks). There are twelve Fiscal Periods in a Fiscal Year.

     

    “Fiscal
      Quarter”
means
      one of four thirteen or fourteen week quarters in a Fiscal Year, with the first
      of such quarters beginning on the first day of a Fiscal Year and ending on
      the
      Saturday of the last week in such quarter.

     

    “Fiscal
      Year”
means
      the fifty-two or fifty-three week period ending on the Saturday closest to
      the
      last day of January of any calendar year.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    “Funding
      Date”
shall
      mean the date on which the conditions set forth in Sections 3.1 have been
      satisfied and the Term Loan is made hereunder.

     

    “GAAP”
means
      generally accepted accounting principles in the United States of America, as
      in
      effect from time to time, set forth in the opinions and pronouncements of the
      Accounting Principles Board and the American Institute of Certified Public
      Accountants, in the statements and pronouncements of the Financial Accounting
      Standards Board and in such other statements by such other entity as may be
      in
      general use by significant segments of the accounting profession that are
      applicable to the circumstances as of the date of determination. Subject to
      Section 1.3,
      all
      references to “GAAP”
shall
      be to GAAP applied consistently with the principles used in the preparation
      of
      the Financial Statements described in Sections 4.10
      and
5.3.

     

    “Governmental
      Authority”
means
      any nation, sovereign or government, any state, province or other political
      subdivision thereof, any agency, authority or instrumentality thereof and any
      entity or authority exercising executive, legislative, taxing, judicial,
      regulatory or administrative functions of or pertaining to government, including
      any central bank regulatory body, arbitrator, public sector entity,
      supra-national entity (including the European Union and the European Central
      Bank) and any self-regulatory organization (including the National Association
      of Insurance Commissioners).

     

    “Governing
      Documents”
means,
      with respect to any Person, collectively and, in each case, together with any
      modification of any term thereof, (a) the articles of incorporation, certificate
      of incorporation, constitution or certificate of formation of such Person,
      (b)
      the bylaws, operating agreement or joint venture agreement of such Person,
      (c)
      any other constitutive, organizational or governing document of such Person,
      whether or not equivalent, and (d) any other document setting forth the manner
      of election or duties of the directors, officers or managing members of such
      Person or the designation, amount or relative rights, limitations and
      preferences of any Stock of such Person.

     

    “Guaranteed
      Pension Plan”
means
      any employee pension benefit plan within the meaning of §3(2) of ERISA
      maintained or contributed to by any Borrower or any ERISA Affiliate the benefits
      of which are guaranteed on termination in full or in part by the PBGC pursuant
      to Title IV of ERISA, other than a Multiemployer Plan.

     

    “Guarantor”
means
      each Subsidiary of Parent or Borrower party to the Guaranty and Security
      Agreement and each other Person that enters into any Guaranty Obligation with
      respect to any Obligation of any Loan Party.

     

    “Guaranty
      and Security Agreement”
means
      a
      guaranty and security agreement, in substantially the form of Exhibit D,
      among
      the Administrative Agent, the Borrowers and other Guarantors from time to time
      party thereto.

     

    “Guaranty
      Obligation”
means,
      as applied to any Person, any direct or indirect liability, contingent or
      otherwise, of such Person for any Indebtedness, lease, dividend or other
      obligation (the “primary
      obligation”)
      of
      another Person (the “primary
      obligor”),
      if
      the purpose or intent of such Person in incurring such liability, or the
      economic effect thereof, is to guarantee such primary obligation or provide
      support, assurance or comfort to the holder of such primary obligation or to
      protect or indemnify such holder against loss with respect to such primary
      obligation, including (a) the direct or indirect guaranty, endorsement (other
      than for collection or deposit in the ordinary course of business), co-making,
      discounting with recourse or sale with recourse by such Person of any primary
      obligation, (b) the incurrence of reimbursement obligations with respect to
      any
      letter of credit or bank guarantee in support of any primary obligation, (c)
      the
      existence of any Lien, or any right, contingent or otherwise, to receive a
      Lien,
      on the property of such Person securing any part of any primary obligation
      and
      (d) any liability of such Person for a primary obligation through any
      Contractual Obligation (contingent or otherwise) or other arrangement (i) to
      purchase, repurchase or otherwise acquire such primary obligation or any
      security therefor or to provide funds for the payment or discharge of such
      primary obligation (whether in the form of a loan, advance, stock purchase,
      capital contribution or otherwise), (ii) to maintain the solvency, working
      capital, equity capital or any balance sheet item, level of income or cash
      flow,
      liquidity or financial condition of any primary obligor, (iii) to make
      take-or-pay or similar payments, if required, regardless of non-performance
      by
      any other party to any Contractual Obligation, (iv) to purchase, sell or lease
      (as lessor or lessee) any property, or to purchase or sell services, primarily
      for the purpose of enabling the primary obligor to satisfy such primary
      obligation or to protect the holder of such primary obligation against loss
      or
      (v) to supply funds to or in any other manner invest in, such primary obligor
      (including to pay for property or services irrespective of whether such property
      is received or such services are rendered); provided,
      however,
      that
“Guaranty
      Obligations”
shall
      not include (x) endorsements for collection or deposit in the ordinary course
      of
      business and (y) product warranties given in the ordinary course of business.
      The outstanding amount of any Guaranty Obligation shall equal the outstanding
      amount of the primary obligation so guaranteed or otherwise supported or, if
      lower, the stated maximum amount for which such Person may be liable under
      such
      Guaranty Obligation.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    “Hazardous
      Material”
means
      (a) substances that are defined or listed in, or otherwise classified
      pursuant to, any applicable laws or regulations as “hazardous substances,”
“hazardous materials,” “hazardous wastes,” “toxic substances,” or any other
      formulation intended to define, list, or classify substances by reason of
      deleterious properties such as ignitability, corrosivity, reactivity,
      carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
      petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
      drilling fluids, produced waters, and other wastes associated with the
      exploration, development, or production of crude oil, natural gas, or geothermal
      resources, (c) any flammable substances or explosives or any radioactive
      materials, and (d) asbestos in any form or electrical equipment that contains
      any oil or dielectric fluid containing levels of polychlorinated biphenyls
      in
      excess of 50 parts per million.

     

    “Hedging
      Agreement”
means
      any Interest Rate Contract, foreign exchange, swap, option or forward contract,
      spot, cap, floor or collar transaction, any other derivative instrument and
      any
      other similar speculative transaction and any other similar agreement or
      arrangement designed to alter the risks of any Person arising from fluctuations
      in any underlying variable.

     

    “Indebtedness”
means,
      as to any Person means, without duplication: (a) all obligations for borrowed
      money, (b) all obligations evidenced by bonds, debentures, notes, or other
      similar instruments and all reimbursement or other obligations in respect of
      letters of credit, bankers acceptances, interest rate swaps, or other financial
      products, (c) all obligations as a lessee under Capital Leases, (d) all
      obligations or liabilities of others secured by a Lien on any asset of a Person
      or its Subsidiaries, irrespective of whether such obligation or liability is
      assumed, (e) all obligations to pay the deferred purchase price of assets (other
      than trade payables incurred in the ordinary course of business), (f) all
      obligations owing under Hedging Agreements or similar agreements, (g) all sales
      by such Person of (i) accounts or general intangibles for money due or to become
      due, (ii) chattel paper, instruments or documents creating or evidencing a
      right
      to payment of money, or (iii) other receivables (collectively “receivables”),
      whether pursuant to a purchase facility or otherwise, other than in connection
      with the disposition of the business operations of such Person relating thereto
      or a disposition of defaulted receivables for collection and not as a financing
      arrangement, and together with any obligation of such Person to pay any
      discount, interest, fees, indemnities, penalties, recourse, expenses or other
      amounts in connection therewith, (h) every obligation of such Person (an “equity
      related purchase obligation”) to purchase, redeem, retire or otherwise acquire
      for value any shares of Stock issued by such Person or any rights measured
      by
      the value of such Stock, (i) every obligation in respect of Indebtedness of
      any
      other entity (including any partnership in which such Person is a general
      partner) to the extent that such Person is liable therefor as a result of such
      Person’s ownership interest in or other relationship with such entity, except to
      the extent that the terms of such Indebtedness provide that such Person is
      not
      liable therefor and such terms are enforceable under applicable law, (j) any
      Guaranty Obligation with respect to any Indebtedness described in any of
clauses
      (a)
      through
(i)
      above,
      and (k) every obligation of such Person under any Synthetic Lease.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    “Indemnified
      Matter”
has
      the
      meaning specified in Section 10.4.

     

    “Indemnitee”
has
      the
      meaning specified in Section 10.4.

     

    “Initial
      Projections”
means
      those financial projections, dated March 2007 covering the Fiscal Years ending
      in January 2007 and January 2008 and delivered to the Administrative Agent
      by
      the Borrower prior to the date hereof.

     

    “Insolvency
      Proceeding”
means
      any proceeding commenced by or against any Person under any provision of the
      Bankruptcy Code, the Bankruptcy and [Insolvency Act (Canada), the Companies’
Creditors Arrangement Act (Canada), ]or under any other state or federal
      bankruptcy or insolvency law, assignments for the benefit of creditors, formal
      or informal moratoria, compositions, extensions generally or with creditors,
      or
      proceedings seeking liquidation, winding up, reorganization, arrangement,
      adjustment, protection, or other similar relief.

     

    “Intellectual
      Property”
means
      all rights, title and interests in or relating to intellectual property and
      industrial property arising under any Requirement of Law and all IP Ancillary
      Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet
      Domain Names, Trade Secrets and IP Licenses.

     

    “Intercreditor
      Agreement”
means
      that certain Intercreditor Agreement dated as of even date herewith by and
      among
      the First Lien Agent, the Administrative Agent and the Loan Parties, as amended
      and in effect from time to time.

     

    “Interest
      Payment Date”
means
      the last day of each Interest Period.

     

    “Interest
      Period”
means,
      (i) initially, the period commencing on the Funding Date and ending May 31,
      2007, and (ii) thereafter, each period commencing on the first day of each
      month
      and ending on the last day of such month; provided,
      however,
      that
      any Interest Period that would otherwise end after the Maturity Date shall
      end
      on the Maturity Date.

     

    “Interest
      Rate Contracts”
means
      all interest rate swap agreements, interest rate cap agreements, interest rate
      collar agreements and interest rate insurance.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    “Internet
      Domain Names”
means
      all rights, title and interests (and all related IP Ancillary Rights) arising
      under any Requirement of Law in or relating to Internet domain
      names.

     

    “Investment”
means,
      with respect to any Person, any investment by such Person in any other Person
      (including Affiliates) in the form of loans, guarantees, advances, or capital
      contributions (excluding (a) commission, travel, and similar advances to
      officers and employees of such Person made in the ordinary course of business,
      and (b) bona fide Accounts arising in the ordinary course of business consistent
      with past practice), purchases or other acquisitions of Indebtedness, Stock,
      or
      all or substantially all of the assets of such other Person (or of any division
      or business line of such other Person), and any other items that are or would
      be
      classified as investments on a balance sheet prepared in accordance with
      GAAP.

     

    “IP
      Ancillary Rights”
means,
      with respect to any other Intellectual Property, as applicable, all foreign
      counterparts to, and all divisionals, reversions, continuations,
      continuations-in-part, reissues, reexaminations, renewals and extensions of,
      such Intellectual Property and all income, royalties, proceeds and Liabilities
      at any time due or payable or asserted under or with respect to any of the
      foregoing or otherwise with respect to such Intellectual Property, including
      all
      rights to sue or recover at law or in equity for any past, present or future
      infringement, misappropriation, dilution, violation or other impairment thereof,
      and, in each case, all rights to obtain any other IP Ancillary
      Right.

     

    “IP
      License”
means
      all Contractual Obligations (and all related IP Ancillary Rights), whether
      written or oral, granting any right title and interest in or relating to any
      Intellectual Property.

     

    “IP
      Security Agreement”
means
      the Intellectual Property Security Agreement, by the Borrowers in favor of
      the
      Administrative Agent, dated as of the Closing Date, together with the exhibits
      attached thereto.

     

    “ITA”
means
      the Income
      Tax Act
      (Canada).

     

    “Leases”
means
      any lease or other agreement, no matter how styled or structured, pursuant
      to
      which any Borrower is entitled to the use or occupancy of any
      space.

     

    “Leaseholds”
means
      any lease, leasehold estate or interest of any Borrower in each of the
      properties at or upon which any such Borrower conducts business, offers any
      inventory for sale, or maintains any of the Collateral, whether or not for
      retail sale, together with the Borrower’s interest in any of the improvements
      and fixtures located upon or appurtenant to each such estate or interest,
      including, without limitation, any rights of any such Borrower to payment,
      proceeds or value of any kind or nature realized upon the sale, transfer or
      assignment of any such estate or interest, whether or not such sale, assignment
      or transfer occurs during any case commenced under the Bankruptcy
      Code.

     

    “Lender”
means
      any financial institution or other Person that (a) is listed on the
      signature pages hereof as a “Lender”
or
      (b)
      from time to time becomes a party hereto by execution of an Assignment, in
      each
      case together with its successors.

     

    “Lender
      Group”
means
      (a) the Lenders, (b) the Administrative Agent and its Affiliates, (c) any other
      Person to whom Obligations under this Agreement and the other Loan Documents
      are
      owing, and (d) the permitted successors and assigns of each of the
      foregoing.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    “Liabilities”
means
      all claims, actions, suits, judgments, damages, losses, liabilities,
      obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes,
      commissions, charges, disbursements and expenses, in each case of any kind
      or
      nature (including interest accrued thereon or as a result thereto and fees,
      charges and disbursements of financial, legal and other advisors and
      consultants), whether joint or several, whether or not indirect, contingent,
      consequential, actual, punitive, treble or otherwise.

     

    “LIBOR
      Base Rate”
means,
      with respect to any Interest Period, the rate determined by the Administrative
      Agent to be the offered rate for deposits in Dollars for the applicable Interest
      Period appearing in the Wall Street Journal on the second full Business Day
      next
      preceding the first day of each Interest Period. In the event that such rate
      does not appear on the Wall Street Journal at such time, the “LIBOR Base Rate”
shall be determined by reference to such other comparable publicly available
      service for displaying the offered rate for deposit in Dollars in the London
      interbank market as may be selected by the Administrative Agent and, in the
      absence of availability, such other method to determine such offered rate as
      may
      be selected by the Administrative Agent in its sole discretion.

     

    “Lien”
means
      any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
      arrangement, encumbrance, easement, lien (statutory or other), security interest
      or other security arrangement and any other preference, priority or preferential
      arrangement of any kind or nature whatsoever, including any conditional sale
      contract or other title retention agreement, the interest of a lessor under
      a
      Capital Lease and any synthetic or other financing lease having substantially
      the same economic effect as any of the foregoing.

     

    “Loan”
or
      “Loans” has the meaning set forth in Section
      2.1.

     

    “Loan
      Account”
means
      the account identified in Section
      2.9.

     

    “Loan
      Documents”
means,
      collectively, this Agreement, the Intercreditor Agreement, the Notes, the
      Guaranty and Security Agreement, the Pledge Agreement, the IP Security
      Agreement, each Mortgage, the Control Agreements, the Canadian Security
      Documents, the Fee Letter, any Perfection Certificates and each document
      executed by a Loan Party and delivered to the Administrative Agent or any Lender
      in connection with or pursuant to any of the foregoing or the Obligations,
      together with any modification of any term, or any waiver with respect to,
      any
      of the foregoing.

     

    “Loan
      Party”
and
      “Loan
      Parties”
means
      (a) the Borrowers and (b) each Guarantor.

     

    “Material
      Adverse Effect”
means
      (a) a material adverse change in the business, operations, results of
      operations, assets, liabilities or financial condition of the Loan Parties
      taken
      as a whole, (b) a material impairment of a Borrower’s ability to perform its
      obligations under the Loan Documents to which it is a party or of the Secured
      Parties’ ability to enforce the Obligations or realize upon the Collateral or
      (c) a material impairment of the validity, enforceability, attachment,
      perfection or priority of Agent’s Liens with respect to the
      Collateral.

     

    “Material
      Environmental Liabilities”
means
      Environmental Liabilities exceeding $7,000,000 in the aggregate.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    “Maturity
      Date”
means
      the earliest to occur of (i) October 24, 2011, (ii) the date on which the
      maturity of the Obligations is accelerated in accordance with the terms hereof,
      or (iii) the date of the occurrence of any Event of Default pursuant to
Section
      8.1(e)
      or
Section
      8.1(f)
      hereof.

     

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

     

    “Mortgage”
means
      any mortgage, deed of trust or other document executed or required herein to
      be
      executed by any Loan Party and granting a Lien over Real Property in favor
      of
      the Administrative Agent as security for the Obligations.

     

    “Mortgage
      Supporting Documents”
means,
      with respect to any Mortgage, each document (including title policies or
      marked-up unconditional insurance binders (in each case, together with copies
      of
      all documents referred to therein), maps, ALTA (or TLTA, if applicable) as-built
      surveys (in form and as to a date that is sufficiently acceptable to the title
      insurer issuing title insurance to the Administrative Agent for such title
      insurer to deliver endorsements to such title insurance as reasonably requested
      by the Administrative Agent), environmental assessments and reports and evidence
      regarding recording and payment of fees, insurance premium and taxes) that
      the
      Administrative Agent may reasonably request, to create, register, perfect,
      maintain, evidence the existence, substance, form or validity of or enforce
      a
      valid Lien on the Eligible Real Property in favor of the Administrative Agent
      for the benefit of the Secured Parties, subject only to such Permitted
      Liens.

     

    “Multiemployer
      Plan”
means
      any multiemployer plan within the meaning of §3(37) of ERISA maintained or
      contributed to by any Borrower or any ERISA Affiliate.

     

    “Net
      Cash Proceeds”
means
      proceeds received in cash from (a) any Sale of, or Property Loss Event with
      respect to, property, net of (i) the customary out-of-pocket cash costs, fees
      and expenses paid or required to be paid in connection therewith, (ii) taxes
      paid or reasonably estimated to be payable as a result thereof and
      (iii) any amount required to be paid or prepaid on Indebtedness (other than
      the Obligations and Indebtedness owing to any Loan Party) secured by the
      property subject thereto or (b) any sale or issuance of Stock or incurrence
      of
      Indebtedness, in each case net of brokers’, advisors’ and investment banking
      fees and other customary out-of-pocket underwriting discounts, commissions
      and
      other customary out-of-pocket cash costs, fees and expenses, in each case
      incurred in connection with such transaction; provided,
      however,
      that
      any such proceeds received by any Subsidiary of the Borrower that is not a
      Wholly Owned Subsidiary of the Borrower shall constitute “Net
      Cash Proceeds”
only
      to
      the extent of the aggregate direct and indirect beneficial ownership interest
      of
      the Borrower therein.

     

    “Note”
means
      a
      promissory note of the Borrower, in substantially the form of Exhibit B, payable
      to the order of a Lender in a principal amount equal to the amount of such
      Lender’s Loan.

     

    “Obligations”
means,
      with respect to any Loan Party, all amounts, obligations, liabilities, covenants
      and duties of every type and description owing by such Loan Party to the
      Administrative Agent, any Lender, any other Indemnitee, any participant, whether
      direct or indirect (regardless of whether acquired by assignment), absolute
      or
      contingent, due or to become due, whether liquidated or not, now existing or
      hereafter arising and however acquired, and whether or not evidenced by any
      instrument or for the payment of money, including, without duplication, (a)
      the
      Term Loan, (b) all interest, whether or not accruing after the filing of any
      petition in bankruptcy or the commencement of any insolvency, reorganization
      or
      similar proceeding, whether or not a claim for post-filing or post-petition
      interest is allowed in such proceeding, and (c) all other fees, expenses
      (including fees, charges and disbursement of counsel), interest, commissions,
      charges, costs, disbursements, indemnities and reimbursement of amounts paid
      and
      other sums chargeable to such Loan Party under any Loan Document.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    “Parent”
has
      the
      meaning specified in the preamble.

     

    “Patents”
means
      all rights, title and interests (and all related IP Ancillary Rights) arising
      under any Requirement of Law in or relating to letters patent and applications
      therefor.

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation created by §4002 of ERISA and any
      successor entity or entities having similar responsibilities.

     

    “Perfection
      Certificate”
means,
      collectively, (a) the Perfection Certificate submitted by the U.S. Borrowers
      to
      the Administrative Agent on the Closing Date, together with the completed
      responses to the inquiries set forth therein, and (b) the Perfection Certificate
      submitted by Bombay Canada to the Administrative Agent, together with Bombay
      Canada’s completed responses to the inquiries set forth therein, each in form
      and substance reasonably satisfactory to the Administrative Agent, together
      with
      any amendments, modifications or supplements thereto.

     

    “Permitted
      Acquisition”
means
      acquisitions of all or substantially all of the assets of a Person in or of
      any
      division or business line of a Person or Stock of a Person; provided,
      (a) the
      Administrative Agent shall receive at least 3 Business Days prior written notice
      of such acquisition, which notice shall include a reasonably detailed
      description of such acquisition, (b) such assets are located in the United
      States or Canada (except that such location requirement shall not apply to
      acquisitions of assets or stores from a licensee or franchisee of any Loan
      Party) and are those assets of a business that would comply with Section 6.2(d),
      and
      which business would not subject the Administrative Agent or any Lender to
      regulatory or third party approvals in connection with the exercise of its
      rights and remedies under this Agreement or any Loan Documents, (c) no Default
      or Event of Default exists prior to or immediately after giving effect to such
      acquisition, (d) the Administrative Agent is granted a valid perfected Lien
      in
      the assets so acquired to the extent and in the manner contemplated by the
      Loan
      Documents (subject only to Permitted Liens) and the applicable Loan Party shall
      have delivered to the Administrative Agent evidence reasonably satisfactory
      to
      the Administrative Agent that all Liens with respect to the assets so acquired,
      other than Permitted Liens, have been discharged in full, (e) the seller of
      such
      assets or Stock is not an Affiliate of any Loan Party, (f) the terms of such
      acquisition are on an arms length basis, (g) Section
      6.11
      is
      complied with at the time of consummation of such acquisition (or concurrently
      therewith), (h) the board of directors and (if required by applicable law)
      the
      shareholders, or the equivalent thereof, of the business to be acquired has
      approved such acquisition, (i) the applicable Loan Party shall have delivered
      to
      Administrative Agent evidence satisfactory to the Administrative Agent that
      such
      Loan Party has completed such acquisition in accordance with the terms of the
      contracts and agreements entered into by such Person in connection with such
      acquisition, and (ii) certified copies of all such documents shall have been
      delivered to the Administrative Agent, (i) no additional Indebtedness,
      contingent obligations or other liabilities shall be incurred assumed or
      otherwise be reflected on a consolidated balance sheet of the Borrowers after
      giving effect to such acquisition, except, (i)  ordinary
      course trade payables, accrued expenses and unsecured Indebtedness of the
      Borrowers and (ii) Indebtedness otherwise permitted under Section
      7.1,
      (j)
      after giving effect to any such acquisition, Availability shall not be less
      than
      $25,000,000 and the Parent shall have delivered to the Administrative Agent
      a
      Compliance Certificate and Projections demonstrating that the Borrowers shall
      have Availability of at least $25,000,000 at all times for the two (2) Fiscal
      Quarters immediately succeeding such acquisition and (k) such acquisitions
      are
      contemplated by the Business Plan.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

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

     

    “Permitted
      Dispositions”
means
      (a) sales or other dispositions by any Loan Party of equipment that is
      substantially worn, damaged, or obsolete in the ordinary course of business,
      (b)
      sales by any Loan Party of inventory to buyers in the ordinary course of
      business, (c) the use or transfer of money or Cash Equivalents by any Loan
      Party
      in a manner that is not prohibited by the terms of this Agreement or the other
      Loan Documents, (d) the licensing by any Loan Party, on a non-exclusive basis,
      of Intellectual Property in the ordinary course of business, (e) a disposition
      between the Borrowers, (f) the surrender or waiver of contract rights or the
      disposition, settlement, release or surrender of contract, tort or other claims
      of any kind in the ordinary course of business, for reasonable consideration
      negotiated on an arm’s length basis, (g) any disposition of defaulted
      receivables that arose in the ordinary course of business for collection, (h)
      the entering into of real property leases in respect of any portion of the
      Bombay Office Complex in the ordinary course of business, (i) inventory sales
      and other dispositions conducted in accordance with Section 6.19, and (j) the
      sale of the Eligible Real Property, so long as the Net Cash Proceeds are applied
      in accordance with Section
      2.5(a).

     

    “Permitted
      Investments”
means
      (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable
      instruments for collection, (c) advances made in connection with purchases
      of
      goods or services in the ordinary course of business, (d) Investments received
      in settlement of amounts due to any Loan Party effected in the ordinary course
      of business or owing to a Loan Party as a result of Insolvency Proceedings
      involving an Account Debtor or upon the foreclosure or enforcement of any Lien
      in favor of any Loan Party, (e) (i) Investments in a Borrower or Guarantor
      and
      (ii) to the extent otherwise permitted hereunder, Investments in any Person
      that, simultaneously with such Investment becomes a Subsidiary of Parent, and
      complies with Section
      6.11
      hereof;
provided,
      however,
      that
      after giving effect to any such Permitted Investments pursuant to clauses
      (e) (ii)
      above,
      Availability shall not be less than $25,000,000 and the Parent shall have
      delivered to the Administrative Agent a Compliance Certificate and Projections
      demonstrating that Borrowers shall have Availability of at least $25,000,000
      at
      all times for the two (2) Fiscal Quarters immediately succeeding such Permitted
      Investments, (f) Investments in The Bombay Furniture Company, Inc. in an amount
      not to exceed $5,000,000 in any Fiscal Year; (g) Investments the net aggregate
      book value of which does not at any time exceed the amount of $1,000,000 and
      (h)
      so long as no First Lien Debt is outstanding, investments in (i) commercial
      notes and bonds or variable rate demand notes, issued by any commercial
      institution with a rating of not less than A, as determined by S&P or
      Moody’s, (ii) Eurodollar deposits, and (iii) money market or other mutual funds
      substantially all of whose assets comprise securities of the types described
      in
      the definition of “Cash Equivalents” or clause
      (h)
      hereof;
provided,
      that no
      such Investments permitted under this clause (h) shall be permitted (i) after
      the occurrence of a Default or Event of Default, and (ii) unless such
      Investments are pledged to the Administrative Agent as additional Collateral
      for
      the Obligations pursuant to such agreements as may be required by the
      Administrative Agent in its Permitted Discretion.

     

    “Permitted
      Liens”
means
      (a) Liens held by the Administrative Agent for the benefit of the Administrative
      Agent and the Lenders, as applicable, (b) Liens for unpaid taxes that
      either (i) are not yet delinquent, or (ii) do not constitute an Event
      of Default hereunder and are the subject of Permitted Protests, (c) Liens set
      forth on Schedule
      7.2,
      (d) the
      interests of lessors under operating leases, (e) Liens in favor of the First
      Lien Agent securing the First Lien Debt, (f) purchase money Liens or the
      interests of lessors under Capital Leases to the extent that such Liens or
      interests secure Permitted Purchase Money Indebtedness and so long as such
      Lien
      attaches only to the asset purchased or acquired and the proceeds thereof,
      (g)
      Liens arising by operation of law including those in favor of warehousemen,
      landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred
      in
      the ordinary course
      of
      the Borrowers’ business and not in connection with the borrowing of money, and
      which Liens either (i) are for sums not yet delinquent, or (ii) are the
      subject of Permitted 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        
Protests,
        (h) Liens arising from deposits made in connection with obtaining worker’s
        compensation or other unemployment insurance, (i) Liens or deposits to secure
        performance of bids, tenders, or leases incurred in the ordinary course of
        business and not in connection with the borrowing of money, (j) Liens granted
        as
        security for surety or appeal bonds in connection with obtaining such bonds
        in
        the ordinary course of business, (k) Liens resulting from any judgment or
        award
        that is not an Event of Default hereunder, (l) with respect to any Real
        Property, easements, rights of way, minor encroachments, and zoning restrictions
        that do not materially interfere with or impair the use or operation thereof,
        (m) Liens in favor of customs and revenue authorities arising as a matter
        of law
        to secure payment of customs duties in connection with the importation of
        goods,
        (n) Liens resulting from the filing of precautionary UCC financing statements,
        PPSA registration statements or registrations in Quebec, Canada relating
        to
        operating leases of any Loan Party which are entered into in the ordinary
        course
        of business and which are limited solely to the assets subject thereto provided
        that Net Cash Proceeds from such transaction are applied in accordance with
        Section
        2.5(a)(ii),
        and (o)
        Liens securing Permitted Office Building Indebtedness so long as such Lien
        attaches only to the Bombay Office Complex (and insurance proceeds thereof)
        in
        connection with any sale leaseback transactions permitted by Section
        7.5,
        provided that Net Cash Proceeds from such transaction are applied in accordance
        with Section
        2.5(a)(ii).

    

     

    “Permitted
      Office Building Indebtedness”
means,
      following the release of the Eligible Real Property in accordance with
Section
      6.19,
      Indebtedness incurred by a Borrower or any of its Subsidiaries in an aggregate
      principal amount at any time outstanding not to exceed 90% of the appraised
      value (based upon an independent third-party appraisal) of the portion of the
      Bombay Office Complex securing such Indebtedness on terms reasonably acceptable
      to the Administrative Agent.

     

    “Permitted
      Protest”
means
      the right of Parent or any of its Subsidiaries, as applicable, to protest any
      Lien (other than any such Lien that secures the Obligations), taxes (other
      than
      payroll taxes or taxes that are the subject of a United States federal tax
      lien), or rental payment; provided
      that (a)
      a reserve with respect to such obligation is established on the Books in such
      amount as is required under GAAP, (b) any such protest is instituted promptly
      and prosecuted diligently by Parent or any of its Subsidiaries, as applicable,
      in good faith, and (c) the Administrative Agent is satisfied that, while any
      such protest is pending, there will be no impairment of the enforceability,
      validity, perfection or priority of any of the Administrative Agent’s
      Liens.

     

    “Permitted
      Purchase Money Indebtedness”
means,
      as of any date of determination, Purchase Money Indebtedness incurred after
      the
      Closing Date in an aggregate amount outstanding at any one time not in excess
      of
      $2,000,000. In no event shall Permitted Purchase Money Indebtedness include
      Indebtedness incurred for the purpose of financing all or any part of the
      acquisition Cost of any inventory.

     

    “Person”
means
      any individual, partnership, corporation (including a business trust and a
      public benefit corporation), joint stock company, estate, association, firm,
      enterprise, trust, limited liability company, unincorporated association, joint
      venture and any other entity or Governmental Authority.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    “Pledge
      Agreements”
means
      the pledge agreement, in substantially the form of Exhibit E,
      dated
      as of even date herewith, among the Administrative Agent and certain of the
      Borrowers.

     

    “PPSA”
means
      the Personal Property Security Act (Ontario), or, where the context requires,
      the legislation of other provinces or territories in Canada relating to security
      in personal property generally, including Accounts and inventory, as adopted
      by
      and in effect from time to time in such provinces or territories in Canada,
      as
      applicable.

     

    “Projections”
means,
      collectively, the Initial Projections and any document delivered pursuant to
      Section 5.3(c).

     

    “Property
      Loss Event”
means,
      with respect to any property, any loss of or damage to such property or any
      taking of such property or condemnation thereof.

     

    “Pro
      Rata Share”
means,
      with respect to any Lender as of any date of determination, the percentage
      obtained by dividing (a) the sum of the outstanding principal amount of the
      Loan
      of such Lender on such date by (b) the outstanding principal amount of the
      Term
      Loan on such date.

     

    “Purchase
      Money Indebtedness”
means
      Indebtedness (other than the Obligations, but including obligations in respect
      of Capital Leases), incurred at the time of, or within 20 days after, the
      acquisition of any fixed assets, including, without limitation, software, for
      the purpose of financing all or any part of the acquisition cost thereof,
      together with any refinancings thereof under Section
      7.1(c).

     

    “Qualified
      Import Letter of Credit”
has
      the
      meaning ascribed to it in the First Lien Credit Agreement as in effect on the
      date hereof.

     

    “Real
      Property”
means
      any estates or interests in real property now owned or hereafter acquired by
      any
      Borrower or a Subsidiary of any Borrower and the improvements
      thereto.

     

    “Record”
means
      information that is inscribed on a tangible medium or which is stored in an
      electronic or other medium and is retrievable in perceivable form.

     

    “Register”
has
      the
      meaning specified in Section
      2.10(b).

     

    “Related
      Person”
means,
      with respect to any Person, each Affiliate of such Person and each director,
      officer, employee, consultant, agent, trustee, representative, attorney,
      accountant and each insurance, environmental, legal, financial and other advisor
      (including those retained in connection with the satisfaction or attempted
      satisfaction of any condition set forth in Article III)
      of or
      to such Person or any of its Affiliates, together with, if such Person is the
      Administrative Agent, each other Person or individual designated, nominated
      or
      otherwise appointed by or assisting the Administrative Agent pursuant to
Section
      9.4
      or any
      comparable provision of any Loan Document.

     

    “Remedial
      Action”
means
      all actions taken to (a) clean up, remove, remediate, contain, treat, monitor,
      assess, evaluate, or in any way address Hazardous Materials in the indoor or
      outdoor environment, (b) prevent or minimize a release or threatened release
      of
      Hazardous Materials so they do not migrate or endanger or threaten to endanger
      public health or welfare or the indoor or outdoor environment, (c) perform
      any
      pre-remedial studies, investigations, or post-remedial operation and maintenance
      activities, or (d) conduct any other actions authorized by 42 USC
§9601.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    “Required
      Lenders”
means,
      at any time, Lenders holding in excess of 51% of the principal amount of the
      Term Loan outstanding at such time.

     

    “Requirements
      of Law”
means,
      with respect to any Person, collectively, the common law and all federal, state,
      provincial, local, foreign, multinational or international laws, statutes,
      codes, treaties, standards, rules and regulations, guidelines, ordinances,
      orders, judgments, writs, injunctions, decrees (including administrative or
      judicial precedents or authorities) and the interpretation or administration
      thereof by, and other determinations, directives, requirements or requests
      of,
      any Governmental Authority, in each case whether or not having the force of
      law
      and that are applicable to or binding upon such Person or any of its property
      or
      to which such Person or any of its property is subject.

     

    “Responsible
      Officer”
means,
      with respect to any Person, any of the president, chief executive officer,
      chief
      financial officer, treasurer, assistant treasurer, controller, managing member
      or general partner of such Person but, in any event, with respect to financial
      matters, any such officer that is responsible for preparing the Financial
      Statements delivered hereunder and, with respect to the Corporate Chart and
      other documents delivered pursuant to Section 5.3(h),
      documents delivered on the Closing Date or the Funding Date and documents
      delivered pursuant to Section 6.10,
      the
      secretary or assistant secretary of such Person or any other officer responsible
      for maintaining the corporate and similar records of such Person.

     

    “S&P”
means
      Standard & Poor’s Rating Services, or its successor.

     

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

     

    “Secured
      Parties”
means
      the Lenders, the Administrative Agent, each other Indemnitee and any other
      holder of any Obligation of any Loan Party.

     

    “Security”
means
      all Stock, Stock Equivalents, voting trust certificates, bonds, debentures,
      instruments and other evidence of Indebtedness, whether or not secured,
      convertible or subordinated, all certificates of interest, share or
      participation in, all certificates for the acquisition of, and all warrants,
      options and other rights to acquire, any Security.

     

    “Sell”
means,
      with respect to any property, to sell, convey, transfer, assign, license, lease
      or otherwise dispose of, any interest therein or to permit any Person to acquire
      any such interest, including, in each case, through a sale and leaseback
      transaction or through a sale, factoring at maturity, collection of or other
      disposal, with or without recourse, of any notes or accounts receivable.
      Conjugated forms thereof and the noun “Sale”
have
      correlative meanings.

     

    “Solvent”
means,
      with respect to any Person, as of any date of determination, that, as of such
      date, (i) the value of the assets of such Person (both at fair value and present
      fair saleable value) is greater than the total amount of liabilities (including
      contingent and unliquidated liabilities) of such Person, (ii) such Person is
      able to pay all liabilities of such Person as such liabilities mature and (iii)
      such Person, as of the Funding Date, does not have unreasonably small capital.
      In computing the amount of contingent or unliquidated liabilities at any time,
      such liabilities shall be computed at the amount that, in light of all the
      facts
      and circumstances existing at such time, represents the amount that can
      reasonably be expected to become an actual or matured liability.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    “Stock”
means
      all shares of capital stock (whether denominated as common stock or preferred
      stock), equity interests, beneficial, partnership or membership interests,
      joint
      venture interests, participations or other ownership or profit interests in
      or
      equivalents (regardless of how designated) of or in a Person (other than an
      individual), whether voting or non-voting.

     

    “Stock
      Equivalents”
means
      all securities convertible into or exchangeable for Stock or any other Stock
      Equivalent and all warrants, options or other rights to purchase, subscribe
      for
      or otherwise acquire any Stock or any other Stock Equivalent, whether or not
      presently convertible, exchangeable or exercisable.

     

    “Store
      Accounts”
means
      an account designated as such on Schedule
      8
      of the
      Perfection Certificate.

     

    Subsidiary”
means,
      with respect to any Person, any corporation, partnership, joint venture, limited
      liability company, association or other entity, the management of which is,
      directly or indirectly, controlled by, or of which an aggregate of more than
      50%
      of the outstanding Voting Stock is, at the time, owned or controlled directly
      or
      indirectly by, such Person or one or more Subsidiaries of such
      Person.

     

    “Synthetic
      Lease”
means
      any lease of goods or other property, whether real or personal, which is treated
      as an operating lease under GAAP and as a loan or financing for United States
      income tax purposes.

     

    “Taxes”
has
      the
      meaning specified in Section
      2.12.

     

    “Term
      Loan”
has
      the
      meaning specified in Section
      2.1.

     

    “Title
      IV Plan”
means
      a
      pension plan subject to Title IV of ERISA, other than a Multiemployer Plan,
      to
      which any ERISA Affiliate incurs or otherwise has any obligation or liability,
      contingent or otherwise.

     

    “Trademarks”
means
      all rights, title and interests (and all related IP Ancillary Rights) arising
      under any Requirement of Law in or relating to trademarks, trade names,
      corporate names, company names, business names, fictitious business names,
      trade
      styles, service marks, logos and other source or business identifiers and,
      in
      each case, all goodwill associated therewith, all registrations and recordations
      thereof and all applications in connection therewith.

     

    “Trade
      Secrets”
means
      all right, title and interest (and all related IP Ancillary Rights) arising
      under any Requirement of Law in or relating to trade secrets.

     

    “UCC”
means
      the Uniform Commercial Code of any applicable jurisdiction and, if the
      applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform
      Commercial Code as in effect in the State of New York.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    “Underlying
      Issuer”
has
      the
      meaning ascribed to it in the First Lien Credit Agreement as in effect on the
      date hereof.

     

    “Underlying
      Letter of Credit”
has
      the
      meaning ascribed to it in the First Lien Credit Agreement as in effect on the
      date hereof.

     

    “United
      States”
means
      the United States of America.

     

    “U.S.
      Borrowers”
means
      Borrowers other than Bombay Canada.

     

    “U.S.
      Eligible In-Transit Inventory”
means
      inventory of the U.S. Borrowers that does not qualify as Eligible Inventory
      under clause
      (b)
      of the
      definition of Eligible Inventory solely because it is not at a location in
      the
      United States set forth on Schedule
      4(b)
      of the
      Perfection Certificate or in transit among such locations in the United States
      and that meets the following criteria, which criteria may be revised by the
      Administrative Agent in its Permitted Discretion from time to time after the
      Closing Date:

     

    (a) the
      inventory was the subject of a Qualified Import Letter of Credit, or was paid
      for in full by a U.S. Borrower;

     

    (b) such
      inventory currently is in transit (whether by vessel, air, or land) to a
      location set forth on Schedule
      4(b)
      of the
      Perfection Certificate 
      in the
      United States that is the subject of a Bailee Acknowledgment or a Collateral
      Access Agreement;

     

    (c) title
      to
      such inventory has passed to the applicable U.S. Borrower;

     

    (d) such
      inventory is insured against types of loss, damage, hazards, and risks, and
      in
      amounts, satisfactory to the Administrative Agent in its Permitted
      Discretion;

     

    (e) the
      Parent has provided a certificate to the Administrative Agent that certifies
      that, to the best knowledge of the Borrowers, such inventory meets all of the
      Borrowers’ representations and warranties contained in the Loan Documents
      concerning Eligible Inventory, that the Borrowers know of no reason why such
      inventory would not be accepted by the applicable Borrower when it arrives
      in
      the United States, and that the shipment as evidenced by the documents conforms
      to the related order documents; and

     

    (f) if
      subject to a Qualified Import Letter of Credit, the Underlying Letter of Credit
      has been drawn upon and the Underlying Issuer has honored such drawing and
      the
      Administrative Agent has honored its obligations to the Underlying Issuer under
      the applicable Qualified Import Letter of Credit.

     

    “Voting
      Stock”
means
      Stock of any Person having ordinary power to vote in the election of members
      of
      the board of directors, managers, trustees or other controlling Persons, of
      such
      Person (irrespective of whether, at the time, Stock of any other class or
      classes of such entity shall have or might have voting power by reason of the
      occurrence of any contingency).

     

    “Wholesale”
means
      Bombay International, Inc.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    “Wholly
      Owned Subsidiary”
of
      any
      Person means any Subsidiary of such Person, all of the Stock of which (other
      than nominal holdings and director’s qualifying shares) is owned by such Person,
      either directly or through one or more Wholly Owned Subsidiaries of such
      Person.

     

     

    Section
      1.2  UCC
      Terms.
      The
      following terms have the meanings given to them in the applicable UCC:
“commodity
      account”,
      “commodity
      contract”,
      “commodity
      intermediary”,
      “deposit
      account”,
      “entitlement
      holder”,
      “entitlement
      order”,
      “equipment”,
      “financial
      asset”,
      “general
      intangible”,
      “goods”,
      “instruments”,
      “inventory”,
      “securities
      account”,
      “securities
      intermediary”,
      “security
      entitlement”
and
      “supporting
      obligations”.

     

     

    Section
      1.3  Accounting
      Terms and Principles.

     

     

    (a)  GAAP.
      If any
      change in any accounting practice is required by GAAP (or any successor of
      the
      foregoing) in order for such principle or practice to continue as a generally
      accepted accounting principle or practice, all reports and financial statements
      required hereunder or in connection herewith may be prepared in accordance
      with
      such change, but all calculations and determinations to be made hereunder may
      be
      made in accordance with such change only after notice of such change is given
      to
      each Lender, and the Borrowers, the Required Lenders and the Administrative
      Agent agree to such change. All accounting terms not specifically defined herein
      shall be construed in accordance with GAAP applied on a consistent basis by
      the
      accounting entity to which they refer. When used herein, the term “financial
      statements” shall include the notes and schedules thereto. Whenever the term
“Borrowers” or the term “Parent” is used in respect of a financial covenant or a
      related definition, it shall be understood to mean Parent and its Subsidiaries
      on a consolidated basis unless the context clearly requires otherwise. Unless
      otherwise expressly provided herein or unless Required Lenders otherwise
      consent, all financial statements and reports furnished to the Administrative
      Agent or any Lender hereunder shall be prepared, all financial computations
      and
      determinations pursuant hereto shall be made, and all terms of an accounting
      or
      financial nature shall be construed, in accordance with GAAP.

     

     

    Section
      1.4  Interpretation.

     

     

    (a)  Certain
      Terms.
      Except
      as set forth in any Loan Document, all accounting terms not specifically defined
      herein shall be construed in accordance with GAAP. The terms “herein”,
      “hereof”
and
      similar terms refer to this Agreement as a whole. In the computation of periods
      of time from a specified date to a later specified date in any Loan Document,
      the terms “from”
means
      “from and including” and the words “to”
and
      “until”
each
      mean “to but excluding” and the word “through”
means
      “to and including.” In any other case, the term “including”
when
      used in any Loan Document means “including without limitation.” The term
“documents”
means
      all writings, however evidenced and whether in physical or electronic form,
      including all documents, instruments, agreements, notices, demands,
      certificates, forms, financial statements, opinions and reports. The term
“incur”
means
      incur, create, make, issue, assume or otherwise become directly or indirectly
      liable in respect of or responsible for, in each case whether directly or
      indirectly, and the terms “incurrence” and “incurred” and similar derivatives
      shall have correlative meanings.

     

     

    (b)  Certain
      References.
      Unless
      otherwise expressly indicated, references (i) in this Agreement to an
      Exhibit, Schedule, Article, Section or clause refer to the appropriate Exhibit
      or Schedule to, or Article, Section or clause in, this Agreement and (ii) in
      any
      Loan Document, to (A) any agreement shall include, without limitation, all
      exhibits, schedules, appendixes and annexes to such agreement and, unless the
      prior consent of any Secured Party required therefor is not obtained, any
      amendment, restatement, amendment and restatement or other modification of
      such
      agreement, (B) any statute shall be to such statute as amended or otherwise
      modified from time to time and to any successor legislation thereto, in each
      case as in effect at the time any such reference is operative and (C) any
      time of day shall be a reference to New York time. Titles of articles, sections,
      clauses, exhibits, schedules and annexes contained in any Loan Document are
      without substantive meaning or content of any kind whatsoever and are not a
      part
      of the agreement between the parties hereto. Unless otherwise expressly
      indicated, the meaning of any term defined (including by reference) in any
      Loan
      Document shall be equally applicable to both the singular and plural forms
      of
      such term.

     

     

    
      
        
        

      

      
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    ARTICLE
      II  

     

     

     

     

    THE
      FACILITY

     

     

    Section
      2.1  Term
      Loan.
      (a)Each
      Lender, severally and not jointly with any other Lender, agrees, upon the terms
      and subject to the conditions herein set forth, to make a loan (each, a
“Loan”
and
      collectively, the “Term
      Loan”)
      to the
      Borrowers on the Funding Date in the respective original principal amounts
      set
      forth on Schedule
      2.1
      hereto;
      provided, however, the Funding Date shall have occurred on or before June 4,
      2007.

     

     

    Section
      2.2  Joint
      and Several Liability.

     

     

    (a)  Notwithstanding
      any provision to the contrary in any Loan Document, all Obligations of the
      Borrowers under this Agreement are joint and several Obligations of the
      Borrowers in consideration of the financial accommodations to be provided by
      the
      Administrative Agent and Lenders under this Agreement, for the mutual benefit,
      directly and indirectly, of each Borrower and in consideration of the
      undertakings of the other Borrowers to accept joint and several liability for
      the Obligations. Each Borrower, hereby irrevocably and unconditionally accepts,
      not merely as a surety but also as a co-debtor, joint and several liability
      with
      the other Borrowers, with respect to the payment and performance of all of
      the
      Obligations.

     

     

    (b)  The
      provisions of this Section 2.2(b)
      are made
      for the benefit of the Secured Parties, and assigns, and may be enforced by
      it
      or them from time to time against any or all Borrowers as often as occasion
      therefore may arise and without requirement on the part of any such Secured
      Parties first to marshal any of its or their claims or to exercise any of its
      or
      their rights against any of the other Borrowers or to exhaust any remedies
      available to it or them against any of the other Borrowers or to resort to
      any
      other source or means of obtaining payment of any of the Obligations hereunder
      or to elect any other remedy. The provisions of this Section 2.2(b)
      shall
      remain in effect until all of the Obligations shall have been indefeasibly
      paid
      in full or otherwise fully satisfied. If at any time, any payment or any part
      thereof, made in respect of any of the Obligations, is rescinded or must
      otherwise be restored or returned by Secured Party upon the insolvency,
      bankruptcy or reorganization of any of Borrowers, or otherwise, the provisions
      of this Section 2.2(b)
      will
      forthwith be reinstated in effect, as though such payment had not been
      made.

     

     

    
      
        
        

      

      
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    (c)  Each
      Borrower hereby agrees that it will not enforce any of its rights of
      contribution or subrogation against the Borrowers with respect to any liability
      incurred by it hereunder or under any of the other Loan Documents, any payments
      made by it to any Secured Party with respect to any of the Obligations or any
      collateral security therefore until such time as all of the Obligations have
      been paid in full in cash. Any claim which any Borrower may have against any
      other Borrower with respect to any payments to any Secured Party hereunder
      or
      under any other Loan Documents are hereby expressly made subordinate and junior
      in right of payment, without limitation as to any increases in the Obligations
      arising hereunder or thereunder, to the prior payment in full in cash of the
      Obligations and, in the event of any insolvency, bankruptcy, receivership,
      liquidation, reorganization or other similar proceeding under the laws of any
      jurisdiction relating to any Borrower, its debts or its assets, whether
      voluntary or involuntary, all such Obligations shall be paid in full in cash
      before any payment or distribution of any character, whether in cash, securities
      or other property, shall be made to any other Borrower therefor.

     

    (i)  Each
      Borrower hereby agrees that, after the occurrence and during the continuance
      of
      any Default or Event of Default, the payment of any amounts due with respect
      to
      the Indebtedness owing by any Borrower to any other Borrower is hereby
      subordinated to the prior payment in full in cash of the Obligations. Each
      Borrower hereby agrees that after the occurrence and during the continuance
      of
      any Default or Event of Default, such Borrower will not demand, sue for or
      otherwise attempt to collect any indebtedness of any other Borrower owing to
      such Borrower until the Obligations shall have been indefeasibly paid in full
      in
      cash. If, notwithstanding the foregoing sentence, such Borrower shall collect,
      enforce or receive any amounts in respect of such indebtedness, such amounts
      shall be collected, enforced and received by such Borrower as trustee for the
      Administrative Agent, and such Borrower shall deliver any such amounts to the
      Administrative Agent for application to the Obligations in accordance with
      Section 2.8(b).

     

     

    Section
      2.3  Repayment
      of Term Loan.
      The
      Borrowers promise to repay the entire unpaid principal amount of the Term Loan
      on the Maturity Date.

     

     

    Section
      2.4  Optional
      Prepayments.
      (a)
      The
      Borrowers shall have the right at any time and from time to time to prepay
      the
      outstanding Term Loan in whole or in part, upon at least two (2) Business Days’
prior written, telex or facsimile notice to the Administrative Agent, prior
      to
      1:00 p.m., New York time, subject in each case to the following
      limitations:

     

    (i)  All
      prepayments shall be paid to the Administrative Agent for application to the
      Loans, pro rata, based upon Pro Rata Shares of the Lenders;

     

    (ii)  Each
      optional prepayment of the Term Loan shall be in an amount equal to $1,000,000
      or in an integral multiple of $100,000 in excess thereof;

     

    (iii)  If
      such
      prepayment shall occur on or prior to the second anniversary of the Funding
      Date, such prepayment shall be accompanied by the additional premium required
      pursuant to Section
      2.7(a);
      and

     

    (iv)  Each
      notice of prepayment shall specify the prepayment date and the principal amount
      of the Term Loan to be prepaid. Each notice of prepayment shall be irrevocable
      and shall commit the Borrowers to prepay the Term Loan by the amount and on
      the
      date stated therein. The Administrative Agent shall, promptly after receiving
      notice from the Borrowers hereunder, notify each Lender of the principal amount
      of the Loan held by such Lender which is to be prepaid, the prepayment date
      and
      the manner of application of the prepayment.

     

     

    
      
        
        

      

      
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    (b)  The
      Borrowers shall reimburse each Lender on demand for any actual loss incurred
      or
      to be incurred by such Lender (i) resulting from any prepayment (for any reason
      whatsoever, including, without limitation acceleration by virtue of, and after,
      the occurrence of an Event of Default) of its Loan required or permitted under
      this Agreement, if such Loan is prepaid other than on the last day of the
      Interest Period. Such loss shall be the amount (herein, collectively,
“Breakage
      Costs”)
      as
      reasonably determined by such Lender as the excess, if any, of (A) the amount
      of
      interest which would have accrued to such Lender on the amount so paid at a
      rate
      of interest equal to the LIBOR Base Rate for such Loan plus the Applicable
      Margin, for the period from the date of such payment to the last day other
      than
      on the last day of the then current Interest Period, over (B) the amount of
      interest which would have accrued to such Lender on such amount by placing
      such
      amount on deposit for a comparable period with leading banks in the London
      interbank market. Any Lender demanding reimbursement for such loss shall deliver
      to the Borrower from time to time one or more certificates setting forth the
      amount of such loss as determined by such Lender and setting forth in reasonable
      detail the manner in which such amount was determined.

     

     

    (c)  In
      the
      event any Borrower fails to prepay any Loan on the date specified in any
      prepayment notice delivered pursuant to Section 2.3(a), the Borrowers, on demand
      by any Lender, shall pay to the Administrative Agent, for the account of such
      Lender, any amounts required to compensate such Lender for any loss incurred
      by
      such Lender as a result of such failure to prepay, including, without
      limitation, any loss, cost or expenses incurred by reason of the acquisition
      of
      deposits or other funds by such Lender to fulfill deposit obligations incurred
      in anticipation of such prepayment. Any Lender demanding such payment shall
      deliver to the Borrower from time to time one or more certificates setting
      forth
      the amount of such loss as determined by such Lender and setting forth in
      reasonable detail the manner in which such amount was determined.

     

     

    Section
      2.5  Mandatory
      Prepayments.

     

     

    (a)  Asset
      Sales and Property Loss Events.
      Upon
      receipt on or after the Funding Date by any Loan Party or any of its
      Subsidiaries of Net Cash Proceeds arising from (i) any Sale of Eligible Real
      Property or (ii) and Property Loss Event with respect to Eligible Real Property,
      the Borrowers shall immediately, if requested by the Required Lenders after
      advance notice thereto, prepay the Term Loan in an amount equal to all such
      proceeds, net of amounts used to repay and permanently reduce the First Lien
      Debt; provided,
      however,
      that in
      the event of a partial Property Loss Event with respect to the Eligible Real
      Property, (i) the Borrowers may in lieu of such prepayment immediately pay
      or
      cause to be paid the insurance proceeds associated with such loss to a
      segregated account over which the Administrative Agent has a valid perfected
      Lien for use by the Borrowers solely to repair such loss or damage to property
      and (ii) the Borrowers shall not be required to pay or cause such proceeds
      to be
      paid to the Administrative Agent to the extent (A) the Borrowers reinvest or
      commit to reinvest such proceeds within 9 months of the occurrence of the
      partial Property Loss Event and (B) the Borrowers diligently pursue repairing
      the loss or damage to such Eligible Real Property. The Borrowers shall deliver
      to the Administrative Agent within 21 days of such partial Property Loss Event
      an updated appraisal with respect to such Eligible Real Property.

     

     

    
      
        
        

      

      
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    (b)  Application
      of Payments.
      Any
      payments made to the Administrative Agent pursuant to this Section 2.5
      shall be
      applied to the Obligations in accordance with Section 2.7(b).

     

     

    Section
      2.6  Interest.

     

     

    (a)  Rate. Subject
      to Section
      2.6,
      the
      Term Loan shall bear interest (computed on the basis of the actual number of
      days elapsed over a year of 360 days) at a rate per annum equal to, during
      each
      Interest Period applicable thereto, the LIBOR Base Rate for such Interest
      Period, plus the Applicable Margin.
      Accrued
      interest on the Term Loan shall be payable in arrears on each Interest Payment
      Date, on the Maturity Date (whether by acceleration or otherwise), after such
      Maturity Date on demand and upon any repayment or prepayment thereof (on the
      amount prepaid).

     

     

    (b)  Payments.
      Interest accrued shall be payable in arrears, (i) if accrued on the principal
      amount of the Term Loan, at maturity (whether by acceleration or otherwise),
      and
      on the last day of each Interest Period, and (ii) if accrued on any other
      Obligation, on demand from and after the time such Obligation is due and payable
      (whether by acceleration or otherwise).

     

     

    (c)  Default
      Interest.
      Notwithstanding the rates of interest specified in clause (a)
      above or
      elsewhere in any Loan Document, effective immediately upon (i) the occurrence
      of
      any Event of Default under Sections 8.1(a),
      8.1(e) or 8.1(f)
      or (ii)
      the delivery of a notice by the Administrative Agent or the Required Lenders
      to
      the Borrowers during the continuance of any other Event of Default and, in
      each
      case, for as long as such Event of Default shall be continuing, the principal
      balance of all Obligations (including any Obligation that bears interest by
      reference to the rate applicable to any other Obligation) then due and payable
      shall, [subject to the Interest
      Act (Canada)],
      bear interest at a rate that is 2% per annum in excess of the interest rate
      applicable to such Obligations from time to time, payable on demand or, in
      the
      absence of demand, on the date that would otherwise be applicable.

     

     

    (d)  Limitation
      on Interest.
      [If any
      provision of this Agreement or of any of the other Loan Documents would obligate
      any Borrower or any other Loan Party to make any payment of interest or other
      amount payable to any Lender in an amount or calculated at a rate which would
      be
      prohibited by law or would result in a receipt by such Lender of interest at
      a
      criminal rate (as such terms are construed under the Criminal
      Code
      (Canada)) then, notwithstanding such provisions, such amount or rate shall
      be
      deemed to have been adjusted with retroactive effect to the maximum amount
      or
      rate of interest, as the case may be, as would not be so prohibited by law
      or so
      result in a receipt by such Lender of interest at a criminal rate, such
      adjustment to be effected, to the extent necessary, as follows: (1) firstly,
      by
      reducing the amount or rate of interest required to be paid to such Lender
      under
      this Section
      2.6,
      and (2)
      thereafter, by reducing any fees, commissions, premiums and other amounts
      required to be paid to such Lender which would constitute “interest”
for
      purposes of Section 347 of the Criminal
      Code (Canada).
      Notwithstanding the foregoing, and after giving effect to all adjustments
      contemplated thereby, if a Lender shall have received an amount in excess of
      the
      maximum permitted by that section of the Criminal
      Code
      (Canada), such Borrower shall be entitled, by notice in writing to such Lender,
      to obtain reimbursement from such Lender in an amount equal to such excess
      and,
      pending such reimbursement, such amount shall be deemed to be an amount payable
      by such Lender to such Borrower. Any amount or rate of interest referred to
      in
      this Section
      2.6(d)
      shall be
      determined in accordance with generally accepted actuarial practices and
      principles as an effective annual rate of interest over the term that the Term
      Loan remains outstanding on the assumption that any charges, fees or expenses
      that fall within the meaning of “interest”
(as
      defined in the Criminal
      Code
      (Canada)) shall, if they relate to a specific period of time, be pro-rated
      over
      that period of time and otherwise be pro-rated over the period from the Funding
      Date to the Maturity Date and, in the event of a dispute, a certificate of
      a
      Fellow of the Canadian Institute of Actuaries appointed by the Administrative
      Agent shall be conclusive for the purposes of such determination.]

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (e)  Interest
      Act
      (Canada).
      For
      purposes of disclosure pursuant to the Interest
      Act
      (Canada), the annual rates of interest or fees to which the rates of interest
      or
      fees provided in this Agreement and the other Loan Documents (and stated herein
      or therein, as applicable, to be computed on the basis of a 360 day year or
      any
      other period of time less than a calendar year) are equivalent are the rates
      so
      determined multiplied by the actual number of days in the applicable calendar
      year and divided by 360 or such other period of time, respectively.

     

     

    Section
      2.7  Fees.

     

     

    (a)  Prepayment
      Fee.
      In the
      event that all or any part of the Term Loan is prepaid or repaid for any reason,
      on or before the second anniversary of the Funding Date, the Borrowers shall
      pay
      to the Administrative Agent, an additional premium (to be paid to the Lenders
      pro rata, in accordance with the original principal amount of their respective
      Loans, as liquidated damages and compensation for the costs of being prepared
      to
      make funds available hereunder with respect to the Term Loan) in an amount
      equal
      to: (i) 2.00% of the amount which is prepaid or repaid, if such repayment or
      prepayment occurs on or at any time prior to the first anniversary of the
      Funding Date; (ii) 1.50% of the amount which is prepaid or repaid, if such
      repayment or prepayment occurs at any time after the first anniversary of the
      Funding Date but on or prior to the second anniversary of the Funding Date;
      and
      (iii) 0% thereafter.

     

    (b)
       Other
      Fees.
      The
      Borrower shall pay to the Administrative Agent, on behalf of the Lenders, the
      fees set forth in the Fee Letter as and when payment of such fees is due as
      therein set forth.

     

    (c)
       Fee
      Payment.
      All
      fees shall be paid on the dates due, in immediately available funds, to the
      Administrative Agent for the respective accounts of the Administrative Agent
      and
      other Credit Parties as provided herein. Once due, all fees shall be fully
      earned and shall not be refundable under any circumstances.

     

     

    Section
      2.8  Application
      of Payments.
      (a) Application
      of Payments.
      Unless
      otherwise provided elsewhere in any Loan Document (including the Intercreditor
      Agreement), all payments and other amounts received by the Administrative Agent
      and all funds on deposit in any Cash Collateral Account and other proceeds
      of
      the Collateral, shall be applied (i) first,
      to pay
      Obligations in respect of any cost or expense reimbursements, fees or
      indemnities then due to the Administrative Agent, (ii) second,
      to pay
      Obligations in respect of any cost or expense reimbursements, fees or
      indemnities then due to the Lenders, pro rata, in accordance with the amount
      of
      such costs, expenses, reimbursements, fees or indemnities then payable to the
      respective Lenders, (iii) third,
      to pay
      interest then due and payable in respect of the Obligations, pro rata, in
      accordance with the amount of interest payable to the respective Lenders, (iv)
      fourth,
      to
      repay the outstanding principal amounts of the Term Loan, pro rata to the
      Lenders, in accordance with the outstanding principal amount of their respective
      Loans, and (v) fifth,
      to the
      ratable payment of all other Obligations, pro rata to the members of the Lender
      Groups, in accordance with the amount of such Obligations payable
      thereto.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    Section
      2.9  Payments
      and Computations.
      (a) Procedure.
      (i) The
      Borrowers shall make each payment under any Loan Document not later than
      1:00 p.m. on the day when due to the Administrative Agent by wire transfer
      to the following account (the “Loan
      Account”)
      (or at
      such other account or by such other means to such other address as the
      Administrative Agent shall have notified the Borrowers in writing within a
      reasonable time prior to such payment) in immediately available Dollars and
      without setoff or counterclaim:

     

    ABA
      No.:
      026009593

     

    Account
      No.: 4602287049 

     

    Name
      of
      Bank: Bank of America - Boston, MA

     

    Account
      Name: 1093 OnShore Funding 

     

    Reference:
      The Bombay Company

     

    The
      Administrative Agent shall promptly thereafter cause to be distributed
      immediately available funds relating to the payment of principal, interest
      or
      fees to the Lenders, in accordance with the application of payments set forth
      in
Section 2.8.
      The
      Lenders shall make any payment under any Loan Document in immediately available
      Dollars and without setoff or counterclaim.

     

     

    (b)  Computations
      of Interests and Fees.
      All
      computations of interest and of fees shall be made by the Administrative Agent
      on the basis of a year of 360 days occurring in the period for which such
      interest and fees are payable. Each determination of an interest rate or the
      amount of a fee hereunder shall be made by the Administrative Agent and shall
      be
      conclusive, binding and final for all purposes, absent manifest
      error.

     

     

    (c)  Payment
      Dates.
      Whenever any payment hereunder shall be stated to be due on a day other than
      a
      Business Day, the due date for such payment shall be extended to the next
      succeeding Business Day without any increase in such payment as a result of
      additional interest or fees; provided,
      however,
      that
      such interest and fees shall continue accruing as a result of such extension
      of
      time.

     

     

    (d)  Advancing
      Payments.
      Unless
      the Administrative Agent shall have received notice from the Borrowers to the
      Lenders prior to the date on which any payment is due hereunder that the
      Borrowers will not make such payment in full, the Administrative Agent may
      assume that the Borrowers has made such payment in full to the Administrative
      Agent on such date and the Administrative Agent may, in reliance upon such
      assumption, cause to be distributed to each Lender on such due date an amount
      equal to the amount then due such Lender. If and to the extent that the
      Borrowers shall not have made such payment in full to the Administrative Agent,
      each Lender shall repay to the Administrative Agent on demand such amount
      distributed to such Lender together with interest thereon for each day from
      the
      date such amount is distributed to such Lender until the date such Lender repays
      such amount to the Administrative Agent.

     

     

    (e)  The
      Administrative Agent is authorized to, and in its sole discretion may, make
      Loans on behalf of each Borrower which the Administrative Agent, in its
      Permitted Discretion, deems necessary or desirable (i) to preserve or protect
      the Collateral, (ii) to enhance the likelihood of repayment of the Obligations,
      (iii) to pay any other amount due under this Agreement or the other Loan
      Documents including all fees, costs, charges, expenses and interest owing by
      the
      Borrowers under this Agreement and the other Loan Documents if and to the extent
      the Borrowers fail to pay promptly such amounts as and when due. Amounts
      advanced under this Section
      2.9(e)
      are
      payable on demand by the Administrative Agent to the Parent.

     

     

    
      
        
        

      

      
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    Section
      2.10  Evidence
      of Debt.
      (a) Records
      of Lenders.
      Each
      Lender shall maintain in accordance with its usual practice accounts evidencing
      Indebtedness of the Borrowers to such Lender resulting from the Loan of such
      Lender, including the amounts of principal and interest payable and paid to
      such
      Lender from time to time under this Agreement. In addition, each Lender having
      sold a participation in any of its Obligations, acting as agent of the Borrowers
      solely for this purpose and solely for tax purposes, shall establish and
      maintain at its address referred to in Section 10.11
      (or at
      such other address as such Lender shall notify the Parent) a record of
      ownership, in which such Lender shall register by book entry (i) the name and
      address of each such participant (and each change thereto, whether by assignment
      or otherwise) and (ii) the rights, interest or obligation of each such
      participant in any Obligation and in any right to receive any payment
      hereunder.

     

     

    (b)  Records
      of the Administrative Agent.
      The
      Administrative Agent, acting as agent of the Borrower, solely for tax purposes
      and solely with respect to the actions described in this Section 2.10,
      shall
      establish and maintain at its address referred to in Section 10.11
      (or at
      such other address as the Administrative Agent may notify the Borrowers) (i)
      a
      record of ownership (the “Register”)
      in
      which the Administrative Agent agrees to register by book entry the interests
      (including any rights to receive payment hereunder) of the Administrative Agent
      and each Lender in the Obligations payable under this Agreement, including
      each
      Loan, and any assignment of such Obligation or Loan, and (ii) accounts in
      the Register in accordance with its usual practice in which it shall record
      (A)
      the names and addresses of the relevant Lenders (and each change thereto
      pursuant to Section 2.13
      and
Section 10.2),
      (B)
      the amount of each Loan, (C) the amount of any principal or interest due and
      payable or paid, and (D) any other payment received by the Administrative Agent
      from the relevant Borrowers and its application to the Obligations.

     

     

    (c)  Registered
      Obligations.
      Notwithstanding anything to the contrary contained in this Agreement, the Loans
      (including any Notes evidencing such Loans) are registered obligations, the
      right, title and interest of the Lenders and their assignees in and to such
      Loans shall be transferable only upon notation of such transfer in the Register
      and no assignment thereof shall be effective until recorded therein. This
Section 2.9
      and
Section 10.2
      shall be
      construed so that the Loans are at all times maintained in “registered
      form”
within
      the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any
      related regulations (and any successor provisions).

     

     

    (d)  Prima
      Facie Evidence.
      The
      entries made in the Register and in the accounts maintained pursuant to
clauses
      (a)
      and
(b)
      above
      shall, to the extent permitted by applicable Requirements of Law, be prima
      facie
      evidence of the existence and amounts of the obligations recorded therein;
      provided,
      however,
      that no
      error in such account and no failure of any Lender or the Administrative Agent
      to maintain any such account shall affect the obligations of any Loan Party
      to
      repay the Term Loan in accordance with its terms. In addition, the Loan Parties,
      the Administrative Agent, and the Lenders shall treat each Person whose name
      is
      recorded in the Register as a Lender for all purposes of this Agreement.
      Information contained in the Register with respect to any Lender shall be
      available for access by the Borrowers, the Administrative Agent, or such Lender
      at any reasonable time and from time to time upon reasonable prior notice.
      No
      Lender shall, in such capacity, have access to or be otherwise permitted to
      review any information in the Register other than information with respect
      to
      such Lender unless otherwise agreed by the Administrative Agent.

     

    
      
        
        

      

      
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    (e)  Notes.
      The
      Borrowers shall execute and deliver a Note, substantially in the form of
Exhibit B,
      to each
      Lender in the original principal amount of such Lender’s Loan. Only one Note
      shall be issued to any Lender, except (i) to an existing Lender exchanging
      existing its Note to reflect changes in the Register relating to such Lender,
      in
      which case the new Notes delivered to such Lender shall be dated the date of
      the
      original Note and (ii) in the case of loss, destruction or mutilation of
      existing Notes and similar circumstances. Each Note shall only be issued as
      means to evidence the right, title or interest of a Lender or a registered
      assignee in and to the related Loan, as set forth in the Register, and in no
      event shall any Note be considered a bearer instrument or
      obligation.

     

     

    Section
      2.11  Breakage
      Costs; Increased Costs; Capital Requirements.
      (a) Breakage
      Costs.
      Without
      duplication of the compensation required under Section
      2.4(b),
      the
      Borrowers shall compensate each Lender, upon demand from such Lender to Parent
      (with copy to the Administrative Agent), for all Liabilities (including, in
      each
      case, those incurred by reason of the liquidation or reemployment of deposits
      or
      other funds acquired by such Lender to prepare to fund, to fund or to maintain
      the Loan of such Lender to the Borrowers but excluding any loss of the
      Applicable Margin on the relevant Loan) that such Lender may incur, to the
      extent any Loan is paid (whether through a scheduled, optional or mandatory
      prepayment) on a date that is not the last day of the applicable Interest
      Period. For purposes of this Section
      2.11,
      each
      Lender shall be deemed to have funded its Loan by using a matching deposit
      or
      other borrowing in the London interbank market.

     

     

    (b)  Increased
      Costs.
      If at
      any time any Lender determines that, after the date hereof, the adoption of,
      or
      any change in or in the interpretation, application or administration of, or
      compliance with, any Requirement of Law from any Governmental Authority shall
      have the effect of (i) increasing the cost to such Lender of maintaining its
      Loan, or (ii) imposing any other cost to such Lender with respect to compliance
      with its obligations under any Loan Document, then, upon demand by such Lender
      (with copy to the Administrative Agent), the Borrowers shall pay to the
      Administrative Agent for the account of such Lender amounts sufficient to
      compensate such Lender for such increased cost.

     

     

    (c)  Increased
      Capital Requirements.
      If at
      any time any Lender determines that, after the date hereof, the adoption of,
      or
      any change in or in the interpretation, application or administration of, or
      compliance with, any Requirement of Law from any Governmental Authority
      regarding capital adequacy, reserves, special deposits, compulsory loans,
      insurance charges against property of, deposits with or for the account of,
      Obligations owing to, or other credit extended or participated in by, any Lender
      or any similar requirement shall have the effect of reducing the rate of return
      on the capital of such Lender’s (or any corporation controlling such Lender ) as
      a consequence of its obligations under or with respect to any Loan Document
      to a
      level below that which, taking into account the capital adequacy policies of
      such Lender, such Lender could have achieved but for such adoption or change,
      then, upon demand from time to time by such Lender (with a copy of such demand
      to the Administrative Agent), the Borrowers shall pay to the Administrative
      Agent for the account of such Lender amounts sufficient to compensate such
      Lender for such reduction.

     

     

    
      
        
        

      

      
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    (d)  Compensation
      Certificate.
      Each
      demand for compensation under this Section 2.11
      shall be
      accompanied by a certificate of the Lender claiming such compensation, setting
      forth the amounts to be paid hereunder, which certificate shall be conclusive,
      binding and final for all purposes, absent manifest error. In determining such
      amount, such Lender may use any reasonable averaging and attribution methods.
      The Borrowers shall pay such Lender, as the case may be, the amount shown due
      on
      any such certificate within 10 days after receipt thereof.

     

     

    Section
      2.12  Taxes.

     

     

    (a)  Except
      as
      otherwise provided herein, all payments made by the Borrowers hereunder or
      under
      any Note or other Loan Document will be made free and clear of, and without
      deduction or withholding for, any present or future taxes, levies, imposts,
      duties, assessments and all interest, penalties or similar obligations with
      respect thereto, but excluding any tax imposed by any jurisdiction or by any
      political subdivision or taxing authority thereof or therein measured by or
      based on the net income or net profits of a Lender (including branch profits
      taxes) and franchise taxes imposed in lieu of net income taxes, imposed on
      any
      Lender as a result of a present or former connection between such Lender and
      the
      jurisdiction of the Governmental Authority imposing such tax or any political
      subdivision or taxing authority thereof or therein (other than such connection
      arising solely from any Lender having executed, delivered or performed its
      obligations or received a payment under, or enforced, any Loan Document) and
      all
      interest, penalties or similar liabilities with respect to such excluded taxes
      (all such non-excluded taxes, levies, imposts, duties, assessments or other
      charges being referred to collectively as “Taxes”).
      If
      any Taxes are so levied or imposed, each Borrower agrees to pay the full amount
      of such Taxes, and such additional amounts as may be necessary so that every
      payment of all amounts due under this Agreement or under any Note, including
      any
      amount paid pursuant to this Section
      2.12(a)
      after
      withholding or deduction for or on account of any Taxes, will not be less than
      the amount provided for herein; provided,
      however,
      that
      the Borrowers shall not be required to increase any such amounts, but only
      to
      the extent in excess of the amount that would have been withheld had the Lender
      delivered the forms required by clause
      (c)
      of this
Section
      2.12,
      payable
      to the Administrative Agent or any Lender that is not organized under the laws
      of the United States, if such Person fails to comply with the other requirements
      of this Section
      2.12;
      provided,
      further,
      that
      the foregoing proviso shall not apply to Taxes that are imposed on amounts
      payable to a Lender or Secured Party at the time such Lender or Secured Party
      becomes a party hereto (or designates a new lending office), except to the
      extent that such Lender or Secured Party (or its respective 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 pursuant to this Section
      2.12.
      After a
      party hereto learns of the imposition of Taxes, such party will act in good
      faith to promptly notify the other parties hereto of their respective
      obligations hereunder. The Borrower will furnish to the Administrative Agent
      as
      promptly as possible after the date the payment of any Taxes are due pursuant
      to
      applicable law original or certified copies of tax receipts evidencing such
      payment by the Borrower.

     

     

    (b)  If
      any
      Taxes shall be required by law to be deducted or withheld from or in respect
      of
      any amount payable under any Loan Document to any Secured Party (i) such amount
      shall be increased as necessary to ensure that, after all required deductions
      or
      withholdings for Taxes are made (including deductions applicable to any
      increases to any amount under this Section 2.12),
      such
      Secured Party receives the amount it would have received had no such deductions
      or withholdings been made, (ii) the relevant Loan Party shall make such
      deductions or withholdings, (iii) the relevant Loan Party shall timely pay
      the
      full amount deducted or withheld to the relevant taxing authority or other
      authority in accordance with applicable Requirements of Law and (iv) within
      30 days after such payment is made, the relevant Loan Party shall deliver to
      the
      Administrative Agent an original or certified copy of a receipt evidencing
      such
      payment; provided,
      however,
      the
      amount payable shall not be increased hereunder if the Secured Party fails
      to
      comply with the other requirements of this Section
      2.12,
      but
      only to the extent in excess of the amount that would have been withheld had
      the
      Lender delivered the forms required by clause
      (c)
      of this
Section
      2.12.

     

     

    
      
        
        

      

      
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    (c)  If
      any
      Lender claims exemption from, or a reduction of, U.S. withholding tax, such
      Lender agrees with and in favor of the Administrative Agent and the Borrowers,
      to deliver to the Administrative Agent and the Parent:

     

    (i)  if
      such
      Lender claims an exemption from withholding tax pursuant to its portfolio
      interest exception, (A) a statement of Lender, signed under penalty of perjury,
      that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the Code,
      (II) a 10% shareholder of a Borrower (within the meaning of Section 871(h)(3)(B)
      of the Code), or (III) a controlled foreign corporation related to a Borrower
      within the meaning of Section 864(d)(4) of the Code, and (B) two properly
      completed and executed copies of IRS Form W-8BEN (or successor form), before
      the
      first payment of any interest under this Agreement and at any other time
      reasonably requested by the Administrative Agent or the Parent;

     

    (ii)  if
      such
      Lender claims an exemption from, or a reduction of, withholding tax under a
      United States tax treaty, two properly completed and executed copies of IRS
      Form
      W-8BEN (or successor form) before the first payment of any interest under this
      Agreement and at any other time reasonably requested by the Administrative
      Agent
      or the Parent;

     

    (iii)  if
      such
      Lender claims that interest paid under this Agreement is exempt from United
      States withholding tax because it is effectively connected with a United States
      trade or business of such Lender, two properly completed and executed copies
      of
      IRS Form W-8ECI (or successor form) before the first payment of any interest
      is
      due under this Agreement and at any other time reasonably requested by the
      Administrative Agent or the Parent;

     

    (iv)  if
      such
      Lender claims exemption from backup withholding under the Code, two properly
      completed and executed copies of IRS Form W-9 (or successor form) before the
      first payment under this Agreement and at any other time reasonably requested
      by
      the Administrative Agent or the Parent;

     

    (v)  such
      other form or forms as may be required under the Code or other laws of the
      United States as a condition to exemption from, or reduction of, United States
      withholding tax.

     

    Such
      Lender agrees promptly to notify the Administrative Agent and the Parent of
      any
      change in circumstances which would modify or render invalid any claimed
      exemption or reduction. Each Lender having sold, assigned, granted or otherwise
      transferred a participation in any of its Obligations shall collect from such
      participant the documents described in this clause
      (c)
      and
      provide them to the Borrowers and the Administrative Agent.

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    (d)  If
      any
      Lender claims exemption from, or reduction of, withholding tax under a United
      States tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns,
      grants a participation in, or otherwise transfers all or part of the Obligations
      of the Borrowers to such Lender, such Lender agrees to notify the Administrative
      Agent of the percentage amount in which it is no longer the beneficial owner
      of
      Obligations of the Borrowers to such Lender. To the extent of such percentage
      amount, the Administrative Agent will treat such Lender’s IRS Form W-8BEN as no
      longer valid.

     

    
       

    

    (e)  If
      any
      Lender is entitled to a reduction in the applicable withholding tax, the
      Administrative Agent may withhold from any interest payment to such Lender
      an
      amount equivalent to the applicable withholding tax after taking into account
      such reduction. If the forms or other documentation required by clause
      (c)
      of this
Section
      2.12
      are not
      delivered to the Administrative Agent, then the Administrative Agent may
      withhold from any interest payment to such Lender not providing such forms
      or
      other documentation an amount equivalent to the applicable withholding tax,
      and
      neither the Administrative Agent nor any Borrower shall have a duty under this
      Section
      2.12
      to
      indemnify the Lender in respect of the Taxes so withheld to the extent that
      they
      exceed the amount that would have been withheld had the Lender delivered the
      forms required by clause
      (c)
      of this
Section
      2.12.

     

     

    (f)  The
      Borrowers shall reimburse and indemnify, within 30 days after receipt of demand
      therefor (with copy to the Administrative Agent), each Lender for all Taxes
      (including any imposed by any jurisdiction on amounts payable under this
Section 2.12)
      paid by
      such Lender and any Liabilities arising therefrom or with respect thereto,
      whether or not such Taxes were correctly or legally asserted. A certificate
      of
      the Lender (or of the Administrative Agent on behalf of such Lender) claiming
      any compensation under this clause
      (f),
      setting
      forth the amounts to be paid thereunder and delivered to the Parent with copy
      to
      the Administrative Agent shall be conclusive, binding and final for all
      purposes, absent manifest error. In determining such amount, the Administrative
      Agent and such Lender may use any reasonable averaging and attribution
      methods.

     

     

    (g)  If
      the
      IRS or any other Governmental Authority of the United States or other
      jurisdiction asserts a claim that the Administrative Agent did not properly
      withhold tax from amounts paid to or for the account of any Lender (because
      the
      appropriate form was not delivered, was not properly executed, or because such
      Lender failed to notify the Administrative Agent of a change in circumstances
      which rendered the exemption from, or reduction of, withholding tax ineffective,
      or for any other reason) such Lender shall indemnify and hold the Administrative
      Agent harmless for all amounts paid, directly or indirectly, by the
      Administrative Agent as tax or otherwise, including penalties and interest,
      and
      including any taxes imposed by any jurisdiction on the amounts payable to the
      Administrative Agent under this Section
      2.12,
      together with all costs and expenses (including attorneys fees and expenses).
      The obligation of the Lenders under this subsection shall survive the payment
      of
      all Obligations and the resignation or replacement of the Administrative Agent.
      No Borrower shall be liable under this Section
      2.12
      for
      amounts paid by Lender pursuant to this clause
      (g).

     

     

    
      
        
        

      

      
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    (h)  Mitigation.
      Any
      Lender claiming any additional amounts payable pursuant to this Section 2.12
      shall
      use its reasonable efforts (consistent in its sole discretion with its internal
      policies and Requirements of Law) to change the jurisdiction of its lending
      office if such a change would reduce any such additional amounts (or any similar
      amount that may thereafter accrue) and would not, in the sole determination
      of
      such Lender, be otherwise disadvantageous to such Lender.

     

     

    Section
      2.13  Substitution
      of Lenders.
      (a) Designation
      of a Different Lending Office.
      If any
      Lender requests compensation under clause (b) or (c) of Section
      2.11,
      or
      requires the Borrower to pay any additional amount to any Lender or any
      Governmental Authority for the account of any Lender pursuant to Section
      2.12,
      then
      such Lender shall use reasonable efforts to designate a different lending office
      for funding or booking its Loan hereunder or to assign its rights and
      obligations hereunder to another of its offices, branches or affiliates, if,
      in
      the judgment of such Lender, such designation or assignment (i) would eliminate
      or reduce amounts payable pursuant to clause
      (b)
      or
(c)
      of
Section
      2.11
      or
Section
      2.12,
      as the
      case may be, in the future and (ii) would not subject such Lender to any
      unreimbursed cost or expense and would not otherwise be disadvantageous to
      such
      Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
      incurred by any Lender in connection with any such designation or
      assignment.

     

     

    (b)  Substitution
      Right.
      In the
      event that any Lender that is not the Administrative Agent or an Affiliate
      of
      the Administrative Agent (an “Affected
      Lender”),
      (i)
      makes a claim under clause
      (b)
      or
(c)
      of
Section 2.11,
      (ii)
      makes a claim for payment pursuant to Section 2.12,
      or
      (iii) does not consent to any amendment, waiver or consent to any Loan Document
      for which the consent of the Required Lenders is obtained but that requires
      the
      consent of other Lenders, the Borrowers may either pay in full such Affected
      Lender with respect to amounts due under this Agreement with the consent of
      the
      Administrative Agent or substitute for such Affected Lender any other Lender
      or
      any Affiliate or Approved Fund of any Lender or any other Person acceptable
      (which acceptance shall not be unreasonably withheld or delayed) to the
      Administrative Agent (in each case, a “Substitute
      Lender”).

     

     

    (c)  Procedure.
      To pay
      in full the Obligations owed to such Affected Lender, the Parent shall deliver
      a
      notice to the Administrative Agent and such Affected Lender. The effectiveness
      of such payment or substitution shall be subject to the delivery to the
      Administrative Agent by the Borrowers (or, as may be applicable in the case
      of a
      substitution, by the Substitute Lender) of, in the case of payment in full
      of
      the Loan of the Affected Lender, (i) payment for the account of such Affected
      Lender, of, to the extent accrued through, and outstanding on, the effective
      date for such payment, all Obligations owing to such Affected Lender (including
      those that will be owed because of such payment and including, without
      limitation any prepayment fee payable pursuant to Section 2.7(a)), and (ii)
      in
      the case of a substitution, (A) payment of the assignment fee set forth in
      Section 10.2(c)
      and (B)
      an assumption agreement in form and substance satisfactory to the Administrative
      Agent whereby the Substitute Lender shall, among other things, agree to be
      bound
      by the terms of the Loan Documents and assume the Loan of the Affected
      Lender.

     

     

    (d)  Effectiveness.
      Upon
      satisfaction of the conditions set forth in clause
      (b)
      above,
      the Administrative Agent shall record such substitution or payment in the
      Register, whereupon (A) the Affected Lender shall be relieved of, and, if
      applicable, the Substitute Lender shall purchase and assume, all rights and
      claims under the Loan Documents with respect to such Loan, except that the
      Affected Lender shall retain such rights expressly providing that they survive
      the repayment of the Obligations, (B) the Substitute Lender, if applicable,
      shall become a “Lender”
      hereunder having a Loan in the amount of such Affected Lender’s Loan and (C) the
      Affected Lender shall execute and deliver to the Administrative Agent an
      Assignment to evidence such substitution and deliver its Note; provided,
      however,
      that
      the failure of any Affected Lender to execute any such Assignment or deliver
      such Note shall not render such sale and purchase (or the corresponding
      assignment) invalid.

     

     

    
      
        
        

      

      
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    ARTICLE
      III  

     

     

    CONDITIONS
      TO LOANS

     

     

    Section
      3.1  Conditions
      Precedent to the Term Loan.
      The
      obligation of the Lenders to make the Term Loan on the Funding Date is subject
      to the satisfaction or due waiver of each of the following conditions precedent
      on or before the Funding Date:

     

     

    (a)  Certain
      Documents.
      The
      Administrative Agent shall have received on or prior to the Funding Date each
      of
      the following, each dated as of the Closing Date or Funding Date (as determined
      by the Administrative Agent) unless otherwise agreed by the Administrative
      Agent, in form and substance satisfactory to the Administrative Agent and each
      Lender:

     

    (i)  this
      Agreement and Notes conforming to the requirements set forth in Section 2.10(e),
      duly
      executed by the Borrowers;

     

    (ii)  the
      Guaranty and Security Agreement and Canadian Security Documents, duly executed
      by each Borrower and Guarantor party thereto, together with (A) copies of UCC,
      PPSA and other appropriate search reports and of all effective prior filings
      listed therein, together with evidence of the termination of such prior filings
      and other documents with respect to the priority of the security interest of
      the
      Administrative Agent in the Collateral, in each case as may be reasonably
      requested by the Administrative Agent, and (B) all Control Agreements that,
      in
      the reasonable judgment of the Administrative Agent, are required for the Loan
      Parties to comply with the Loan Documents as of the Funding Date, each duly
      executed by, in addition to the applicable Loan Party, the applicable financial
      institution;

     

    (iii)  the
      Pledge Agreement, duly executed by each applicable Borrower, together with
      (A)
      the original certificates representing the Stock of any Borrower or Subsidiary
      pursuant to a Pledge Agreement and (B) a Stock Power (as such term is defined
      in
      the Pledge Agreement) executed in blank for each certificate of Stock pledged
      pursuant to a Pledge Agreement;

     

    (iv)  the
      IP
      Security Agreements, duly executed by the appropriate Borrowers, together with
      duly executed exhibits attached thereto for filing with the U.S. Trademark
      Office and the U.S. Copyright Office, as appropriate;

     

    (v)  The
      Intercreditor Agreement, duly executed by the appropriate Borrowers and the
      First Lien Agent;

     

    (vi)  a
      Mortgage for the Eligible Real Property, duly executed by the applicable
      Borrowers, together with all Mortgage Supporting Documents relating
      thereto;

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (vii)  duly
      executed favorable opinions of counsel to the Loan Parties from (a) Michael
      J.
      Veitenheimer, general counsel to the Parent, (b) Thompson & Knight LLP,
      special U.S. counsel to the Loan Parties, and (c) Fraser
      Milner Casgrain LLP,
      special
      Canadian counsel to the Loan Parties, each addressed to the Administrative
      Agent
      and the Lenders and addressing such matters as the Administrative Agent may
      reasonably request;

     

    (viii)  a
      copy of
      each Governing Document of each Loan Party that is on file with any Governmental
      Authority in any jurisdiction, certified as of a recent date by such
      Governmental Authority, together with, if applicable, certificates attesting
      to
      the good standing of such Loan Party in such jurisdiction and each other
      jurisdiction where such Loan Party is qualified to do business as a foreign
      entity or where such qualification is necessary (and, if appropriate in any
      such
      jurisdiction, related tax certificates);

     

    (ix)  a
      certificate of the secretary or other Responsible Officer of each Loan Party
      in
      charge of maintaining Books and records of such Loan Party certifying as to
      (A)
      the names and signatures of each officer of such Loan Party authorized to
      execute and deliver any Loan Document, (B) the Governing Documents of such
      Loan
      Party attached to such certificate are complete and correct copies of such
      Governing Documents as in effect on the date of such certification (or, for
      any
      such Governing Document delivered pursuant to clause
      (viii)
      above,
      that there have been no changes from such Governing Document so delivered)
      and
      (C) the resolutions of such Loan Party’s board of directors or other appropriate
      governing body approving and authorizing the execution, delivery and performance
      of each Loan Document to which such Loan Party is a party;

     

    (x)  a
      certificate of a Responsible Officer of the Parent to the effect that (A) each
      condition set forth in Section 3.1(g)
      has been
      satisfied and (B) each Loan Parties is, and after giving effect to the Term
      Loan and the application of the proceeds thereof in accordance with Section 6.22
      and the
      payment of all estimated legal, accounting and other fees and expenses related
      hereto, shall be, Solvent;

     

    (xi)  insurance
      certificates in form and substance satisfactory to the Administrative Agent
      demonstrating that the insurance policies required by Section 6.4
      are in
      full force and effect and have all endorsements required by such Section 6.4;

     

    (xii)  the
      Corporate Chart;

     

    (xiii)  the
      Perfection Certificate;

     

    (xiv)  a
      Business Plan and Projections for Fiscal Year 2007, in each case in form and
      substance acceptable to the Administrative Agent;

     

    (xv)  an
      inventory appraisal and collateral audit in form and substance acceptable to
      the
      Administrative Agent, prepared by such auditors as are reasonably acceptable
      to
      the Administrative Agent;

     

    (xvi)  such
      other documents and information as any Lender through the Administrative Agent
      may reasonably request.

     

     

    
      
        
        

      

      
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    (b)  Fees
      and Expenses.
      There
      shall have been paid to the Administrative Agent, for the account of the
      Administrative Agent, its Related Persons or any Lender, as the case may be,
      all
      fees and all reimbursements of costs or expenses, in each case due and payable
      under any Loan Document on or before the Funding Date.

     

     

    (c)  Consents.
      Each
      Loan Party shall have received all consents and authorizations required pursuant
      to any material Contractual Obligation with any other Person and shall have
      obtained all Permits of, and effected all notices to and filings with, any
      Governmental Authority, in each case, as may be necessary in connection with
      the
      consummation of the transactions contemplated in any Loan Document or Related
      Document (including the Related Transactions).

     

     

    (d)  Cash
      Management.
      The
      Administrative Agent shall have received evidence that, as of the Funding Date,
      the procedures with respect to cash management required by the Loan Documents
      have been established and are currently being maintained by each Loan Party,
      together with Control Agreements executed by such Loan Party in connection
      therewith.

     

     

    (e)  Initial
      Appraisals.
      The
      Administrative Agent shall have received appraisals, conducted by appraisers
      retained by the Administrative Agent, of all inventory of the Borrowers and
      the
      Eligible Real Property, each in form and substance satisfactory to the
      Administrative Agent, and shall be satisfied with any review an/or valuation
      of
      furniture, fixtures and equipment of the Borrowers that may be requested from
      the Borrowers or conducted by the Administrative Agent or on its
      behalf.

     

     

    (f)  Borrowing
      Request.
      The
      Administrative Agent shall have received a duly executed borrowing request
      from
      the Borrowers addressed to the Administrative Agent, on behalf of itself and
      the
      Lenders, with respect to the disbursement of the proceeds of the Term Loan
      on
      the Funding Date.

     

     

    (g)  Representations
      and Warranties; No Defaults.
      The
      representations and warranties set forth in any Loan Document shall be true
      and
      correct in all material respects on and as of such date or, to the extent such
      representations and warranties expressly relate to an earlier date, on and
      as of
      such earlier date, and no Default or Event of Default shall be
      continuing.

     

     

    ARTICLE
      IV  

     

     

    REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce
      the Lenders and the Administrative Agent to enter into the Loan Documents,
      each
      Borrower (and, to the extent set forth in any other Loan Document, each other
      Loan Party) represents and warrants, in all material respects, to each of them
      each of the following on and as of the Closing Date and the Funding
      Date:

     

     

    Section
      4.1  No
      Encumbrances.
      Each
      Loan Party (a) has good and valid title to its personal property assets and
      good
      and marketable title to its owned Real Property (subject to exceptions that
      do
      not, in the aggregate, materially impair the use of the personal property and
      Real Property of Borrowers taken as a whole), and in the case of the Collateral,
      free and clear of Liens except for Permitted Liens. All other information set
      forth on the Perfection Certificate is accurate and complete. There has been
      no
      change in any of such information since the date on which the Perfection
      Certificate was signed by Borrowers.

     

    
      
        
        

      

      
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    Section
      4.2  Accounts.
      The
      Accounts are bona fide existing payment obligations of Account Debtors created
      by the sale and delivery of inventory or the rendition of services to such
      Account Debtors in the ordinary course of Borrowers’ business, owed to Borrowers
      without any known defenses, disputes, offsets, counterclaims, or rights of
      return or cancellation (other than contingent customer rights of return arising
      in the ordinary course of business).

     

     

    Section
      4.3  Inventory.
      All
      inventory is of good and merchantable quality, free from known defects (other
      than saleable clearance goods arising in the ordinary course of business
      consistent with past practice).

     

     

    Section
      4.4  Location
      of Inventory.
      The
      inventory of each Loan Party is stored or located only at, or in-transit
      between, the locations identified on Schedule
      4(a)
      of the
      Perfection Certificate or is stored with a bailee, warehouseman, or similar
      party, subject to a Bailee Acknowledgement or Collateral Access Agreement,
      except as otherwise permitted pursuant to Section
      6.5
      from
      September 1 to December 31 of any Fiscal Year.

     

     

    Section
      4.5  Inventory
      Records.
      Each
      Borrower keeps correct and accurate records itemizing and describing the type,
      quality, and quantity of its and its Subsidiaries’ inventory and the book value
      thereof.

     

     

    Section
      4.6  Name,
      Jurisdiction of Incorporation; Location of Chief Executive Office; FEIN;
      Organizational ID Number.
      (a)
      The
      legal name and jurisdiction of organization of each Loan Party is set forth
      on
      the Perfection Certificate.

     

     

    (b)  The
      chief
      executive office of each Loan Party is located at the address indicated on
      the
      Perfection Certificate.

     

     

    (c)  Each
      Loan
      Party’s FEIN and organizational identification number, if any, are identified on
      the Perfection Certificate.

     

     

    (d)  Each
      Borrower has previously delivered to the Administrative Agent a Perfection
      Certificate. Each Borrower represents and warrants to the Lender Group that:
      (i)
      such Borrower’s exact legal name is that indicated on the applicable Perfection
      Certificate and on the signature page hereof; (ii) such Borrower is an
      organization of the type, and is organized in the jurisdiction, set forth in
      the
      applicable Perfection Certificate; (iii) the applicable Perfection Certificate
      accurately sets forth such Borrower’s organizational identification number or
      accurately states that such Borrower has none; (iv) the applicable Perfection
      Certificate accurately sets forth such Borrower’s place of business or, if more
      than one, its chief executive office, as well as such Borrower’s mailing
      address, if different; (v) all other information set forth on the applicable
      Perfection Certificate pertaining to such Borrower is accurate and complete
      as
      of the date hereof; and (vi) there has been no change in any of such information
      since the date on which the applicable Perfection Certificate was signed by
      such
      Borrower.

     

     

    Section
      4.7  Due
      Organization and Qualification; Subsidiaries.
      (a)
      Each
      Borrower (i) is duly organized and existing and in good standing under the
      laws
      of the jurisdiction of its organization and (ii) has all requisite corporate
      (or
      the equivalent company) power to own its property and conduct its business
      as
      now conducted and as presently contemplated and (iii) is qualified to do
      business in any state or province where the failure to be so qualified
      reasonably could be expected to cause a Material Adverse Effect.

     

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    (b)  Set
      forth
      on Schedule
      4.7
      (as such
      Schedule may be updated with the written consent of the Administrative Agent),
      is a complete and accurate description of the authorized capital Stock of each
      Borrower, by class, and, as of the Closing Date a description of the number
      of
      shares of each such class that are issued and outstanding and, other than with
      respect to Parent, the owner of such Stock. Other than as described on
Schedule
      4.7
      and
      except for employee and director stock options and deferred director units
      there
      are no subscriptions, options, warrants, or calls relating to any shares of
      each
      Borrower’s capital Stock, including any right of conversion or exchange under
      any outstanding security or other instrument. No Borrower is subject to any
      obligation (contingent or otherwise) to repurchase or otherwise acquire or
      retire any shares of its capital Stock or any security convertible into or
      exchangeable for any of its capital Stock.

     

     

    (c)  Set
      forth
      on Schedule
      4.7
      (as such
      Schedule may be updated with the written consent of the Administrative Agent),
      is a complete and accurate list of each Borrower’s direct and indirect
      Subsidiaries, showing: (i) the jurisdiction of their organization; (ii) the
      number of shares of each class of common and preferred Stock authorized for
      each
      of such Subsidiaries; and (iii) the number and the percentage of the outstanding
      shares of each such class owned directly or indirectly by the applicable
      Borrower. All of the outstanding capital Stock of each such Subsidiary has
      been
      validly issued and is fully paid and non-assessable.

     

     

    (d)  Except
      as
      set forth on Schedule
      4.7,
      there
      are no subscriptions, options, warrants, or calls relating to any shares of
      any
      Borrower’s Subsidiaries’ capital Stock, including any right of conversion or
      exchange under any outstanding security or other instrument. No Loan Party
      is
      subject to any obligation (contingent or otherwise) to repurchase or otherwise
      acquire or retire any shares of any Borrower’s Subsidiaries’ capital Stock or
      any security convertible into or exchangeable for any such capital
      Stock.

     

     

    Section
      4.8  Due
      Authorization; No Conflict.
      (a)
      As to
      each Borrower, the execution, delivery, and performance by such Borrower of
      this
      Agreement and the other Loan Documents to which it is a party and the
      transactions contemplated hereby and thereby are within the corporate (or the
      equivalent) authority of such Borrower and have been duly authorized by all
      necessary action on the part of such Borrower.

     

     

    (b)  As
      to
      each Borrower, the execution, delivery, and performance by such Borrower of
      this
      Agreement and the other Loan Documents to which it is a party do not and will
      not (i) violate any provision of federal, state, or local, statute, law, rule
      or
      regulation applicable to any Borrower or any order, judgment, decree, writ,
      injunction, license or permit of any court or other Governmental Authority
      binding on any Borrower unless such violation could not reasonably be expected
      to cause a Material Adverse Effect, (ii) violate any provision of the Governing
      Documents of any Borrower or require any approval of any Borrower’s interest
      holder, (iii) conflict with, result in a breach of, or constitute (with due
      notice or lapse of time or both) a default under any material Contractual
      Obligation of any Borrower unless such violation could not reasonably be
      expected to cause a Material Adverse Effect or the termination of such contract,
      (iv) result in or require the creation or imposition of any Lien of any nature
      whatsoever upon any properties or assets of any Borrower, other than Permitted
      Liens, or (v) require any approval of any Person under any material Contractual
      Obligation of any Borrower, other than consents or approvals that have been
      obtained and that are still in force and effect.

     

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    (c)  Other
      than the filing of UCC financing statements, PPSA registration statements and
      registrations in Quebec, Canada, the execution, delivery, and performance by
      each Borrower of this Agreement and the other Loan Documents to which such
      Borrower is a party do not and will not require any registration with, consent,
      or approval of, or notice to, or other action with or by, any Governmental
      Authority, other than consents or approvals that have been obtained and that
      are
      still in force and effect.

     

     

    (d)  As
      to
      each Borrower, this Agreement and the other Loan Documents to which such
      Borrower is a party, and all other documents contemplated hereby and thereby,
      when executed and delivered by such Borrower will be the legally valid and
      binding obligations of such Borrower, enforceable against such Borrower in
      accordance with their respective terms, except as enforcement may be limited
      by
      equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
      or similar laws relating to or limiting creditors’ rights
      generally.

     

     

    (e)  The
      Administrative Agent’s Liens are validly created, perfected Liens, subject only
      to Permitted Liens.

     

     

    Section
      4.9  Litigation.
      (a)
      Other
      than those matters disclosed on Schedule
      4.9
      and
      immaterial matters where the amount in controversy is less than $250,000, there
      are no actions, suits, or proceedings or investigations pending or, to the
      best
      knowledge of Borrowers, threatened against any Loan Party, except for (a)
      matters that are fully covered by insurance (subject to customary deductibles),
      and (b) matters arising after the Closing Date, that could not reasonably be
      expected to result in a Material Adverse Effect.

     

     

    (b)  There
      are
      no actions, suits, proceedings or investigations pending or, to the best
      knowledge of the Borrowers, threatened against any Loan Party that question
      the
      validity or enforceability of this Agreement or any other Loan Document or
      any
      action taken or to be taken by the Borrowers in connection
      therewith.

     

     

    Section
      4.10  No
      Material Adverse Effect.
      All
      financial statements relating to any Loan Party that have been delivered by
      the
      Borrowers to the Lender Group have been prepared in accordance with GAAP
      (except, in the case of unaudited financial statements, for the lack of
      footnotes and being subject to normal year-end audit adjustments not material
      in
      amount) and present fairly in all material respects, each Loan Party’s financial
      condition as of the date thereof and results of operations for the period then
      ended. There has not been a Material Adverse Effect with respect to any Loan
      Party since the date of the latest financial statements submitted to the Lender
      Group on or before the Closing Date.

     

     

    Section
      4.11  Fraudulent
      Transfer.
      (a)
      The
      Borrowers, taken as a whole, are Solvent. The Loan Parties, taken as a whole,
      are Solvent.

     

     

    (b)  No
      transfer of property is being made by any Loan Party and no obligation is being
      incurred by any Loan Party in connection with the transactions contemplated
      by
      this Agreement or the other Loan Documents with the intent to hinder, delay,
      or
      defraud either present or future creditors of any such Loan Party.

     

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    Section
      4.12  Canadian
      Benefit Plans and Canadian Pension Plans.
      Bombay
      Canada does not maintain or contribute to any Canadian Benefit Plan or Canadian
      Pension Plan.

     

     

    Section
      4.13  ERISA.
      None of
      the Loan Parties or any of their ERISA Affiliates maintains or contributes,
      or
      in the prior six years has maintained or contributed, to any Benefit
      Plan.

     

     

    Section
      4.14  Environmental
      Condition.
      Except
      as set forth on Schedule
      4.14
      and
      except for other matters that could not reasonably be expected to result in
      a
      Material Adverse Effect, (a) to the Borrowers’ knowledge, none of the Loan
      Parties’ properties or assets has ever been used by any Loan Party, or by
      previous owners or operators in the disposal of, or to produce, store, handle,
      treat, release, or transport, any Hazardous Materials, where such production,
      storage, handling, treatment, release or transport was in violation of any
      applicable Environmental Law, (b) to the Borrowers’ knowledge, none of the Loan
      Parties’ owned Real Property has ever been designated or identified in any
      manner pursuant to any environmental protection statute as a Hazardous Materials
      disposal site, (c) no Loan Party has received notice that a Lien arising under
      any Environmental Law has attached to any revenues or to any Real Property
      owned
      or operated by any Loan Party, and (d) no Loan Party has received a summons,
      citation, notice, or directive from the Environmental Protection Agency or
      any
      other federal, state or provincial governmental agency concerning any action
      or
      omission by any Loan Party resulting in the releasing or disposing of Hazardous
      Materials into the environment in violation of any applicable Environmental
      Law.

     

     

    Section
      4.15  Brokerage
      Fees.
      No Loan
      Party has utilized the services of any broker or finder in connection with
      obtaining financing from the Lender Group under this Agreement and no brokerage
      commission or finders fee is payable by any Loan Party in connection
      herewith.

     

     

    Section
      4.16  Intellectual
      Property.
      Each
      Loan Party owns, or holds licenses in, all Intellectual Property that is
      necessary to the conduct of its business as currently conducted, except where
      the failure to do so, in the aggregate, would not result in a Material Adverse
      Effect.

     

     

    Section
      4.17  Leases.
      Except
      where the failure to do so would not cause a Material Adverse Effect, the Loan
      Parties enjoy peaceful and undisturbed possession under all leases (including
      Capital Leases) material to their business and to which they are a party or
      under which they are operating. Except to the extent that such default would
      not
      cause a Material Adverse Effect, each of such leases is valid and subsisting
      and
      no material default by any Loan Party exists under such lease.

     

     

    Section
      4.18  Deposit
      Accounts.
      Set
      forth on Schedule
      8
      to the
      Perfection Certificate are all deposit accounts and securities accounts of
      each
      Loan Party, including, with respect to each bank or securities intermediary
      (i)
      the name and address of such Person, (ii) the account numbers of the deposit
      accounts or securities accounts maintained with such Person and (iii) whether
      such account is a “Store Account”, a “Concentration Account” or another account
      and if such account is another account, setting forth the purpose of such
      account.

     

     

    Section
      4.19  Complete
      Disclosure.
      All
      factual information (taken as a whole) furnished by or on behalf of any Loan
      Party in writing to the Administrative Agent or any Lender (including all
      information contained in the Schedules hereto or in the other Loan Documents)
      for purposes of or in connection with this Agreement, the other Loan Documents
      or any transaction contemplated herein or therein is, and all other such factual
      information (taken as a whole) hereafter furnished by or on behalf of any Loan
      Party in writing to the Administrative Agent or any Lender will be, true and
      accurate in all material respects on the date as of which such information
      is
      dated or certified and not incomplete by omitting to state any fact necessary
      to
      make such information (taken as a whole) not misleading in any material respect
      (other than industry-wide risks normally associated with the types of businesses
      conducted by the Loan Partys) at such time in light of the circumstances under
      which such information was provided. On the Closing Date and the Funding Date,
      the Projections represent, and as of the date on which any other Projections
      are
      delivered to the Administrative Agent, such additional Projections represent
      the
      Borrowers’ good faith reasonable estimate of the Loan Parties’ future
      performance for the periods covered thereby it being understood that such
      Projections as to future events are not to be viewed as facts and that actual
      results during the period or period covered by Projections may differ from
      the
      projected results and no assurance can be given that the Projections will be
      realized.

     

    
      
        
        

      

      
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    Section
      4.20  Credit
      Card Receipts.
      Schedule
      4.20
      sets
      forth each of the Borrowers’ Credit Card Issuers, Credit Card Processors and all
      arrangements to which the Borrowers are a party with respect to the payment
      to
      the Borrowers of the proceeds of all credit card charges for sales by the
      Borrowers, including a description of each Credit Card Agreement.

     

     

    Section
      4.21  Holding
      Company and Investment Company Acts.
      No Loan
      Party is a “holding
      company”,
      or a
“subsidiary
      company”
of
      a
“holding
      company,
      or an
“affiliate”
of
      a
“holding
      company”,
      as
      such terms are defined in the Public Utility Holding Company Act of 1935; nor
      is
      it an “investment
      company”,
      or an
“affiliated
      company”
or
      a
“principal
      underwriter”
of
      an
“investment
      company”,
      as
      such terms are defined in the Investment Company Act of 1940.

     

     

    Section
      4.22  Absence
      of Financing Statements, etc.
      Except
      with respect to Permitted Liens, there is no financing statement, security
      agreement, chattel mortgage, real estate mortgage or other document filed or
      recorded with any filing records, registry or other public office, that purports
      to cover, affect or give notice of any present or possible future Lien on any
      Collateral.

     

     

    Section
      4.23  Certain
      Transactions.
      None of
      the officers, directors, or employees of any Loan Party is presently a party
      to
      any transaction with any Loan Party (other than for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or such employee or, to the knowledge of the Borrowers, any
      corporation, partnership, trust or other entity in which any officer, director,
      or any such employee has a substantial interest or is an officer, director,
      trustee or partner.

     

     

    Section
      4.24  Regulations
      U and X.
      No Loan
      Party is engaged in principally, or as one of its important activities in,
      and
      no portion of the proceeds of any Loan is to be used for the purpose of
      purchasing or carrying any “margin
      security”
or
      “margin
      stock”
as
      such
      terms are used in Regulations U and X of the Board of Governors of the Federal
      Reserve System, 12 C.F.R. Parts 221 and 224.

     

     

    Section
      4.25  Labor
      Relations.
      No
      Borrower has been or is presently a party to any collective bargaining or other
      labor contract. No event has occurred or circumstance exists which is likely
      to
      provide the basis for any work stoppage or other labor dispute. The Borrowers
      have complied in all material respects with all applicable laws, decrees,
      orders, judgments, statutes, laws, rules and regulations relating to employment,
      equal employment opportunity, nondiscrimination, immigration, wages, hours,
      benefits, collective bargaining, the payment of social security and similar
      taxes, occupational safety and health, and plant closing including all
      applicable provisions of the federal Fair Labor Standards Act, as amended.
      There
      is not presently pending and, to the Borrowers’ knowledge, there is not
      threatened any of the following:

     

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    (a)  any
      strike, slowdown, picketing, or work stoppage;

     

     

    (b)  any
      proceeding against or affecting the Borrowers relating to the alleged violation
      of any applicable law, decree, order, judgment, statute, law, rule or regulation
      pertaining to labor relations or before National Labor Relations Board, the
      Equal Employment Opportunity Commission, or any comparable governmental body,
      organizational activity, or other labor or employment dispute against or
      affecting the Borrowers, which, if determined adversely to the Borrowers would
      cause a Material Adverse Effect;

     

     

    (c)  any
      lockout of any employees by the Borrowers (and no such action is contemplated
      by
      the Borrowers); or

     

     

    (d)  any
      application for the certification of a collective bargaining agent.

     

     

    Section
      4.26  Indebtedness.
      Set
      forth on Schedule
      7.1
      is a
      true and complete list of all Indebtedness of each Borrower outstanding
      immediately prior to the Closing Date that is to remain outstanding after the
      Funding Date and such Schedule accurately reflects the aggregate principal
      amount of such Indebtedness.

     

     

    Section
      4.27  Payment
      of Taxes.
      All tax
      returns, reports and declarations required to be filed by the Borrowers by
      any
      jurisdiction to which any of them is subject have been timely filed, except
      where the failure to so file could not reasonably be expected to have a Material
      Adverse Effect. All taxes and other governmental assessments and charges upon
      the Borrowers or their properties, assets, income and franchises (including
      real
      property taxes and payroll taxes) but not subject of a Permitted Protest have
      been paid prior to delinquency except where the failure to so pay could not
      reasonably be expected to have a Material Adverse Effect. The Borrowers have
      set
      aside on their books provisions reasonably adequate for the payment of all
      taxes
      for periods subsequent to the periods to which such returns, reports or
      declarations apply. There are no unpaid taxes in any material amount claimed
      to
      be due by the taxing authority of any jurisdiction, and none of the officers
      of
      any Borrower know of any basis for any such claim. The Borrowers do not intend
      to treat the Term Loan and/or related transactions hereunder as being a
“reportable transaction” (within the meaning of Treasury Regulation Section
      1.6011-4).

     

     

    Section
      4.28  Foreign
      Assets Control Regulations, Etc.
      None of
      the requesting or borrowing of the Term Loan or the use of the proceeds of
      any
      thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as
      amended) (the “Trading
      With the Enemy Act”)
      or any
      of the foreign assets control regulations of the United States Treasury
      Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign
      Assets Control Regulations”)
      or any
      enabling legislation or executive order relating thereto (which for the
      avoidance of doubt shall include, but shall not be limited to (a) Executive
      Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
      With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
      Reg.
      49079 (2001)) (the “Executive
      Order”)
      and
      (b) the Uniting and Strengthening America by Providing Appropriate Tools
      Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)).
      Furthermore, none of Loan Parties or any of their Affiliates (a) is or will
      become a “blocked person” as described in the Executive Order, the Trading With
      the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will
      engage in any dealings or transactions, or be otherwise associated, with any
      such “blocked person.”

     

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    Section
      4.29  No
      Burdensome Obligations; No Defaults.
      No Loan
      Party is a party to any Contractual Obligation, no Loan Party has Governing
      Documents containing obligations, and, to the knowledge of any Loan Party,
      there
      are no applicable Requirements of Law, in each case the compliance with which
      would have, in the aggregate, a Material Adverse Effect. No Loan Party (and,
      to
      the knowledge of each Loan Party, no other party thereto) is in default under
      or
      with respect to any Contractual Obligation of any Loan Party, other than those
      that would not, in the aggregate, have a Material Adverse Effect.

     

     

    ARTICLE
      V  

     

     

    REPORTING
      COVENANTS

     

    Each
      Borrower (and, to the extent set forth in any other Loan Document, each other
      Loan Party) agrees with the Lenders and the Administrative Agent to each of
      the
      following, as long as any Obligation remains outstanding, the Borrowers shall
      and shall cause each of their respective Subsidiaries to do all of the
      following:

     

     

    Section
      5.1  Accounting
      System; Access.
      Maintain a system of accounting that enables the Borrowers to produce financial
      statements in accordance with GAAP and maintain records pertaining to the
      Collateral that contain information as from time to time reasonably may be
      requested by the Administrative Agent. The Borrowers also shall keep an
      inventory reporting system that shows all additions, sales, claims, returns,
      and
      allowances with respect to the inventory. The Borrowers shall further
(a)
      maintain
      adequate accounts and reserves for all taxes (including income taxes),
      depreciation, depletion, obsolescence and amortization of its properties and
      the
      properties of its Subsidiaries, contingencies and other reserves and
(b)
      at all
      times engage independent certified public accountants satisfactory to the
      Administrative Agent as the independent certified public accountants of the
      Parent and its Subsidiaries and will not permit more than 90 days to elapse
      between the cessation of such firm’s (or any successor firm’s) engagement as the
      independent certified public accountants of the Parent and its Subsidiaries
      and
      the appointment in such capacity of a successor firm registered with the Public
      Company Accounting Oversight Board.

     

     

    Section
      5.2  Collateral
      Reporting.

     

     

    (a)  Provide
      the Administrative Agent (and if so requested by the Administrative Agent,
      with
      copies for each Lender) the documents set forth on Schedule
      5.2
      in
      accordance with the delivery schedule set forth thereon; and

     

     

    (b)  concurrently
      with each delivery of a Compliance Certificate pursuant to Section
      5.3(a)(iii),
      provide
      the Administrative Agent (and if so requested by the Administrative Agent,
      with
      copies for each Lender) with an updated Perfection Certificate illustrating
      all
      changes to the information set forth in the Perfection Certificate previously
      delivered pursuant to Section
      3.1(a)(xiii)
      or this
Section
      5.2(b)
      (including such updates and amendments required by Section
      4.4,
      4.6,
      4.18,
      6.5
      or
6.18
      of this
      Agreement or the Guaranty and Security Agreement or any other provision of
      any
      Loan Document, except if such information is otherwise required to be provided
      under this Agreement); provided,
      that
      delivery of an updated Perfection Certificate shall not cure any Default or
      Event of Default occurring as a result of failure of the Loan Parties to give
      any prior notice or obtain any consent required under this
      Agreement.

     

     

    
      
        
        

      

      
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    Section
      5.3  Financial
      Statements, Reports, Business Plan, Certificates.
      Deliver
      to the Administrative Agent, with copies to each Lender:

     

     

    (a)  as
      soon
      as available, but in any event within 45 days after the end of each of the
      11
      Fiscal Periods during each of Parent’s Fiscal Years,

     

    (i)  a
      company
      prepared consolidated balance sheet, income statement, and statement of cash
      flow covering Parent’s and its Subsidiaries’ operations during such period, in
      each case setting forth in comparative form the figures for the corresponding
      period in the prior Fiscal Year;

     

    (ii)  a
      certificate signed by the chief financial officer of Parent to the effect
      that:

     

    (A)  the
      financial statements delivered hereunder have been prepared in accordance with
      GAAP (except for the lack of footnotes and being subject to year-end audit
      adjustments) and fairly present in all material respects the financial condition
      of Parent and its Subsidiaries;

     

    (B)  the
      representations and warranties of the Borrowers contained in this Agreement
      and
      the other Loan Documents are true and correct in all material respects on and
      as
      of the date of such certificate, as though made on and as of such date (except
      to the extent that such representations and warranties relate solely to an
      earlier date); and

     

    (C)  there
      does not exist any condition or event that constitutes a Default or Event of
      Default (or, to the extent of any non-compliance, describing such non-compliance
      as to which he or she may have knowledge and what action the Borrowers have
      taken, are taking, or propose to take with respect thereto).

     

    (iii)  a
      Compliance Certificate.

     

     

    (b)  As
      soon
      as available, but in any event within 90 days after the end of each of Parent’s
      Fiscal Years, consolidated financial statements of Parent and its Subsidiaries
      for each such Fiscal Year, audited by independent certified public accountants
      reasonably acceptable to the Administrative Agent and certified by such
      accountants to have been prepared in accordance with GAAP (such audited
      financial statements to include a balance sheet, income statement, and statement
      of cash flow and, a copy of any “final” management letter delivered to Parent,
      its board of directors or any committees thereof), together with a certificate
      signed by the chief financial officer of Parent certifying as to the matters
      set
      forth in Section
      5.3(a)(ii)(A)-(C)
      and a
      Compliance Certificate;

     

     

    (c)  as
      soon
      as available, but in any event within 90 days after the end of each of Parent’s
      Fiscal Years, copies of the Borrowers’ Projections, in form and substance
      (including as to scope and underlying assumptions) satisfactory to the
      Administrative Agent, in its sole discretion, for the forthcoming Fiscal Year,
      on a month by month basis, certified by the chief financial officer of Parent
      as
      being such officer’s good faith reasonable estimate of the financial performance
      of Parent and its Subsidiaries during the period covered thereby, it being
      understood that such Projections as to future events are not to be viewed as
      facts and that actual results during the period or periods covered by any
      Projections may differ from the projected results and no assurance can be given
      that the Projections will be realized;

     

     

    
      
        
        

      

      
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    (d)  if
      and
      when filed by any Borrower,

     

    (i)  Form
      10-Q
      quarterly reports, Form 10-K annual reports, and Form 8-K current
      reports;

     

    (ii)  any
      other
      filings made by any Borrower with the SEC;

     

    (iii)  upon
      request by the Administrative Agent, in its Permitted Discretion, copies of
      the
      Borrowers’ federal income tax returns, and any amendments thereto, filed with
      the Internal Revenue Service; and

     

    (iv)  any
      other
      information that is provided by Parent to its shareholders or by the Borrowers
      to the First Lien Agent generally;

     

    provided,
      that
      for purposes of this clause (d), any information to be delivered hereunder
      shall
      be deemed to have been delivered when posted on the Parent’s website or
      otherwise made available on the website of the SEC;

     

    (e)  as
      soon
      as a Borrower has knowledge of any event or condition that constitutes a Default
      or an Event of Default, notice thereof together with a reasonably detailed
      description thereof and a statement of the curative action that the Borrowers
      propose to take with respect thereto;

     

     

    (f)  promptly
      after the commencement thereof, but in any event within 10 Business Days after
      the service of process with respect thereto on any Loan Party, notice of all
      actions, suits, or proceedings brought by or against any Loan Party before
      any
      Governmental Authority which, if determined adversely to such Loan Party,
      reasonably could be expected to result in a Material Adverse
      Effect;

     

     

    (g)  upon
      the
      request of the Administrative Agent in its Permitted Discretion, any other
      report reasonably requested relating to the financial condition of any Loan
      Party; provided,
      that
      such reports shall not be overly burdensome for any Borrower to prepare;
      and

     

     

    (h)  as
      part
      of the Compliance Certificate delivered pursuant to clause (a)(iii) above,
      each
      in form and substance satisfactory to the Administrative Agent, a certificate
      by
      the Responsible Officer of the Parent certifying that (i) the Corporate Chart
      attached thereto (or the last Corporate Chart delivered pursuant to this
clause
      (h))
      is
      correct and complete as of the date of such Compliance Certificate, (ii) the
      Loan Parties have delivered all documents (including an updated Perfection
      Certificate as to locations of Collateral) they are required to deliver pursuant
      to any Loan Document on or prior to the date of delivery of such Compliance
      Certificate and (iii) complete and correct copies of all documents
      modifying any term of any Governing Document of any Loan Party or any Subsidiary
      or joint venture thereof on or prior to the date of delivery of such Compliance
      Certificate have been delivered to the Administrative Agent or are attached
      to
      such certificate.

     

    
      
        
        

      

      
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    In
      addition to the financial statements referred to above, the Borrowers agree
      to
      deliver financial statements prepared on both a consolidated and consolidating
      basis; provided,
      that
      (a) only Parent’s consolidated financial statements shall be audited, (b)
      consolidating financial statements shall be prepared without footnotes, and
      (c)
      the Borrowers shall only be required to deliver balance sheets and income
      statements on a consolidating basis. Parent agrees to cooperate with the
      Administrative Agent to allow the Administrative Agent to consult with its
      independent certified public accountants if the Administrative Agent reasonably
      requests the right to do so (and the Administrative Agent shall notify Parent
      as
      to the timing of such consultation and permit Parent to be present thereat
      or to
      otherwise participate therein) and that, in such connection, their independent
      certified public accountants are authorized to communicate with the
      Administrative Agent and to release to the Administrative Agent whatever
      financial information concerning any Loan Party that the Administrative Agent
      reasonably may request.

     

     

    Section
      5.4  Right
      to Inspect; Inventories, Appraisals Audits and Assessments.

     

     

    (a)  The
      Administrative Agent (through any of its affiliates or any of its or their
      respective officers, employees, or agents) shall have the right, from time
      to
      time hereafter (which shall be at reasonable times following reasonable notice
      to Parent, prior to the occurrence of and during the continuation of an Event
      of
      Default) to (i)
      visit
      and inspect the property of each Borrower and examine the Books and make copies
      or abstracts thereof and to check, test, and appraise the Collateral in order
      to
      verify the Borrowers’ financial condition or the amount, quality, value,
      condition of, or any other matter relating to, the Collateral; (ii)
      discuss
      the affairs, finances and accounts of each Borrower with the Chief Financial
      Officer, the Treasurer or any Assistant Treasurer or any other Persons
      designated by such officers and (iii)
      communicate directly with any registered certified public accountants (including
      the Borrowers’ accountants) of any Borrower, and such accountants shall be
      authorized to communicate directly with the Administrative Agent, the Lenders
      and their respective affiliates and to disclose to the Administrative Agent,
      the
      Lenders or their respective affiliates, all financial statements and other
      documents and information as they might have and the Administrative Agent or
      any
      Lender reasonably requests with respect to any Borrower.

     

     

    (b)  Without
      limiting the generality of the foregoing:

     

    (i)  At
      the
      Borrowers’ expense, an Approved Inventory Servicer shall conduct physical
      inventories at, at least 95% of the Borrowers’ store locations 1 time per Fiscal
      Year, and at each of the Borrowers’ distribution centers at least 1 time per
      Fiscal Year at such times as shall be determined by the Borrowers with notice
      to
      the Administrative Agent. The Administrative Agent, at the expense of the
      Borrowers, may participate in and/or observe each physical count and/or
      inventory of so much of the Collateral as consists of inventory which is
      undertaken on behalf of the Borrowers at each of the Borrowers’ distribution
      centers and at not more than 10% of the Borrowers’ store locations. The Parent
      shall provide the Administrative Agent with the preliminary inventory levels
      at
      each store of each Borrower within 15 Business Days following the completion
      of
      such inventory. The Parent, within 45 days following the completion of each
      such
      physical inventory, in the aggregate, shall provide the Administrative Agent
      with an aggregate reconciliation of the results of such inventory and shall
      post
      such results to Borrowers’ stock ledger and general ledger, as applicable. Prior
      to the occurrence of an Event of Default, the Administrative Agent, in its
      Permitted Discretion, may (and shall at the Required Lender’s direction), cause
      one (1) additional inventory per Fiscal Year to be taken at the expense of
      the
      Borrowers, provided that the Administrative Agent shall not require any physical
      inventories prior to January 1, 2008. Following the occurrence and during the
      continuance of an Event of Default, the Administrative Agent, in its Permitted
      Discretion, may (and shall at the Required Lender’s direction), cause additional
      inventories to be taken at the expense of the Borrowers.

     

    
      
        
        

      

      
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    (ii)  At
      the
      Borrowers’ expense, at the request of the Administrative Agent, the Borrowers
      will obtain and deliver to the Administrative Agent, or, if the Administrative
      Agent so elects, will cooperate with the Administrative Agent in the
      Administrative Agent’s obtaining, a report of an independent collateral auditor
      satisfactory to the Administrative Agent (which may be affiliated with one
      of
      Lenders) with respect to the Books and Accounts and inventory components
      included in the Aggregate Borrowing Base, which report shall indicate whether
      or
      not the information set forth in the Borrowing Base Certificate most recently
      delivered is accurate and complete in all material respects based upon a review
      by such auditors of the Accounts (including verification with respect to the
      amount, aging, identity and credit of the respective account debtors and the
      billing practices of the Borrowers) and inventory (including verification as
      to
      the value, location and respective types); provided,
      however,
      that
      the Borrowers shall not be obligated to pay for more than 4 commercial finance
      exams in any 12 month period; provided,
      further,
      however,
      the
      Administrative Agent shall not conduct its own commercial finance audits so
      long
      as the First Lien Agent conducts such commercial finance audits and furnishes
      the Administrative Agent with copies of the results of such audits provided,
      further,
      however,
      that
      following the occurrence and during the continuance of an Event of Default,
      the
      Borrowers shall be obligated to pay for such additional commercial finance
      exams
      as the Administrative Agent may, in its Permitted Discretion,
      require.

     

    (iii)  The
      Administrative Agent may from time to time obtain inventory appraisals conducted
      by such appraisers as are satisfactory to the Administrative Agent or conduct
      inventory appraisals (in all events, at the Borrowers’ expense). If the
      Administrative Agent determines that there have been changes in markdowns,
      inventory mix and composition, accounting methods or any other factors affecting
      the value of the Collateral, the Administrative Agent may in its Permitted
      Discretion have the inventory reappraised by a qualified appraisal company
      selected by the Administrative Agent from time to time after the Closing Date;
      provided,
      however,
      that
      the Borrowers shall not be obligated to pay for more than 2 inventory appraisals
      in any 12 month period unless the Adjusted Availability is less than 10% of
      the
      Aggregate Borrowing Base, in which case, the Borrowers shall be obligated to
      pay
      for 4 inventory appraisals in such 12 month period; provided,
      further,
      however,
      that
      Administrative Agent may from time to time in its Permitted Discretion require
      “limited scope” appraisals (it being the Administrative Agent’s present
      intention to require such “limited scope” appraisals no less than monthly), in
      each case at the Borrower’s expense;
      provided further,
      however,
      that
      that following the occurrence and during the continuance of an Event of Default,
      the Borrowers shall be obligated to pay for such additional appraisals as the
      Administrative Agent may, in its Permitted Discretion, require.

     

    
      
        
        

      

      
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    (iv)  At
      the
      Borrowers’ expense, upon the request of the Administrative Agent, the Borrowers
      will obtain and deliver to the Administrative Agent, or, if the Administrative
      Agent so elects, will cooperate with the Administrative Agent in the
      Administrative Agent’s obtaining, real property appraisals or “desktop” review
      of the most recent real estate appraisal as the Administrative Agent may, in
      its
      Permitted Discretion, require from an independent real estate appraiser
      satisfactory to the Administrative Agent (which may be affiliated with one
      of
      Lenders) with respect to the Eligible Real Property. 

     

    (v)  Upon
      the
      request of the Administrative Agent from time to time, the Borrowers shall
      furnish statements and schedules further identifying and describing the
      Collateral and such other documents in connection with the Collateral as the
      Administrative Agent may reasonably request, all in reasonable detail and in
      form and reasonably satisfactory to the Administrative Agent.

     

     

    ARTICLE
      VI  

     

     

    AFFIRMATIVE
      COVENANTS

     

    Each
      Borrower (and, to the extent set forth in any other Loan Document, each other
      Loan Party) agrees with the Lenders and the Administrative Agent, as long as
      any
      Obligation remains outstanding, the Borrowers shall and shall cause each of
      their respective Subsidiaries to do each of the following:

     

     

    Section
      6.1  Returns.
      Account
      for returns of inventory and customer credits and record the effects thereof
      on
      the general ledger on the same basis and in accordance with the usual and
      customary practices of the applicable Borrower, as they exist at the time of
      the
      execution and delivery of this Agreement except where failure to do so could
      not
      reasonably be expected to result in a Material Adverse Effect.

     

     

    Section
      6.2  Maintenance
      of Properties.

     

     

    (a)  At
      all
      times preserve and keep in full force and effect each Borrower’s valid existence
      and good standing and any rights and franchises material to the Borrowers’
business;

     

     

    (b)  Maintain
      and preserve all of their properties which are necessary or useful in the proper
      conduct to their business in good working order and condition, ordinary wear
      and
      tear excepted;

     

     

    (c)  Cause
      to
      be made all necessary repairs, renewals, replacements, betterments and
      improvements thereof, all as in the judgment of the Borrowers may be necessary
      so that the business carried on in connection therewith may be properly and
      advantageously conducted at all times;

     

     

    (d)  Continue
      to engage in the businesses of selling home furnishings at the retail and
      wholesale level, and related businesses; and

     

     

    (e)  Comply
      at
      all times with the provisions of all leases to which it is a party as lessee,
      so
      as to prevent any loss or forfeiture thereof or thereunder;

     

    provided,
      that
      nothing in this Section
      6.2
      shall
      prevent the Borrowers from conducting the store closings contemplated by Section
      6.19 or from discontinuing the operation and maintenance of any of their
      properties or any of those of its Subsidiaries if such discontinuance is, in
      the
      judgment of the relevant Borrower, desirable in the conduct of its or their
      business and do not in the aggregate cause a Material Adverse
      Effect.

     

    
      
        
        

      

      
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    Section
      6.3  Taxes.
      Cause
      all assessments and taxes, whether real, personal, or otherwise, due or payable
      by, or imposed, levied, or assessed against the Loan Parties, or any of their
      respective assets to be paid in full, before delinquency or before the
      expiration of any extension period, as well as all claims for labor materials
      or
      supplies that if unpaid might by law become a Lien or charge upon its property,
      except to the extent that the validity of such assessment or tax shall be the
      subject of a Permitted Protest. The Borrowers will and will cause their
      Subsidiaries to make timely payment or deposit of all tax payments and
      withholding taxes required of them by applicable laws, including those laws
      concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
      income taxes, and will, upon request, furnish the Administrative Agent with
      proof satisfactory to the Administrative Agent indicating that the applicable
      Loan Party has made such payments or deposits.

     

     

    Section
      6.4  Insurance.
      At the
      Borrowers’ expense, maintain in full force and effect all policies of insurance
      respecting the Loan Parties’ assets wherever located, covering loss or damage by
      fire, theft, explosion, and other hazards and risks and also shall maintain
      business interruption, public liability, product liability, property damage,
      other casualty, workers’ compensation insurance, as well as insurance against
      larceny, embezzlement, and criminal misappropriation, all as ordinarily are
      insured against by other Persons engaged in the same or similar business and
      with financially sound and reputable insurance companies or associations. All
      such policies of insurance shall be in such amounts which are customary for
      Persons engaged in the same or similar business and with nationally recognized
      insurance companies. The Borrowers shall deliver copies of all such policies
      to
      the Administrative Agent with a satisfactory lender’s loss payable endorsement
      (subject to the rights of the First Lien Lender) naming the Administrative
      Agent
      as loss payee (with respect to the Collateral) or additional insured, as
      appropriate. Each such policy of insurance or endorsement shall contain a clause
      requiring the insurer to give not less than 30 days prior written notice to
      the
      Administrative Agent in the event of cancellation of the policy for any reason
      whatsoever.

     

     

    Section
      6.5  Location
      of Inventory.
      Keep
      each Loan Party’s inventory (other than Eligible In-Transit Inventory) only at
      the locations identified on Schedule
      4(b)
      of the
      Perfection Certificate and their chief executive offices only at the locations
      identified on Section
      2(b)
      of the
      Perfection Certificate; provided,
      however,
      that
      (a) Parent may amend Section
      2(b)
      and
Schedule
      4(b)
      of the
      Perfection Certificate so long as such amendment occurs by written notice to
      the
      Administrative Agent not less than 30 days prior to the date on which such
      inventory is moved to such new location or such chief executive office is
      relocated, so long as such new location is within the United States or Canada
      (other than Eligible In-Transit Inventory), which amendment shall be included
      in
      any Perfection Certificate delivered pursuant to Section
      5.2,
      and so
      long as, at the time of such written notification, the applicable Borrower
      provides any financing statements or other documents necessary to perfect and
      continue the Administrative Agent’s Liens on such assets and also provides a
      Collateral Access Agreement with respect thereto if such location is a
      warehouse, distribution center, fulfillment center, contract warehouse or other
      real property (other than a retail store location) leased by a Borrower, and
      (b)
      each Loan Party may keep inventory during the period from September 1 to
      December 31 of each year at warehouses leased by such Persons or in a
      fulfillment center or contract warehouse, to the extent permitted pursuant
      to
      Section 6.5 of the First Lien Credit Agreement.

     

    
      
        
        

      

      
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    Section
      6.6  Compliance
      with Laws, Etc.
      Comply
      with all Requirements of Law, and orders of any Governmental Authority, and
      make
      all necessary filings with, and give all appropriate notices to, Governmental
      Authorities, including the Fair Labor Standards Act and the Americans With
      Disabilities Act, and with all Contractual Obligations and Permits, other than
      laws, rules, regulations, orders, Contractual Obligations and Permits the
      non-compliance with which, individually or in the aggregate, could not
      reasonably be expected to result in a Material Adverse Effect.

     

     

    Section
      6.7  Leases.
      Pay
      when due all rents and other amounts payable under any leases to which any
      Loan
      Party is a party or by which any Loan Party’s properties and assets are bound,
      unless such payments are the subject of a Permitted Protest or unless nonpayment
      of such rents and other amounts individually or in the aggregate could not
      reasonably be expected to result in a Material Adverse Effect.

     

     

    Section
      6.8  Existence.
      At all
      times preserve and keep in full force and effect each Loan Party’s valid
      existence and good standing and any rights and franchises material to their
      businesses except as otherwise permitted pursuant to Section
      7.4.

     

     

    Section
      6.9  Environmental.
      Except
      for such Environmental Liens, failures to comply, releases, Environmental
      Actions, notices, citations or orders which individually or in the aggregate
      could not reasonably be expected to result in a Material Adverse Effect (a)
      keep
      any property either owned or operated by any Loan Party free of any
      Environmental Liens or post bonds or other financial assurances sufficient
      to
      satisfy the obligations or liability evidenced by such Environmental Liens,
      (b)
      comply with all applicable Environmental Laws and provide to the Administrative
      Agent documentation of such compliance which the Administrative Agent reasonably
      requests, (c) promptly notify the Administrative Agent of any release of a
      Hazardous Material of any reportable quantity from or onto property owned or
      operated by any Loan Party and take any Remedial Actions required to abate
      said
      release or otherwise to come into compliance with applicable Environmental
      Law,
      and (d) promptly, but in any event within 5 days of its receipt thereof, provide
      the Administrative Agent with written notice of any of the following: (i) notice
      that an Environmental Lien has been filed against any of the real or personal
      property of any Loan Party, (ii) commencement of any Environmental Action or
      notice that an Environmental Action will be filed against any Loan Party, and
      (iii) notice of a violation, citation, or other administrative order which
      reasonably could be expected to result in a Material Adverse
      Effect.

     

     

    Section
      6.10  Disclosure
      Updates.
      Promptly and in no event later than 5 Business Days after obtaining knowledge
      thereof, notify the Administrative Agent if any written information, exhibit,
      or
      report furnished to the Lender Group contained any untrue statement of a
      material fact or omitted to state any material fact necessary to make the
      statements contained therein not misleading in any material respect (other
      than
      industry-wide risks normally associated with the types of businesses conducted
      by the Loan Parties) in light of the circumstances in which made; provided,
      that
      Projections, Perfection Certificates and Schedules furnished to the Lender
      Group
      shall be deemed to be updated as and when delivered pursuant to and in
      accordance with the terms hereof. The foregoing to the contrary notwithstanding,
      any notification pursuant to the foregoing provision will not cure or remedy
      the
      effect of the prior untrue statement of a material fact or omission of any
      material fact nor shall any such notification have the affect of amending or
      modifying this Agreement, any Perfection Certificate or any of the Schedules
      hereto.

     

     

    
      
        
        

      

      
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    Section
      6.11  Formation
      of Subsidiaries; Further Assurances.
      (a)
      At the
      time that any Borrower forms any direct or indirect Subsidiary or acquires
      any
      direct or indirect Subsidiary after the Closing Date, such Borrower shall (i)
      cause such new Subsidiary to provide to the Administrative Agent a joinder
      to
      this Agreement and the Guaranty and Security Agreement or the Canadian Security
      Documents, as applicable, allonges to Notes, and other security documents,
      as
      well as appropriate UCC-1 financing statements, PPSA or other relevant filings
      in such jurisdictions as may be required by the Loan Documents or applicable
      Requirements of Law or as the Administrative Agent may otherwise reasonably
      request, all in form and substance satisfactory to the Administrative Agent
      (including being sufficient to grant the Administrative Agent a Lien, subject
      only to Permitted Liens, in and to the assets of such newly formed or acquired
      Subsidiary in scope similar to the collateral granted hereunder); and (ii)
      provide to the Administrative Agent all other documentation, including one
      or
      more opinions of counsel satisfactory to the Administrative Agent, which in
      its
      opinion is appropriate with respect to the execution and delivery of the
      applicable documentation referred to above. (b)
      The
      Borrowers shall take all other actions necessary or advisable to ensure the
      validity or continuing validity of any guaranty for any Obligation or any Lien
      securing any Obligation, to perfect, maintain, evidence or enforce any Lien
      securing any Obligation or to ensure such Liens have the same priority as that
      of the Liens on similar Collateral set forth in the Loan Documents executed
      on
      the Closing Date (or, for Collateral located outside the United States, a
      similar priority acceptable to the Administrative Agent). Any document,
      agreement, or instrument executed or issued pursuant to this Section
      6.11
      shall be
      a Loan Document.

     

     

    Section
      6.12  Additional
      Collateral Covenants.
      Except
      for Permitted Liens, be the owners of the Collateral free from any right or
      claim of any other Person or any Lien, and shall defend the same against all
      claims and demands of all Persons at any time claiming the same or any interests
      therein adverse to the Administrative Agent or any Lender. The Borrowers may
      grant such allowances, discounts or other adjustments to the Borrowers’ Account
      Debtors as the Borrowers may reasonably deem to accord with sound business
      practice pursuant to past practices.

     

     

    Section
      6.13  Investment
      Proceeds, Etc.
      The
      proceeds of any funds received by any Borrower whether or not from ordinary
      course business operations (including, without limitation, tax refunds, damage
      awards, or insurance or condemnation proceeds) with respect to the Collateral
      shall be deposited directly into the Cash Collateral Account to be applied
      on
      account of the Obligations in accordance with Section
      2.8
      if a
      Cash Dominion Event has occurred and is continuing.

     

     

    Section
      6.14  Immediate
      Notice to the Administrative Agent.

     

     

    (a)  The
      Parent shall provide the Administrative Agent with written notice promptly
      upon
      the occurrence of any of the following events, which written notice shall state
      with reasonable particularity the facts and circumstances of the event for
      which
      such notice is being given:

     

    (i)  The
      completion of any physical count of all or a material portion of the Borrowers’
inventory (together with a copy of the results thereof certified by the
      Parent);

     

    
      
        
        

      

      
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    (ii)  Any
      failure by the Borrowers to pay rent on a timely basis at 20% or more of any
      of
      the Borrowers’ locations, and as and when such rent payment is due;

     

    (iii)  Any
      Material Adverse Effect;

     

    (iv)  the
      occurrence of any Default or Event of Default, including, without limitation,
      the delivery of any notice to the First Lien Agent (or any First Lien Lender)
      of
      any “defaults” or “events of default” under the First Lien Credit Agreement or
      the other First Lien Loan Documents;

     

    (v)  The
      occurrence of any Cash Dominion Event or Cash Dominion Reversion;

     

    (vi)  Any
      setoff, claims, withholdings or other defenses to which any of the Collateral,
      or the Administrative Agent’s rights with respect to the Collateral, are
      subject;

     

    (vii)  The
      occurrence any Property Loss Event involving Collateral having a fair market
      value in excess of $500,000;

     

    (viii)  Any
      permanent reduction of First Lien Debt; or

     

    (ix)  The
      obtaining of an organization identification number by any Borrower which did
      not
      have one on the Closing Date, together with such number.

     

     

    (b)  The
      Parent shall:

     

    (i)  Provide
      the Administrative Agent, when so distributed, with copies of any materials
      distributed to the shareholders of any Borrower (provided,
      that
      for purposes of this clause (i), any materials to be delivered hereunder shall
      be deemed to have been delivered when posted on the Parent’s website or
      otherwise made available on the website of the SEC);

     

    (ii)  Add
      the
      Administrative Agent as an addressee on all mailing lists maintained by or
      for
      Borrowers;

     

    (iii)  At
      the
      reasonable request of the Administrative Agent, from time to time, provide
      the
      Administrative Agent with copies of all requested advertising (including copies
      of all print advertising and duplicate tapes of all requested video and radio
      advertising);

     

    (iv)  At
      the
      request of the Administrative Agent, provide the Administrative Agent, following
      review by the Audit and Finance Committee of the Parent’s Board of Directors,
      with a copy of any management letter or similar communications from any
      accountant of the Borrowers; and

     

    (v)  Provide
      the Administrative Agent with details of all credit card arrangements to which
      any Loan Party is from time to time a party, including details relating to
      such
      Loan Party’s compliance with the terms of payment to the applicable Cash
      Collateral Account of the proceeds of all credit card charges for sales by
      such
      Loan Party.

     

    
      
        
        

      

      
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    (vi)  The
      Parent shall provide the Administrative Agent with (a) prior written notice
      of
      any entity’s becoming or ceasing to be a Subsidiary and (b) prompt written
      notice of any entity’s becoming or ceasing to be an Affiliate (other than a
      Subsidiary).

     

     

    Section
      6.15  Certain
      Subsidiaries.
      The
      Parent shall not permit Bailey Street Trading Company, BMAJ, Inc., and The
      Bombay Company de Mexico, S.A. de C.V. to engage in any trade or business or
      own
      any assets or incur any Indebtedness to any Person. The Bombay Furniture
      Company, Inc. shall not engage in any business or activity other than managing
      the foreign offices of the Loan Parties and holding immaterial assets incidental
      thereto.

     

     

    Section
      6.16  Further
      Assurances.
      Cooperate with Lenders and the Administrative Agent and execute such further
      instruments and documents as Lenders or the Administrative Agent shall
      reasonably request to carry out to their satisfaction the transactions
      contemplated by this Agreement and the other Loan Documents.

     

     

    Section
      6.17  Governing
      Documents.
      Deliver
      to the Administrative Agent complete and correct copies of all documents
      modifying any term of any Governing Document of any Loan Party or joint venture
      thereof on or prior to the date of delivery of any Compliance Certificate
      delivered pursuant to Section
      5.3(a)(iii).

     

     

    Section
      6.18  Deposit
      Accounts; Securities Accounts and Cash Collateral Accounts.

     

     

    (a)  Subject
      to the Intercreditor Agreement, the Borrowers shall (i) establish and maintain
      cash management services of a type and on terms satisfactory to the
      Administrative Agent at one or more of the banks (a “Cash
      Management Bank”)
      set
      forth on Schedule 8
      of the
      Perfection Certificate, (ii) promptly, and in any event no later than the first
      Business Day after the date of receipt thereof, cause all Collections of
      Borrowers or cash proceeds of Accounts of Borrowers to be deposited only into
      Store Accounts or Concentration Accounts, each set forth on Schedule 8
      of the
      Perfection Certificate and (iii) direct all Cash Management Banks with Store
      Accounts to (A) so long as no Cash Dominion Event has occurred and is
      continuing, cause all Collections of Borrowers in an amount greater than $50,000
      to be transferred no less frequently than twice each week, to and only to,
      a
      Concentration Account or a Cash Collateral Account, and (B) after the occurrence
      and during the continuance of a Cash Dominion Event cause all Collections of
      Borrowers in an amount greater than $10,000 then held in each such Store Account
      to be transferred no less frequently than once each day to, and only to, a
      Concentration Account or a Cash Collateral Account. If, notwithstanding the
      provisions of this Section 6.18,
      after
      the occurrence and during the continuance of a Cash Dominion Event, any Borrower
      receives or otherwise has dominion over or control of any Collections, such
      Borrower shall hold such Collections in trust for the Administrative Agent,
      as
      the case may be, and shall not commingle such Collections with any of Borrowers’
other funds or deposit such Collections in any account of Borrowers except
      as
      instructed by the Administrative Agent.

     

    (b)  Borrowers
      shall establish and maintain Control Agreements with the Administrative Agent,
      the First Lien Agent and each Cash Management Bank with respect to each
      Concentration Account. Each such Control Agreement shall provide, among other
      things, that after the occurrence and during the continuance of a Cash Dominion
      Event, (i) upon notice from the Administrative Agent, the Cash Management Bank
      will comply with instructions of the Administrative Agent, directing the
      disposition of funds in the Concentration Account without further consent by
      Borrowers, (ii) the Cash Management Bank has no rights of setoff or recoupment
      or any other claim against the applicable Concentration Account, other than
      for
      payment of its service fees and other charges directly related to the
      administration of such Concentration Account and for returned checks or other
      items of payment, and (iii) it immediately will forward by daily sweep all
      amounts in the applicable Concentration Accounts to a Cash Collateral Account
      designated by the Administrative Agent.

     

    
      
        
        

      

      
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    (c)  Borrowers
      shall establish and maintain Credit Card Agreements with the Administrative
      Agent, the First Lien Agent and each Credit Card Processor. Each such Credit
      Card Agreement shall provide, among other things, that each such Credit Card
      Processor shall transfer all proceeds due with respect to credit card charges
      for sales (net of expenses and chargebacks of the Credit Card Issuer or Credit
      Card Processor) by Borrowers received by it (or other amounts payable by such
      Credit Card Processor) into a designated Concentration Account on a daily basis.
      Borrowers shall not attempt to change any direction or designation set forth
      in
      the Credit Card Agreements regarding payment of charges without the prior
      written consent of the Administrative Agent.

     

    (d)  So
      long
      as no Cash Dominion Event has occurred and is continuing, the Parent may amend
      Schedule 8
      of the
      Perfection Certificate to add or replace a Cash Management Bank or deposit
      account; provided,
      however,
      that
      (i) such prospective Cash Management Bank shall be satisfactory to the
      Administrative Agent and the Administrative Agent shall have consented in
      writing in advance to the opening of such deposit account with the prospective
      Cash Management Bank, and (ii) prior to the time of the opening of any
      Concentration Account, Borrowers and such prospective Cash Management Bank
      shall
      have executed and delivered to the Administrative Agent, a Control Agreement
      in
      accordance with clause
      (b)
      above.
      Borrowers shall close any of their deposit accounts (and establish replacement
      cash management accounts in accordance with the foregoing sentence) promptly
      and
      in any event within 30 days of notice from the Administrative Agent, that the
      creditworthiness of any Cash Management Bank is no longer acceptable in the
      Administrative Agent’s reasonable judgment, or as promptly as practicable and in
      any event within 60 days of notice from the Administrative Agent, that the
      operating performance, funds transfer, or availability procedures or performance
      of the Cash Management Bank with respect to Concentration Accounts or the
      Administrative Agent’s liability under any Control Agreement with such Cash
      Management Bank is no longer acceptable in the Administrative Agent’s reasonable
      judgment. If, notwithstanding the provisions of this Section 6.18,
      after
      the occurrence and during the continuance of a Cash Dominion Event, any Borrower
      receives or otherwise has dominion over or control of any Collections, such
      Borrower shall hold such Collections in trust for the Administrative Agent,
      and
      shall not commingle such Collections with any of the Borrowers’ other funds or
      deposit such Collections in any account of the Borrowers except as instructed
      by
      the Administrative Agent.

     

    (e)  After
      the
      occurrence and during the continuance of a Cash Dominion Event, the deposit
      accounts shall be cash collateral accounts, with all cash, checks and similar
      items of payment in such accounts securing payment of the Obligations, and
      in
      which Borrowers have granted a Lien on each deposit account to the
      Administrative Agent pursuant to the Loan Documents.

     

    
      
        
        

      

      
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    (f)     
      Following the occurrence of a Cash Dominion Event, the Borrowers agree that
      they
      will not, and will not permit their Subsidiaries to, transfer assets out of
      any
      of their deposit accounts or securities accounts. Following the occurrence
      of a
      Cash Dominion Event, the Borrowers agree that they will and will cause their
      Subsidiaries to take any or all reasonable steps that the Administrative Agent
      requests in order for the Administrative Agent to obtain control in accordance
      with the UCC with respect to any of its or their securities accounts, deposit
      accounts, electronic chattel paper, investment property, and letter-of-credit
      rights. No arrangement contemplated hereby or by any Control Agreement in
      respect of any deposit accounts, securities accounts or other investment
      property shall be modified by Borrowers without the prior written consent of
      the
      Administrative Agent. Upon the occurrence and during the continuance of a
      Default or Event of Default, the Administrative Agent may notify any bank or
      securities intermediary to liquidate the applicable deposit account or
      securities account or any related investment property maintained or held thereby
      and remit the proceeds thereof to a Cash Collateral Account identified by the
      Administrative Agent.

     

    (g)  The
      Administrative Agent shall have no responsibility for, or bear any risk of
      loss
      of, any investment or income of any funds in any deposit account. From time
      to
      time after funds are deposited in any Cash Collateral Account, the
      Administrative Agent, may apply funds then held in such Cash Collateral Account
      to the payment of Obligations in accordance with Section 2.8.
      No Loan
      Party and no Person claiming on behalf of or through any Loan Party shall have
      any right to demand payment of any funds held in any Cash Collateral Account
      at
      any time prior to the payment in full of all Obligations.

     

     

    Section
      6.19  Release
      of Eligible Real Property.
      Following the Parent’s written request therefore, the Administrative Agent shall
      release its Lien upon the Eligible Real Property, at the expense of the
      Borrowers, so long as (a) Borrowers shall have provided the Administrative
      Agent
      with fifteen (15) Business Days’ prior notice thereof; (b) Borrowers shall have
      complied with Section
      2.8(a),
      if
      applicable; (c) at the time of such request and after giving effect thereto
      no
      Default or Event of Default shall have occurred and be continuing and (d)
      Adjusted Availability at the time of such request and after giving effect
      thereto shall be no less than 20% of the Aggregate Borrowing Base on such date
      and for the next two Fiscal Periods succeeding the Fiscal Period in which such
      release shall occur.

     

     

    Section
      6.20  Store
      Closing Sale.
      Borrowers shall complete the closure of at least 70% of the stores Borrowers
      project to close in the Business Plan by January 31, 2008 (excluding Bombay
      Kids
      stores operated in a combination format). Borrowers shall conduct such store
      closures on a “store closing sale” basis with the assistance of a nationally
      recognized liquidator, acceptable to both the First Lien Agent and the
      Administrative Agent in their Permitted Discretion, which liquidator shall
      be
      retained pursuant to an “agency agreement” on terms and conditions acceptable to
      the Administrative Agent, in its Permitted Discretion. The Borrowers shall
      retain an Affiliate of the Administrative Agent as its agent for the purposes
      of
      acting as “agent” in connection with the conduct of such store closing sales in
      accordance with its Business Plan on a “fee basis” on terms and conditions to be
      agreed by Borrowers and such Affiliate, provided, that in the event that
      Borrowers intend to conduct a store closing sale involving a simultaneous
      closing of 30 or more of its retail locations, then Borrowers shall retain
      a
      nationally recognized liquidation company, acceptable to, and on such terms
      and
      conditions acceptable to, the First Lien Agent, in its Permitted Discretion.
      In
      connection with such store closing sales, Borrowers shall retain an Affiliate
      of
      the Administrative Agent, on terms and conditions acceptable to the First Lien
      Agent in their Permitted Discretion, as its agent for the purposes of acting
      as
“agent” in connection with the negotiation for the disposition and/or
      termination of the Leases and Leasehold Interests for such store locations.
      All
      proceeds of such store closing sales and Lease and Leasehold Interest
      dispositions shall, subject to the terms of the Intercreditor Agreement, be
      remitted to the Administrative Agent for application to the Loan.

     

    
      
        
        

      

      
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    Section
      6.21  Grant
      of Non-Exclusive License.
      For the
      purpose of enabling the Administrative Agent to exercise the Administrative
      Agent’s rights and remedies under Section
      8
      of this
      Agreement and Section
      6.1
      of the
      Guaranty and Security Agreement (including, without limitation, in order to
      take
      possession of, hold, preserve, process, assemble, prepare for sale, market
      for
      sale, sell or otherwise dispose of the Collateral) at such time as the
      Administrative Agent shall be lawfully entitled to exercise such rights and
      remedies under Section
      8
      of this
      Agreement and Section
      6.1
      of the
      Guaranty and Security Agreement, each Borrower hereby (a) grants to the
      Administrative Agent and its agents, for the benefit of each Secured Party,
      a
      royalty free, non-exclusive, irrevocable worldwide license, such license being
      with respect to the Administrative Agent’s exercise of its rights and remedies
      under Section 8
      of this
      Agreement and Section
      6.1
      of the
      Guaranty and Security Agreement including, without limitation, in connection
      with any completion of the manufacture of inventory or any sale or other
      disposition of inventory (i) to use, apply, and affix any trademark, trade
      name,
      logo, or the like in which any Borrower now or hereafter has rights, (ii) to
      use, license or sublicense any Intellectual Property or computer software now
      owned, held or hereafter acquired by such Borrower, including in such license
      access to all media such and to the extent to which any of the licensed items
      may be recorded or stored and to all computer software programs such and to
      the
      extent used for the compilation or print out thereof; provided,
      that
      the Administrative Agent’s use of the property described in clauses
      (i)
      and
(ii)
      above
      will comply with all Requirements of Law, and (iii) to use any and all
      furniture, fixtures and equipment contained in any premises owned or occupied
      by
      any Borrower in connection with the exercise of the Administrative Agent’s
      rights and remedies under Section
      8
      of this
      Agreement and Section
      6.1
      of the
      Guaranty and Security Agreement, and (b) agrees to provide the Administrative
      Agent and/or its agents with access to, and the right to use, any such premises
      owned or occupied by any Borrower.

     

     

    Section
      6.22  Use
      of
      Proceeds.
      Use the
      proceeds of the Term Loan solely for the general working capital requirements
      of
      the Borrowers, including transactional fees, costs, and expenses incurred in
      connection with this Agreement and the other Loan Documents and the transactions
      contemplated hereby and thereby, and shall not use such proceeds to purchase
      or
      carry margin stock (within the meaning of Regulation U of the Federal Reserve
      Board).

     

     

    ARTICLE
      VII  

     

     

    NEGATIVE
      COVENANTS

     

    Each
      Borrower (and, to the extent set forth in any other Loan Document, each other
      Loan Party) agrees with the Lenders and the Administrative Agent, as long as
      any
      Obligation remains outstanding, no Borrower shall, nor shall it permit any
      Loan
      Party to:

     

     

    Section
      7.1  Indebtedness.
      Create,
      incur, assume, suffer to exist, guarantee, or otherwise become or remain,
      directly or indirectly, liable with respect to any Indebtedness,
      except:

     

     

    (a)  the
      Obligations;

     

     

    
      
        
        

      

      
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    (b)  Indebtedness
      set forth on Schedule
      7.1;

     

     

    (c)  Permitted
      Purchase Money Indebtedness;

     

     

    (d)  refinancings,
      renewals, or extensions of Indebtedness permitted under clauses
      (b)
      and
(c)
      of this
Section
      7.1
      (and
      continuance or renewal of any Permitted Liens associated therewith) so long
      as:
      (i) the terms and conditions of such refinancings, renewals, or extensions
      do
      not, in the Administrative Agent’s Permitted Discretion, materially impair the
      prospects of repayment of the Obligations by the Borrowers or materially impair
      the Borrowers’ creditworthiness, (ii) such refinancings, renewals, or extensions
      do not result in an increase in the then extant principal amount of, or interest
      rate with respect to, the Indebtedness so refinanced, renewed, or extended
      or
      add one or more Borrower as liable with respect thereto if such additional
      Borrowers were not liable with respect to the original Indebtedness, (iii)
      such
      refinancings, renewals, or extensions do not result in a shortening of the
      average weighted maturity of the Indebtedness so refinanced, renewed, or
      extended, nor are they on terms or conditions, that, taken as a whole, are
      materially more burdensome or restrictive to the applicable Borrower, (iv)
      if
      the Indebtedness that is refinanced, renewed, or extended was subordinated
      in
      right of payment to the Obligations, then the terms and conditions of the
      refinancing, renewal, or extension Indebtedness must include subordination
      terms
      and conditions that are at least as favorable to the Lender Group as those
      that
      were applicable to the refinanced, renewed, or extended Indebtedness, and (v)
      the Indebtedness that is refinanced, renewed, or extended is not recourse to
      any
      Person that is liable on account of the Obligations other than those Persons
      which were obligated with respect to the Indebtedness that was refinanced,
      renewed, or extended;

     

     

    (e)  at
      any
      time following the release of the Eligible Real Property in accordance with
      Section
      6.19,
      Permitted Office Building Indebtedness and all refinancings, renewals, or
      extensions thereof (and continuance or renewal or any Permitted Liens associated
      therewith);

     

     

    (f)  endorsement
      of instruments or other payment items for deposit;

     

     

    (g)  Indebtedness
      composing Permitted Investments;

     

     

    (h)  Indebtedness
      of a Borrower to another Borrower;

     

     

    (i)  Indebtedness
      of a Loan Party in respect of Hedging Agreements entered into by such Person
      with the purpose and effect of fixing interest rates on a principal amount
      of
      Indebtedness of such Person that is accruing interest at a variable rate;
provided,
      that
      each such contract is with a counterparty or has a guarantor of the obligation
      of the counterparty who at the time the contract is made has long-term
      obligations rated A or Aa3 or better, respectively, by S&P and
      Moody’s;

     

     

    (j)  other
      unsecured Indebtedness of any Loan Party, in an aggregate amount not to exceed
      at any time $2,000,000; and

     

     

    (k)  First
      Lien Debt under the First Lien Credit Agreement.

     

     

    Section
      7.2  Liens.
      Create,
      incur, assume, or suffer to exist, directly or indirectly, any Lien on or with
      respect to any of its assets, of any kind, whether now owned or hereafter
      acquired, or any income or profits therefrom, except for Permitted Liens
      (including Liens in favor of the First Lien Agent and Liens that are
      replacements of Permitted Liens to the extent that the original Indebtedness
      is
      refinanced, renewed, or extended under Section
      7.1(d) or (e)
      and so
      long as the replacement Liens only encumber those assets that secured the
      refinanced, renewed, or extended Indebtedness).

     

     

    
      
        
        

      

      
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    Section
      7.3  Restrictions
      on Negative Pledges and Upstream Limitation.

     

     

    (a)  Enter
      into or permit to exist any arrangement or agreement (excluding this Agreement,
      the other Loan Documents and the First Lien Credit Documents) which directly
      or
      indirectly prohibits any Loan Party from creating, assuming or incurring any
      Lien upon its properties, revenues or assets or those of any of their
      Subsidiaries whether now owned or hereafter acquired; or

     

     

    (b)  Enter
      into any agreement, contract or arrangement (excluding this Agreement, the
      other
      Loan Documents and the First Lien Credit Documents as in effect on the date
      hereof) restricting the ability of any Subsidiary of any Borrower to pay or
      make
      dividends or distributions in cash or kind to the Borrowers, to make loans,
      advances or other payments of whatsoever nature to the Borrowers, or to make
      transfers or distributions of all or any part of its assets to the
      Borrowers;

     

    in
      each
      case other than (i) restrictions on specific assets which assets are the subject
      of Permitted Purchase Money Indebtedness or at any time following the release
      of
      the Eligible Real Property in accordance with Section
      6.19,
      Permitted Office Building Indebtedness, (ii) customary anti-assignment
      provisions contained in leases and licensing agreements entered into by such
      Loan Party in the ordinary course of its business and (iii) customary
      restrictions contained in asset sale agreements limiting the transfer of such
      assets pending the closing of such sale.

     

    Section
      7.4  Restrictions
      on Fundamental Changes.
      (a)
      Enter into any merger or consolidation, (b) liquidate, wind up, or dissolve
      itself (or suffer any liquidation or dissolution), or (c) convey, sell, lease,
      license, assign, transfer, or otherwise dispose of, in one transaction or a
      series of transactions, all or any substantial part of its assets,
      except:

     

    (i)  any
      Borrower may be merged with or into another U.S. Borrower, or be liquidated,
      wound up or dissolved, or all or any part of its business, property or assets
      may be conveyed, sold, leased, transferred or otherwise disposed of, in one
      transaction or a series of transactions, to any U.S. Borrower; provided,
      that
      (A) at the time of any such event, no Event of Default shall exist or shall
      result from such event and (B) in the case of such an event, a U.S. Borrower
      shall be the continuing or surviving Person;

     

    (ii)  (A)
      any
      Subsidiary of a Borrower that is a Domestic Person may be merged with or into
      another Subsidiary of a Borrower that is a Domestic Person, or be liquidated,
      wound up or dissolved, or all or any part of its business, property or assets
      may be conveyed, sold, leased, transferred or otherwise disposed of, in one
      transaction or a series of transactions, to any Subsidiary of a Borrower that
      is
      a Domestic Person; provided,
      that at
      the time of any such event no Event of Default shall exist or shall result
      from
      such event, and (B) any Subsidiary of a Borrower that is a Domestic Person
      may
      be merged with and into a Borrower, or be liquidated, wound up or dissolved,
      or
      all or any part of its business, property or assets may be conveyed, sold,
      leased, transferred or otherwise disposed of, in one transaction or a series
      of
      transactions, to any U.S. Borrower; provided,
      that
      (1) at the time of any such event, no Event of Default shall exist or shall
      result from such event, (2) a U.S. Borrower shall be the continuing or surviving
      Person, and (3) the Borrowers shall have obtained the Administrative Agent’s
      prior written consent;

     

    
      
        
        

      

      
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    (iii)  in
      connection with (A) sales or closures of stores or distribution centers in
      the
      normal course of business, and (B) dispositions of inventory and other assets
      located at such locations (or used in connection with the operation thereof)
      and
      related non-depreciated leasehold interests related thereto, in each case on
      reasonable terms consistent with such Person’s usual practice in connection with
      such sales or closures; provided,
      that
      the proceeds of such sales and dispositions of inventory closures are used
      to
      repay or prepay the Obligations pursuant to Section
      2.8;

     

    (iv)  the
      sale,
      in one transaction or a series of transactions, of the Bombay Office
      Complex;

     

    (v)  dispositions
      permitted by Section
      7.5;
      and

     

    (vi)  any
      other
      disposition of assets in any Fiscal Year for full and fair consideration as
      long
      as the value of such assets does not exceed $1,000,000.

     

     

    Section
      7.5  Disposal
      of Assets; Sale and Leaseback.
      Other
      than Permitted Dispositions, and dispositions permitted by Section
      7.4,
      convey,
      sell, lease, license, assign, transfer, or otherwise dispose of any of the
      assets of any Loan Party. The Borrowers will not, and will not permit any of
      their Subsidiaries to, enter into any arrangement, directly or indirectly,
      whereby any Loan Party shall sell or transfer any property owned by it in order
      then or thereafter to lease such property or lease other property that any
      Loan
      Party intends to use for substantially the same purpose as the property being
      sold or transferred other than (a) sale leaseback transactions (in one
      transaction or a series of transactions) in respect of the Bombay Office Complex
      and (b) other sale leaseback transactions not to exceed $2,500,000 in the
      aggregate at any time.

     

     

    Section
      7.6  Change
      Name; Change Governing Documents.
      (a)
      Change any Loan Party’s name, FEIN, organizational identification number, type
      of organization, jurisdiction of organization or other legal structure or
      relocate any Loan Party’s chief executive office to a new location, without the
      consent of the Administrative Agent (not to be unreasonably withheld so long
      as,
      at the time of such request for consent, such Loan Party provides any financing
      statements necessary to perfect and continue perfected the Administrative
      Agent’s Liens or any constitutive documents resulting from such change);
provided,
      however,
      that a
      Loan Party may change its name or chief executive office location upon at least
      30 days prior written notice by Parent to the Administrative Agent of such
      change and so long as, at the time of such written notification, such Loan
      Party
      provides any financing statements necessary to perfect and continue perfected
      the Administrative Agent’s Liens; provided,
      further,
      that no
      Loan Party shall change its name, identity or corporate or organizational
      structure in any manner that might make any financing statement filed in
      connection herewith or any other Loan Document materially misleading within
      the
      meaning of section 46(4) of the PPSA (or any comparable provision then in
      effect) except upon prior written notice to the Administrative Agent and after
      the Administrative Agent’s written acknowledgement that any reasonable action
      requested by the Administrative Agent in connection therewith, including to
      continue the perfection of any Liens in favor of the Administrative Agent,
      on
      behalf of the Lenders; or

     

    
      
        
        

      

      
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    (b)
      Change, waive or otherwise modify any Governing Document of, or otherwise change
      the capital structure of, any Loan Party (including the terms of any of their
      outstanding Stock or Stock Equivalents), in each case except for those
      modifications and waivers that (i) do not elect, or permit the election, to
      treat the Stock Equivalents of any limited liability company (or similar entity)
      as certificated and (ii) do not materially affect the rights and privileges
      of
      any Loan Party and do not materially affect the interests of any Secured Party
      under the Loan Documents or in the Collateral.

     

    
       

    

    Section
      7.7  Prepayments
      and Amendments.
      Except
      in connection with a refinancing permitted by Section
      7.1(d),

     

     

    (a)  prepay,
      redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan
      Party, other than the Obligations in accordance with this Agreement or the
      prepayment of the First Lien Debt in accordance with the terms of the First
      Lien
      Credit Agreement as in effect on the date hereof; or

     

     

    (b)  directly
      or indirectly, amend, modify, alter, increase, or change any of the terms or
      conditions of any agreement, instrument, document, indenture, or other writing
      evidencing or concerning Indebtedness permitted under Section
      7.1(b)
      or
(c)
      or,
      except as permitted pursuant to the Intercreditor Agreement, .

     

     

    Section
      7.8  Consignments.
      Consign
      any of their inventory or sell any of their inventory on bill and hold, sale
      or
      return, sale on approval, or other conditional terms of sale, except for (a)
      consignments of inventory not to exceed the aggregate Cost amount of $1,000,000
      at any time, and (b) rights of purchasers to return inventory pursuant to any
      Loan Party’s return policy.

     

     

    Section
      7.9  Distributions.
      Other
      than distributions or declaration and payment of dividends by a Borrower to
      another Borrower, make any distribution or declare or pay any dividends (in
      cash
      or other property, other than common Stock or options or rights with respect
      to
      common Stock) on, or purchase, acquire, redeem, or retire any of any Borrower’s
      Stock, of any class, whether now or hereafter outstanding; provided,
      however,
      that
      (a) the Borrowers may purchase, acquire, redeem or retire any of the Borrowers’
Stock or may pay cash dividends on any Borrowers’ Stock at any time so long as
      (i) at the time of such purchase, acquisition redemption, retirement, payment
      and after giving effect thereto, no Default or Event of Default shall have
      occurred and be continuing, (ii) immediately after giving effect thereto,
      Availability shall be at least equal to $25,000,000 and the Parent shall have
      delivered to the Administrative Agent a Compliance Certificate and Projections
      evidencing the maintenance of Availability of at least $25,000,000 for the
      2
      Fiscal Quarters then ended immediately prior to such purchase, acquisition,
      redemption or retirement of any Borrower’s Stock, and (iii) such distributions
      are contemplated by the Business Plan and (b) Borrowers may make distributions
      or declare and pay any dividends on and may purchase, acquire, redeem, or retire
      any Borrower’s Stock in a substantially contemporaneous exchange for common
      Stock or other common equity interests of such Borrower (including as a result
      of new issuances of common Stock or common equity interests).

     

     

    
      
        
        

      

      
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    Section
      7.10  Accounting
      Methods.
      Modify
      or change their Fiscal Year or their method of accounting (other than as may
      be
      required to conform to GAAP).

     

     

    Section
      7.11  Investments,
      Acquisitions.
      Except
      for Permitted Investments and Permitted Acquisitions, directly or indirectly,
      make or acquire any Investment, or incur any liabilities (including contingent
      obligations) for or in connection with any Investment; provided,
      however,
      that
      such Investments will be considered Investments permitted by this Section
      7.11
      only if
      all actions have been taken to the satisfaction of the Administrative Agent
      to
      provide to the Administrative Agent, for the benefit of Lenders and the
      Administrative Agent, a perfected security interest in all of such Investments
      free of all Liens other than Permitted Liens.

     

     

    Section
      7.12  Transactions
      with Affiliates.
      Engage
      in any transaction with any Affiliate (other than for services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      such Affiliate or, to the knowledge of the Borrowers, any corporation,
      partnership, trust or other entity in which any such Affiliate has a substantial
      interest or is an officer, director, trustee or partner, on terms more favorable
      to such Person than would have been obtainable on an arm’s-length basis in the
      ordinary course of business except (a) reasonable and customary fees and other
      consideration paid to members of the board of directors of Parent and (b)
      compensation and benefit arrangements for officers and other employees of any
      Loan Party entered into in the ordinary course of business and (c) transactions
      among Parent and its wholly-owned Subsidiaries in the ordinary course of
      business consistent with past practices. Each Affiliate of the Borrowers is
      listed on Schedule
      7.12
      (as such
      Schedule may be updated from time to time).

     

     

    Section
      7.13  Suspension.
      Suspend
      or go out of a substantial portion of their business, other than in relation
      to
      Permitted Dispositions or transactions expressly permitted by Sections
      7.4
      and
7.5.

     

     

    Section
      7.14  Inventory
      with Bailees.
      Unless
      the Administrative Agent has granted its prior written consent and the Borrowers
      have delivered to the Administrative Agent a Bailee Acknowledgment with respect
      to the applicable inventory, no inventory shall at any time now or hereafter
      be
      stored with a bailee, warehouseman, or similar party (other than inventory
      located at retail locations).

     

     

    Section
      7.15  Store
      Openings.
      Except
      as otherwise provided in the Borrowers’ Business Plan or Section
      6.20
      with
      respect to the store closings, open any location at which the Borrowers
      maintain, offer for sale or store any of the Collateral.

     

     

    Section
      7.16  Securities
      Accounts.
      Establish or maintain any securities account unless the Administrative Agent
      shall have received a Control Agreement in respect of such securities account
      in
      compliance with Section
      6.18.
      No
      Borrower shall transfer assets out of any securities account; provided,
      however,
      that,
      so long as no Cash Dominion Event has occurred and is continuing or would result
      therefrom, the Borrowers may use such assets (and the proceeds thereof) to
      the
      extent not prohibited by this Agreement.

     

     

    Section
      7.17  Deposit
      Accounts, Credit Card Agreements, etc.
      (a)
      Establish any bank accounts, credit card clearinghouse or processors, other
      than
      those deposit accounts, securities accounts, Credit Card Agreements and other
      accounts, all listed on Schedule 8
      of the
      Perfection Certificate or Schedule 4.20,
      without
      providing advance written notice to the Administrative Agent, provided that,
      in
      the case of securities accounts and deposit accounts, the Borrowers shall
      provide the Administrative Agent with Control Agreements simultaneously with
      the
      opening of such new accounts, (b) violate directly or indirectly any Control
      Agreement with respect to a Controlled Deposit Account or a Controlled
      Securities Account or other bank agency or lock box agreement in favor of the
      Administrative Agent for the benefit of the Lender Group with respect to such
      account, (c) deposit into any of the payroll accounts listed on Schedule 8
      of the
      Perfection Certificate any amounts in excess of amounts necessary to pay current
      payroll obligations from such accounts or (d) change any direction or
      designation relating to any Credit Card Processor.

     

    
      
        
        

      

      
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    Section
      7.18  Employee
      Benefit Plans.

     

     

    (a)  Engage
      in
      any “prohibited transaction”
within
      the meaning of §406 of ERISA or §4975 of the Code which could reasonably be
      expected to result in a Material Adverse Effect; or

     

     

    (b)  permit
      any Guaranteed Pension Plan to incur an “accumulated funding deficiency”,
      as
      such term is defined in §302 of ERISA, whether or not such deficiency is or may
      be waived; or

     

     

    (c)  fail
      to
      contribute to any Guaranteed Pension Plan to an extent which, or terminate
      any
      Guaranteed Pension Plan in a manner which, could result in the imposition of
      a
      lien or encumbrance on the assets of any Loan Party pursuant to §302(f) or §4068
      of ERISA; or

     

     

    (d)  amend
      any
      Guaranteed Pension Plan in circumstances requiring the posting of security
      pursuant to §307 of ERISA or §401(a)(29) of the Code; or

     

     

    (e)  establish,
      maintain, contribute to, or have any obligation or liability, contingent or
      otherwise, with respect to a Benefit Plan, Canadian Benefit Plan or Canadian
      Pension Plan; or

     

     

    (f)  permit
      or
      take any action which would result in the aggregate benefit liabilities (with
      the meaning of §4001 of ERISA) of all Guaranteed Pension Plans exceeding the
      value of the aggregate assets of such Plans, disregarding for this purpose
      the
      benefit liabilities and assets of any such Plan with assets in excess of benefit
      liabilities, by more than $250,000.

     

     

    Section
      7.19  Margin
      Regulations.
      Use all
      or any portion of the proceeds of the Term Loan or any other credit extended
      hereunder to purchase or carry margin stock (within the meaning of Regulation
      U
      of the Federal Reserve Board) in contravention of Regulation U of the Federal
      Reserve Board.

     

     

    Section
      7.20  Amendments
      to First Lien Credit Agreement.
      The
      Borrowers will not agree to any amendment, modification, waiver or supplement
      to
      the First Lien Credit Agreement or any other agreement executed in connection
      therewith which
      contravenes the provisions of the Intercreditor Agreement.

     

     

    Section
      7.21  Acquisition
      of First Lien Debt, Notes.
      The Loan
      Parties shall not, and shall not permit any Subsidiary or Affiliate to purchase,
      redeem, prepay, tender for or otherwise acquire, directly or indirectly, any
      of
      the outstanding First Lien Debt except upon the full repurchase or prepayment
      of
      the Obligations in accordance with the other terms of this Agreement, or the
      refinancing, repurchase or repayment of the First Lien Debt in accordance with
      the Intercreditor Agreement. The Loan Parties will promptly cancel all Notes
      or
      First Lien Debt acquired by it or any of its Subsidiaries or Affiliates pursuant
      to any purchase, redemption, prepayment or tender for the Notes or First Lien
      Debt pursuant to any provision of this Agreement or otherwise and no Notes
      or
      First Lien Debt may be issued in substitution or exchange for any such Notes
      or
      First Lien Debt. For
      the
      avoidance of doubt, this Section 7.21 is not intended and shall not prevent
      the
      Borrowers from making
      any
      payments pursuant
      to the First Lien Credit Agreement.

     

    
      
        
        

      

      
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    Section
      7.22  Potential
      Conflicts of Interest.
      No Loan
      Party shall own, directly or indirectly, any interest in (excepting passive
      holdings for investment purposes of not more than five percent (5%) of the
      securities of any publicly held and traded company), or shall be an officer,
      director, employee, or consultant of, any Person that is a competitor of any
      Loan Party. No officer or director of any Loan Party or any Subsidiary of a
      Loan
      Party shall own, directly or indirectly, any interest in any tangible or
      intangible property used in or necessary to the business of the Loan Parties
      or
      any Subsidiary of a Loan Party, have any cause of action or other claim
      whatsoever against another Loan Party, or owe any amount to any other Loan
      Party, except as permitted pursuant to the definition of Permitted
      Investments.

     

     

    Section
      7.23  Financial
      Covenants.

     

    (a) Minimum
      Availability.
      The
      Borrowers shall not permit or suffer to exist Availability, at all times tested,
      of less than the lesser of (i) the Availability Floor then in effect and (ii)
      ten percent (10%) of the Aggregate Borrowing Base.

     

    (b) Maximum
      Indebtedness.
      The
      Borrowers shall not permit or suffer to exist the aggregate of (i) all payment
      Obligations hereunder, plus
      (ii) all
      First Lien Debt (including, without limitation, all L/C Obligations as defined
      in the First Lien Credit Agreement), to be greater than 60% of the sum of the
      Eligible Inventory (valued at Cost) owned by the U.S. Borrowers and Eligible
      Inventory (valued at Cost) owned by Bombay Canada, tested as of December 31,
      2007.

     

    

     

    ARTICLE
      VIII  

     

     

    EVENTS
      OF
      DEFAULT

     

     

    Section
      8.1  Definition.
      Each of
      the following shall be an Event of Default:

     

     

    (a)  any
      Borrower shall fail to pay (i) when due any installment of principal whether
      at
      the stated date of maturity or any accelerated date of maturity or at any other
      date fixed for payment of the Obligations, and (ii) any interest (including
      any
      interest which, but for the provisions of the Bankruptcy Code, would have
      accrued on such amounts), fees under any Loan Document or any other Obligation
      not set forth in the preceding clauses (i) or (ii) herein (x) so long as any
      Cash Dominion Event shall not have occurred, within 5 days after the date due,
      and (y) when the same shall be due and payable at any time any Cash Dominion
      Event shall have occurred;

     

     

    
      
        
        

      

      
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    (b)  (i)
      any
      Loan Party shall fail to comply with any of the provisions contained in
Sections 5.2
      (with
      respect to delivery of the Borrowing Base Certificate), 6.8,
      6.14(a)(iii),
      6.14(a)(iv),
      6.18,
      or
Article
      VII];
      (ii)
      any Loan Party shall fail to comply with any of the provisions contained in
      Sections
      5.2
      (other
      than with respect to delivery of the Borrowing Base Certificate) or 6.4
      for 5
      Business Days, (iii) any Loan Party shall fail to perform any term, covenant
      or
      agreement contained herein or in any of the other Loan Documents (other than
      those specified elsewhere in this Article VIII)
      for 20
      days after written notice of such failure has been given to the Parent by the
      Administrative Agent; and (iv) any representation or warranty of any Loan Party
      in this Agreement or any of the other Loan Documents or any Record or in any
      other document or instrument delivered pursuant to or in connection with this
      Agreement shall prove to have been false in any material respect upon the date
      when made or deemed to have been made or repeated;

     

     

    (c)  if
      any
      material portion of any Loan Party’s assets is attached, seized, subject to a
      writ or distress warrant, levied upon, or comes into the possession of any
      third
      Person and the same is not discharged for 30 days or more;

     

     

    (d)  if
      an
      Insolvency Proceeding is commenced by any Loan Party;

     

     

    (e)  if
      an
      Insolvency Proceeding is commenced against any Loan Party, and any of the
      following events occur: (i) the applicable Loan Party consents to the
      institution of the Insolvency Proceeding against it, (ii) the petition
      commencing the Insolvency Proceeding is not timely controverted, (iii) the
      petition commencing the Insolvency Proceeding is not dismissed within 60
      calendar days of the date of the filing thereof, (iv) a trustee, custodian,
      liquidator, monitor, receiver or receiver manager is appointed to take
      possession of all or any substantial portion of the properties or assets of,
      or
      to operate all or any substantial portion of the business of, any Loan Party,
      (v) an order for relief shall have been entered therein, (vi) any Loan Party
      shall generally not pay its debts as such debts become due, shall admit in
      writing its inability to pay its debts generally or shall make a general
      assignment for the benefit of creditors or (vii) any Loan Party shall take
      any
      corporate or similar action or any other action to authorize any action
      described in clause
      (i)
      or
      (vi)
      above;

     

     

    (f)  if
      any
      Loan Party is enjoined, restrained, or in any way prevented by court order
      from
      continuing to conduct all or any material part of its business
      affairs;

     

     

    (g)  if
      a
      notice of Lien, levy, or assessment is filed of record with respect to any
      Loan
      Party’s assets by any Governmental Authority, or if any taxes or debts owing at
      any time hereafter to any one or more of such entities becomes a Lien, whether
      choate or otherwise, upon any Loan Party’s assets and the same is not paid prior
      to becoming delinquent;

     

     

    (h)  if
      any
      Loan Party suffers the entry against it of a final judgment for the payment
      of
      money in excess of $1,000,000 (not covered by insurance) and such judgment
      is
      unstayed and undischarged for a period of thirty consecutive days after the
      date
      of entry thereof;

     

     

    (i)  if
      there
      is a default in any material agreement
      to which any Loan Party is a party relative to such Person’s Indebtedness
      involving an aggregate amount of $5,000,000, or more, and such default (i)
      occurs at the final maturity of the obligations thereunder, or (ii) results
      in a
      right by the other party thereto, irrespective of whether exercised, to
      accelerate the maturity of the applicable Loan Party’s obligations thereunder,
      or to terminate such agreement;

     

     

    
      
        
        

      

      
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    (j)  if
      any
      Loan Party makes any payment on account of Indebtedness that has been
      contractually subordinated in right of payment to the payment of the
      Obligations, except to the extent such payment is permitted by the terms of
      the
      subordination provisions application to such Indebtedness;

     

     

    (k)  if
      any of
      the Loan Documents shall be cancelled, terminated, revoked or rescinded or
      the
      Administrative Agent’s Liens on the Collateral with a value in excess of
      $250,000 shall cease to be perfected, or shall cease to have the priority
      contemplated by the Loan Documents, in each case otherwise than in accordance
      with the terms thereof or with the express prior written agreement, consent
      or
      approval of the Lenders, or any action at law, suit or in equity or other legal
      proceeding to cancel, revoke or rescind any of the Loan Documents shall be
      commenced by or on behalf of any Loan Party or any of their respective
      stockholders, or any court or any other governmental or regulatory authority
      or
      agency of competent jurisdiction shall make a determination that, or issue
      a
      judgment, order, decree or ruling to the effect that, any one or more of the
      Loan Documents is illegal, invalid or unenforceable in accordance with the
      terms
      thereof;

     

     

    (l)  any
      Borrower or any ERISA Affiliate incurs any liability to the PBGC or a Guaranteed
      Pension Plan pursuant to Title IV of ERISA in an aggregate amount exceeding
      $1,000,000, or any Borrower or any ERISA Affiliate is assessed withdrawal
      liability pursuant to Title IV of ERISA by a Multiemployer Plan requiring
      aggregate annual payments exceeding $1,000,000, or any of the following occurs
      with respect to a Guaranteed Pension Plan: (i) an ERISA Reportable Event, or
      a
      failure to make a required installment or other payment (within the meaning
      of
§ 302(f)(1) of ERISA), provided
      that the
      Administrative Agent determines in its Permitted Discretion that such event
      (x)
      could be expected to result in liability of any Borrower or any of its
      Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount
      exceeding $1,000,000 and (y) could constitute grounds for the termination
      of such Guaranteed Pension Plan by the PBGC, for the appointment by the
      appropriate United States District Court of a trustee to administer such
      Guaranteed Pension Plan or for the imposition of a lien in favor of such
      Guaranteed Pension Plan; or (ii) the appointment by a United States District
      Court of a trustee to administer such Guaranteed Pension Plan; or (iii) the
      institution by the PBGC of proceedings to terminate such Guaranteed Pension
      Plan;

     

     

    (m)  any
      Loan
      Party shall be indicted for a state or federal crime, or any civil or criminal
      action shall otherwise have been brought or threatened against any Loan Party,
      a
      punishment for which in any such case could include the forfeiture of any assets
      of such Loan Party having a fair market value in excess of
      $1,000,000;

     

     

    (n)  a
      Change
      of Control shall occur; or

     

     

    (o)  any
      “Event of Default” under and as defined in the First Lien Credit Agreement shall
      have occurred and be continuing.

     

     

    
      
        
        

      

      
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    Section
      8.2  Remedies.
      During
      the continuance of any Event of Default, the Administrative Agent may, and,
      at
      the request of the Required Lenders, shall, in each case by notice to the
      Borrowers and in addition to any other right or remedy provided under any Loan
      Document or by any applicable Requirement of Law, do each of the following:
      declare immediately due and payable all or part of any Obligation (including
      any
      accrued but unpaid interest thereon), whereupon the same shall become
      immediately due and payable, without presentment, demand, protest or further
      notice or other requirements of any kind, all of which are hereby expressly
      waived by Parent and the Borrowers (and, to the extent provided in any other
      Loan Document, other Loan Parties); provided,
      however,
      that,
      effective immediately upon the occurrence of the Events of Default specified
      in
Section
      8.1(d)
      or
Section 8.1(e)(ii),
      each
      Obligation (including in each case any accrued all accrued but unpaid interest
      thereon) shall automatically become and be due and payable, without presentment,
      demand, protest or further notice or other requirement of any kind, all of
      which
      are hereby expressly waived by the Borrowers (and, to the extent provided in
      any
      other Loan Document, any other Loan Party).

     

     

    
       

       

    

    ARTICLE
      IX  

     

     

    THE
      ADMINISTRATIVE AGENT

     

     

    Section
      9.1  Appointment
      and Duties.
      (a) Appointment
      of Agents.
      Each
      Lender hereby appoints GB Merchant Partners, LLC (together with any successor
      Administrative Agent pursuant to Section 9.9)
      as the
      Administrative Agent hereunder and authorizes the Administrative Agent to (i)
      execute and deliver the Loan Documents and accept delivery thereof on its behalf
      from any Loan Party, (ii) take such action on its behalf and to exercise all
      rights, powers and remedies and perform the duties as are expressly delegated
      to
      the Administrative Agent under such Loan Documents and (iii) exercise such
      powers as are reasonably incidental thereto.

     

     

    (b)  Duties
      as Collateral and Disbursing Agent.
      Without
      limiting the generality of clause
      (a)
      above,
      the Administrative Agent shall have the sole and exclusive right and authority
      (to the exclusion of the Lenders), and are hereby authorized, to (i) act as
      the disbursing and collecting agent for the Lenders with respect to all payments
      and collections arising in connection with the Loan Documents (including in
      any
      Insolvency Proceeding described in Section
      8.1(d)
      or
Section 8.1(e)(ii)
      or any
      other bankruptcy, insolvency or similar proceeding), and each Person making
      any
      payment in connection with any Loan Document to any Secured Party is hereby
      authorized to make such payment to the Administrative Agent, (ii) file and
      prove
      claims and file other documents necessary or desirable to allow the claims
      of
      the Secured Parties with respect to any Obligation in any proceeding described
      in Section
      8.1(d)
      or
Section 8.1(e)(ii)
      or any
      other bankruptcy, insolvency or similar proceeding (but not to vote, consent
      or
      otherwise act on behalf of such Secured Party), (iii) act as collateral agent
      for each Secured Party for purposes of the perfection of all Liens created
      by
      such agreements and all other purposes stated therein, (iv) manage, supervise
      and otherwise deal with the Collateral, (v) take such other action as is
      necessary or desirable to maintain the perfection and priority of the Liens
      created or purported to be created by the Loan Documents, (vi) except as may
      be
      otherwise specified in any Loan Document, exercise all remedies given to the
      Administrative Agent and the other Secured Parties with respect to the
      Collateral, whether under the Loan Documents, applicable Requirements of Law
      or
      otherwise and (vii) execute any amendment, consent or waiver under the Loan
      Documents on behalf of any Lender that has consented in writing to such
      amendment, consent or waiver; provided,
      however,
      that
      the Administrative Agent hereby appoints, authorizes and directs each other
      Lender to act as collateral sub-agent for the Administrative Agent and the
      Lenders for purposes of the perfection of all Liens with respect to the
      Collateral, including any deposit account maintained by a Loan Party with,
      and
      cash and Cash Equivalents held by, such Lender and may further authorize and
      direct each other, the Lenders to take further actions as collateral sub-agents
      for purposes of enforcing such Liens or otherwise to transfer the Collateral
      subject thereto to the Administrative Agent and each Lender hereby agrees to
      take such further actions to the extent, and only to the extent, so authorized
      and directed.

     

    
      
        
        

      

      
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    (c)  Limited
      Duties.
      Under
      the Loan Documents, the Administrative Agent (i) is acting solely on behalf
      of
      the Lenders, with duties that are entirely administrative in nature,
      notwithstanding the use of the defined term “Administrative Agent”, and the
      terms “agent”, “administrative agent”, and “collateral agent” and similar terms
      in any Loan Document to refer to the Administrative Agent, which terms are
      used
      for title purposes only, (ii) is not assuming any obligation under any Loan
      Document other than as expressly set forth therein or any role as agent,
      fiduciary or trustee of or for any Lender or any other Secured Party and (iii)
      shall have no implied functions, responsibilities, duties, obligations or other
      liabilities under any Loan Document, and each Lender hereby waives and agrees
      not to assert any claim against the Administrative Agent based on the roles,
      duties and legal relationships expressly disclaimed in clauses
      (i)
      through
(iii)
      above.

     

     

    (d)  To
      the
      extent that any Loan Party now or in the future is required to grant security
      pursuant to the laws of the Province of Quebec, each Lender acting for itself
      and on behalf of all present and future Related Persons of such Lender that
      are
      or become Secured Parties, hereby irrevocably authorizes and appoints the
      Administrative Agent to act as the holder of an irrevocable power of attorney
      (fondé
      de pouvoir)
      (within
      the meaning of Article 2692 of the Civil
      Code of Quebec)
      in
      order to hold any hypothec granted under the laws of the Province of Quebec
      as
      security for any debenture, bond or other title of indebtedness that may be
      issued by a Loan Party pursuant to a deed of hypothec and to exercise such
      rights and duties as are conferred upon a fondé
      de pouvoir
      under
      the relevant deed of hypothec and applicable laws (with the power to delegate
      any such rights or duties). Moreover, in respect of any pledge by a Loan Party
      of any such debenture, bond or other title of indebtedness as security for
      any
      Obligations, the Administrative Agent shall also be authorized to hold such
      debenture, bond or other title of indebtedness as agent and pledgee for the
      benefit of the Secured Parties, the whole notwithstanding the provisions of
      Section 32 of the An
      Act respecting the Special Powers of Legal Persons
      (Quebec). The execution prior to the date hereof by the Administrative Agent
      of
      any deed of hypothec or other security documents made pursuant to the laws
      of
      the Province of Quebec, is hereby ratified and confirmed. Any person who becomes
      a Secured Party shall be deemed to have consented to and ratified the foregoing
      appointment of each of the Administrative Agent as fondé
      de pouvoir,
      agent
      and mandatory on behalf of all Secured Parties, including such
      person.
      For
      greater certainty, the Administrative Agent,
      acting
      as the holder of an irrevocable power of attorney (fondé
      de pouvoir),
      shall
      have the same rights, powers, immunities, indemnities and exclusions from
      liability as are prescribed in favor of the Administrative
      Agent in this Agreement, which shall apply mutatis
      mutandis.
      In the
      event of the resignation and appointment of a successor Administrative
      Agent, such successor Administrative Agent shall also act
      as the
      holder of an irrevocable power of attorney (fondé
      de pouvoir).

     

     

    Section
      9.2  Binding
      Effect.
      Each
      Lender agrees that (i) any action taken by the Administrative Agent or the
      Required Lenders (or, if expressly required hereby, a greater proportion of
      the
      Lenders) in accordance with the provisions of the Loan Documents, (ii) any
      action taken by the Administrative Agent in reliance upon the instructions
      of
      the Required Lenders (or, where so required, such greater proportion) and (iii)
      the exercise by the Administrative Agent or the Required Lenders (or, where
      so
      required, such greater proportion) of the powers set forth herein or therein,
      together with such other powers as are reasonably incidental thereto, shall
      be
      authorized and binding upon all of the Secured Parties.

     

    
      
        
        

      

      
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    Section
      9.3  Use
      of
      Discretion.
      (a) No
      Action without Instructions.
      The
      Administrative Agent shall not be required to exercise any discretion or take,
      or to omit to take, any action, including with respect to enforcement or
      collection, except any action it is required to take or omit to take
      (i) under any Loan Document or (ii) pursuant to instructions from the
      Required Lenders.

     

     

    (b)  Right
      Not to Follow Certain Instructions.
      Notwithstanding clause
      (a)
      above,
      the Administrative Agent shall not be required to take, or to omit to take,
      any
      action (i) unless, upon demand, the Administrative Agent receives an
      indemnification satisfactory to it from the Lenders (or, to the extent
      applicable and acceptable to the Administrative Agent, any other Secured Party)
      against all Liabilities that, by reason of such action or omission, may be
      imposed on, incurred by or asserted against the Administrative Agent or any
      Related Person thereof or (ii) that is, in the opinion of the Administrative
      Agent or its counsel, contrary to any Loan Document or applicable Requirement
      of
      Law.

     

     

    Section
      9.4  Delegation
      of Rights and Duties.
      The
      Administrative Agent may, upon any term or condition it specifies, delegate
      or
      exercise any of its rights, powers and remedies under, and delegate or perform
      any of its duties or any other action with respect to, any Loan Document by
      or
      through any trustee, co-agent, employee, attorney-in-fact and any other Person
      (including any Secured Party). Any such Person shall benefit from this
Article IX
      to the
      extent as the Administrative Agent.

     

     

    Section
      9.5  Reliance
      and Liability.
      (a)
      The
      Administrative Agent may, without incurring any liability hereunder, (i) treat
      the payee of any Note as its holder until such Note has been assigned in
      accordance with Section 10.2,
      (ii)
      rely on the Register to the extent set forth in Section 2.10
      (iii)
      consult with any of its Related Persons and, whether or not selected by it,
      any
      other advisors, accountants and other experts (including advisors to, and
      accountants and experts engaged by, any Loan Party) and (iv) rely and act upon
      any document and information (including those transmitted by Electronic
      Transmission) and any telephone message or conversation, in each case believed
      by it to be genuine and transmitted, signed or otherwise authenticated by the
      appropriate parties.

     

     

    (b)  Neither
      the Administrative Agent nor any Related Person shall be liable for any action
      taken or omitted to be taken by any of them under or in connection with any
      Loan
      Document, and each Lender and the Borrowers hereby waive and shall not assert
      (and each of the Borrowers shall cause each other Loan Party to waive and agree
      not to assert) any right, claim or cause of action based thereon, except to
      the
      extent of liabilities resulting primarily from the gross negligence or willful
      misconduct of the Administrative Agent or, as the case may be, such Related
      Person (each as determined in a final, non-appealable judgment by a court of
      competent jurisdiction) in connection with the duties expressly set forth
      herein. Without limiting the foregoing, the Administrative Agent:

     

    (i)  shall
      not
      be responsible or otherwise incur liability for any action or omission taken
      in
      reliance upon the instructions of the Required Lenders or for the actions or
      omissions of any of its Related Persons selected with reasonable care (other
      than employees, officers and directors of the Administrative Agent, when acting
      on behalf of the Administrative Agent);

     

    
      
        
        

      

      
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    (ii)  shall
      not
      be responsible to any Secured Party for the due execution, legality, validity,
      enforceability, effectiveness, genuineness, sufficiency or value of, or the
      attachment, perfection or priority of any Lien created or purported to be
      created under or in connection with, any Loan Document;

     

    (iii)  makes
      no
      warranty or representation, and shall not be responsible, to any Secured Party
      for any statement, document, information, representation or warranty made or
      furnished by or on behalf of any Loan Party or any Loan Party’s Related Person
      in connection with any Loan Document or any transaction contemplated therein
      or
      any other document or information with respect to any Loan Party, whether or
      not
      transmitted or (except for documents expressly required under any Loan Document
      to be transmitted to the Lenders) omitted to be transmitted by the
      Administrative Agent, including as to completeness, accuracy, scope or adequacy
      thereof, or for the scope, nature or results of any due diligence performed
      by
      the Administrative Agent in connection with the Loan Documents; and

     

    (iv)  shall
      not
      have any duty to ascertain or to inquire as to the performance or observance
      of
      any provision of any Loan Document, whether any condition set forth in any
      Loan
      Document is satisfied or waived, as to the financial condition of any Loan
      Party
      or as to the existence or continuation or possible occurrence or continuation
      of
      any Default or Event of Default and shall not be deemed to have notice or
      knowledge of such occurrence or continuation unless it has received a notice
      from the Borrower, any Lender describing such Default or Event of Default
      clearly labeled “notice of default” (in which case the Administrative Agent
      shall promptly give notice of such receipt to all Lenders);

     

    and,
      for
      each of the items set forth in clauses (i) through (iv) above, each Lender
      and
      the Borrowers hereby waives and agrees not to assert (and each of the Borrowers
      shall cause each other Loan Party to waive and agree not to assert) any right,
      claim or cause of action it might have against the Administrative Agent based
      thereon.

     

    Section
      9.6  Agent
      Individually.
      The
      Administrative Agent and its Affiliates may make loans and other extensions
      of
      credit to, acquire Stock and Stock Equivalents of, engage in any kind of
      business with, any Loan Party or Affiliate thereof as though it were not acting
      as the Administrative Agent and may receive separate fees and other payments
      therefor. To the extent the Administrative Agent or any of their Affiliates
      makes any Loan or otherwise becomes a Lender hereunder, it shall have and may
      exercise the same rights and powers hereunder and shall be subject to the same
      obligations and liabilities as any other Lender and the terms “Lender”,
“Required Lender” and any similar terms shall, except where otherwise expressly
      provided in any Loan Document, include, without limitation, the Administrative
      Agent or such Affiliate, as the case may be, in its individual capacity as
      Lender or as one of the Required Lenders, respectively.

     

     

    Section
      9.7  Lender
      Credit Decision.
      Each
      Lender acknowledges that it shall, independently and without reliance upon
      the
      Administrative Agent, any Lender or any of their Related Persons or upon any
      document (including the Disclosure Documents) solely or in part because such
      document was transmitted by the Administrative Agent or any of its Related
      Persons, conduct its own independent investigation of the financial condition
      and affairs of each Loan Party and make and continue to make its own credit
      decisions in connection with entering into, and taking or not taking any action
      under, any Loan Document or with respect to any transaction contemplated in
      any
      Loan Document, in each case based on such documents and information as it shall
      deem appropriate. Except for documents expressly required by any Loan Document
      to be transmitted by the Administrative Agent to the Lenders, the Administrative
      Agent shall not have any duty or responsibility to provide any Lender with
      any
      credit or other information concerning the business, prospects, operations,
      property, financial and other condition or creditworthiness of any Loan Party
      or
      any Affiliate of any Loan Party that may come in to the possession of either
      the
      Administrative Agent or any of its Related Persons.

     

    
      
        
        

      

      
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    Section
      9.8  Expenses;
      Indemnities.
      (a)
      Each
      Lender agrees to reimburse the Administrative Agent and each of its Related
      Persons (to the extent not reimbursed by any Loan Party) promptly upon demand
      for such Lender’s Pro Rata Share of any costs and expenses (including fees,
      charges and disbursements of financial, legal and other advisors and Taxes
      paid
      in the name of, or on behalf of, any Loan Party) that may be incurred by the
      Administrative Agent or any of their Related Persons in connection with the
      preparation, syndication, execution, delivery, administration, modification,
      consent, waiver or enforcement (whether through negotiations, through any
      work-out, bankruptcy, restructuring or other legal or other proceeding or
      otherwise) of, or legal advice in respect of its rights or responsibilities
      under, any Loan Document.

     

     

    (b)  Each
      Lender further agrees to indemnify the Administrative Agent and each of its
      Related Persons (to the extent not reimbursed by any Loan Party), for such
      Lender’s Pro Rata Share of any Liabilities (including taxes, interests and
      penalties imposed for not properly withholding or backup withholding on payments
      made to on or for the account of any Lender) that may be imposed on, incurred
      by
      or asserted against the Administrative Agent or any of its Related Persons
      in
      any matter relating to or arising out of, in connection with or as a result
      of
      any Loan Document, any Related Document or any other act, event or transaction
      related, contemplated in or attendant to any such document, or, in each case,
      any action taken or omitted to be taken by the Administrative Agent or any
      of
      its Related Persons under or with respect to any of the foregoing; provided,
      however,
      that no
      Lender shall be liable to the Administrative Agent or any of its Related Persons
      to the extent such liability has resulted from the gross negligence or willful
      misconduct of the Administrative Agent or, as the case may be, such Related
      Person.

     

     

    Section
      9.9  Resignation
      of Administrative Agent.

     

     

    (a)  The
      Administrative Agent may resign at any time by delivering notice of such
      resignation to the Lenders and the Parent, effective on the date set forth
      in
      such notice (or provided such effective date is at least 30 days after the
      date
      of such notice). If the Administrative Agent delivers any such notice, the
      Required Lenders shall have the right to appoint a successor Administrative
      Agent. If, within 30 days after the retiring Administrative Agent has given
      notice of resignation, no successor Administrative Agent has been appointed
      by
      such Lenders that has accepted such appointment, then the retiring
      Administrative Agent may, on behalf of the Lenders, appoint a successor
      Administrative Agent from among the relevant Lenders. Each appointment under
      this clause
      (a)
      shall be
      subject to the prior consent of the Parent, which may not be unreasonably
      withheld, conditioned or delayed but shall not be required during the
      continuance of a Default.

     

     

    
      
        
        

      

      
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    (b)  Effective
      immediately upon its resignation, (i) the retiring Administrative Agent shall
      be
      discharged from its duties and obligations under the Loan Documents, (ii) the
      relevant Lenders shall assume and perform all of the duties of such
      Administrative Agent until a successor Administrative Agent shall have accepted
      a valid appointment hereunder, (iii) the retiring Administrative Agent and
      its
      Related Persons shall no longer have the benefit of any provision of any Loan
      Document other than with respect to any actions taken or omitted to be taken
      while such retiring Administrative Agent was, or because such Administrative
      Agent had been, validly acting as Administrative Agent, under the Loan Documents
      and (iv) subject to its rights under Section 9.3,
      the
      retiring Administrative Agent shall take such action as may be reasonably
      necessary to assign to the successor Administrative Agent its rights as
      Administrative Agent under the Loan Documents. Effective immediately upon its
      acceptance of a valid appointment as Administrative Agent, a successor
      Administrative Agent shall succeed to, and become vested with, all the rights,
      powers, privileges and duties of the retiring Administrative Agent under the
      Loan Documents.

     

     

    Section
      9.10  Release
      of Collateral or Guarantors.
      Each
      Lender hereby consents to the release and hereby directs the Administrative
      Agent to release (or, in the case of clause
      (b)(ii)
      below,
      release or subordinate) the following:

     

     

    (a)  any
      Subsidiary of a Borrower from its guaranty of any Obligation of any Loan Party
      or any Borrower (other than Parent) if all of the Securities of such Person
      owned by any Loan Party are Sold in a Sale permitted under the Loan Documents
      (including pursuant to a waiver or consent), to the extent that, after giving
      effect to such Sale, such Person would not be required to guaranty any
      Obligations pursuant to Section 6.11
      or be a Borrower hereunder;
      and

     

     

    (b)  any
      Lien
      held by the Administrative Agent for the benefit of the Secured Parties against
      (i) any Collateral that is Sold by a Loan Party in a Sale permitted by the
      Loan
      Documents (including pursuant to a valid waiver or consent), to the extent
      all
      Liens required to be granted in such Collateral pursuant to Section 6.11
      after
      giving effect to such Sale have been granted, and (ii) all of the Collateral
      and
      all Loan Parties, upon (A) payment and satisfaction in full of the Term Loan
      and
      all other Obligations that the Administrative Agent has been notified in writing
      are then due and payable, (B) deposit of cash collateral with respect to all
      contingent Obligations, in amounts and on terms and conditions and with parties
      satisfactory to the Administrative Agent and each Indemnitee that is owed such
      Obligations and (C) to the extent requested by the Administrative Agent, receipt
      by the Secured Parties of liability releases from the Loan Parties each in
      form
      and substance acceptable to the Administrative Agent.

     

    Each
      Lender hereby directs the Administrative Agent, and the Administrative Agent
      hereby agrees, upon receipt of reasonable advance notice from the Parent, to
      execute and deliver or file such documents and to perform other actions
      reasonably necessary to release the guaranties and Liens when and as directed
      in
      this Section 9.10.

     

     

    Section
      9.11  Additional
      Secured Parties.
      The
      benefit of the provisions of the Loan Documents directly relating to the
      Collateral or any Lien granted thereunder shall extend to and be available
      to
      any Secured Party that is not a Lender as long as, by accepting such benefits,
      such Secured Party agrees, as among the Administrative Agent, and all other
      Secured Parties, that such Secured Party is bound by (and, if requested by
      the
      Administrative Agent, shall confirm such agreement in a writing in form and
      substance acceptable to the relevant Administrative Agent) this Article IX,
      Section 10.8
      (Right
      of Setoff),
      Section 10.9
      (Sharing
      of Payments)
      and
Section 10.20
      (Confidentiality)
      and the
      decisions and actions of the Administrative Agent and the Required Lenders
      to
      the same extent a Lender is bound; provided,
      however,
      that,
      notwithstanding the foregoing, (a) such Secured Party shall be bound by
Section 9.8
      only to
      the extent of Liabilities, costs and expenses with respect to or otherwise
      relating to the Collateral held for the benefit of such Secured Party, in which
      case the obligations of such Secured Party thereunder shall not be limited
      by
      any concept of Pro Rata Share or similar concept, (b) each of the Administrative
      Agent and the Lenders shall be

     

    
      
        
        

      

      
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 entitled
        to act at its sole discretion, without regard to the interest of such Secured
        Party, regardless of whether any Obligation to such Secured Party thereafter
        remains outstanding, is deprived of the benefit of the Collateral, becomes
        unsecured or is otherwise affected or put in jeopardy thereby, and without
        any
        duty or liability to such Secured Party or any such Obligation and (c) such
        Secured Party shall not have any right to be notified of, consent to, direct,
        require or be heard with respect to, any action taken or omitted in respect
        of
        the Collateral or under any Loan Document.

    

     

     

    ARTICLE
      X  

     

     

    MISCELLANEOUS

     

     

    Section
      10.1  Amendments,
      Waivers, Etc.
      (a)
      No
      amendment or waiver of any provision of any Loan Document (other than the Fee
      Letter and the Control Agreements) and no consent to any departure by any Loan
      Party therefrom shall be effective unless the same shall be in writing and
      signed (1) in the case of an amendment, consent or waiver to cure any ambiguity,
      omission, defect or inconsistency or granting a new Lien for the benefit of
      the
      Secured Parties or extending an existing Lien over additional property, by
      the
      Administrative Agent and the Parent, (2) in the case of any other waiver, or
      consent, by the Required Lenders (or by the Administrative Agent with the
      consent of the Required Lenders) and (3) in the case of any other amendment,
      by
      the Required Lenders (or by the Administrative Agent with the consent of the
      Required Lenders) and the Borrowers; provided,
      however,
      that no
      amendment, consent or waiver described in clauses (2)
      or
(3)
      above
      shall, unless in writing and signed by each Lender directly affected thereby
      (or
      by the Administrative Agent with the consent of such Lender), in addition to
      any
      other Person the signature of which is otherwise required pursuant to any Loan
      Document, do any of the following:

     

    (i)  waive
      any
      condition specified in Section 3.1,
      except
      any condition referring to any other provision of any Loan
      Document;

     

    (ii)  reduce
      (including through release, forgiveness, assignment or otherwise) (A) the
      principal amount of, the interest rate on, or any obligation of the Borrower
      to
      repay (whether or not on a fixed date), any outstanding Loan owing to such
      Lender, or (B) any fee or accrued interest payable to such Lender;

     

    (iii)  waive
      or
      postpone any scheduled maturity date or other scheduled date fixed for the
      payment, in whole or in part, of principal of or interest on the Term Loan
      or
      any fee owing to such Lender; provided,
      however,
      that
      this clause
      (iv)
      does not
      apply to any change to mandatory prepayments, including those required under
      Section 2.5;

     

    
      
        
        

      

      
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    (iv)  except
      as
      provided in Section 10.9,
      release
      all or substantially all of the Collateral or any Borrower or any Guarantor
      from
      its guaranty of any Obligation of the Borrowers;

     

    (v)  reduce
      or
      increase the proportion of Lenders required for the Lenders (or any subset
      thereof) to take any action hereunder or change the definition of the terms
      “Required Lenders”, “Pro Rata Share” or “Pro Rata Outstandings”; or

     

    (vi)  amend
      Section 9.10,
      Section 10.9
      or this
Section 10.1;

     

    and
      provided,
      further,
      that
      (x) no amendment, waiver or consent shall affect the rights or duties under
      any
      Loan Document of, or any payment to, the Administrative Agent (or otherwise
      modify any provision of Article IX
      or the
      application thereof), and (y) the consent of the Borrowers shall not be required
      to change any order of priority set forth in Section 2.12.

     

    (b)  Each
      waiver or consent under any Loan Document shall be effective only in the
      specific instance and for the specific purpose for which it was given. No notice
      to or demand on any Loan Party shall entitle any Loan Party to any notice or
      demand in the same, similar or other circumstances. No failure on the part
      of
      any Secured Party to exercise, and no delay in exercising, any right hereunder
      shall operate as a waiver thereof, nor shall any single or partial exercise
      of
      any such right preclude any other or further exercise thereof or the exercise
      of
      any other right.

     

     

    Section
      10.2  Assignments
      and Participations; Binding Effect.
      (a) Binding
      Effect.
      This
      Agreement shall become effective when it shall have been executed by the
      Borrowers, the Lenders and the Administrative Agent. Thereafter, it shall be
      binding upon and inure to the benefit of the Borrowers (in each case except
      for
Article IX),
      the
      Administrative Agent and each Lender and, to the extent provided in Section 9.11,
      each
      other Indemnitee and Secured Party and, in each case, their respective
      successors and permitted assigns. None of the Borrowers or the Administrative
      Agent (except to a successor Administrative Agent named pursuant to Section 9.9
      or
      otherwise to facilitate the transaction contemplated in such Section 9.9)
      shall
      have the right to assign any rights or obligations hereunder or any interest
      herein.

     

     

    (b)  Right
      to Assign.
      Each
      Lender may, with the consent of the Administrative Agent, sell, transfer,
      negotiate or assign all or a portion of its rights and obligations hereunder
      to
      (i) any existing Lender, (ii) any Affiliate or Approved Fund of any such Lender,
      (iii) any Eligible Assignee, or (iv) any other Person acceptable (which
      acceptance shall not be unreasonably withheld or delayed) to the Administrative
      Agent; provided,
      however,
      the
      aggregate outstanding principal amount (determined as of the effective date
      of
      the applicable Assignment) of the Loan subject to any such Sale shall be an
      integral multiple of $1,000,000, unless such Sale is made to an existing Lender
      or an Affiliate or Approved Fund of any existing Lender, or is of the assignor’s
      (together with its Affiliates and Approved Funds) entire interest in the Term
      Loan or is made with the prior consent of the Borrowers and the Administrative
      Agent.

     

     

    (c)  Procedure.
      The
      parties to each Sale made in reliance on clause
      (b)
      above
      (other than those described in clause
      (e)
      or
(f)
      below)
      shall execute and deliver to the Administrative Agent (which shall keep a copy
      thereof) an Assignment, together with any existing Note subject to such Sale
      (or
      any affidavit of loss therefor acceptable to the Administrative Agent), any
      tax
      forms required to be delivered pursuant to Section 2.12(a)
      and
      payment by the assignee of an assignment fee in the amount of $3,500, provided,
      that no
      such
      fee shall be payable in connection with an assignment to any existing Lender
      or
      any Affiliate of any Lender, or any Approved Fund. Upon receipt of all the
      foregoing, and conditioned upon such receipt and upon the Administrative Agent
      consenting to such Assignment, from and after the effective date specified
      in
      such Assignment, the Administrative Agent shall record or cause to be recorded
      in the Register the information contained in such Assignment.

     

     

    
      
        
        

      

      
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    (d)  Effectiveness.
      Effective upon the entry of such record in the Register, (i) such assignee
      shall become a party hereto and, to the extent that rights and obligations
      under
      the Loan Documents have been assigned to such assignee pursuant to such
      Assignment, shall have the rights and obligations of a Lender, (ii) any
      applicable Note shall be transferred to such assignee through such entry and
      (iii) the assignor thereunder shall, to the extent that rights and obligations
      under this Agreement have been assigned by it pursuant to such Assignment,
      relinquish its rights (except for those surviving the payment in full of the
      Obligations) and be released from its obligations under the Loan Documents,
      other than those relating to events or circumstances occurring prior to such
      assignment (and, in the case of an Assignment covering all or the remaining
      portion of an assigning Lender’s rights and obligations under the Loan
      Documents, such Lender shall cease to be a party hereto except that each Lender
      agrees to remain bound by Article IX,
      Section 10.8
      and
Section 10.9
      to the
      extent provided in Section 9.11).

     

     

    (e)  Grant
      of Security Interests.
      In
      addition to the other rights provided in this Section 10.2,
      each
      Lender may grant a security interest in, or otherwise assign as collateral,
      any
      of its rights under this Agreement, whether now owned or hereafter acquired
      (including rights to payments of principal or interest on its Loan), to (A)
      any
      federal reserve bank (pursuant to Regulation A of the Federal Reserve Board),
      without notice to the Administrative Agent or (B) any holder of, or trustee
      for the benefit of the holders of, such Lender’s Securities by notice to the
      Administrative Agent; provided,
      however,
      that no
      such holder or trustee, whether because of such grant or assignment or any
      foreclosure thereon (unless such foreclosure is made through an assignment
      in
      accordance with clause
      (b)
      above),
      shall be entitled to any rights of such Lender hereunder and no such Lender
      shall be relieved of any of its obligations hereunder.

     

     

    (f)  Participants.
      In
      addition to the other rights provided in this Section 10.2,
      each
      Lender may without notice to or consent from the Administrative Agent or
      the Borrowers, sell participations to one or more Persons in or to all or a
      portion of its rights and obligations under the Loan Documents; provided,
      however,
      that,
      whether as a result of any term of any Loan Document or of such grant or
      participation, (i) no such participant shall have a commitment, or be deemed
      to
      have made an offer to commit, to make any Loan hereunder, and, except as
      provided in the applicable option agreement, none shall be liable for any
      obligation of such Lender hereunder, (ii) such Lender’s rights and obligations,
      and the rights and obligations of the Loan Parties and the Secured Parties
      towards such Lender, under any Loan Document shall remain unchanged and each
      other party hereto shall continue to deal solely with such Lender, which shall
      remain the holder of the Obligations in the Register, except that (A) each
      such
      participant shall be entitled to the benefit of Sections 2.11
      and
2.12,
      but
      only to the extent such participant delivers the tax forms such Lender is
      required to collect pursuant to Section 2.12(a)
      and then
      only to the extent of any amount to which such Lender would be entitled in
      the
      absence of any such grant or participation; provided,
      however,
      that in
      no case shall such participant have the right to enforce any of the terms of
      any
      Loan Document, and (iii) the consent of such participant shall not be required
      (either directly, as a restraint on such Lender’s ability to consent
      hereunder or otherwise) for any amendments, waivers or consents with respect
      to
      any Loan Document or to exercise or refrain from exercising any powers or rights
      such Lender may have under or in respect of the Loan Documents (including the
      right to enforce or direct enforcement of the Obligations), except for those
      described in clauses (ii)
      and
(iii)
      of
Section 10.1(a)
      with
      respect to amounts, or dates fixed for payment of amounts, to which such
      participant would otherwise be entitled and, except for those described in
      Section 10.1(a)(iv)
      (or
      amendments, consents and waivers with respect to Section 9.10
      to
      release all or substantially all of the Collateral).

     

    
      
        
        

      

      
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    Section
      10.3  Costs
      and Expenses.
      Any
      action taken by any Loan Party under or with respect to any Loan Document,
      even
      if required under any Loan Document or at the request of any Secured Party,
      shall be at the expense of such Loan Party, and no Secured Party shall be
      required under any Loan Document to reimburse any Loan Party or Loan Party
      therefor except as expressly provided therein. In addition, the Borrowers agree
      to pay or reimburse upon demand (a) the Administrative Agent for all reasonable
      out-of-pocket costs and expenses incurred by it or any of its Related Persons
      in
      connection with the investigation, development, preparation, negotiation,
      syndication, execution, interpretation or administration of, any modification
      of
      any term of or termination of, any Loan Document, any commitment or proposal
      letter therefor, any other document prepared in connection therewith or the
      consummation and administration of any transaction contemplated therein
      (including periodic audits in connection therewith and environmental audits
      and
      assessments), in each case including the reasonable fees, charges and
      disbursements of legal counsel to the Administrative Agent or such Related
      Persons, and fees, charges and disbursements of the auditors, appraisers,
      printers and other of their Related Persons retained by or on behalf of any
      of
      them or any of their Related Persons, (b) the Administrative Agent for all
      reasonable costs and expenses incurred by it or any of its Related Persons
      in
      connection with internal audit reviews, field examinations and Collateral
      examinations (which shall be reimbursed, in addition to the out-of-pocket costs
      and expenses of such examiners, at the per diem rate per individual charged
      by
      the Administrative Agent for its examiners) and (c) the Administrative Agent,
      its Related Persons, and each Lender for all costs and expenses incurred in
      connection with (i) any refinancing or restructuring of the credit arrangements
      provided hereunder in the nature of a “work-out”, (ii) the enforcement or
      preservation of any right or remedy under any Loan Document, any Obligation,
      with respect to the Collateral or any other related right or remedy or (iii)
      the
      commencement, defense, conduct of, intervention in, or the taking of any other
      action with respect to, any proceeding (including any bankruptcy or insolvency
      proceeding) related to any Loan Party, Loan Document, Obligation or Related
      Transaction (or the response to and preparation for any subpoena or request
      for
      document production relating thereto), including reasonable fees and
      disbursements of counsel (including allocated costs of internal
      counsel).

     

     

    Section
      10.4  Indemnities.
      (a)
      The
      Borrowers agree to indemnify, hold harmless and defend the Administrative Agent,
      each Lender and each of their respective Related Persons (each such Person
      being
      an “Indemnitee”)
      from
      and against all Liabilities (including brokerage commissions, fees and other
      compensation) that may be imposed on, incurred by or asserted against any such
      Indemnitee in any matter relating to or arising out of, in connection with
      or as
      a result of (i) any Loan Document, any Related Document, any Disclosure
      Document, any Obligation (or the repayment thereof), the use or intended use
      of
      the proceeds of the Term Loan, or any securities filing of, or with respect
      to,
      any Loan Party, (ii) any commitment letter, proposal letter or term sheet with
      any Person or any Contractual Obligation, arrangement or understanding with
      any
      broker, finder or consultant, in each case entered into by or on behalf of
      the
      Borrowers, any Loan Party or any Affiliate of any of them in connection with
      any
      of the foregoing, (iii) any actual or prospective investigation, litigation
      or
      other proceeding, whether or not brought by any such Indemnitee or any of its
      Related Persons, any holders of Securities or creditors (and including
      attorneys’ fees in any case), 

     

     

    
      
        
        

      

      
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whether
        or not any such Indemnitee, Related Person, holder or creditor is a party
        thereto, and whether or not based on any securities or commercial law or
        regulation or any other Requirement of Law or theory thereof, including common
        law, equity, contract, tort or otherwise, or (iv) any other act, event or
        transaction related, contemplated in or attendant to any of the foregoing
        (collectively, the “Indemnified
        Matters”);
        provided,
        however,
        that
        the Borrowers shall not have any liability under this Section 10.4
        to any
        Indemnitee with respect to any Indemnified Matter, and no Indemnitee shall
        have
        any liability with respect to any Indemnified Matter other than (to the extent
        otherwise liable), to the extent such liability has resulted from the gross
        negligence or willful misconduct of such Indemnitee, as determined by a court
        of
        competent jurisdiction in a final non-appealable judgment or order. Furthermore,
        each Borrower waives and agrees not to assert against any Indemnitee, and
        shall
        cause each other Loan Party to waive and not assert against any Indemnitee,
        any
        right of contribution with respect to any Liabilities that may be imposed
        on,
        incurred by or asserted against any Related Person.

    

     

     

    (b)  Without
      limiting the foregoing, “Indemnified
      Matters”
      includes all Environmental Liabilities, including those arising from, or
      otherwise involving, any property of any Related Person or any actual, alleged
      or prospective damage to property or natural resources or harm or injury alleged
      to have resulted from any release of Hazardous Materials on, upon or into such
      property or natural resource or any property on or contiguous to any real
      property of any Related Person, whether or not, with respect to any such
      Environmental Liabilities, any Indemnitee is a mortgagee pursuant to any
      leasehold mortgage, a mortgagee in possession, the successor-in-interest to
      any
      Related Person or the owner, lessee or operator of any property of any Related
      Person through any foreclosure action, in each case except to the extent such
      Environmental Liabilities (i) are incurred solely following foreclosure by
      any
      Secured Party or following any Secured Party having become the
      successor-in-interest to any Loan Party and (ii) are attributable solely to
      acts of such Indemnitee.

     

     

    Section
      10.5  Survival.
      Any
      indemnification or other protection provided to any Indemnitee pursuant to
      any
      Loan Document (including pursuant to Section 2.11,
      Section 2.12,
      Article IX,
      Section 10.3,
      Section 10.4
      or this
Section 10.5)
      and all
      representations and warranties made in any Loan Document shall (A) survive
      the payment in full of other Obligations and (B) inure to the benefit of any
      Person that at any time held a right thereunder (as an Indemnitee or otherwise)
      and, thereafter, its successors and permitted assigns.

     

     

    Section
      10.6  Limitation
      of Liability for Certain Damages.
      In no
      event shall any Indemnitee be liable on any theory of liability for any special,
      indirect, consequential or punitive damages (including any loss of profits,
      business or anticipated savings). Each Borrower hereby waives, releases and
      agrees (and shall cause each other Loan Party to waive, release and agree)
      not
      to sue upon any such claim for any special, indirect, consequential or punitive
      damages, whether or not accrued and whether or not known or suspected to exist
      in its favor.

     

     

    Section
      10.7  Lender-Creditor
      Relationship.
      The
      relationship between the Lenders and the Administrative Agent, on the one hand,
      and the Loan Parties, on the other hand, is solely that of lender and creditor.
      No Secured Party has any fiduciary relationship or duty to any Loan Party
      arising out of or in connection with, and there is no agency, tenancy or joint
      venture relationship between the Secured Parties and the Loan Parties by virtue
      of, any Loan Document or any transaction contemplated therein.

     

    
      
        
        

      

      
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    Section
      10.8  Right
      of Setoff.
      The
      Administrative Agent, each Lender and each Affiliate (including each branch
      office thereof) of any of them is hereby authorized, without notice or demand
      (each of which is hereby waived by each Borrower), at any time and from time
      to
      time during the continuance of any Event of Default and to the fullest extent
      permitted by applicable Requirements of Law, to set off and apply any and all
      deposits (whether general or special, time or demand, provisional or final)
      at
      any time held and other Indebtedness, claims or other obligations at any time
      owing by the Administrative Agent, such Lender or any of their respective
      Affiliates to or for the credit or the account of any Borrower against any
      Obligation of any Loan Party now or hereafter existing, whether or not any
      demand was made under any Loan Document with respect to such Obligation and
      even
      though such Obligation may be unmatured. The Administrative Agent and each
      Lender agree promptly to notify the Borrowers and the Administrative Agent
      after
      any such setoff and application made by such Lender or its Affiliates;
provided,
      however,
      that
      the failure to give such notice shall not affect the validity of such setoff
      and
      application. The rights under this Section 10.8
      are in
      addition to any other rights and remedies (including other rights of setoff)
      that the Administrative Agent, the Lenders and their Affiliates and other
      Secured Parties may have.

     

     

    Section
      10.9  Sharing
      of Payments, Etc.
      If any
      Lender, directly or through an Affiliate or branch office thereof, obtains
      any
      payment of any Obligation of any Loan Party (whether voluntary, involuntary
      or
      through the exercise of any right of setoff or the receipt of any Collateral
      or
“proceeds”
(as
      defined under the applicable UCC) of Collateral) other than pursuant to
Sections 2.11,
      2.12
      and
2.13
      and such
      payment exceeds the amount such Lender would have been entitled to receive
      if
      all payments had gone to, and been distributed by, the Administrative Agent
      in
      accordance with the provisions of the Loan Documents, such Lender shall purchase
      for cash from other Secured Parties such participations in their Obligations
      as
      necessary for such Lender to share such excess payment with such Secured Parties
      to ensure such payment is applied as though it had been received by the
      Administrative Agent and applied in accordance with this Agreement (or, if
      such
      application would then be at the discretion of the Borrowers, applied to repay
      the Obligations in accordance herewith); provided,
      however,
      that
      (a) if such payment is rescinded or otherwise recovered from such Lender in
      whole or in part, such purchase shall be rescinded and the purchase price
      therefor shall be returned to such Lender without interest and (b) such Lender
      shall, to the fullest extent permitted by applicable Requirements of Law, be
      able to exercise all its rights of payment (including the right of setoff)
      with
      respect to such participation as fully as if such Lender were the direct
      creditor of the Borrowers in the amount of such participation.

     

     

    Section
      10.10  Marshaling;
      Payments Set Aside.
      No
      Secured Party shall be under any obligation to marshal any property in favor
      of
      any Loan Party or any other party or against or in payment of any Obligation.
      To
      the extent that any Secured Party receives a payment from the Borrowers, from
      the proceeds of the Collateral, from the exercise of its rights of setoff,
      any
      enforcement action or otherwise, and such payment is subsequently, in whole
      or
      in part, invalidated, declared to be fraudulent or preferential, set aside
      or
      required to be repaid to a trustee, receiver or any other party, then to the
      extent of such recovery, the obligation or part thereof originally intended
      to
      be satisfied, and all Liens, rights and remedies therefor, shall be revived
      and
      continued in full force and effect as if such payment had not
      occurred.

     

     

    
      
        
        

      

      
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    Section
      10.11  Notices.
      (a) Addresses.
      All
      notices, demands, requests, directions and other communications required or
      expressly authorized to be made by this Agreement shall, whether or not
      specified to be in writing but unless otherwise expressly specified to be given
      by any other means, be given (i)
      in
      writing and addressed to:

     

    (A)  if
      to
      Parent or any Borrower, to:

     

    The
      Bombay Company, Inc.

    550
      Bailey Avenue

    Suite
      700

    Fort
      Worth, TX 76107

    Attention:
      Elaine D. Crowley

    Fax:
      (817) 332-7066

    

    with
      copy
      to:

     

    Thompson
      & Knight LLP

    1700
      Pacific Ave, Suite 3300

    Dallas,
      Texas 75201

    Attention:
      Fred W. Fulton, Esq.

    Fax:
      (214) 880-3155

     

    (B)  if
      to the
      Administrative Agent, to:

     

    GB
      Merchant Partners, LLC

    101
      Huntington Ave., 10th
      Floor

    Boston,
      MA 02199

    Attention:
      Michael D. Murray

    Tel:
      (617) 422-7845

    Fax:
      (617) 210-7141

     

    with
      copy
      to:

     

    Proskauer
      Rose LLP

    One
      International Place

    Boston,
      MA 02110

    Attention:
      Peter J. Antoszyk, Esq.

    Tel:
      (617) 526-9749

    Fax:
      (617) 526-9899

     

    otherwise
      to the party to be notified at its address specified on the signature page
      of
      any applicable Assignment, or (ii) addressed to such other address as shall
      be
      notified in writing (A) in the case of the Borrowers and the Administrative
      Agent, to the other parties hereto and (B) in the case of all other parties,
      to
      the Borrowers and the Administrative Agent. Transmission by electronic mail
      (including E-Fax, even if transmitted to the fax numbers set forth in
clause
      (i)
      above)
      shall not be sufficient or effective to transmit any such notice under this
      clause
      (a).

     

     

    (b)  Effectiveness.
      All
      communications described in clause
      (a)
      above
      and all other notices, demands, requests and other communications made in
      connection with this Agreement shall be effective and be deemed to have been
      received (i) if delivered by hand, upon personal delivery, (ii) if delivered
      by
      overnight courier service, one Business Day after delivery to such courier
      service, (iii) if delivered by mail, when deposited in the mails, and (iv)
      if
      delivered by facsimile, upon sender’s receipt of confirmation of proper
      transmission,; provided,
      however,
      that no
      communications to the Administrative Agent pursuant to Article II
      or
Article IX
      shall be
      effective until received by the Administrative Agent.

     

    
      
        
        

      

      
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    Section
      10.12  Electronic
      Transmissions.
      (a) Authorization.
      Subject
      to the provisions of Section 10.11(a),
      the
      Administrative Agent, the Borrowers, the Lenders and each of their Related
      Persons is authorized (but not required) to transmit, post or otherwise make
      or
      communicate, in its sole discretion, Electronic Transmissions in connection
      with
      any Loan Document and the transactions contemplated therein. Each Borrower
      and
      each Secured Party hereby acknowledges and agrees, and each Borrower shall
      cause
      each other Loan Party to acknowledge and agree, that the use of Electronic
      Transmissions is not necessarily secure and that there are risks associated
      with
      such use, including risks of interception, disclosure and abuse and each
      indicates it assumes and accepts such risks by hereby authorizing the
      transmission of Electronic Transmissions.

     

     

    Section
      10.13  Governing
      Law.
      This
      Agreement, each other Loan Document that does not expressly set forth its
      applicable law, and the rights and obligations of the parties hereto and thereto
      shall be governed by, and construed and interpreted in accordance with, the
      law
      of the State of New York.

     

     

    Section
      10.14  Jurisdiction.
      (a) Submission
      to Jurisdiction.
      Any
      legal action or proceeding with respect to any Loan Document may be brought
      in
      the courts of the State of New York located in the City of New York, Borough
      of
      Manhattan, or of the United States of America for the Southern District of
      New
      York and, by execution and delivery of this Agreement, each Borrower hereby
      accepts for itself and in respect of its property, generally and
      unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
      (and, to the extent set forth in any other Loan Document, each other Loan Party)
      hereby irrevocably waive any objection, including any objection to the laying
      of
      venue or based on the grounds of forum
      non conveniens,
      that
      any of them may now or hereafter have to the bringing of any such action or
      proceeding in such jurisdictions.

     

     

    (b)  Service
      of Process.
      Each
      Borrower (and, to the extent set forth in any other Loan Document, each other
      Loan Party) hereby irrevocably waives personal service of any and all legal
      process, summons, notices and other documents and other service of process
      of
      any kind and consents to such service in any suit, action or proceeding brought
      in the United States of America with respect to or otherwise arising out of
      or
      in connection with any Loan Document by any means permitted by applicable
      Requirements of Law, including by the mailing thereof (by registered or
      certified mail, postage prepaid) to the address of each Borrower specified
      in
Section 10.11
      (and
      shall be effective when such mailing shall be effective, as provided therein).
      Each Borrower (and, to the extent set forth in any other Loan Document, each
      other Loan Party) agrees that a final judgment in any such action or proceeding
      shall be conclusive and may be enforced in other jurisdictions by suit on the
      judgment or in any other manner provided by law. Bombay Canada hereby
      irrevocably appoints CT Corporation System, in New York, New York (the
“Process
      Agent”),
      with
      an office on the date hereof at 111 8th Avenue, 13th Floor, New York, NY 10011,
      as its agent and true and lawful attorney-in-fact in its name, place and stead
      to accept on behalf of Bombay Canada and its property service of copies of
      the
      summons and complaint and any other process which may be served in any such
      suit, action or proceeding brought in the State of New York. Such appointment
      shall be irrevocable as long as the Term Loan is outstanding, except that if
      for
      any reason the Process Agent appointed hereby ceases to act as such, Bombay
      Canada will, by an instrument reasonably satisfactory to the Administrative
      Agent, appoint another Person in the Borough of Manhattan, New York as such
      Process Agent subject to the approval of the Administrative Agent (not to be
      unreasonably withheld). Bombay Canada hereby further irrevocably consents to
      the
      service of process in any suit, action or proceeding in said courts by the
      mailing thereof by the Administrative Agent or any Lender by registered or
      certified mail, postage prepaid, at its address set forth beneath its signature
      hereto. Bombay Canada covenants and agrees that it shall take any and all
      reasonable action, including the execution and filing of any and all documents,
      that may be necessary to continue the designation of a Process Agent pursuant
      to
      this Section
      10.14(b)
      in full
      force and effect and to cause the Process Agent to act as such.

     

     

    
      
        
        

      

      
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    (c)  Non-Exclusive
      Jurisdiction.
      Nothing
      contained in this Section 10.14
      shall
      affect the right of the Administrative Agent or any Lender to serve process
      in
      any other manner permitted by applicable Requirements of Law or commence legal
      proceedings or otherwise proceed against any Loan Party in any other
      jurisdiction.

     

     

    Section
      10.15  Waiver
      of Jury Trial.
      Each PARTY
      HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
      WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
      CONNECTION WITH, ANY Loan
      Document OR
      THE
      TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN
      CONTRACT, TORT OR ANY OTHER THEORY). Each PARTY
      HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO Related
      Person OF
      ANY
      OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
      WOULD
      NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
      (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
      ENTER INTO THE Loan
      Documents,
      AS
      APPLICABLE, BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 10.15.

     

     

    Section
      10.16  Severability.
      Any
      provision of any Loan Document being held illegal, invalid or unenforceable
      in
      any jurisdiction shall not affect any part of such provision not held illegal,
      invalid or unenforceable, any other provision of any Loan Document or any part
      of such provision in any other jurisdiction.

     

     

    Section
      10.17  Execution
      in Counterparts.
      This
      Agreement may be executed in any number of counterparts and by different parties
      in separate counterparts, each of which when so executed shall be deemed to
      be
      an original and all of which taken together shall constitute one and the same
      agreement. Signature pages may be detached from multiple separate counterparts
      and attached to a single counterpart. Delivery of an executed signature page
      of
      this Agreement by facsimile transmission or Electronic Transmission shall be
      as
      effective as delivery of a manually executed counterpart hereof.

     

     

    Section
      10.18  Entire
      Agreement.
      The
      Loan Documents embody the entire agreement of the parties and supersede all
      prior agreements and understandings relating to the subject matter thereof
      and
      any prior letter of interest, commitment letter, fee letter, confidentiality
      and
      similar agreements involving any Loan Party and the Administrative Agent, any
      Lender or any of their respective Affiliates relating to a financing of
      substantially similar form, purpose or effect. In the event of any conflict
      between the terms of this Agreement and any other Loan Document, the terms
      of
      this Agreement shall govern (unless such terms of such other Loan Documents
      are
      necessary to comply with applicable Requirements of Law, in which case such
      terms shall govern to the extent necessary to comply therewith).

     

    
      
        
        

      

      
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    Section
      10.19  Use
      of
      Name.
      Each
      Borrower agrees, and shall cause each other Loan Party to agree, that it shall
      not, and none of its Affiliates shall, issue any press release or other public
      disclosure (other than any document filed with any Governmental Authority
      relating to a public offering of the Securities of any Loan Party) using the
      name, logo or otherwise referring to GB Merchant Partners, LLC or of any of
      its
      Affiliates, the Loan Documents or any transaction contemplated therein to which
      the Secured Parties are party without at least 2 Business Days’ prior
      notice to GB Merchant Partners, LLC and without the prior consent of GB Merchant
      Partners, LLC except to the extent required to do so under applicable
      Requirements of Law and then, only after consulting with GB Merchant Partners,
      LLC prior thereto. The Borrowers hereby consent to the publication (including,
      without limitation, by way of press release or other public announcement),
      from
      time to time, by the Administrative Agent or any Lender of advertising material
      relating to the financing transactions contemplated by this Agreement and the
      other Loan Documents using any Borrower’s name, product photographs, logo or
      trademark, provided such publication shall not occur prior to the earlier of
      (i)
      the Closing Date and (ii) any Borrower’s public announcement of such financing
      transactions.

     

     

    Section
      10.20  Non-Public
      Information; Confidentiality.
      (a)
      Each
      Lender acknowledges and agrees that it may receive material non-public
      information hereunder concerning the Loan Parties and their Affiliates and
      Securities and agrees to use such information in compliance with all relevant
      policies, procedures and Contractual Obligations and applicable Requirements
      of
      Laws (including United States federal and state security laws and
      regulations).

     

     

    (b)  Each
      Lender and the Administrative Agent agree to use all reasonable efforts to
      maintain, in accordance with its customary practices, the confidentiality of
      information obtained by it pursuant to any Loan Document and designated in
      writing by any Loan Party as confidential, except that such information may
      be
      disclosed (i) with the Borrowers’ consent, (ii) to Related Persons of such
      Lender or the Administrative Agent, (iii) to the extent such information
      presently is or hereafter becomes available to such Lender or the Administrative
      Agent, as the case may be, on a non-confidential basis from a source other
      than
      any Loan Party, (iv) to the extent disclosure is required by applicable
      Requirements of Law or other legal process or requested or demanded by any
      Governmental Authority, (v) to the extent necessary or customary for inclusion
      in league table measurements or in any tombstone or other advertising materials
      (and the Loan Parties consent to the publication of such tombstone or other
      advertising materials by the Administrative Agent, any Lender or any of their
      Related Persons), (vi) to the National Association of Insurance
      Commissioners or any similar organization, any examiner or any nationally
      recognized rating agency or otherwise to the extent consisting of general
      portfolio information that does not identify borrowers, (vii) to current or
      prospective assignees, grantees of any option described in Section 10.2(f)
      or
      participants, direct or contractual counterparties to any Hedging Agreement
      permitted hereunder and to their respective Related Persons, in each case to
      the
      extent such assignees, participants, counterparties or Related Persons agree
      to
      be bound by provisions substantially similar to the provisions of this
Section 10.20
      and
      (viii) in connection with the exercise of any remedy under any Loan Document.
      In
      the event of any conflict between the terms of this Section 10.20
      and
      those of any other Contractual Obligation entered into with any Loan Party
      (whether or not a Loan Document), the terms of this Section 10.20
      shall
      govern.

     

     

    
      
        
        

      

      
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    Section
      10.21  Judgment
      Currency.
      If for
      the purpose of obtaining judgment in any court it is necessary to convert a
      sum
      due hereunder in Dollars into another currency (in this Section 10.21
      called
      the “judgment
      currency”),
      the
      rate of exchange that shall be applied shall be that at which in accordance
      with
      normal banking procedures the Administrative Agent could purchase such Dollars
      in New York, New York with the judgment currency on the Business Day next
      preceding the day on which such judgment is rendered. The obligation of the
      Borrowers in respect of any such sum due from it to the Administrative Agent
      or
      any Lender hereunder (in this Section 10.21
      called
      an “Entitled
      Person”)
      shall,
      notwithstanding the rate of exchange actually applied in rendering such
      judgment, be discharged only to the extent that on the Business Day following
      receipt by such Entitled Person of any sum adjudged to be due hereunder in
      the
      judgment currency, such Entitled Person may in accordance with normal banking
      procedures purchase and transfer Dollars to New York, New York with the amount
      of the judgment currency so adjudged to be due; and the Borrowers hereby, as
      a
      separate obligation and notwithstanding any such judgment, agrees, to the
      fullest extent that it may effectively do so to indemnify such Entitled Person
      against, and to pay such Entitled Person on demand, in Dollars, the amount
      (if
      any) by which the sum originally due to such Entitled Person in Dollars
      hereunder exceeds the amount of the Dollars so purchased and transferred. If
      the
      amount of Dollars so purchased exceeds the sum originally due to the Entitled
      Person, such Entitled Person shall remit such excess to the
      Borrowers.

     

     

    Section
      10.22  Patriot
      Act Notice.
      Each
      Lender subject to the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.) hereby
      notifies the Borrowers that, pursuant to Section 326 thereof, it is required
      to
      obtain, verify and record information that identifies the Borrowers, including
      the name and address of the Borrowers and other information allowing such Lender
      to identify the Borrowers in accordance with such act.

     

     

    Section
      10.23  Intercreditor
      Agreement.
      In the
      event of any conflict between any provision in this Agreement and any provision
      in the Intercreditor Agreement, such provision in the Intercreditor Agreement
      shall control and such provision of this Agreement shall be deemed to have
      been
      complied with or satisfied to the extent of such conflict. Without limiting
      the
      foregoing, so long any First Lien Debt or any obligation of the First Lien
      Lenders to extend credit to the Loan Parties pursuant to the First Lien Credit
      Agreement shall remain outstanding, any provisions of this Agreement requiring
      (or any representation or warranty hereunder to the extent that it would have
      the effect of requiring) delivery of, or control over, collateral of any Loan
      Party, to be granted in or delivered to the Administrative Agent, shall be
      deemed complied with and satisfied (or, in the case of any representation or
      warranty hereunder, shall be deemed to be true) if the same is delivered or
      granted to the First Lien Agent for itself and on behalf of the First Lien
      Lenders.

     

    [SIGNATURE
      PAGES FOLLOW]

    

     

    
      
        
        

      

      
        85

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their respective officers thereunto duly authorized, as of the date first above
      written.

     

                     
   THE
      BOMBAY COMPANY,
      INC.

     

                     
   as
      Parent and a
      Borrower

     

    
      	                                                 	
              By:

            	 ____________________________	 

    

     

                                                                    
      Name:

     

                                                                   
      Title:

     

                                                                   
      BBA HOLDINGS, LLC

     

                                                                   
      as a Borrower

     

    
      	                                                                              
              	
              By:

            	 _____________________________	 

    

     

                                                                  
      Name:

     

                                                                 
      Title:

     

                                                                 
      BOMBAY INTERNATIONAL, INC.

     

                                                                
      as a Borrower

     

    
      	                                                                                                                      
              	
              By:

            	 ______________________________	 

    

     

                                                               
      Name:

     

                                                               
      Title:

     

                                                               
      THE BOMBAY FURNITURE COMPANY OF CANADA INC.

     

                                                               
      as a Borrower

     

    
      	                                                                                                                     
              	
              By:

            	 _______________________________	 

    

     

                                                               
      Name:

     

                                                              
      Title:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                                                             
      GB MERCHANT PARTNERS, LLC, 

     

                                                             
      as Administrative Agent

     

    
      	                                                                                                                   
              	
              By:

            	 ____________________________	 

    

     

                                                            
      Name:

     

                                                            
      Title:

     

    
      	
               

               

                 

               

               

                                                                                                                                                                      
                1903 ONSHORE FUNDING, LLC,

                                                                                                                                                                      
                as a Lender

            
	
                                                                                                                                                                      
                By:  GB Merchant Partners, LLC, its Investment
                Manager

            
	
                                                                                                                                                                      
                By:   _________________________________                                                               
                

                                                                                                                                                          
                Name:

               

                                                                                                                                                         
                Title:

               

            

    

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      I

    Term
      Loan Amount

    

    

    

            Term
      Loan:

    

            1903
      ONSHORE FUNDING,
      LLC       $10,000,000

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      4.7

    Subsidiaries

    

    See
      attached

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      4.9

    Litigation

    

    See
      attached

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      4.14

    Environmental
      Condition

    

    See
      attached

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      4.20

    Credit
      Card Receipts

    

    See
      attached

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      5.2

    Collateral
      Reporting

    

    Borrowers
      shall provide Administrative Agent (and if so requested by Administrative Agent,
      with copies for each Lender) with the following documents at the following
      times
      in form satisfactory to Administrative Agent:

     

    (a) Weekly
      Reports.

     

    (i) Borrowing
      Base Certificate.
      Parent
      shall provide to Administrative Agent, on Wednesday of each week, a signed
      Borrowing Base Certificate (in the form of Exhibit
      I,
      as such
      form may be revised from time to time by Administrative Agent), containing
      a
      weekly roll forward of inventory of the prior week; provided,
      however,
      that
      Parent, may, in its discretion, provide to Administrative Agent a Borrowing
      Base
      Certificate more frequently than as set forth herein. Such Certificate may
      be
      sent to Administrative Agent electronically (with an electronic signature)
      or by
      facsimile transmission; provided,
      further,
      that in
      each case, upon request by Administrative Agent, the original thereof is
      forwarded to Administrative Agent on the date of such transmission. No
      adjustments to the Borrowing Base Certificate may be made without supporting
      documentation and such other documentation as may be reasonably requested by
      Administrative Agent from time to time.

     

    (ii) If,
      at
      any time, Adjusted Availability is less than 20% of the Aggregate Borrowing
      Base, a collateral activity summary or “roll forward” inventory
      report.

     

    (b) Monthly
      Reports. Monthly, Parent shall provide to Administrative Agent original
      counterparts of (each in such form as the Administrative Agent from time to
      time
      may specify):

     

    (i) Within
      15
      days of the end of each Fiscal Period for the immediately preceding Fiscal
      Period or on the next Business Day, in the event the 15th day does not fall
      on a
      Business Day:

     

    (A) Reserved;

    (B) Top
      10
      Vendor Purchases report;

    (C) sales
      audit report and inventory summary by location and merchandise
      class;

    (D) inventory
      certificate;

    (E) state
      of
      store activity; and

    (F) a
      collateral activity summary or “roll forward” inventory report.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) Within
      45
      days of the end of each Fiscal Period for the immediately preceding Fiscal
      Period or on the next Business Day, in the event the 45th day does not fall
      on a
      Business Day:

     

    (A) reconciliation
      of the stock ledger to the general ledger and the calculation of Availability;
      and

     

    (B) rent,
      tax
      and insurance compliance certificate.

     

    (iii) For
      purposes of items(c)(i) and (c)(ii) above, the first “preceding month” in
      respect of which the items required by that Section shall be provided shall
      be
      May, 2007.

     

    In
      addition, each Borrowers agree to use their commercially reasonable efforts
      to
      assist Administrative Agent with the facilitation and implementation of a system
      of electronic collateral reporting in order to provide electronic reporting
      of
      each of the items set forth above.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      7.1

    Existing
      Indebtedness

    

    See
      attached

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      7.2

    Existing
      Liens

    

    See
      attached

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      7.13

    Affiliates

    

    See
      attached

    
 

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      7.16

    Scheduled
      Store Closings

    

    See
      attached

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