Document:

Exhibit 10.1

Exhibit 10.1

UST Seq. 413

UNITED STATES DEPARTMENT OF THE TREASURY

1500 PENNSYLVANIA AVENUE, NW

WASHINGTON, D.C. 20220

Dear Ladies and Gentlemen:

The company set forth on the signature page hereto (the “Company”) intends to issue the number
of shares of a series of its preferred stock set forth on Schedule A hereto (the “CDCI
Preferred Shares”) to the United States Department of the Treasury (the “Investor”) in exchange for
the number of shares of preferred stock previously acquired by the Investor pursuant to the
Company’s participation in the Troubled Asset Relief Program Capital Purchase Program set forth on
Schedule A (the “CPP Preferred Shares”).

The purpose of this letter agreement is to confirm the terms and conditions of the exchange.
Except to the extent supplemented or superseded by the terms set forth herein or in the Schedules
hereto, the provisions contained in the Exchange Agreement — Standard Terms attached hereto as
Exhibit A (the “Exchange Agreement”) are incorporated by reference herein. Terms that are defined
in the Exchange Agreement are used in this letter agreement as so defined. In the event of any
inconsistency between this letter agreement and the Exchange Agreement, the terms of this letter
agreement shall govern.

Each of the Company and the Investor hereby confirms its agreement with the other party with
respect to the issuance by the Company of the CDCI Preferred Shares and the exchange of the
“Preferred Shares” for the CPP Preferred Shares pursuant to this letter agreement and the Exchange
Agreement on the terms specified on Schedule A hereto.

This letter agreement (including the Schedules hereto), the Exchange Agreement (including the
Annexes thereto) and the Disclosure Schedules (as defined in the Exchange Agreement) constitute the
entire agreement, and supersede all other prior agreements, understandings, representations and
warranties, both written and oral, between the parties, with respect to the subject matter hereof.
This letter agreement constitutes the “Letter Agreement” referred to in the Exchange Agreement.

This letter agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts will together
constitute the same agreement. Executed signature pages to this letter agreement may be delivered
by facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been
delivered.

* * *

 

 

 

UST Seq. 413

In witness whereof, this letter agreement has been duly executed and delivered by the duly
authorized representatives of the parties hereto as of the date
written below.

	 	 	 	 	 
	 	UNITED STATES DEPARTMENT OF THE TREASURY

 	 
	 	By:  	/s/ David N. Miller
 	 
	 	 	Name:  	David N. Miller 	 
	 	 	Title:  	Chief Investment Officer 	 
	 
	 	COMPANY: CARVER BANCORP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Mark A. Ricca 	 
	 	 	Title:  	Executive Vice President,

Chief Risk Officer and General Counsel 	 

Date:
August 27, 2010

 

 

 

UST Seq. 413

In witness whereof, this letter agreement has been duly executed and delivered by the duly
authorized representatives of the parties hereto as of the date written below.

	 	 	 	 	 
	 	UNITED STATES DEPARTMENT OF THE TREASURY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	COMPANY: CARVER BANCORP, INC.

 	 
	 	By:  	/s/ Mark A. Ricca
 	 
	 	 	Name:  	Mark A. Ricca 	 
	 	 	Title:  	Executive Vice President,

Chief Risk Officer and General Counsel 	 

Date: August 27, 2010

 

 

 

UST Seq. 413

EXHIBIT A

EXCHANGE AGREEMENT

 

 

 

UST Sequence 413

EXHIBIT A

 

EXCHANGE AGREEMENT

STANDARD TERMS

 

 

 

 

UST Sequence 413

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I

	 
	 	 	 	 
	THE CLOSING; THE EXCHANGE OF CDCI PREFERRED STOCK FOR CPP PREFERRED STOCK

	 
	 	 	 	 
	Section 1.1 The CDCI Preferred Stock 
	 	 	2	 
	Section 1.2 The Closing 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II 

	 
	 	 	 	 
	EXCHANGE

	 
	 	 	 	 
	Section 2.1 Exchange 
	 	 	5	 
	Section 2.2 Exchange Documentation 
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III

	 
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF THE COMPANY

	 
	 	 	 	 
	Section 3.1 Existence and Power 
	 	 	6	 
	Section 3.2 CDCI Preferred Shares 
	 	 	7	 
	Section 3.3 Community Development Financial Institution Status; Domestic Ownership 
	 	 	7	 
	Section 3.4 Authorization and Enforceability 
	 	 	7	 
	Section 3.5 Anti-Takeover Provisions and Rights Plan 
	 	 	8	 
	Section 3.6 No Company Material Adverse Effect 
	 	 	8	 
	Section 3.7 Company Financial Statements 
	 	 	8	 
	Section 3.8 No Undisclosed Liabilities 
	 	 	9	 
	Section 3.9 Offering of Securities 
	 	 	9	 
	Section 3.10 Litigation and Other Proceedings 
	 	 	9	 
	Section 3.11 Compliance with Laws 
	 	 	9	 
	Section 3.12 Employee Benefit Matters 
	 	 	10	 
	Section 3.13 Taxes
	 	 	10	 
	Section 3.14 Properties and Leases
	 	 	11	 
	Section 3.15 Environmental Liability
	 	 	11	 
	Section 3.16 Risk Management Instruments
	 	 	11	 
	Section 3.17 Agreements with Regulatory Agencies
	 	 	11	 
	Section 3.18 Insurance
	 	 	12	 
	Section 3.19 Intellectual Property
	 	 	12	 
	Section 3.20 Brokers and Finders
	 	 	13	 

 

-i-

 

UST Sequence 413

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 3.21 Disclosure Schedule
	 	 	13	 
	Section 3.22 CPP Preferred Stock
	 	 	13	 
	 
	 	 	 	 
	ARTICLE IV

	 
	 	 	 	 
	COVENANTS

	 
	 	 	 	 
	Section 4.1 Affirmative Covenants
	 	 	13	 
	Section 4.2 Negative Covenants
	 	 	20	 
	 
	 	 	 	 
	ARTICLE V

	 
	 	 	 	 
	ADDITIONAL AGREEMENTS

	 
	 	 	 	 
	Section 5.1 Purchase for Investment
	 	 	21	 
	Section 5.2 Legends
	 	 	22	 
	Section 5.3 Transfer of CDCI Preferred Shares
	 	 	23	 
	Section 5.4
Rule 144; Rule 144A; 4(11⁄2) Transactions
	 	 	23	 
	Section 5.5 Depositary Shares
	 	 	25	 
	Section 5.6 Expenses and Further Assurances
	 	 	25	 
	Section 5.7 Repurchase of Investor Securities
	 	 	25	 
	 
	 	 	 	 
	ARTICLE VI

	 
	 	 	 	 
	MISCELLANEOUS

	 
	 	 	 	 
	Section 6.1 Termination
	 	 	26	 
	Section 6.2 Survival
	 	 	27	 
	Section 6.3 Amendment
	 	 	27	 
	Section 6.4 Waiver of Conditions
	 	 	27	 
	Section 6.5 Governing Law; Submission to Jurisdiction, etc
	 	 	27	 
	Section 6.6 Notices
	 	 	27	 
	Section 6.7 Definitions, Interpretation
	 	 	28	 
	Section 6.8 Interpretation
	 	 	31	 
	Section 6.9 Assignment
	 	 	32	 
	Section 6.10 Severability
	 	 	32	 
	Section 6.11 No Third-Party Beneficiaries
	 	 	32	 
	Section 6.12 Entire Agreement, etc
	 	 	32	 
	Section 6.13 Specific Performance
	 	 	32	 

 

-ii-

 

UST Sequence 413

LIST OF ANNEXES

	 	 	 	 	 
	ANNEX A: FORM OF OFFICER’S CERTIFICATE
	 	 	 	 
	ANNEX B: FORM OF NEW CERTIFICATE OF DESIGNATIONS
	 	 	 	 
	ANNEX C: FORM OF OPINION
	 	 	 	 
	ANNEX D: FORM OF WAIVER
	 	 	 	 
	ANNEX E: REGISTRATION RIGHTS
	 	 	 	 
	ANNEX F: FORM OF OFFICER’S CERTIFICATE (CDFI REQUIREMENTS)
	 	 	 	 

 

-iii-

 

UST Sequence 413

	 	 	 
	Defined Terms	 	 
	 
	 	 
	Affiliate
	 	Section 6.7(a)(ii)
	Agreement
	 	Recitals
	Appropriate Federal Banking Agency
	 	Section 6.7(a)(iii)
	Bank Holding Company
	 	Section 6.7(a)(iv)
	Bankruptcy Exceptions
	 	Section 3.4(a)
	Benefit Plans
	 	Section 1.2(c)(vi)
	Board of Directors
	 	Section 3.5
	Business Combination
	 	Section 6.7(a)(v)
	Capitalization Date
	 	Section 3.1(b)
	CDCI
	 	Recitals
	CDCI Preferred Shares
	 	Recitals
	CDCI Preferred Stock
	 	Recitals
	CDFI
	 	Section 3.3
	CDFI Application
	 	Section 1.2(c)(xii)
	CDFI Application Update
	 	Section 1.2(c)(xii)
	Certified Entity
	 	Section 6.7(a)(vi)
	Charter
	 	Section 1.2(c)(iv)
	Closing
	 	Section 1.2(a)
	Closing Date
	 	Section 1.2(a)
	Code
	 	Section 3.12
	Common Stock
	 	Section 3.1(b)
	Company
	 	Recitals
	Company Financial Statements
	 	Section 6.7(a)(vii)
	Company Material Adverse Effect
	 	Section 6.7(a)(viii)
	Company Subsidiaries
	 	Section 3.4(b)
	Compensation Regulations
	 	Section 1.2(c)(vi)
	Controlled Group
	 	Section 3.12
	CPP
	 	Recitals
	CPP Preferred Shares
	 	Recitals
	CPP Preferred Stock
	 	Recitals
	CPP Securities
	 	Section 6.12(b)
	CPP Securities Purchase Agreement
	 	Recitals
	CPP Signing Date
	 	Recitals
	CPP Waiver
	 	Section 1.2(c)(vii)
	Designated Matters
	 	Section 6.7(a)(ix)
	Development Services
	 	Section 4.1(d)(i)
	Disclosure Schedule
	 	Section 6.7(a)(x)
	Disclosure Update
	 	Section 1.2(c)(xi)
	EAWA
	 	Section 6.7(a)(xi)
	EESA
	 	Section 1.2(c)(vi)
	ERISA
	 	Section 3.12
	Exchange
	 	Recitals

 

-iv-

 

UST Sequence 413

	 	 	 
	Defined Terms	 	 
	 
	 	 
	Exchange Act
	 	Section 5.3
	Federal Reserve
	 	Section 6.7(a)(iv)
	Financial Products
	 	Section 4.1(d)(i)
	Fund
	 	Section 1.2(c)(xii)
	Governmental Entities
	 	Section 1.2(c)
	Holder
	 	Section 5.4
	Indemnitee
	 	Section 5.4(b)
	Information
	 	Section 4.1(c)(iii)
	Investment Area
	 	Section 4.1(d)(i)
	Investor
	 	Recitals
	Junior Stock
	 	Section 6.7(a)(xii)
	Letter Agreement
	 	Recitals
	MHA
	 	Section 4.1(i)
	New Certificate of Designations
	 	Section 1.2(c)(iv)
	Parity Stock
	 	Section 6.7(a)(xiii)
	Plan
	 	Section 3.12
	Previously Disclosed
	 	Section 6.7(a)(xiv)
	Proprietary Rights
	 	Section 3.19
	Regulatory Agreement
	 	Section 3.17
	Relevant Period
	 	Section 1.2(c)(vi)
	Savings and Loan Holding Company
	 	Section 6.7(a)(xv)
	Schedules
	 	Recitals
	SEC
	 	Section 3.9
	Section 4.1(e) Employee
	 	Section 4.1(e)(ii)
	Securities Act
	 	Section 3.1(a)
	Senior Executive Officers
	 	Section 6.7(a)(xvi)
	Share Dilution Amount
	 	Section 6.7(a)(xvii)
	Signing Date
	 	Section 1.2(c)(xi)
	subsidiary
	 	Section 6.7(a)(i)
	Target Market
	 	Section 4.1(d)(i)
	Targeted Populations
	 	Section 4.1(d)(i)
	Tax
	 	Section 6.7(xviii)
	Transfer
	 	Section 5.3

 

-v-

 

UST Sequence 413

EXCHANGE AGREEMENT — STANDARD TERMS

Recitals:

WHEREAS, the United States Department of the Treasury (the “Investor”) has purchased shares
of preferred stock or has acquired shares of preferred stock through the exercise of warrants or
the exchange of other securities (collectively, the “CPP Preferred Stock”) from eligible financial
institutions which elected to participate in the Troubled Asset Relief Program Capital Purchase
Program (“CPP”);

WHEREAS,
the Investor may from time to time agree to exchange the shares of CPP Preferred
Stock it received from eligible financial institutions that participated in CPP for newly issued
shares of preferred stock (“CDCI Preferred Stock”) from such eligible financial institutions to the
extent they elect to participate in the Community Development Capital Initiative (“CDCI”);

WHEREAS, an eligible financial institution electing to participate in the CDCI and exchange
CPP Preferred Stock for CDCI Preferred Stock shall enter into a letter agreement (the “Letter
Agreement”) with the Investor which incorporates this
Exchange Agreement — Standard Terms (the
eligible financial institution identified in the Letter Agreement,
the “Company”);

WHEREAS, the Company issued the CPP Preferred Stock (or warrants exercised to acquire the CPP
Preferred Stock or the securities exchanged for the CPP Preferred Stock) pursuant to that certain
Securities Purchase Agreement — Standard Terms incorporated into a letter agreement, dated as of
the date set forth on Schedule A to the Letter Agreement (the “CPP Signing Date”), as
amended from time to time, between the Company and the Investor (the “CPP Securities Purchase
Agreement”);

WHEREAS, the Company agrees to support the availability of credit and financial services to
underserved populations and communities in the United States to promote the expansion of small
businesses and the creation of jobs in such populations and communities;

WHEREAS, the Company agrees to work diligently, under existing and any future programs, to
modify the terms of residential mortgages as appropriate to strengthen the health of the U.S.
housing market;

WHEREAS, the Company intends to issue the number of shares of the series of its CDCI Preferred
Stock set forth on Schedule A to the Letter Agreement (the “CDCI Preferred Shares”)
to the Investor in exchange for (the “Exchange”) the number of shares of the CPP Preferred Stock
set forth on Schedule A to the Letter Agreement (the “CPP Preferred Shares”); and

 

 

 

UST Sequence 413

WHEREAS,
the Exchange will be governed by this Exchange Agreement — Standard Terms and the
Letter Agreement, including the schedules thereto (the “Schedules”), specifying additional terms
of the Exchange. This Exchange Agreement — Standard Terms (including the Annexes hereto) and the
Letter Agreement (including the Schedules thereto) are together referred to as this “Agreement”.
All references in this Exchange Agreement — Standard Terms to “Schedules” are to the Schedules
attached to the Letter Agreement.

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:

ARTICLE I

THE CLOSING; THE EXCHANGE OF CDCI PREFERRED STOCK FOR CPP PREFERRED STOCK

Section 1.1 The CDCI Preferred Stock. The CDCI Preferred Shares are being issued to
the Investor in the Exchange pursuant to Article II hereof. The CPP Preferred Shares exchanged for
the CDCI Preferred Shares pursuant to Article II hereof are being reacquired by the Company and
shall have the status of authorized but unissued shares of preferred stock of the Company
undesignated as to series and may be designated or redesignated and issued or reissued, as the case
may be, as part of any series of preferred stock of the Company; provided that such shares shall
not be reissued as shares of CPP Preferred Stock.

Section 1.2 The Closing. (a) On the terms and subject to the conditions set forth in
this Agreement, the closing of the Exchange (the “Closing”) will take place at the location
specified in Schedule A, at the time and on the date set forth in Schedule A or as soon as
practicable thereafter, or at such other place, time and date as shall be agreed between the
Company and the Investor. The time and date on which the Closing occurs is referred to in this
Agreement as the “Closing Date”.

(b) Subject to the fulfillment or waiver of the conditions to the Closing in this Section 1.2,
at the Closing (i) the Company will deliver the CDCI Preferred Shares to the Investor, as evidenced
by one or more certificates dated the Closing Date and registered in the name of the Investor or
its designee(s) and (ii) the Investor will deliver the certificate representing the CPP Preferred
Shares to the Company.

(c) The obligation of the Investor to consummate the Exchange is also subject to the
fulfillment (or waiver by the Investor) at or prior to the Closing of each of the following
conditions:

(i) (A) any approvals or authorizations of all United States and other governmental,
regulatory or judicial authorities (collectively, “Governmental Entities”) required for the
consummation of the Exchange shall have been obtained or made in form and substance
reasonably satisfactory to each party and shall be in full force and effect

 

-2-

 

UST Sequence 413

and all waiting periods required by United States and other applicable law, if any, shall have
expired and (B) no provision of any applicable United States or other law and no judgment,
injunction, order or decree of any Governmental Entity shall prohibit consummation of the Exchange
as contemplated by this Agreement;

(ii) (A) the representations and warranties of the Company set forth in Article III of this
Agreement shall be true and correct in all respects as though made on and as of the Closing Date
(other than representations and warranties that by their terms speak as of another date, which
representations and warranties shall be true and correct in all respects as of such other date) and
(B) the Company shall have performed in all respects all obligations required to be performed by it
under this Agreement at or prior to the Closing;

(iii) the Company shall have delivered to the Investor a certificate signed on behalf of the
Company by a Senior Executive Officer certifying to the effect that the conditions set forth in
Section 1.2(c)(ii) have been satisfied, in substantially the form attached hereto as Annex
A;

(iv) the Company shall have duly adopted and filed with the Secretary of State of its
jurisdiction of organization or other applicable Governmental Entity an amendment to its
certificate or articles of incorporation, articles of association, or similar organizational
document (“Charter”) in substantially the form attached hereto as Annex B (the “New
Certificate of Designations”) and the Company shall have delivered to the Investor a copy of
the filed New Certificate of Designations with appropriate evidence from the Secretary of State or
other applicable Governmental Entity that the filing has been accepted, or if a filed copy is
unavailable, a certificate signed on behalf of the Company by a Senior Executive Officer
certifying to the effect that the filing of the New Certificate of Designation has been accepted,
in substantially the form attached hereto as Annex A;

(v) the Company shall have delivered to the Investor, a certificate signed on behalf of the
Company by a Senior Executive Officer certifying to the effect that the Charter and bylaws of the
Company delivered to the Investor pursuant to the CPP Securities Purchase Agreement remain true,
complete and correct, in substantially the form attached hereto as Annex A; to the extent
that the Charter and bylaws of the Company delivered to the Investor pursuant to the CPP
Securities Purchase Agreement are no longer true, correct and complete, prior to the Closing Date,
the Company shall deliver to Investor true, complete and correct certified copies of any
amendments or supplements to the Charter or bylaws of the Company or the documentation necessary
to make the Charter or bylaws of the Company delivered to the Investor true, correct and complete
as of the Closing Date;

(vi) (A) the Company shall have effected such changes to its compensation, bonus, incentive
and other benefit plans, arrangements and agreements (including golden parachute, severance and
employment agreements) (collectively, “Benefit Plans”) with respect to its Senior Executive
Officers and any other employee of the Company or its

 

-3-

 

UST Sequence 413

Affiliates subject to Section 111 of the Emergency Economic Stabilization Act of 2008, as amended
by the American Recovery and Reinvestment Act of 2009, or otherwise from time to time (“EESA”), as
implemented by any guidance, rule or regulation thereunder, as the same shall be in effect from
time to time (collectively, the “Compensation Regulations”) (and to the extent necessary
for such changes to be legally enforceable, each of its Senior Executive Officers and other
employees shall have duly consented in writing to such changes), as may be necessary, during the
period in which any obligation of the Company arising from financial assistance under the Troubled
Asset Relief Program remains outstanding (such period, as it may be further described in the
Compensation Regulations, the “Relevant Period”), in order to comply with Section 111 of EESA or
the Compensation Regulations and (B) the Investor shall have received a certificate signed on
behalf of the Company by a Senior Executive Officer certifying to the effect that the condition set
forth in Section 1.2(c)(vi)(A) has been satisfied, in substantially the form attached hereto as
Annex A;

(vii) the Company shall have delivered to the Investor, a written waiver from each of the
Company’s Senior Executive Officers and any other employee of the Company required to have
delivered a waiver to Investor pursuant to Section 1.2(d)(v) of the CPP Securities Purchase
Agreement (each, a “CPP Waiver”) and, to the extent that any Senior Executive Officer or any other
employee of the Company or its Affiliates that are subject to Section 111 of EESA did not deliver a
CPP Waiver, the Company shall cause each such Senior Executive Officer or other employee to have
delivered to the Investor a written waiver in the form attached hereto as Annex D releasing
the Investor and the Company from any claims that such Senior Executive Officer or other employee
may otherwise have as a result of the modification of, or the agreement of the Company hereunder to
modify, the terms of any Benefit Plans with respect to its Senior Executive Officers or other
employees to eliminate any provisions of such Benefit Plans that would not be in compliance with
the requirements of Section 111 of EESA as implemented by the Compensation Regulations;

(viii) the Company shall have delivered to the Investor a written opinion from counsel to the
Company (which may be internal counsel), addressed to the Investor and dated as of the Closing
Date, in substantially the form attached hereto as Annex C;

(ix) the Company shall have delivered certificates in proper form or, with the prior consent
of the Investor, evidence of shares in book-entry form, evidencing the CDCI Preferred Shares to
the Investor or its designee(s);

(x) the Company and the Company Subsidiaries shall have taken all necessary action to ensure
that the Company and the Company Subsidiaries and their executive officers, respectively, are in
compliance with (i) all guidelines put forth by the Investor with respect to transparency,
reporting and monitoring and (ii) the provisions of EESA and any federal law respecting EESA,
including the Employ American Workers Act (Section 1611 of Division A, Title XVI of the American
Recovery and Reinvestment Act of 2009), Public Law No. 111-5, effective as of February 17, 2009,
and all rules, regulations and guidance issued thereunder;

 

-4-

 

UST Sequence 413

(xi) the Company shall have delivered to the Investor, a copy of the Disclosure
Schedule on or prior to the date of the Letter Agreement (the “Signing Date”) and, to the
extent that any information set forth on the Disclosure Schedule needs to be updated or
supplemented to make it true, complete and correct as of the Closing Date, (i) the Company
shall have delivered to the Investor an update to the Disclosure Schedule (the “Disclosure
Update”), setting forth any information necessary to make the Disclosure Schedule true,
correct and complete as of the Closing Date and (ii) the Investor, in its sole discretion/
shall have approved the Disclosure Update, provided, however, that the delivery and
acceptance of the Disclosure Update shall not limit or affect any rights of or remedies
available to the Investor;

(xii) the Company shall have delivered to the Investor prior to the Signing Date either
(i) a true, complete and correct certified copy of each CDFI Certification Application that
each Certified Entity submitted to the Community Development Financial Institution Fund (the
“Fund”) in connection with its certification as a CDFI along with any updates to the CDFI
Certification Application necessary to make it true, complete and correct as of the Signing
Date or (ii), to the extent a copy of the CDFI Certification Application that any Certified
Entity submitted to the Fund in connection with its certification as a CDFI is not
available, a newly completed CDFI Certification Application with respect to such Certified
Entity true, complete and correct as of the Signing Date (the CDFI Certification Application
delivered to the Investor pursuant to this Section 1.2(c)(xii), the “CDFI Application”),
and, to the extent any information set forth in the CDFI Application is not true, complete
and correct as of the Closing Date, the Company shall have delivered to the Investor an
update to the CDFI Application (the “CDFI Application Update”), setting forth any
information necessary to make the information set forth in the CDFI Application true,
correct and complete as of the Closing Date; and

(xiii) CPP/CDCI Securities. The Company shall have paid to Investor
all accrued and unpaid dividends or interest then due on the CPP Preferred Stock.

ARTICLE II

EXCHANGE

Section 2.1
Exchange. On the terms and subject to the
conditions set forth in this
Agreement, the Company agrees to issue the CDCI Preferred Shares to the Investor in exchange for
CPP Preferred Shares, and the Investor agrees to deliver to the Company the CPP Preferred Shares
in exchange for the CDCI Preferred Shares.

Section 2.2 Exchange Documentation. Settlement of the Exchange will take place on the
Closing Date, at which time the Investor will cause delivery of the CPP Preferred Shares to the
Company or its designated agent and the Company will cause delivery of the CDCI Preferred Shares
to the Investor or its designated agent.

 

-5-

 

UST Sequence 413

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as Previously Disclosed, the Company represents and warrants to the Investor that as
of the Signing Date and as of the Closing Date (or such other date specified herein) that:

Section 3.1 Existence and Power.

(a) Organization, Authority and Significant Subsidiaries. The Company has been duly
incorporated and is validly existing and in good standing under the laws of its jurisdiction of
organization, with the necessary power and authority to own, operate and lease its properties and
to conduct its business in all material respects as it is being currently conducted, and except as
has not, individually or in the aggregate, had and would not reasonably be expected to have a
Company Material Adverse Effect, has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as to require such qualification; each
Certified Entity (if not the Company) and each subsidiary of the Company that would be considered a
“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the Securities
Act of 1933 (the “Securities Act”), has been duly organized and is validly existing in good
standing under the laws of its jurisdiction of organization. The Charter and bylaws of the Company
and each Certified Entity (if not the Company), copies of which have been provided to the Investor
prior to the Signing Date, are true, complete and correct copies of such documents as in full force
and effect as of the Signing Date and as of the Closing Date.

(b) Capitalization. The authorized capital stock of the Company, and the outstanding
capital stock of the Company (including securities convertible into, or exercisable or exchangeable
for, capital stock of the Company) as of the most recent fiscal month-end preceding the Signing
Date (the “Capitalization Date”) is set forth on Schedule B. The outstanding shares of
capital stock of the Company have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights (and were not issued in violation
of any preemptive rights). As of the Signing Date, the Company does not have outstanding any
securities or other obligations providing the holder the right to acquire common stock of the
Company (“Common Stock”) or other capital stock that is not reserved for issuance as specified on
Schedule B, and the Company has not made any other commitment to authorize, issue or sell
any Common Stock or other capital stock. Since the Capitalization Date, the Company has not
issued any shares of Common Stock or other capital stock other than (i) shares issued upon the
exercise of stock options or delivered under other equity-based awards or other convertible
securities or warrants which were issued and outstanding on the Capitalization Date and disclosed
on Schedule B and (ii) shares disclosed on Schedule B. Each holder of 5% or more
of any class of capital stock of the Company and such holder’s primary address are set forth on
Schedule B.

 

-6-

 

UST Sequence 413

Section 3.2 CDCI Preferred Shares. The CDCI Preferred Shares have been duly and
validly authorized by all necessary action, and, when issued and delivered pursuant to this
Agreement, such CDCI Preferred Shares will be duly and validly issued and fully paid and
nonassessable, will not be issued in violation of any preemptive
rights, and will rank pari passu
or senior to all other series or classes of CDCI Preferred Stock, whether or not designated,
issued or outstanding, with respect to the payment of dividends and the distribution of assets in
the event of any dissolution, liquidation or winding up of the Company.

Section 3.3 Community Development Financial Institution Status; Domestic Ownership.

(a) The Company, collectively with all of its “Affiliates” (within the meaning of 12 C.F.R.
1805.104) satisfies the requirements of 12 C.F.R. 1805.200(b).

(b) Each Certified Entity (A) is a regulated community development financial institution (a
“CDFI”) currently certified by the Fund of the United States Department of the Treasury pursuant to
12 C.F.R. 1805.201(a) as having satisfied the eligibility requirements of the Fund’s Community
Development Financial Institutions Program and (B) satisfies the eligibility requirements for a
CDFI set forth in 12 C.F.R. 1805.201(b)(1) — (6).

(c) The Company is not a Bank Holding Company, Savings and Loan Holding Company, bank or
savings association controlled (within the meaning of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(a)(2)) and 12 C.F.R. 225(a)(i) in the case of Bank Holding Companies and banks and the
Home Owners’ Loan Act of 1933 (12 U.S.C. 1467a (a)(2)) and 12 C.F.R. 583.7 in the case of Savings
and Loan Holding Companies and savings associations) by a foreign bank or company.

Section 3.4 Authorization and Enforceability. (a) The Company has the corporate power
and authority to execute and deliver this Agreement and to carry out its obligations hereunder
(which includes the issuance of the CDCI Preferred Shares). The execution, delivery and
performance by the Company of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part of the Company and
its stockholders, and no further approval or authorization is required on the part of the Company.
This Agreement is a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to any limitations by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles, regardless of whether such enforceability is
considered in a proceeding at law or in equity (“Bankruptcy Exceptions”).

(b) The execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby, and compliance by the Company with the
provisions hereof, will not (A) violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the

 

-7-

 

UST Sequence 413

creation of, any lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any subsidiary of the Company or Certified Entity (if not the Company)
(each subsidiary or Certified Entity, a “Company Subsidiary” and, collectively, the
“Company Subsidiaries”) under any of the terms, conditions or provisions of (i) its
organizational documents or (ii) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any Company Subsidiary
is a party or by which it or any Company Subsidiary may be bound, or to which the Company or any
Company Subsidiary or any of the properties or assets of the Company or any Company Subsidiary may
be subject, or (B) subject to compliance with the statutes and regulations referred to in the next
paragraph, violate any statute, rule or regulation or any judgment, ruling, order, writ,
injunction or decree applicable to the Company or any Company Subsidiary or any of their
respective properties or assets except, in the case of clauses (A)(ii) and (B), for those
occurrences that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.

(c) Other than the filing of the New Certificate of Designations with the Secretary of State
of its jurisdiction of organization or other applicable Governmental Entity, such filings and
approvals as are required to be made or obtained under any state “blue sky” laws and such as have
been made or obtained, no notice to, filing with, exemption or review by, or authorization,
consent or approval of, any Governmental Entity is required to be made or obtained by the Company
in connection with the consummation by the Company of the Exchange except for any such notices,
filings, exemptions, reviews, authorizations, consents and approvals the failure of which to make
or obtain would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.

Section 3.5 Anti-Takeover Provisions and Rights Plan. The Board of Directors of the
Company (the “Board of Directors”) has taken all necessary action to ensure that the transactions
contemplated by this Agreement and the consummation of the transactions contemplated hereby, will
be exempt from any anti-takeover or similar provisions of the Company’s Charter and bylaws, and any
other provisions of any applicable “moratorium”, “control share”, “fair price”, “interested
stockholder” or other anti-takeover laws and regulations of any jurisdiction.

Section 3.6
No Company Material Adverse Effect. Since the CPP Signing Date, no fact,
circumstance, event, change, occurrence, condition or development has occurred that, individually
or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse
Effect, except as disclosed on Schedule C.

Section 3.7 Company Financial Statements. The Company Financial Statements present
fairly in all material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates indicated therein and the consolidated results of their
operations for the periods specified therein; and except as stated therein, such financial
statements (i) were prepared in conformity with GAAP applied on a consistent basis (except as may
be noted therein) and (ii) have been prepared from, and are in accordance with, the books and
records of the Company and the Company Subsidiaries.

 

-8-

 

UST Sequence 413

Section 3.8 No Undisclosed Liabilities. Neither the Company nor any of the Company
Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) which are not properly reflected or reserved against in the Company Financial
Statements to the extent required to be so reflected or reserved against in accordance with GAAP,
except for (i) liabilities that have arisen since the last fiscal year end in the ordinary and
usual course of business and consistent with past practice and (ii) liabilities that, individually
or in the aggregate, have not had and would not reasonably be expected to have a Company Material
Adverse Effect.

Section 3.9 Offering of Securities. Neither the Company nor any person acting on its
behalf has taken any action (including any offering of any securities of the Company under
circumstances which would require the integration of such offering with the offering of the CDCI
Preferred Shares under the Securities Act and the rules and regulations of the Securities and
Exchange Commission (the “SEC”) promulgated thereunder), which might subject the issuance or
acquisition of the CDCI Preferred Shares to the Investor pursuant to this Agreement to the
registration requirements of the Securities Act.

Section 3.10 Litigation and Other Proceedings. Except (i) as set forth on
Schedule D or (ii) as would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect, there is no (A) pending or, to the knowledge of the
Company, threatened, claim, action, suit, investigation or proceeding, against the Company or any
Company Subsidiary or to which any of their assets are subject, nor is the Company or any Company
Subsidiary subject to any order, judgment or decree or (B) unresolved violation, criticism or
exception by any Governmental Entity with respect to any report or relating to any examinations or
inspections of the Company or any Company Subsidiaries.

Section 3.11 Compliance with Laws. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and the
Company Subsidiaries have all permits, licenses, franchises, authorizations, orders and approvals
of, and have made all filings, applications and registrations with, Governmental Entities that are
required in order to permit them to own or lease their properties and assets and to carry on their
business as presently conducted and that are material to the business of the Company or such
Company Subsidiary. Except as set forth on Schedule E, the Company and the Company
Subsidiaries have complied in all respects and are not in default or violation of, and none of
them is, to the knowledge of the Company, under investigation with respect to or, to the knowledge
of the Company, have been threatened to be charged with or given notice of any violation of, any
applicable domestic (federal, state or local) or foreign law, statute, ordinance, license, rule,
regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any
Governmental Entity, other than such noncompliance, defaults or violations that would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Except for statutory or regulatory restrictions of general application or as set forth on
Schedule E, no Governmental Entity has placed any restriction on the business or
properties of the Company or any Company Subsidiary that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.

 

-9-

 

UST Sequence 413

Section 3.12 Employee Benefit Matters. Except as would not reasonably be expected to
have, either individually or in the aggregate, a Company Material Adverse Effect: (i) each
“employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)) providing benefits to any current or former employee,
officer or director of the Company or any member of its “Controlled Group” (defined as any
organization which is a member of a controlled group of corporations within the meaning of Section
414 of the Internal Revenue Code of 1986, as amended (the “Code”)) that is sponsored, maintained or
contributed to by the Company or any member of its Controlled Group and for which the Company or
any member of its Controlled Group would have any liability, whether actual or contingent (each, a
“Plan”) has been maintained in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations, including ERISA and the Code; (ii) with respect to each
Plan subject to Title IV of ERISA (including, for purposes of this clause (ii), any plan subject to
Title IV of ERISA that the Company or any member of its Controlled Group previously maintained or
contributed to in the six years prior to the Signing Date), (1) no “reportable event” (within the
meaning of Section 4043(c) of ERISA), other than a reportable event for which the notice period
referred to in Section 4043(c) of ERISA has been waived, has occurred in the three years prior to
the Signing Date or is reasonably expected to occur, (2) no “accumulated funding deficiency”
(within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not waived, has
occurred in the three years prior to the Signing Date or is reasonably expected to occur, (3) the
fair market value of the assets under each Plan exceeds the present value of all benefits accrued
under such Plan (determined based on the assumptions used to fund such Plan) and (4) neither the
Company nor any member of its Controlled Group has incurred in the six years prior to the Signing
Date, or reasonably expects to incur, any liability under Title IV of ERISA (other than
contributions to the Plan or premiums to the Pension Benefit Guaranty Corporation in the ordinary
course and without default) in respect of a Plan (including any Plan that is a “multiemployer
plan”, within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to
be qualified under Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to its qualified status that has not been revoked, or
such a determination letter has been timely applied for but not received by the Signing Date, and
nothing has occurred, whether by action or by failure to act, which could reasonably be expected to
cause the loss, revocation or denial of such qualified status or favorable determination letter.

Section 3.13 Taxes. Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, (i) the Company and the Company
Subsidiaries have filed all federal, state, local and foreign income and franchise Tax returns
(together with any schedules and attached thereto) required to be filed through the Signing Date,
subject to permitted extensions, and have paid all Taxes due thereon, (ii) all such Tax returns
(together with any schedules and attached thereto) are true, complete and correct in all material
respects and were prepared in compliance with all applicable laws and (iii) no Tax deficiency has
been determined adversely to the Company or any of the Company Subsidiaries, nor does the Company
have any knowledge of any Tax deficiencies.

 

-10-

 

UST Sequence 413

Section 3.14 Properties and Leases. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and the
Company Subsidiaries have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens (including, without limitation,
liens for Taxes), encumbrances, claims and defects that would affect the value thereof or
interfere with the use made or to be made thereof by them. Except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and
the Company Subsidiaries hold all leased real or personal property under valid and enforceable
leases with no exceptions that would interfere with the use made or to be made thereof by them.

Section 3.15 Environmental Liability. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect:

(a) there is no legal, administrative, or other proceeding, claim or action of any nature
seeking to impose, or that would reasonably be expected to result in the imposition of, on the
Company or any Company Subsidiary, any liability relating to the release of hazardous substances as
defined under any local, state or federal environmental statute, regulation or ordinance, including
the Comprehensive Environmental Response, Compensation and Liability Act of 1980, pending or, to
the Company’s knowledge, threatened against the Company or any Company Subsidiary;

(b) to the Company’s knowledge, there is no reasonable basis for any such proceeding, claim or
action; and

(c) neither the Company nor any Company Subsidiary is subject to any agreement, order,
judgment or decree by or with any court, Governmental Entity or third party imposing any such
environmental liability.

Section 3.16 Risk Management Instruments. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, all derivative
instruments, including, swaps, caps, floors and option agreements, whether entered into for the
Company’s own account, or for the account of one or more of the Company Subsidiaries or its or
their customers, were entered into (i) only in the ordinary course of business, (ii) in accordance
with prudent practices and in all material respects with all applicable laws, rules, regulations
and regulatory policies and (iii) with counterparties believed to be financially responsible at the
time; and each of such instruments constitutes the valid and legally binding obligation of the
Company or one of the Company Subsidiaries, enforceable in accordance with its terms, except as may
be limited by the Bankruptcy Exceptions. Neither the Company or the Company Subsidiaries, nor, to
the knowledge of the Company, any other party thereto, is in breach of any of its obligations under
any such agreement or arrangement other than such breaches that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.

Section 3.17 Agreements with Regulatory Agencies. Except as set forth on
Schedule F, neither the Company nor any Company Subsidiary is subject to any material cease-

 

-11-

 

UST Sequence 413

and-desist or other similar order or enforcement action issued by, or is a party to any material
written agreement, consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any capital directive by, or since
December 31, 2006, has adopted any board resolutions at the request of, any Governmental Entity
that currently restricts in any material respect the conduct of its business or that in any
material manner relates to its capital adequacy, its liquidity and funding policies and practices,
its ability to pay dividends, its credit, risk management or compliance policies or procedures,
its internal controls, its management or its operations or business (each item in this sentence,
a “Regulatory Agreement”), nor has the Company or any Company Subsidiary been advised since
December 31, 2006 by any such Governmental Entity that it is considering issuing, initiating,
ordering, or requesting any such Regulatory Agreement. The Company and each Company Subsidiary is
in compliance in all material respects with each Regulatory Agreement to which it is party or
subject, and neither the Company nor any Company Subsidiary has received any notice from any
Governmental Entity indicating that either the Company or any Company Subsidiary is not in
compliance in all material respects with any such Regulatory Agreement.

Section 3.18 Insurance. The Company and the Company Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management of the Company
reasonably has determined to be prudent and consistent with industry practice. The Company and the
Company Subsidiaries are in material compliance with their insurance policies and are not in
default under any of the material terms thereof, each such policy is outstanding and in full force
and effect, all premiums and other payments due under any material policy have been paid, and all
claims thereunder have been filed in due and timely fashion, except, in each case, as would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.

Section 3.19 Intellectual Property. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) the Company and
each Company Subsidiary owns or otherwise has the right to use, all intellectual property rights,
including all trademarks, trade dress, trade names, service marks, domain names, patents,
inventions, trade secrets, know-how, works of authorship and copyrights therein, that are used in
the conduct of their existing businesses and all rights relating to the plans, design and
specifications of any of its branch facilities (“Proprietary Rights”) free and clear of all liens
and any claims of ownership by current or former employees, contractors, designers or others and
(ii) neither the Company nor any of the Company Subsidiaries is materially infringing, diluting,
misappropriating or violating, nor has the Company or any of the Company Subsidiaries received any
written (or, to the knowledge of the Company, oral) communications alleging that any of them has
materially infringed, diluted, misappropriated or violated, any of the Proprietary Rights owned by
any other person. Except as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, to the Company’s knowledge, no other person is infringing,
diluting, misappropriating or violating, nor has the Company or any or the Company Subsidiaries
sent any written communications since January 1, 2007 alleging that any person has infringed,
diluted, misappropriated or violated, any of the Proprietary Rights owned by the Company and the
Company Subsidiaries.

 

-12-

 

UST Sequence 413

Section 3.20 Brokers and Finders. The Investor has no liability for any amounts that
any broker, finder or investment banker is entitled to for any financial advisory, brokerage,
finder’s or other fee or commission in connection with this Agreement or the transactions
contemplated hereby based upon arrangements made by or on behalf of the Company or any Company
Subsidiary.

Section 3.21 Disclosure Schedule. The Company has delivered the Disclosure Schedule
and, if applicable, the Disclosure Update to the Investor and the information contained in the
Disclosure Schedule, as modified by the information contained in the Disclosure Update, if
applicable, is true, complete and correct.

Section 3.22 CPP Preferred Stock. The Company has (i) not breached any
representation, warranty or covenant set forth in the CPP Securities Purchase Agreement or any of
the other documents governing the CPP Preferred Stock and (ii) paid to Investor all accrued and
unpaid dividends and/or interest then due on the CPP Preferred Stock.

ARTICLE IV

COVENANTS

Section 4.1 Affirmative Covenants. The Company hereby covenants and agrees with
Investor that:

(a) Commercially Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties will use its commercially reasonable efforts in good faith to take,
or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of the Exchange as
promptly as practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall use commercially reasonable efforts to cooperate with the other party
to that end.

(b) Certain Notifications Until Closing. From the Signing Date until the Closing,
the Company shall promptly notify the Investor of (i) any fact, event or circumstance of which it
is aware and which would reasonably be expected to cause any representation or warranty of the
Company contained in this Agreement to be untrue or inaccurate in any material respect or to cause
any covenant or agreement of the Company contained in this Agreement not to be complied with or
satisfied in any material respect and (ii) except as Previously Disclosed, any fact, circumstance,
event, change, occurrence, condition or development of which the Company is aware and which,
individually or in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect; provided, however, that delivery of any notice pursuant to this Section
4.1(b) shall not limit or affect any rights of or remedies available to the Investor.

 

-13-

 

UST Sequence 413

(c) Access, Information and Confidentiality.

(i) From the Signing Date until the date when the Investor owns an amount of CDCI Preferred
Shares having an aggregate liquidation value of less than 10% of the aggregate liquidation value
of the CDCI Preferred Shares as of the Closing Date, the Company will permit the Investor and its
agents, consultants, contractors and advisors (A) acting through the Appropriate Federal Banking
Agency, or otherwise to the extent necessary to evaluate, manage, or transfer its investment in
the Company, to examine the corporate books, Tax returns (including all schedules and attached
thereto) and other information reasonably requested by Investor relating to Taxes and make copies
thereof and to discuss the affairs, finances and accounts of the Company and the Company
Subsidiaries with the principal officers of the Company, all upon reasonable notice and at such
reasonable times and as often as the Investor may reasonably request and (B) to review any
information material to the Investor’s investment in the Company provided by the Company to its
Appropriate Federal Banking Agency. Any investigation pursuant to
this Section 4.1(c) shall be
conducted during normal business hours and in such manner as not to interfere unreasonably with
the conduct of the business of the Company, and nothing herein shall require the Company or any
Company Subsidiary to disclose any information to the Investor to the extent (x) prohibited by
applicable law or regulation, or (y) that such disclosure would reasonably be expected to cause a
violation of any agreement to which the Company or any Company Subsidiary is a party or would
cause a risk of a loss of privilege to the Company or any Company Subsidiary (provided that the
Company shall use commercially reasonable efforts to make appropriate substitute disclosure
arrangements under circumstances where the restrictions in this clause (i) apply).

(ii) From the Signing Date until the date on which all of the CDCI Preferred Shares have been
redeemed in whole, the Company will deliver, or will cause to be delivered, to the Investor:

(A) as soon as available after the end of each fiscal year of the
Company, and in any event within 90 days thereafter, a consolidated balance
sheet of the Company as of the end of such fiscal year, and consolidated
statements of income, retained earnings and cash flows of the Company for such
year, in each case prepared in accordance with GAAP and setting forth in each
case in comparative form the figures for the previous fiscal year of the Company,
and which shall be audited to the extent audited financial statements are available;

(B) as soon as available after the end of the first, second and third
quarterly periods in each fiscal year of the Company, a copy of any quarterly
reports provided to other stockholders of the Company or Company management
by the Company;

(C) as soon as available after the Company receives any assessment of
the Company’s internal controls, a copy of such assessment;

 

-14-

 

UST Sequence 413

(D) annually on a date specified by the Investor, a completed survey, in a form
specified by the Investor, providing, among other things, a description of how the Company
has utilized the funds the Company received in connection with the sale of the CPP
Preferred Shares and the effects of such funds on the operations and status of the Company;

(E) as soon as such items become effective, any amendments to the
Charter, bylaws or other organizational documents of the Company; and

(F) at the same time as such items are sent to any stockholders of the Company,
copies of any information or documents sent by the Company to its stockholders.

(iii) The Investor will use reasonable best efforts to hold, and will use reasonable best
efforts to cause its agents, consultants, contractors and advisors and United States executive
branch officials and employees, to hold, in confidence all non-public records, books, contracts,
instruments, computer data and other data and information (collectively, “Information”) concerning
the Company furnished or made available to it by the Company or its representatives pursuant to
this Agreement (except to the extent that such information can be shown to have been (A)
previously known by such party on a non-confidential basis, (B) in the public domain through no
fault of such party or (C) later lawfully acquired from other sources by the party to which it was
furnished (and without violation of any other confidentiality obligation)); provided that nothing
herein shall prevent the Investor from disclosing any Information to the extent required by
applicable laws or regulations or by any subpoena or similar legal process. The Investor
understands that the Information may contain commercially sensitive confidential information
entitled to an exception from a Freedom of Information Act request.

(iv) The Investor’s information rights pursuant to Section 4.1(c)(ii)(A), (B), (C), (E) and
(F) and the Investor’s right to receive certifications from the Company pursuant to Section
4.1(d)(ii) may be assigned by the Investor to a transferee or assignee of the CDCI Preferred
Shares with a liquidation preference of no less than an amount equal to 2% of the initial
aggregate liquidation preference of the CDCI Preferred Shares.

(v) From the Signing Date until the date when the Investor no longer owns any CDCI Preferred
Shares, the Company shall permit, and shall cause each of the Company’s Subsidiaries to permit (A)
the Investor and its agents, consultants, contractors and advisors, (B) the Special Inspector
General of the Troubled Asset Relief Program, and (C) the Comptroller General of the United States
access to personnel and any books, papers, records or other data, in each case, to the extent
relevant to ascertaining compliance with the financing terms and conditions; provided that prior
to disclosing any information pursuant to clause (B) or (C), the Special Inspector General of the
Troubled Asset Relief Program and the Comptroller General of the United States shall have agreed,
with respect to documents obtained under this Agreement in furtherance of its function, to follow
applicable law and regulation (and the

 

-15-

 

UST Sequence 413

applicable customary policies and procedures) regarding the dissemination of confidential
materials, including redacting confidential information from the public version of its reports and
soliciting the input from the Company as to information that should be afforded confidentiality, as
appropriate.

(vi) Nothing in this Section shall be construed to limit the authority that the Special
Inspector General of the Troubled Asset Relief Program, the Comptroller General of the United
States or any other applicable regulatory authority has under law.

(d) CDFI Requirements.

(i) From the Signing Date until the date on which all of the CDCI Preferred Shares have been
redeemed in whole, each Certified Entity shall (A) be certified by the Fund as a CDFI; (B)
together with its Affiliates collectively meet the eligibility requirements of 12 C.F.R.
1805.200(b); (C) have a primary mission of promoting community development, as may be determined
by Investor from time to time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (D)
provide Financial Products, Development Services, and/or other similar financing as a predominant
business activity in arm’s-length transactions; (E) serve a Target Market by serving one or more
Investment Areas and/or Targeted Populations as may be determined by Investor from time to time,
substantially in the manner set forth in 12 C.F.R. 1805.201(b)(3); (F) provide Development
Services in conjunction with its Financial Products, directly, through an Affiliate or through a
contract with a third-party provider; (G) maintain accountability to residents of the applicable
Investment Area(s) or Targeted Population(s) through representation on its governing Board of
Directors or otherwise; and (H) remain a non-governmental entity which is not an agency or
instrumentality of the United States of America, or any State or political subdivision thereof, as
described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any supplemental regulations or
interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental regulations published by the
Fund. Notwithstanding any other provision hereof, as used in this Section 4.1(d), the terms
“Affiliates”; “Financial Products”; “Development Services”; “Target Market”; “Investment
Areas”; and “Targeted Populations” have the meanings ascribed to such terms in 12 C.F.R.
1805.104.

(ii) From the Signing Date until the date on which all of the CDCI Preferred Shares have been
redeemed in whole, the Company shall deliver to Investor (1)(x) on the date that is 180 days after
the Closing Date and (y) annually on the same date on which the Company delivers the documentation
required under Section 4.1(c)(ii)(A) to the Investor, a certificate signed on behalf of the
Company by a Senior Executive Officer, in substantially the form attached hereto as Annex F,
certifying (A) that the Company and each Certified Entity remains in compliance with the
covenants set forth in Section 4.1(d)(i); (B) that the information in the CDFI Application, as
modified by any updates to the CDFI Application provided by the Company to the Investor on or
prior to the date of such certificate, with respect to the covenants set forth in Section
4.1(d)(i)(B) and Section 4.1(d)(i)(D) remains true, correct and complete as of such date or, to
the extent any information set forth in the CDFI Application, as modified by any updates to

 

-16-

 

UST Sequence 413

the CDFI Application provided by the Company to the Investor on or prior to the date of such
certificate, with respect to such covenants needs to be updated or supplanted to make it true,
complete and correct as of such date, that an updated narrative to the CDFI Application setting
forth any information necessary to make the information set forth in the CDFI Application is true,
complete and correct as of such date; (C) either (a) that the contracts and material agreements
entered into by each Certified Entity with respect to Development Services previously disclosed to
the Investor remain in effect or (b) that attached are any new contracts and material agreements
entered into by the Certified Entity with respect to Development Services; (D) a list of the names
and addresses of the individuals which comprise the board of directors of each Certified Entity as
of such date and, to the extent any of such individuals was not a member of the board of directors
of such Certified Entity as of the last certification to the Investor, a narrative describing such
individual’s relationship to the applicable Investment Area(s) and Targeted Population(s) or, if
such Certified Entity maintains accountability to residents of the applicable Investment Area(s) or
Target Population(s) through means other than representation on its governing board of directors
and such means have changed since the date of the last certification to the Investor, a narrative
describing such change; (E) that each Certified Entity is not an agency of the United States of
America, or any State or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6)
and within the meaning of any supplemental regulations or interpretations of 12 C.F.R.
1805.201(b)(6) or such supplemental regulations published by the Fund and (F) that the Company
remains in compliance with the covenants set forth in Section 4.1(f) and Section 4.1(1) and (2)
within five (5) business days of receipt, copies of any notices, correspondence or other written
communication between each Certified Entity and the Fund, including any form that such Certified
Entity is required to provide to the Fund due to the occurrence of a “Material Event” within the
meaning of the Fund’s CDFI Certification Procedures.

(iii) The Company shall immediately notify the Investor upon the
occurrence of any breach of any of the covenants set forth in Section 4.1(d).

(e) Executive Compensation.

(i) Benefit Plans. During the Relevant Period, the Company shall take all necessary
action to ensure that the Benefit Plans of the Company and its Affiliates comply in all respects
with, and shall take all other actions necessary to comply with, Section 111 of EESA, as
implemented by the Compensation Regulations, and neither the Company nor any of its Affiliates
shall adopt any new Benefit Plan (x) that does not comply therewith or (y) that does not expressly
state and require that such Benefit Plan and any compensation thereunder shall be subject to any
relevant Compensation Regulations adopted, issued or released on or after the date any such
Benefit Plan is adopted. To the extent that EESA and/or the Compensation Regulations are amended
or otherwise change during the Relevant Period in a manner that requires changes to then-existing
Benefit Plans, or that requires other actions, the Company and its Affiliates shall effect such
changes to its or their Benefit Plans, and take such other actions, as promptly

 

-17-

 

UST Sequence 413

as practicable after it has actual knowledge of such amendments or changes in order to be
in compliance with this Section 4.1(e) (and shall be deemed to be in compliance for a
reasonable period to effect such changes). In addition, the Company and its Affiliates
shall take all necessary action, other than to the extent prohibited by applicable law or
regulation applicable outside of the United States, to ensure that the consummation of the
transactions contemplated by this Agreement will not accelerate the vesting, payment or
distribution of any equity-based awards, deferred cash awards or any nonqualified deferred
compensation payable by the Company or any of its Affiliates.

(ii) Additional Waivers. After the Closing Date, in connection with the hiring
or promotion of a Section 4.1(e) Employee and/or the promulgation of applicable
Compensation Regulations or otherwise, to the extent any Section 4.1(e) Employee shall not
have executed a waiver in a form satisfactory to the Investor with respect to the
application to such Section 4.1(e) Employee of the Compensation Regulations, the Company
shall use its best efforts to (x) obtain from such Section 4.1(e) Employee a waiver in
substantially the form attached hereto as Annex D and (y) deliver such waiver to the
Investor as promptly as possible, in each case within sixty days of such Section 4.1(e)
Employee becoming subject to the requirements of this Section. “Section 4.1(e)
Employee” means (A) each Senior Executive Officer and (B) any other employee of the
Company or any of its Affiliates determined at any time to be subject to Section 111 of
EESA as implemented by the Compensation Regulations.

(iii) Clawback. In the event that any Section 4.1(e) Employee receives a
payment in contravention of the provisions of this Section 4.1(e), the Company shall
promptly provide such individual with written notice that the amount of such payment must be
repaid to the Company in full within fifteen business days following receipt of such notice
or such earlier time as may be required by the Compensation Regulations and shall promptly
inform the Investor (x) upon discovering that a payment in contravention of this Section
4.1(e) has been made and (y) following the repayment to the Company of such amount and shall
take such other actions as may be necessary to comply with the Compensation Regulations.

(iv) Limitation on Deductions. During the Relevant Period, the Company agrees
that it shall not claim a deduction for remuneration for federal income tax purposes in
excess of $500,000 for each Senior Executive Officer that would not be deductible if
Section 162(m)(5) of the Code applied to the Company.

(v) Amendment to Prior Agreement. The parties agree that, effective as of the
date hereof, Section 4.10 of the CPP Securities Purchase Agreement shall be amended in its
entirety by replacing such Section 4.10 with the provisions set forth in this Section
4.1(e) and any terms included in this Section 4.1(e) that are not otherwise defined in the
CPP Securities Purchase Agreement shall have the meanings ascribed to such terms in this
Agreement.

(f) Bank or Savings and Loan Holding Company Status. If the Company is a Bank
Holding Company or a Savings and Loan Holding Company on the Signing Date, then the

 

-18-

 

UST Sequence 413

Company shall maintain its status as a Bank Holding Company or Savings and Loan Holding Company,
as the case may be, for as long as the Investor owns any CDCI Preferred Shares. The Company shall
redeem all CDCI Preferred Shares held by the Investor prior to terminating its status as a Bank
Holding Company or Savings and Loan Holding Company, as applicable.

(g) Predominantly Financial. For as long as the Investor owns any CDCI Preferred
Shares, the Company, to the extent it is not itself an insured depository institution, agrees to
remain predominantly engaged in financial activities. A company is predominantly engaged in
financial activities if the annual gross revenues derived by the company and all subsidiaries of
the company (excluding revenues derived from subsidiary depository institutions), on a
consolidated basis, from engaging in activities that are financial in nature or are incidental to
a financial activity under subsection (k) of Section 4 of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k)) represent at least 85 percent of the consolidated annual gross revenues of the
company.

(h) Capital Covenant. From the Signing Date until the date on which all of the CDCI
Preferred Shares have been redeemed in whole, the Company and the Company Subsidiaries shall
maintain such capital as may be necessary to meet the minimum capital requirements of the
Appropriate Federal Banking Agency, as in effect from time to time.

(i) HAMP Modifications. The Company shall take all necessary action to ensure that
(i) from and after the date the Company or any Company Subsidiary that services residential
mortgage loans has 100 or more residential mortgage loans not owned or guaranteed by Fannie Mae or
Freddie Mac which have been past due for 60 or more days, the Company or such Company Subsidiary
shall, to the extent such programs are open for participation, (A) participate in the United
States Department of the Treasury’s Making Home Affordable (“MHA”) program, including MHA’s Second
Lien Modification Program and, (B) immediately execute a Commitment to Purchase Financial
Instrument and Servicer Participation Agreement (in such form as may be set forth on the MHA
website at www.hmpadmin.com from time to time) with Fannie Mae (acting as the United
States Department of the Treasury’s fiscal agent) and (ii) if the Company or any Company
Subsidiary owns mortgage loans that are serviced by a non-affiliated mortgage servicer, the
Company or such Company Subsidiary shall consent to any MHA modification request made by such
mortgage servicer.

(j) Reporting Requirements. Prior to the date on which all of the CDCI Preferred
Shares have been redeemed in whole, the Company covenants and agrees that, at all times on or after
the Closing Date, (i) to the extent it is subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, it shall comply with the terms and conditions set forth in Annex
E or (ii) as soon as practicable after the date that the Company becomes subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall comply with the terms
and conditions set forth in Annex E.

(k) Compliance with Employ American Workers Act. The Company shall agree to comply,
and take all necessary action to ensure that any Company Subsidiary complies in all respects with
the provisions of EESA and any federal law respecting EESA, including the Employ American Workers
Act (Section 1611 of Division A, Title XVI of the American

 

-19-

 

UST Sequence 413

Recovery and Reinvestment Act of 2009), Public Law No. 111-5, effective as of February 17, 2009,
as implemented by any rules, regulation or guidance thereunder, as such may be amended or
supplemented from time to time, and any applicable guidance of the United States Department of the
Treasury with respect thereto.

(l) Control by Foreign Bank or Company. Prior to the date on which all of the CDCI
Preferred Shares have been redeemed in whole, the Company shall not be controlled (within the
meaning of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(2)) and 12 C.F.R. 225(a)(i) in
the case of Bank Holding Companies and banks and the Home Owners’ Loan Act of 1933 (12 U.S.C. 1467a
(a)(2)) and 12 C.F.R. 583.7 in the case of Savings and Loan Holding Companies and savings
associations) by a foreign bank or company.

Section 4.2 Negative Covenants. The Company hereby covenants and agrees with the
Investor that:

(a) Certain Transactions.

(i) The Company shall not merge or consolidate with, or sell, transfer or lease all or
substantially all of its property or assets to, any other party unless the successor,
transferee or lessee party (or its ultimate parent entity), as the case may be (if not the
Company), expressly assumes the due and punctual performance and observance of each and
every covenant, agreement and condition of this Agreement to be performed and observed by
the Company.

(ii) Without the prior written consent of the Investor, until such time as the
Investor shall cease to own any debt or equity securities of the Company acquired pursuant
to this Agreement or the CPP Securities Purchase Agreement (including, for the avoidance of
doubt, the CPP Preferred Shares or the CDCI Preferred Shares), the Company shall not permit
any of its “significant subsidiaries” (as such term is defined in Rule 12b-2 promulgated
under the Exchange Act) to (i) engage in any merger, consolidation, statutory share
exchange or similar transaction following the consummation of which such significant
subsidiary is not wholly-owned by the Company, (ii) dissolve or sell all or substantially
all of its assets or property other than in connection with an internal reorganization or
consolidation involving wholly-owned subsidiaries of the Company or (iii) issue or sell any
 shares of its capital stock or any securities convertible or exercisable for any such
 shares, other than issuances or sales in connection with an internal reorganization or
consolidation involving wholly-owned subsidiaries of the Company.

(b) Restriction on Dividends and Repurchases.

(i) The Company covenants and agrees that it shall not violate any of the restrictions
on dividends, distributions, redemptions, repurchases, acquisitions and related actions set
forth in the New Certificate of Designations, which are incorporated by reference herein as
if set forth in full.

 

-20-

 

UST Sequence 413

(ii) During the period beginning on the eighth anniversary of the Closing and ending on
the date on which the Investor no longer owns any of the CDCI Preferred Shares, neither the
Company nor any Company Subsidiary shall, without the consent of the Investor, (A) declare
or pay any dividend or make any distribution on capital stock or other equity securities of
any kind of the Company or any Company Subsidiary; or (B) redeem, purchase or acquire any
 shares of Common Stock or other capital stock or other equity securities of any kind of the
Company or any Company Subsidiary, or any trust preferred securities issued by the Company
or any Affiliate of the Company, other than (1) redemptions, purchases or other acquisitions
of the CDCI Preferred Shares, (2) regular dividends on shares of preferred stock in
accordance with the terms thereof and which are permitted under the terms of the CDCI
Preferred Shares, or (3) dividends or distributions by any wholly-owned Company Subsidiary.

(c) Related Party Transactions. Until such time as the Investor ceases to own
any debt or equity securities of the Company, including the CDCI Preferred Shares, the
Company and the Company Subsidiaries shall not enter into transactions with Affiliates or
related persons (within the meaning of Item 404 under the SEC’s Regulation S-K) unless
(A) such transactions are on terms no less favorable to the Company and the Company
Subsidiaries than could be obtained from an unaffiliated third party, and (B) have been
approved by the audit committee of the Board of Directors or comparable body of independent directors
of the Company, or if there are no independent directors, the Board of Directors, provided that
the Board of Directors shall maintain written documentation which supports its determination that
the transaction meets the requirements of clause (A) of this Section 4.2(c).

(d) Restriction on Repurchase of CDCI Preferred Shares Not Held by Investor. Prior to the date on which the Investor no longer owns any of the CDCI Preferred
Shares the Company shall not repurchase, redeem, call or otherwise reacquire any CDCI Preferred Shares from any holder thereof, whether by means of open market purchase, negotiated
transaction, or otherwise, unless it offers to repurchase, redeem, call or otherwise reacquire a
ratable portion of the CDCI Preferred Shares, as the case may be, then held by the Investor on
the same terms and conditions.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1 Purchase for Investment. The Investor acknowledges that the CDCI
Preferred Shares have not been registered under the Securities Act or under any state securities
laws. The Investor (a) is acquiring the CDCI Preferred Shares pursuant to an exemption from
registration under the Securities Act solely for investment with no present intention to
distribute them to any person in violation of the Securities Act or any applicable U.S. state
securities laws, (b) will not sell or otherwise dispose of any of the CDCI Preferred Shares,
except in compliance with the registration requirements or exemption provisions of the Securities
Act and any applicable U.S. state securities laws, and (c) has such knowledge and experience in

 

-21-

 

UST Sequence 413

financial and business matters and in investments of this type that it is capable of evaluating the
merits and risks of the Exchange and of making an informed investment decision.

Section 5.2 Legends. (a) The Investor agrees that all certificates or other
instruments representing the CDCI Preferred Shares will bear a legend substantially to the
following effect:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. EACH PURCHASER OF THE
SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. ANY TRANSFEREE OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT BY ITS ACCEPTANCE
HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER”
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT
IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES
REPRESENTED BY THIS INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR
SO LONG AS THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON

 

-22-

 

UST Sequence 413

RULE 144A, (C) TO THE ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THE
SECURITIES REPRESENTED BY THIS INSTRUMENT ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER
AND OTHER PROVISIONS OF AN EXCHANGE AGREEMENT BETWEEN THE ISSUER OF
THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF
WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS
INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN
COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.”

(b) In the event that any CDCI Preferred Shares (i) become registered under the Securities
Act or (ii) are eligible to be transferred without restriction in accordance with Rule 144 or
another exemption from registration under the Securities Act (other than Rule 144A), the Company
shall issue new certificates or other instruments representing such CDCI Preferred Shares, which
shall not contain the applicable legends in Section 5.2(a) above; provided that the Investor
surrenders to the Company the previously issued certificates or other instruments.

Section 5.3 Transfer of CDCI Preferred Shares. Subject to compliance with applicable
securities laws, the Investor shall be permitted to transfer, sell, assign or otherwise dispose of
(“Transfer”) all or a portion of the CDCI Preferred Shares at any time, and the Company shall take
all steps as may be reasonably requested by the Investor to facilitate the Transfer of the CDCI
Preferred Shares, including without limitation, as set forth in Section 5.4, provided that the
Investor shall not Transfer any CDCI Preferred Shares if such transfer would require the Company to
be subject to the periodic reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934 (the “Exchange Act”) and the Company was not already subject to such requirements. In
furtherance of the foregoing, the Company shall provide reasonable cooperation to facilitate any
Transfers of the CDCI Preferred Shares, including, as is reasonable under the circumstances, by
furnishing such information concerning the Company and its business as a proposed transferee may
reasonably request and making management of the Company reasonably available to respond to
questions of a proposed transferee in accordance with customary practice, subject in all cases to
the proposed transferee agreeing to a customary confidentiality agreement.

Section 5.4
Rule 144; Rule 144A; 4(11/2) Transactions. (a) At all times after the
Signing Date, the Company covenants that (1) it will, upon the request of the Investor or any
subsequent holders of the CDCI Preferred Shares (“Holders”), use its reasonable best efforts to
(x), to the extent any Holder is relying on Rule 144 under the Securities Act to sell any

 

-23-

 

UST Sequence 413

of the CDCI Preferred Shares, make “current public information” available, as provided in Section
(c)(1) of Rule 144 (if the Company is a “Reporting Issuer” within the meaning of Rule 144) or in
Section (c)(2) of Rule 144 (if the Company is a “Non-Reporting Issuer” within the meaning of Rule
144), in either case for such time period as necessary to permit sales pursuant to Rule 144, (y),
to the extent any Holder is relying on the so-called
“Section 4
(11/2)” exemption to sell any of its
CDCI Preferred Shares, prepare and provide to such Holder such information, including the
preparation of private offering memoranda or circulars or financial information, as the Holder may
reasonably request to enable the sale of the CDCI Preferred Shares pursuant to such exemption, or
(z) to the extent any Holder is relying on Rule 144A under the Securities Act to sell any of its
CDCI Preferred Shares, prepare and provide to such Holder the information required pursuant to Rule
144A(d)(4), and (2) it will take such further action as any Holder may reasonably request from time
to time to enable such Holder to sell CDCI Preferred Shares without registration under the
Securities Act within the limitations of the exemptions provided by (i) the provisions of the
Securities Act or any interpretations thereof or related thereto by the SEC, including transactions
based on the so-called “Section 4
(11/2)” and other similar transactions, (ii) Rule 144 or 144A
under the Securities Act, as such rules may be amended from time to time, or (iii) any similar rule
or regulation hereafter adopted by the SEC; provided that the Company shall not be required to take
any action described in this Section 5.4(a) that would cause the Company to become subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act if the Company was not subject to
such requirements prior to taking such action. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with such requirements
and, if not, the specifics thereof.

(b) The Company agrees to indemnify Investor, Investor’s officers, directors,
employees, agents, representatives and Affiliates, and each person, if any, that controls
Investor within the meaning of the Securities Act (each, an “Indemnitee”), against any and all losses,
claims, damages, actions, liabilities, costs and expenses (including reasonable fees, expenses
and disbursements of attorneys and other professionals incurred in connection with investigating,
defending, settling, compromising or paying any such losses, claims, damages, actions,
liabilities, costs and expenses), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of material fact contained in any document or report provided by
the Company pursuant to this Section 5.4 or any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.

(c) If the indemnification provided for in Section 5.4(b) is unavailable to an
Indemnitee with respect to any losses, claims, damages, actions, liabilities, costs or
expenses referred to therein or is insufficient to hold the Indemnitee harmless as contemplated
therein, then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid
or payable by such Indemnitee as a result of such losses, claims, damages, actions,
liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the
Indemnitee, on the one hand, and the Company, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages, actions, liabilities,
costs or expenses as well as any other relevant equitable considerations. The relative fault of
the

 

-24-

 

UST Sequence 413

Company, on the one hand, and of the Indemnitee, on the other hand, shall be determined by
reference to, among other factors, whether the untrue statement of a material fact or omission to
state a material fact relates to information supplied by the Company or by the Indemnitee and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; the Company and Investor agree that it would not be just and equitable
if contribution pursuant to this Section 5.4(c) were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable considerations referred to
in Section 5.4(b). No Indemnitee guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from the Company if the
Company was not guilty of such fraudulent misrepresentation.

Section 5.5 Depositary Shares. Upon request by the Investor at any time following the
Closing Date, the Company shall promptly enter into a depositary arrangement, pursuant to
customary agreements reasonably satisfactory to the Investor and with a depositary reasonably
acceptable to the Investor, pursuant to which the CDCI Preferred Shares may be deposited and
depositary shares, each representing a fraction of a CDCI Preferred Share, as specified by the
Investor, may be issued. From and after the execution of any such depositary arrangement, and the
deposit of any CDCI Preferred Shares, as applicable, pursuant thereto, the depositary shares
issued pursuant thereto shall be deemed “CDCI Preferred Shares” and, as applicable, “Registrable
Securities” for purposes of this Agreement.

Section 5.6 Expenses and Further Assurances. (a) Unless otherwise provided in this
Agreement, each of the parties hereto will bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated under this Agreement, including
fees and expenses of its own financial or other consultants, investment bankers, accountants and
counsel.

(b) The Company shall, at the Company’s sole cost and expense, (i) furnish to the Investor all
instruments, documents and other agreements required to be furnished by the Company pursuant to the
terms of this Agreement, including, without limitation, any documents required to be delivered
pursuant to Section 5.4 above, or which are reasonably requested by the Investor in connection
therewith; (ii) execute and deliver to the Investor such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable, to evidence,
preserve and/or protect the CDCI Preferred Shares purchased by the Investor, as Investor may
reasonably require; and (iii) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the intents and
purposes of this Agreement, as the Investor shall reasonably require from time to time.

Section 5.7 Repurchase of Investor Securities. From and after the date of this
Agreement, the agreements set forth in Section 4.9 of the CPP Securities Purchase Agreement shall
be applicable following the redemption in whole of the CDCI Preferred Shares held by the Investor
or the Transfer by the Investor of all of the CDCI Preferred Shares held by the Investor to one or
more third parties not affiliated with the Investor.

 

-25-

 

UST Sequence 413

ARTICLE VI

MISCELLANEOUS

Section 6.1 Termination. This Agreement shall terminate upon the earliest to occur
of:

(a) termination at any time prior to the Closing:

(i) by either the Investor or the Company if the Closing shall not have occurred by the
30th calendar day following the Signing Date; provided, however, that in the event the
Closing has not occurred by such 30th calendar day, the parties will consult in good faith
to determine whether to extend the term of this Agreement, it being understood that the
parties shall be required to consult only until the fifth calendar day after such 30th
calendar day and not be under any obligation to extend the term of this Agreement
thereafter; provided, further, that the right to terminate this Agreement under this Section
6.1(a)(i) shall not be available to any party whose breach of any representation or warranty
or failure to perform any obligation under this Agreement shall have caused or resulted in
the failure of the Closing to occur on or prior to such date; or

(ii) by either the Investor or the Company in the event that any Governmental Entity
shall have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and nonappealable; or

(iii) by the mutual written consent of the Investor and the Company; or

(b) the date on which all of the CDCI Preferred Shares have been redeemed in
whole; or

(c) the date on which the Investor has transferred all of the CDCI Preferred
Shares to third parties which are not Affiliates of the Investor; or

(d) if the Closing shall not have occurred by September 30, 2010, on such
date.

In the event of termination of this Agreement as provided in this Section 6.1, this Agreement
shall forthwith become void and there shall be no liability on the part of either party hereto
except that nothing herein shall relieve either party from liability for any breach of this
Agreement.

Section 6.2 Survival. (a) This Agreement and all representations, warranties,
covenants and agreements made herein shall survive the Closing without limitation.

(b) The covenants set forth in Article IV and Annex E and the agreements set forth in
Article V shall, to the extent such covenants do not explicitly terminate at such time as

 

-26-

 

UST Sequence 413

the Investor no longer owns any CDCI Preferred Shares, survive the termination of this Agreement
pursuant to Section 6.1(c) hereof without limitation until the date on which all of the CDCI
Preferred Shares have been redeemed in whole.

Section 6.3 Amendment. No amendment of any provision of this Agreement will be
effective unless made in writing and signed by an officer or a duly authorized representative of
each of the Company and the Investor; provided that for so long as the CDCI Preferred Shares are
outstanding, the Investor may at any time and from time to time
unilaterally amend Section 4.1(d)
to the extent the Investor deems necessary, in its sole discretion, to comply with, or conform to,
any changes after the Signing Date in any federal statutes, any rules and regulations promulgated
thereunder and any other publications or interpretative releases of the Fund governing CDFIs,
including, without limitation, any changes in the criteria for certification as a CDFI by the
Fund. No failure or delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or
further exercise of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative of any rights or remedies provided by law.

Section 6.4 Waiver of Conditions. The conditions to each party’s obligation to
consummate the Exchange are for the sole benefit of such party and may be waived by such party in
whole or in part to the extent permitted by applicable law. No waiver will be effective unless it
is in a writing signed by a duly authorized officer of the waiving party that makes express
reference to the provision or provisions subject to such waiver.

Section 6.5 Governing Law; Submission to Jurisdiction, etc. This Agreement and any
claim, controversy or dispute arising under or related to this Agreement, the relationship of the
parties, and/or the interpretation and enforcement of the rights and duties of the parties shall be
enforced, governed, and construed in all respects (whether in contract or in tort) in accordance
with the federal law of the United States if and to the extent such law is applicable, and
otherwise in accordance with the laws of the State of New York applicable to contracts made and to
be performed entirely within such State. Each of the parties hereto agrees (a) to submit to the
exclusive jurisdiction and venue of the United States District Court for the District of Columbia
and the United States Court of Federal Claims for any and all civil actions, suits or proceedings
arising out of or relating to this Agreement or the Exchange contemplated hereby and (b) that
notice may be served upon (i) the Company at the address and in the manner set forth for notices to
the Company in Section 6.6 and (ii) the Investor at the address and in the manner set forth for
notices to the Company in Section 6.6, but otherwise in accordance with federal law. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY UNCONDITIONALLY WAIVES TRIAL BY JURY
IN ANY CIVIL LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE EXCHANGE CONTEMPLATED
HEREBY.

Section 6.6 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to have been duly given
(a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of
receipt, or (b) on the second business day following the date of dispatch if delivered by a
recognized next day courier service. All notices hereunder shall be delivered as set forth below

 

-27-

 

UST Sequence 413

or pursuant to such other instructions as may be designated in writing by the party to receive such
notice.

If to the Company as set forth in Schedule A.

If to the Investor:

United States Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

Attention: Chief Counsel, Office of Financial Stability

Facsimile: (202) 927-9225

E-mail: CDCINotice@do.treas.gov

with a copy to:

E-mail: OFSChiefCounselNotices@do.treas.gov

Section 6.7 Definitions, Interpretation.

(a) Definitions.

(i) When a reference is made in this Agreement to a subsidiary of a person, the term
“subsidiary” means any corporation, partnership, joint venture, limited liability company or
other entity (x) of which such person or a subsidiary of such person is a general partner or
(y) of which a majority of the voting securities or other voting interests, or a majority of
the securities or other interests of which having by their terms ordinary voting power to
elect a majority of the board of directors or persons performing similar functions with
respect to such entity, is directly or indirectly owned by such person and/or one or more
subsidiaries thereof.

(ii) The term “Affiliate” means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other person. For
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”) when used with respect to any person,
means the possession, directly or indirectly, of the power to cause the direction of
management and/or policies of such person, whether through the ownership of voting
securities by contract or otherwise.

(iii) The term “Appropriate Federal Banking Agency” means the “appropriate
Federal banking agency” with respect to the Company or such Company Subsidiaries, as
applicable, as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1813(q)).

(iv) The
term “Bank Holding Company” means a company registered as such with
the Board of Governors of the Federal Reserve System (the “Federal Reserve”)

 

-28-

 

UST Sequence 413

pursuant to 12 U.S.C. §1842 and the regulations of the Federal Reserve promulgated thereunder.

(v) The term “Business Combination” means a merger, consolidation, statutory share
exchange or similar transaction that requires the approval of the Company’s stockholders.

(vi) The term “Certified Entity” means the Company or, if the Company itself has not been
certified by the Fund as a CDFI, each Affiliate of the Company that has been certified by the CDFI
and is specified on Schedule A of the Letter Agreement.

(vii) The term “Company Financial Statements” means the consolidated financial
statements of the Company and its consolidated subsidiaries for each of the last three completed
fiscal years of the Company (which shall be audited to the extent audited financial statements are
available) and each completed quarterly period since the last completed fiscal year, required to
be delivered to Investor pursuant to the CPP Securities Purchase Agreement.

(viii) The term “Company Material Adverse Effect” means a material adverse effect on
(i) the business, results of operation or financial condition of the Company and its consolidated
subsidiaries and each Certified Entity taken as a whole; provided, however, that Company Material
Adverse Effect shall not be deemed to include the effects of (A) changes after the Signing Date in
general business, economic or market conditions (including changes generally in prevailing
interest rates, credit availability and liquidity, currency exchange rates and price levels or
trading volumes in the United States or foreign securities or credit markets), or any outbreak or
escalation of hostilities, declared or undeclared acts of war or terrorism, in each case generally
affecting the industries in which the Company and its subsidiaries operate, (B) changes or
proposed changes after the Signing Date in GAAP, or authoritative interpretations thereof, or (C)
changes or proposed changes after the Signing Date in securities, banking and other laws of
general applicability or related policies or interpretations of Governmental Entities (in the case
of each of these clauses (A), (B) and (C), other than changes or occurrences to the extent that
such changes or occurrences have or would reasonably be expected to have a materially
disproportionate adverse effect on the Company and its consolidated subsidiaries taken as a whole
relative to comparable U.S. banking or financial services organizations); or (ii) the ability of
the Company to consummate the Exchange and the other transactions contemplated by this Agreement
and perform its obligations hereunder or thereunder on a timely basis.

(ix) The
term “Designated Matters” means (i) the election and removal of directors,
(ii) the approval of any Business Combination, (iii) the approval of a sale of all or substantially
all of the assets or property of the Company, (iv) the approval of a dissolution of the Company,
(v) the approval of any issuance of any securities of the Company on which holders of Common Stock
are entitled to vote, (vi) the approval of any amendment to the Charter or bylaws of the Company on
which holders of Common Stock are entitled to vote, (vii) any matters which require stockholder
approval under any

 

-29-

 

UST Sequence 413

applicable national stock exchange rules and (viii) the approval of any other matters reasonably
incidental to the matters set forth in subclauses (i) through (vii) as determined by the Investor.

 (x) The term “Disclosure Schedule” means collectively, those certain schedules
delivered to the Investor on or prior to (i) the CPP Signing Date, with respect to the “Disclosure
Schedule” delivered in connection with the CPP Securities Purchase Agreement and (ii) the Signing
Date with respect to the schedules required to be delivered under this Agreement, setting forth,
among other things, items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 2.2 of the CPP Securities Purchase Agreement or
Article III hereof.

(xi) The term “EAWA” means the Employ American Workers Act (Section 1611 of Division A, Title
XVI of the American Recovery and Reinvestment Act of 2009), Public Law No. 111-5, effective as of
February 17, 2009, as may be amended and in effect from time to time.

(xii) The term “Junior Stock” means the Common Stock and any other class or series of stock
of the Company the terms of which expressly provide that it ranks junior to the CDCI Preferred
Shares as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the
Company.

(xiii) The term “Parity Stock” means any class or series of stock of the Company the terms of
which do not expressly provide that such class or series will rank senior or junior to the CDCI
Preferred Shares as to dividend rights and/or as to rights on liquidation, dissolution or winding
up of the Company (in each case without regard to whether dividends accrue cumulatively or
non-cumulatively).

(xiv) The term “Previously Disclosed” means information set forth on the Disclosure
Schedule or the Disclosure Update, as applicable; provided, however, that disclosure in any section
of such Disclosure Schedule or Disclosure Update, as applicable, shall apply only to the indicated
section of this Agreement except to the extent that it is reasonably apparent from the face of such
disclosure that such disclosure is relevant to another section of this Agreement; provided,
further, that the existence of Previously Disclosed information, pursuant to a Disclosure Update,
shall neither obligate the Investor to consummate the Exchange nor limit or affect any rights of or
remedies available to the Investor.

(xv) The term “Savings and Loan Holding Company” means a company registered as such
with the Office of Thrift Supervision pursuant to 12 U.S.C. §1467(a) and the regulations of the
Office of Thrift Supervision promulgated thereunder.

 

-30-

 

UST Sequence 413

(xvi) The term “Senior Executive Officers” means the Company’s “senior
executive officers” as defined in Section 111 of the EESA and the Compensation Regulations.

(xvii) The term “Share Dilution Amount” means the increase in the number of
diluted shares outstanding (determined in accordance with GAAP, and as measured from the
date of the Company’s most recent consolidated financial statements prior to the Closing
Date) resulting from the grant, vesting or exercise of equity-based compensation to
employees and equitably adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.

(xviii) The term “Tax” or “Taxes” means any federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add on minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or addition imposed by any Governmental
Entity.

(xix) To the extent any securities issued pursuant to this Agreement or the
transactions contemplated hereby are registered in the name of a designee of the Investor
pursuant to Section 1.2 or Section 6.9(c) or transferred to an Affiliate of the Investor,
all references herein to the Investor holding or owning any debt or equity securities of
the Company, CDCI Preferred Shares shall be deemed to refer to the Investor, together with
such designees and/or Affiliates, holding or owning any debt or equity securities, CDCI
Preferred Shares (and any like variations thereof), as applicable.

Section 6.8 Interpretation. When a reference is made in this Agreement to “Recitals”,
“Articles”, “Sections”, “Annexes” or “Schedules” such reference shall be to a Recital, Article or
Section of, or Annex or Schedule to, this Agreement, unless otherwise indicated. The terms defined
in the singular have a comparable meaning when used in the plural, and vice versa. References to
“herein”, “hereof, “hereunder” and the like refer to this Agreement as a whole and not to any
particular section or provision, unless the context requires otherwise. The table of contents and
headings contained in this Agreement are for reference purposes only and are not part of this
Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement,
they shall be deemed followed by the words “without limitation.” No rule of construction against
the draftsperson shall be applied in connection with the interpretation or enforcement of this
Agreement, as this Agreement is entered into between sophisticated parties advised by counsel. All
references to “$” or “dollars” mean the lawful currency of the United States of America. Except as
expressly stated in this Agreement, all references to any statute, rule or regulation are to the
statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and,
in the case of statutes, include any rules and regulations promulgated under the statute) and to
any section of any statute, rule or regulation include any successor to the section. References to
a “business day” shall mean any day except Saturday, Sunday and any day on which banking
institutions in the State of New York or the District of Columbia generally are authorized or
required by law or other governmental actions to close.

 

-31-

 

UST Sequence 413

Section 6.9 Assignment. Neither this Agreement nor any right, remedy, obligation nor
liability arising hereunder or by reason hereof shall be assignable by any party hereto without the
prior written consent of the other party, and any attempt to assign any right, remedy, obligation
or liability hereunder without such consent shall be void, except (a) an assignment, in the case of
a merger, consolidation, statutory share exchange or similar transaction that requires the approval
of the Company’s stockholders where such party is not the surviving entity, or a sale of
substantially all of its assets, to the entity which is the survivor of such Business Combination
or the purchaser in such sale, (b) an assignment of certain
rights as provided in Sections 4.1(c)
or 4.1(j) or Annex E or (c) an assignment by the Investor of this Agreement to an Affiliate
of the Investor; provided that if the Investor assigns this Agreement to an Affiliate, the Investor
shall be relieved of its obligations under this Agreement but (i) all rights, remedies and
obligations of the Investor hereunder shall continue and be enforceable by such Affiliate, (ii) the
Company’s obligations and liabilities hereunder shall continue to be outstanding and (iii) all
references to the Investor herein shall be deemed to be references to such Affiliate.

Section 6.10 Severability. If any provision of this Agreement, or the application
thereof to any person or circumstance, is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.

Section 6.11 No Third-Party Beneficiaries. Other than as expressly provided herein,
nothing contained in this Agreement, expressed or implied, is intended to confer upon any person
or entity other than the Company and the Investor (and any Indemnitee) any benefit, right or
remedies.

Section 6.12 Entire Agreement, etc. (a) This Agreement (including the Annexes and
Schedules hereto) constitutes the entire agreement, and supersedes all other prior agreements,
understandings, representations and warranties, both written and oral, between the parties, with
respect to the subject matter hereof.

(b) For the avoidance of doubt, for so long as the Investor holds any outstanding CPP
Preferred Stock or warrants issued by the Company to the Investor pursuant to the CPP Securities
Purchase Agreement or any securities issuable upon the exercise thereof or exchanged therefor
(collectively, the “CPP Securities”), the CPP Securities Purchase Agreement and the CPP Securities
shall remain in full force and effect, other than as specifically modified herein.

Section 6.13 Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms. It is accordingly agreed that the parties shall be entitled

 

-32-

 

UST Sequence 413

(without the necessity of posting a bond) to specific performance of the terms hereof, this being
in addition to any other remedies to which they are entitled at law or equity.

[Remainder of Page Intentionally Left Blank]

 

-33-

 

ANNEX A

FORM OF OFFICER’S CERTIFICATE

OFFICER’S CERTIFICATE

OF

[COMPANY]

In connection with that certain letter agreement, dated [____________], 2010 (the
“Agreement”) by and between [COMPANY] (the “Company”) and the United States Department of the
Treasury which incorporates that certain Exchange Agreement — Standard Terms referred to therein
(the “Standard Terms”), the undersigned does hereby certify as follows:

1. I am a duly elected/appointed [____________] of the Company.

2. The representations and warranties of the Company set forth in Article III
of the Standard Terms are true and correct in all respects as though as of the date hereof
(other than representations and warranties that by their terms speak as of another date, which
representations and warranties shall be true and correct in all respects as of such other
date) and the Company has performed in all material respects all obligations required to be
performed by it under the Agreement.

3. The New Certificate of Designations, a true, complete and correct copy of
which is attached as Exhibit A hereto, has been filed with, and accepted by, the
Secretary of State of the State of [__________].

4. The Company has effected such changes to its Benefit Plans with respect
to its Senior Executive Officers and any other employee of the Company or its Affiliates
subject to Section 111 of EESA, as implemented by any Compensation Regulations (and to the extent
necessary for such changes to be legally enforceable, each of its Senior Executive Officers
and other employees has duly consented in writing to such changes), as may be necessary, during
the Relevant Period, in order to comply with Section 111 of EESA or the Compensation
Regulations.

5. The Charter and bylaws of the Company delivered to the Investor pursuant
to the CPP Securities Purchase Agreement are true, complete and correct as of the date hereof.

The foregoing certifications are made and delivered as of [___________] pursuant to Section 1.2 of the Standard Terms.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to
them in the Standard Terms.

[SIGNATURE PAGE FOLLOWS]

Annex A-1

 

IN WITNESS WHEREOF, this Officer’s Certificate has been duly executed and
delivered as of the [__] day of [___________], 20[__].

	 	 	 	 	 
	 	[COMPANY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

Annex A-2

 

EXHIBIT A

  

Annex A-3

 

ANNEX B

FORM OF NEW CERTIFICATE OF DESIGNATIONS

[SEE ATTACHED]

 

Annex B-1

 

UST Seq. 413

(CDFI Bank/Thrifts

Senior Preferred Stock)

CERTIFICATE OF DESIGNATIONS

OF

FIXED RATE CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES _____

OF

CARVER BANCORP, INC.

Carver Bancorp, Inc., a corporation organized and existing under the laws of the Delaware
(the “Issuer”), in accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware thereof, does hereby certify:

The board of directors of the Issuer (the “Board of Directors”) or an applicable committee of
the Board of Directors, in accordance with the Certificate of Incorporation and the Second Amended
and Restated bylaws of the Issuer and applicable law, adopted the following
resolution on _____________, 2010 creating a series of _________ shares of Preferred Stock of
the Issuer designated as “Fixed Rate Cumulative Perpetual Preferred Stock, Series _____.”

RESOLVED, that pursuant to the provisions of the certificate of incorporation and the bylaws
of the Issuer and applicable law, a series of Preferred Stock, par value $0.01 per share, of the
Issuer be and hereby is created, and that the designation and number of shares of such series, and
the voting and other powers, preferences and relative, participating, optional or other rights,
and the qualifications, limitations and restrictions thereof, of the shares of such series, are as
follows:

Part 1. Designation and Number of Shares. There is hereby created out of the
authorized and unissued shares of preferred stock of the Issuer a series of preferred stock
designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series _____” (the “Designated Preferred Stock”). The authorized number of shares of Designated Preferred Stock
shall be __________.

Part 2. Standard Provisions. The Standard Provisions contained in Schedule A
attached hereto are incorporated herein by reference in their entirety and shall be deemed to
be a part of this Certificate of Designations to the same extent as if such provisions had been
set forth in full herein.

Part 3. Definitions. The following terms are used in this Certificate of Designations
(including the Standard Provisions in Schedule A hereto) as defined below:

(a) “Common Stock” means the common stock, par value $0.01 per share, of
the Issuer.

(b) “Dividend Payment Date” means February 15, May 15, August 15 and
November 15 of each year.

(c) “Junior Stock” means the Common Stock, and any other class or series of
stock of the Issuer the terms of which expressly provide that it ranks junior to Designated

 

 

 

UST Seq. 413

Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up
of the Issuer.

(d) “Liquidation Amount” means $1,000 per share of Designated Preferred Stock.

(e) “Minimum Amount” means $_______________.

(f) “Parity Stock” means any class or series of stock of the Issuer (other than
Designated Preferred Stock) the terms of which do not expressly provide that such class or
series will rank senior or junior to Designated Preferred Stock as to dividend rights and/or as to
rights on liquidation, dissolution or winding up of the Issuer (in each case without regard to
whether dividends accrue cumulatively or non-cumulatively).

(g) “Signing Date” means the Original Issue Date.

Part 4. Certain Voting Matters. Holders of shares of Designated Preferred Stock will
be entitled to one vote for each such share on any matter on which holders of Designated Preferred
Stock are entitled to vote, including any action by written consent.

[Remainder of Page Intentionally Left Blank]

 

-2-

 

UST Seq. 413

IN WITNESS WHEREOF, CARVER BANCORP, INC. has caused this Certificate of Designations to be signed by Mark A. Ricca, its Executive Vice President, Chief
Risk Officer and General Counsel, this ___ day of ________, 2010.

	 	 	 	 	 
	 	CARVER BANCORP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Mark A. Ricca 	 
	 	 	Title:  	Executive Vice President, Chief Risk

Officer and General Counsel 	 

 

 

 

UST Seq. 413

Schedule A

STANDARD PROVISIONS

Section 1. General Matters. Each share of Designated Preferred Stock shall be
identical in all respects to every other share of Designated Preferred Stock. The Designated
Preferred Stock shall be perpetual, subject to the provisions of Section 5 of these Standard
Provisions that form a part of the Certificate of Designations. The Designated Preferred Stock
shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the
payment of dividends and the distribution of assets in the event of any dissolution, liquidation
or winding up of the Issuer.

Section 2. Standard Definitions. As used herein with respect to Designated Preferred
Stock:

(a) “Affiliate” means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other person. For
purposes of this definition, “control ” (including, with correlative meanings, the terms
“controlled by” and “under common control with”) when used with respect to any person, means the
possession, directly or indirectly, of the power to cause the direction of management and/or
policies of such person, whether through the ownership of voting securities by contract or
otherwise.

(b) “Applicable Dividend Rate” means (i) until the first day of the first
Dividend Period commencing on or after the eighth anniversary of the Original Issue Date, 2%
per annum, provided, however, that if a CDFI Event shall have occurred and it or any other
CDFI Event is continuing at all times, from and after the 180th day after the date on
which the first CDFI Event occurred until the date on which no CDFI Events are continuing, the Applicable
Dividend Rate shall be 5% per annum, and (ii) for any other Dividend Period, 9% per annum.

(c) “Appropriate Federal Banking Agency” means the “appropriate Federal
banking agency” with respect to the Issuer as defined in Section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.

(d) “Business Combination” means a merger, consolidation, statutory share
exchange or similar transaction that requires the approval of the Issuer’s stockholders.

(e) “Business Day” means any day except Saturday, Sunday and any day on
which banking institutions in the State of New York or the District of Columbia generally are
authorized or required by law or other governmental actions to close.

(f) “Bylaws” means the bylaws of the Issuer, as they may be amended from
time to time.

(g) “CDFI Events” means the failure by each Certified Entity at any time
while the Designated Preferred Stock is outstanding to (i) be certified by the Community
Development Financial Institution Fund of the United States Department of Treasury as a

 

A-1

 

UST Seq. 413

regulated community development financial institution; (ii) together with all of its Affiliates
collectively meet the eligibility requirements of 12 C.F.R. 1805.200(b), (iii) have a primary
mission of promoting community development, as may be determined by the United States Department of
the Treasury from time to time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (iv)
provide Financial Products, Development Services, and/or other similar financing as a predominant
business activity in arm’s-length transactions; (v) serve a Target Market by serving one or more
Investment Areas and/or Targeted Populations as may be determined by the United States Department
of the Treasury from time to time, substantially in the manner set forth in 12 C.F.R.
1805.201(b)(3); (vi) provide Development Services in conjunction with its Financial Products,
directly, through an Affiliate or through a contract with a third-party provider; (vii) maintain
accountability to residents of the applicable Investment Area(s) or Targeted Population(s) through
representation on its governing board of directors or otherwise; and (viii) remain a
non-governmental entity which is not an agency or instrumentality of the United States of America,
or any State or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within
the meaning of any supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such
supplemental regulations published by the Fund. For the avoidance of doubt, a CDFI Event shall not
have occurred so long as at least one Certified Entity satisfies the requirements set forth in
clauses (i) through (viii) of the preceding sentence, even if other Certified Entities fail to
satisfy such requirements. Notwithstanding any other provision hereof, as used in this definition,
the terms “Affiliates”; “Financial
Products”; “Development Services”; “Target Market”; “Investment
Areas”; and “Targeted Populations” have the meanings ascribed to such terms in 12 C.F.R. 1805.104.
A CDFI Event may be waived in writing by the holders of a majority of the Designated Preferred
Stock then outstanding.

(h) “Certificate of Designations” means the Certificate of Designations or comparable
instrument relating to the Designated Preferred Stock, of which these Standard Provisions form a
part, as it may be amended from time to time.

(i) “Certified Entity” means the Issuer or, if the Issuer itself has not been certified by
the Community Development Financial Institution Fund as a regulated community development
financial institution (“CDFI”), each Affiliate of the Issuer that has been certified by the CDFI
and is specified on Schedule A of the that certain letter agreement by and between Issuer
and the United States Department of the Treasury.

(j) “Charter” means the Issuer’s certificate or articles of incorporation, articles of
association, or similar organizational document.

(k) “Dividend Period” has the meaning set forth in Section 3(a).

(l) “Dividend Record Date” has the meaning set forth in Section 3(a).

(m) “GAAP” means the generally accepted accounting principles in the United States.

(n) “Issuer Subsidiary” means any subsidiary of the Issuer.

(o) “Liquidation Preference” has the meaning set forth in Section 4(a).

 

A-2

 

UST Seq. 413

(p) “Original Issue Date” means the date on which shares of Designated Preferred
Stock are first issued.

(q) “Preferred Director” has the meaning set forth in Section 7(b).

(r) “Preferred Stock” means any and all series of preferred stock of the Issuer, including
the Designated Preferred Stock.

(s) [Reserved]

(t) “Share Dilution Amount” means the increase in the number of diluted shares
outstanding (determined in accordance with GAAP, and as measured from the date of the Issuer’s
most recent consolidated financial statements prior to the Signing Date) resulting from the grant,
vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock
split, stock dividend, reverse stock split, reclassification or similar transaction.

(u) “Standard Provisions” mean these Standard Provisions that form a part of the
Certificate of Designations relating to the Designated Preferred Stock.

(v) “Voting Parity Stock” means, with regard to any matter as to which the holders of
Designated Preferred Stock are entitled to vote as specified in Sections 7(a) and 7(b) of these
Standard Provisions that form a part of the Certificate of Designations, any and all series of
Parity Stock upon which like voting rights have been conferred and are exercisable with respect to
such matter.

Section 3. Dividends.

(a) Rate. Holders of Designated Preferred Stock shall be entitled to receive, on each
share of Designated Preferred Stock if, as and when declared by the Board of Directors or any duly
authorized committee of the Board of Directors, but only out of assets legally available therefor,
cumulative cash dividends with respect to each Dividend Period (as defined below) at a rate per
annum equal to the Applicable Dividend Rate on (i) the Liquidation Amount per share of Designated
Preferred Stock and (ii) the amount of accrued and unpaid dividends for any prior Dividend Period
on such share of Designated Preferred Stock, if any. Such dividends shall begin to accrue and be
cumulative from the Original Issue Date, shall compound on each subsequent Dividend Payment Date
(i.e., no dividends shall accrue on other dividends unless and until the first Dividend Payment
Date for such other dividends has passed without such other dividends having been paid on such
date) and shall be payable quarterly in arrears on each Dividend Payment Date, commencing with the
first such Dividend Payment Date to occur at least 20 calendar days after the Original Issue Date.
In the event that any Dividend Payment Date would otherwise fall on a day that is not a Business
Day, the dividend payment due on that date will be postponed to the next day that is a Business
Day and no additional dividends will accrue as a result of that postponement. The period from and
including any Dividend Payment Date to, but excluding, the next Dividend Payment Date is a
“Dividend Period”, provided that the initial Dividend Period shall be the period from and
including the Original Issue Date to, but excluding, the next Dividend Payment Date.

 

A-3

 

UST Seq. 413

Dividends that are payable on Designated Preferred Stock in respect of any Dividend Period
shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of
dividends payable on Designated Preferred Stock on any date prior to the end of a Dividend Period,
and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting
of twelve 30-day months, and actual days elapsed over a 30-day month.

Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date will be
payable to holders of record of Designated Preferred Stock as they appear on the stock register of
the Issuer on the applicable record date, which shall be the 15th calendar day immediately
preceding such Dividend Payment Date or such other record date fixed by the Board of Directors or
any duly authorized committee of the Board of Directors that is not more than 60 nor less than 10
days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day
that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a
Business Day.

Holders of Designated Preferred Stock shall not be entitled to any dividends, whether payable
in cash, securities or other property, other than dividends (if any) declared and payable on
Designated Preferred Stock as specified in this Section 3 (subject to the other provisions of the
Certificate of Designations).

(b) Priority of Dividends. So long as any share of Designated Preferred Stock remains
outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other
shares of Junior Stock (other than dividends payable solely in shares of Common Stock) or Parity
Stock, subject to Section 3(c) below and the immediately following paragraph in the case of Parity
Stock, and no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly,
purchased, redeemed or otherwise acquired for consideration by the Issuer or any of its
subsidiaries unless all accrued and unpaid dividends for all past Dividend Periods, including the
latest completed Dividend Period (including, if applicable as provided in Section 3(a) above,
dividends on such amount), on all outstanding shares of Designated Preferred Stock have been or are
contemporaneously declared and paid in full (or have been declared and a sum sufficient for the
payment thereof has been set aside for the benefit of the holders of shares of Designated Preferred
Stock on the applicable record date).

When dividends are not paid (or declared and a sum sufficient for payment thereof set aside
for the benefit of the holders thereof on the applicable record date) on any Dividend Payment Date
(or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment
Dates, on a dividend payment date falling within a Dividend Period related to such Dividend
Payment Date) in full upon Designated Preferred Stock and any shares of Parity Stock, all
dividends declared on Designated Preferred Stock and all such Parity Stock and payable on such
Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different
from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period
related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts
of such dividends declared shall bear the same ratio to each other as all accrued and unpaid
dividends per share on the shares of Designated Preferred Stock (including, if applicable as
provided in Section 3(a) above, dividends on such amount) and all Parity Stock payable on such
Dividend Payment Date (or, in the case of Parity Stock having

 

A-4

 

UST Seq. 413

dividend payment dates different from the Dividend Payment Dates, on a dividend payment date
falling within the Dividend Period related to such Dividend Payment Date) (subject to their having
been declared by the Board of Directors or a duly authorized committee of the Board of Directors
out of legally available funds and including, in the case of Parity Stock that bears cumulative
dividends, all accrued but unpaid dividends) bear to each other. If the Board of Directors or a
duly authorized committee of the Board of Directors determines not to pay any dividend or a full
dividend on a Dividend Payment Date, the Issuer will provide written notice to the holders of
Designated Preferred Stock prior to such Dividend Payment Date.

Subject to the foregoing and Section 3(c) below, and not otherwise, such dividends (payable
in cash, securities or other property) as may be determined by the Board of Directors or any duly
authorized committee of the Board of Directors may be declared and paid on any securities,
including Common Stock and other Junior Stock, from time to time out of any funds legally
available for such payment, and holders of Designated Preferred Stock shall not be entitled to
participate in any such dividends.

(c) Restriction on Dividends. So long as any share of Designated Preferred Stock
remains outstanding, neither the Issuer nor any Issuer Subsidiary shall, declare or pay any
dividend or make any distribution on Common Stock, Junior Stock, Parity Stock or other capital
stock or other equity securities of any kind of the Issuer or any Issuer Subsidiary (other than (i)
regular quarterly cash dividends of not more than the amount of the last quarterly cash dividend
per share declared or, if lower, announced to its holders of Common Stock an intention to declare,
on the Common Stock prior to October 14, 2008, as adjusted for any stock split, stock dividend,
reverse stock split, reclassification or similar transaction, (ii) dividends payable solely in
shares of Common Stock, (iii) regular dividends on shares of preferred stock in accordance with the
terms thereof and which are permitted under the terms of this Section 3, (iv) dividends or
distributions by any wholly-owned Issuer Subsidiary, (v) dividends or distributions by any Issuer
Subsidiary required pursuant to binding contractual agreements entered into prior to January 16,
2009, or (vi) in the case of pari passu Preferred Stock, dividends payable on a pro rata basis with
Designated Preferred Stock), unless all accrued and unpaid dividends for all past Dividend Periods,
including the latest completed Dividend Period (including, if applicable as provided in Section
3(a) above, dividends on such amount), on all outstanding shares of Designated Preferred Stock have
been or are contemporaneously declared and paid in full (or have been declared and a sum sufficient
for the payment thereof has been set aside for the benefit of the holders of shares of Designated
Preferred Stock on the applicable record date).

So long as any share of Designated Preferred Stock remains outstanding, neither the Issuer nor
any Issuer Subsidiary shall, (x) pay any per share dividend or distribution on Common Stock, Junior
Stock, Parity Stock or other capital stock or other equity securities of any kind of the Issuer at
a rate that is in excess of 100% of the aggregate per share dividends and distributions for the
immediately prior fiscal year (other than regular dividends on shares of preferred stock in
accordance with the terms thereof and which are permitted under the terms of this Section 3);
provided that no increase in the aggregate amount of dividends or distributions on Common Stock
shall be permitted for any twelve (12) month period, including, without limitation, as a result of
any dividends or distributions paid in shares of Common Stock, any stock split or any similar
transaction or (y) pay aggregate dividends or distributions on capital stock or other equity
securities of any kind of any Issuer Subsidiary that is in excess of 100% of

 

A-5

 

UST Seq. 413

the aggregate dividends and distributions paid for the immediately prior fiscal year (other than
in the case of this clause (y), (1) regular dividends on shares of preferred stock in accordance
with the terms thereof and which are permitted under the terms of this Section 3, (2) dividends or
distributions by any wholly-owned Issuer Subsidiary, (3) dividends or distributions by any Issuer
Subsidiary required pursuant to binding contractual agreements entered into prior to January 16,
2009 or (4) dividends or distributions on newly issued shares of capital stock for cash or other
property).

Section 4. Liquidation Rights.

(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution
or winding up of the affairs of the Issuer, whether voluntary or involuntary, holders of Designated
Preferred Stock shall be entitled to receive for each share of Designated Preferred Stock, out of
the assets of the Issuer or proceeds thereof (whether capital or surplus) available for
distribution to stockholders of the Issuer, subject to the rights of any creditors of the Issuer,
before any distribution of such assets or proceeds is made to or set aside for the holders of
Common Stock and any other stock of the Issuer ranking junior to Designated Preferred Stock as to
such distribution, payment in full in an amount equal to the sum of (i) the Liquidation Amount per
share and (ii) the amount of any accrued and unpaid dividends (including, if applicable as provided
in Section 3(a) above, dividends on such amount), whether or not declared, to the date of payment
(such amounts collectively, the “Liquidation Preference”).

(b) Partial Payment. If in any distribution described in Section 4(a) above the
assets of the Issuer or proceeds thereof are not sufficient to pay in full the amounts payable
with respect to all outstanding shares of Designated Preferred Stock and the corresponding amounts
payable with respect of any other stock of the Issuer ranking equally with Designated Preferred
Stock as to such distribution, holders of Designated Preferred Stock and the holders of such other
stock shall share ratably in any such distribution in proportion to the full respective
distributions to which they are entitled.

(c) Residual Distributions. If the Liquidation Preference has been paid in full to
all holders of Designated Preferred Stock and the corresponding amounts payable with respect of
any other stock of the Issuer ranking equally with Designated Preferred Stock as to such
distribution has been paid in full, the holders of other stock of the Issuer shall be entitled to
receive all remaining assets of the Issuer (or proceeds thereof) according to their respective
rights and preferences.

(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this
Section 4, the merger or consolidation of the Issuer with any other corporation or other entity,
including a merger or consolidation in which the holders of Designated Preferred Stock receive
cash, securities or other property for their shares, or the sale, lease or exchange (for cash,
securities or other property) of all or substantially all of the assets of the Issuer, shall not
constitute a liquidation, dissolution or winding up of the Issuer.

 

A-6

 

UST Seq. 413

Section 5. Redemption.

(a) Optional Redemption. The Issuer, at its option, subject to the approval of
the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from
time to time, out of funds legally available therefor, the shares of Designated Preferred
Stock at
the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption
price
equal to the sum of (i) the Liquidation Amount per share and (ii) any accrued and unpaid
dividends (including, if applicable as provided in Section 3(a) above, dividends on such
amount)
(regardless of whether any dividends are actually declared) to, but excluding, the date fixed
for
redemption.

The redemption price for any shares of Designated Preferred Stock shall be payable on the
redemption date to the holder of such shares against surrender of the
certificate(s) evidencing
such shares to the Issuer or its agent. Any declared but unpaid dividends payable on a redemption
date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to
the holder entitled to receive the redemption price on the redemption date, but rather shall be
paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the
Dividend Payment Date as provided in Section 3 above.

(b) No Sinking Fund. The Designated Preferred Stock will not be subject to any
mandatory redemption, sinking fund or other similar provisions. Holders of Designated Preferred
Stock will have no right to require redemption or repurchase of any shares of Designated Preferred
Stock.

(c) Notice of Redemption. Notice of every redemption of shares of Designated
Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of
record of the shares to be redeemed at their respective last addresses appearing on the books of
the Issuer. Such mailing shall be at least 30 days and not more than 60 days before the date fixed
for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice, but failure duly to give
such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of
shares of Designated Preferred Stock designated for redemption shall not affect the validity of
the proceedings for the redemption of any other shares of Designated Preferred Stock.
Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry
form through The Depository Trust Company or any other similar facility, notice of redemption may
be given to the holders of Designated Preferred Stock at such time and in any manner permitted by
such facility. Each notice of redemption given to a holder shall state: (1) the redemption date;
(2) the number of shares of Designated Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the redemption price; and (4) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price.

(d) Partial Redemption. In case of any redemption of part of the shares of Designated
Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro
rata or in such other manner as the Board of Directors or a duly authorized committee thereof may
determine to be fair and equitable. Subject to the provisions hereof, the Board of Directors or a
duly authorized committee thereof shall have full power and authority to prescribe

 

A-7

 

UST Seq. 413

the terms and conditions upon which shares of Designated Preferred Stock shall be redeemed from
time to time. If fewer than all the shares represented by any certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without charge to the holder
thereof.

(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on
or before the redemption date specified in the notice all funds necessary for the redemption have
been deposited by the Issuer, in trust for the pro rata benefit of the holders of the shares called
for redemption, with a bank or trust company doing business in the Borough of Manhattan, The City
of New York, and having a capital and surplus of at least $500 million and selected by the Board of
Directors, so as to be and continue to be available solely therefor, then, notwithstanding that any
certificate for any share so called for redemption has not been surrendered for cancellation, on
and after the redemption date dividends shall cease to accrue on all shares so called for
redemption, all shares so called for redemption shall no longer be deemed outstanding and all
rights with respect to such shares shall forthwith on such redemption date cease and terminate,
except only the right of the holders thereof to receive the amount payable on such redemption from
such bank or trust company, without interest. Any funds unclaimed at the end of three years from
the redemption date shall, to the extent permitted by law, be released to the Issuer, after which
time the holders of the shares so called for redemption shall look only to the Issuer for payment
of the redemption price of such shares.

(f) Status of Redeemed Shares. Shares of Designated Preferred Stock that are
redeemed, repurchased or otherwise acquired by the Issuer shall revert to authorized but unissued
shares of Preferred Stock (provided that any such cancelled shares of Designated Preferred Stock
may be reissued only as shares of any series of Preferred Stock other than Designated Preferred
Stock).

Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no
right to exchange or convert such shares into any other securities.

Section 7. Voting Rights.

(a) General. The holders of Designated Preferred Stock shall not have any voting
rights except as set forth below or as otherwise from time to time required by law.

(b) Preferred Stock Directors. Whenever, at any time or times, dividends payable on
the shares of Designated Preferred Stock have not been paid for an aggregate of eight quarterly
Dividend Periods or more, whether or not consecutive, the authorized number of directors of the
Issuer shall automatically be increased by two and the holders of the Designated Preferred Stock
shall have the right, with holders of shares of any one or more other classes or series of Voting
Parity Stock outstanding at the time, voting together as a class, to elect two directors
(hereinafter the “Preferred Directors” and each a “Preferred Director”) to fill
such newly created directorships at the Issuer’s next annual meeting of stockholders (or at a
special meeting called for that purpose prior to such next annual meeting) and at each subsequent
annual meeting of stockholders until dividends payable on all outstanding shares of Designated
Preferred Stock have been declared and paid in full for four consecutive quarterly Dividend Period
(and which shall include all accrued and unpaid dividends for all past Dividend Periods,

 

A-8

 

UST Seq. 413

including the latest completed Dividend Period (including, if applicable as provided in Section
3(a) above, dividends on such amount)), at which time such right shall terminate with respect to
the Designated Preferred Stock, except as herein or by law expressly provided, subject to revesting
in the event of each and every subsequent default of the character above mentioned; provided that
it shall be a qualification for election for any Preferred Director that the election of such
Preferred Director shall not cause the Issuer to violate any corporate governance requirements of
any securities exchange or other trading facility on which securities of the Issuer may then be
listed or traded that listed or traded companies must have a majority of independent directors.
Upon any termination of the right of the holders of shares of Designated Preferred Stock and Voting
Parity Stock as a class to vote for directors as provided above, the Preferred Directors shall
cease to be qualified as directors, the term of office of all Preferred Directors then in office
shall terminate immediately and the authorized number of directors shall be reduced by the number
of Preferred Directors elected pursuant hereto. Any Preferred Director may be removed at any time,
with or without cause, and any vacancy created thereby may be filled, only by the affirmative vote
of the holders a majority of the shares of Designated Preferred Stock at the time outstanding
voting separately as a class together with the holders of shares of Voting Parity Stock, to the
extent the voting rights of such holders described above are then exercisable. If the office of any
Preferred Director becomes vacant for any reason other than removal from office as aforesaid, the
remaining Preferred Director may choose a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred.

(c) Class Voting Rights as to Particular Matters. So long as any shares of Designated
Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter, the vote or consent of the holders of at least 66 2/3% of the shares of
Designated Preferred Stock at the time outstanding, voting as a separate class, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:

(i) Authorization of Senior Stock. Any amendment or alteration of the
Certificate of Designations for the Designated Preferred Stock or the Charter to authorize
or create or increase the authorized amount of, or any issuance of, any shares of, or any
securities convertible into or exchangeable or exercisable for shares of, any class or
series of capital stock of the Issuer ranking senior to Designated Preferred Stock with
respect to either or both the payment of dividends and/or the distribution of assets on
any liquidation, dissolution or winding up of the Issuer;

(ii) Amendment of Designated Preferred Stock. Any amendment, alteration or
repeal of any provision of the Certificate of Designations for the Designated Preferred
Stock or the Charter (including, unless no vote on such merger or consolidation is
required by Section 7(c)(iii) below, any amendment, alteration or repeal by means of a
merger, consolidation or otherwise) so as to adversely affect the rights, preferences,
privileges or voting powers of the Designated Preferred Stock; or

(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any
consummation of a binding share exchange or reclassification involving the Designated
Preferred Stock, or of a merger or consolidation of the Issuer with another corporation or
other entity, unless in each case (x) the shares of Designated Preferred Stock remain

 

A-9

 

UST Seq. 413

outstanding or, in the case of any such merger or consolidation with respect to which the
Issuer is not the surviving or resulting entity, are converted into or exchanged for
preference securities of the surviving or resulting entity or its ultimate parent, and (y)
such shares remaining outstanding or such preference securities, as the case may be, have
such rights, preferences, privileges and voting powers, and limitations and restrictions
thereof, taken as a whole, as are not materially less favorable to the holders thereof than
the rights, preferences, privileges and voting powers, and limitations and restrictions
thereof, of Designated Preferred Stock immediately prior to such consummation, taken as a
whole;

provided, however, that for all purposes of this Section 7(c), any increase in the amount of the
authorized Preferred Stock, including any increase in the authorized amount of Designated
Preferred Stock necessary to satisfy preemptive or similar rights granted by the Issuer to other
persons prior to the Signing Date, or the creation and issuance, or an increase in the authorized
or issued amount, whether pursuant to preemptive or similar rights or otherwise, of any other
series of Preferred Stock, or any securities convertible into or exchangeable or exercisable for
any other series of Preferred Stock, ranking equally with and/or junior to Designated Preferred
Stock with respect to the payment of dividends (whether such dividends are cumulative or
non-cumulative) and the distribution of assets upon liquidation, dissolution or winding up of the
Issuer will not be deemed to adversely affect the rights, preferences, privileges or voting
powers, and shall not require the affirmative vote or consent of, the holders of outstanding
shares of the Designated Preferred Stock.

(d) Changes after Provision for Redemption. No vote or consent of the holders of
Designated Preferred Stock shall be required pursuant to Section 7(c) above if, at or prior to the
time when any such vote or consent would otherwise be required pursuant to such Section, all
outstanding shares of the Designated Preferred Stock shall have been redeemed, or shall have been
called for redemption upon proper notice and sufficient funds shall have been deposited in trust
for such redemption, in each case pursuant to Section 5 above.

(e) Procedures for Voting and Consents. The rules and procedures for calling and
conducting any meeting of the holders of Designated Preferred Stock (including, without limitation,
the fixing of a record date in connection therewith), the solicitation and use of proxies at such a
meeting, the obtaining of written consents and any other aspect or matter with regard to such a
meeting or such consents shall be governed by any rules of the Board of Directors or any duly
authorized committee of the Board of Directors, in its discretion, may adopt from time to time,
which rules and procedures shall conform to the requirements of the Charter, the Bylaws, and
applicable law and the rules of any national securities exchange or other trading facility on which
Designated Preferred Stock is listed or traded at the time.

Section 8. Restriction on Repurchases. So long as any share of Designated Preferred
Stock remains outstanding, neither the Issuer nor any Issuer Subsidiary shall, redeem, purchase or
acquire any shares of Common Stock, Junior Stock, Parity Stock or other capital stock or other
equity securities of any kind of the Issuer or any Issuer Subsidiary, or any trust preferred
securities issued by the Issuer or any Affiliate of the Issuer, (other than (i) redemptions,
purchases, repurchases or other acquisitions of the Designated Preferred Stock and (ii) repurchases
of Junior Stock or Common Stock in connection with the administration of any

 

A-10

 

UST Seq. 413

employee benefit plan in the ordinary course of business (including purchases to offset any Share
Dilution Amount pursuant to a publicly announced repurchase plan) and consistent with past
practice; provided that any purchases to offset the Share Dilution Amount shall in no event exceed
the Share Dilution Amount, (iii) the acquisition by the Issuer or any of the Issuer Subsidiaries
of record ownership in Junior Stock or Parity Stock for the beneficial ownership of any other
persons (other than the Issuer or any other Issuer Subsidiary), including as trustees or
custodians, (iv) the exchange or conversion of Junior Stock for or into other Junior Stock or of
Parity Stock or trust preferred securities for or into other Parity Stock (with the same or lesser
aggregate liquidation amount) or Junior Stock, in each case set forth in this clause (iv), solely
to the extent required pursuant to binding contractual agreements entered into prior to the
Signing Date or any subsequent agreement for the accelerated exercise, settlement or exchange
thereof for Common Stock, (v) redemptions of securities held by the Issuer or any wholly-owned
Issuer Subsidiary or (vi) redemptions, purchases or other acquisitions of capital stock or other
equity securities of any kind of any Issuer Subsidiary required pursuant to binding contractual
agreements entered into prior to January 16, 2009), unless all accrued and unpaid dividends for
all past Dividend Periods, including the latest completed Dividend Period (including, if
applicable as provided in Section 3(a) above, dividends on such amount), on all outstanding shares
of Designated Preferred Stock have been or are contemporaneously declared and paid in full (or
have been declared and a sum sufficient for the payment thereof has been set aside for the benefit
of the holders of shares of Designated Preferred Stock on the applicable record date).

Section 9. Record Holders. To the fullest extent permitted by applicable law, the
Issuer and the transfer agent for Designated Preferred Stock may deem and treat the record holder
of any share of Designated Preferred Stock as the true and lawful owner thereof for all purposes,
and neither the Issuer nor such transfer agent shall be affected by any notice to the contrary.

Section 10. Notices. All notices or communications in respect of Designated Preferred
Stock shall be sufficiently given if given in writing and delivered in person or by first class
mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of
Designations, in the Charter or Bylaws or by applicable law. Notwithstanding the foregoing, if
shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust
Company or any similar facility, such notices may be given to the holders of Designated Preferred
Stock in any manner permitted by such facility.

Section 11. No Preemptive Rights. No share of Designated Preferred Stock shall have
any rights of preemption whatsoever as to any securities of the Issuer, or any warrants, rights or
options issued or granted with respect thereto, regardless of how such securities, or such
warrants, rights or options, may be designated, issued or granted.

Section 12. Replacement Certificates. The Issuer shall replace any mutilated
certificate at the holder’s expense upon surrender of that certificate to the Issuer. The Issuer
shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon
delivery to the Issuer of reasonably satisfactory evidence that the certificate has been
destroyed, stolen or lost, together with any indemnity that may be reasonably required by the
Issuer.

 

A-11

 

UST Seq. 413

Section 13. Other Rights. The shares of Designated Preferred Stock shall not have any
rights, preferences, privileges or voting powers or relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof, other than as set forth
herein or in the Charter or as provided by applicable law.

 

A-12

 

ANNEX C

FORM OF OPINION

(a) The Company has been duly formed and is validly
existing as a [TYPE OF ORGANIZATION] and
is in good standing under the laws of the jurisdiction of its organization. The Company has all
necessary power and authority to own, operate and lease its properties and to carry on its
business as it is being conducted.

(b) The Company has been duly qualified as a foreign entity for the
transaction of business and is in good standing under the laws of [                    ],
[                    ]
and [                    ].

(c) The CDCI Preferred Shares have been duly and validly authorized, and, when issued and
delivered pursuant to the Agreement, the CDCI Preferred Shares will be duly and validly issued and
fully paid and non-assessable, will not be issued in violation of any preemptive rights, and will
rank pari passu with or senior to all other series or classes of CDCI Preferred Stock issued on
the Closing Date with respect to the payment of dividends and the distribution of assets in the
event of any dissolution, liquidation or winding up of the Company.

(d) The Company has the corporate power and authority to execute and deliver the Agreement and
to carry out its obligations thereunder (which includes the issuance of the CDCI Preferred Shares).

(e) The execution, delivery and performance by the Company of the Agreement and the
consummation of the transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company and its stockholders, and no further approval or
authorization is required on the part of the Company, including, without limitation, by any rule
or requirement of any national stock exchange.

(f) The Agreement is a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and general equitable principles, regardless of whether such enforceability is
considered in a proceeding at law or in equity.

(g) The execution and delivery by the Company of this Agreement and the performance by the
Company of its obligations thereunder (i) do not require any approval by any Governmental Entity
to be obtained on the part of the Company, except those that have been obtained, (ii) do not
violate or conflict with any provision of the Charter, (iii) do not violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or acceleration of, or
result in the creation of, any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any Company Subsidiary under any of the terms, conditions
or provisions of its organizational documents or under any agreement, contract, indenture, lease,
mortgage, power of attorney, evidence of indebtedness, letter of credit, license,

 

Annex C-1

 

instrument, obligation, purchase or sales order, or other commitment, whether oral or written, to
which it is a party or by which it or any of its properties is bound or (iv) do not conflict with,
breach or result in a violation of, or default under any judgment, decree or order known to us that
is applicable to the Company and, pursuant to any applicable laws, is issued by any Governmental
Entity having jurisdiction over the Company.

(h) Other than the filing of the New Certificate of Designations with the Secretary of State
of its jurisdiction of organization or other applicable Governmental Entity, such filings and
approvals as are required to be made or obtained under any state “blue sky” laws and such consents
and approvals that have been made or obtained, no notice to, filing with, exemption or review by,
or authorization, consent or approval of, any Governmental Entity is required to be made or
obtained by the Company in connection with the consummation by the Company of the Exchange.

(i) The Company is not nor, after giving effect to the issuance of the CDCI Preferred Shares
pursuant to the Agreement, would be on the date hereof an “investment company” or an entity
“controlled” by an “investment company,” as such terms are defined in the Investment Company Act of
1940, as amended.

(j) Each Certified Entity (A) is a regulated community development financial institution (a
“CDFI”) currently certified by the Community Development Financial Institution Fund (the
“Fund”) of the United States Department of the Treasury pursuant to 12 C.F.R. 1805.201(a)
and (B) satisfies all of the eligibility requirements of the Fund’s Community Development
Financial Institutions Program for a CDFI.

 

Annex C-2

 

ANNEX D

FORM OF WAIVER

In consideration for the benefits I will receive as a result of the participation
of
[                    ] (together with its subsidiaries and affiliates, the “Company”) in the
United States Department of the Treasury’s (the “Treasury”) Capital Purchase Program,
Community Development Capital Initiative and/or any other economic stabilization program
implemented by the Treasury under the Emergency Economic Stabilization Act of 2008 (as amended,
supplemented, or otherwise modified, the “EESA”) (any such program, including the Capital
Purchase Program and the Community Development Capital Initiative, a
“Program”), I hereby
voluntarily waive any claim against the United States (and each of its departments and agencies)
or the Company or any of its directors, officers, employees and agents for any changes to my
compensation or benefits that are required to comply with the executive compensation and corporate
governance requirements of Section 111 of the EESA, as implemented by any guidance or regulations
issued and/or to be issued thereunder, including without limitation the provisions for the Capital
Purchase Program, as implemented by any guidance or regulation thereunder, including the rules set
forth in 31 C.F.R. Part 30, or any other guidance or regulations under the EESA and the applicable
requirements of the Exchange Agreement by and
among the Company and the Treasury dated as of                     
_____, 2010, as amended (such
requirements, the “Limitations”).

I acknowledge that the Limitations may require modification or termination of the employment,
compensation, bonus, incentive, severance, retention and other benefit plans, arrangements,
policies and agreements (including so-called “golden parachute” agreements), whether or not in
writing, that I may have with the Company or in which I may participate as they relate to the
period the United States holds any equity or debt securities of the Company acquired through a
Program or for any other period applicable under such Program or Limitations, as the case may be,
and I hereby consent to all such modifications.

This waiver includes all claims I may have under the laws of the United States or any other
jurisdiction (whether or not in existence as of the date hereof) related to the requirements
imposed by the Limitations, including without limitation, a claim for any compensation or other
payments or benefits I would otherwise receive, any challenge to the process by which the
Limitations are or were adopted and any tort or constitutional claim about the effect of these
Limitations on my employment relationship and I hereby agree that I will not at any time initiate,
or cause or permit to be initiated on my behalf, any such claim against the United States, the
Company or its directors, officers, employees or agents in or before any local, state, federal or
other agency, court or body.

I agree that, in the event and to the extent that the Compensation Committee of the Board of
Directors of the Company or similar governing body (the “Committee”) reasonably determines
that any compensatory payment and benefit provided to me, including any bonus or incentive
compensation based on materially inaccurate financial statements or performance criteria, would
cause the Company to fail to be in compliance with the Limitations (such payment or benefit, an
“Excess Payment”), upon notification from the Company, I shall repay such Excess Payment to

 

Annex D-1

 

the Company within 15 business days. In addition, I agree that the Company shall have the right to
postpone any such payment or benefit for a reasonable period of time to enable the Committee to
determine whether such payment or benefit would constitute an Excess Payment.

I understand that any determination by the Committee as to whether or not, including the manner in
which, a payment or benefit needs to be modified, terminated or repaid in order for the Company to
be in compliance with Section 111 of the EESA and/or the Limitations shall be a final and
conclusive determination of the Committee which shall be binding upon me. I further understand that
the Company is relying on this letter from me in connection with its participation in a Program.

 

Annex D-2

 

IN WITNESS WHEREOF, I execute this waiver on my own behalf, thereby communicating my acceptance and
acknowledgement to the provisions herein.

	 	 	 	 	 
	 

	 	Respectfully,	 	 
	 
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 

	 	Date:	 	 

 

Annex D-3

 

ANNEX E 

REGISTRATION RIGHTS

1.1 Definitions. Terms not defined in this Annex shall have the meaning ascribed to
such terms in the Agreement. As used in this Annex E, the following terms shall have the following
respective meanings:

(a) “Holder” means the Investor and any other holder of Registrable Securities to
whom the registration rights conferred by this Agreement have been transferred in compliance with
Section 1.9 hereof.

(b) “Holders Counsel” means one counsel for the selling Holders chosen by Holders
holding a majority interest in the Registrable Securities being registered.

(c) “Pending Underwritten Offering” means, with respect to any Holder forfeiting its
rights pursuant to Section 1.11 of this Annex E, any underwritten offering of Registrable
Securities in which such Holder has advised the Company of its intent to register its Registrable
Securities either pursuant to Section 1.2(b) or 1.2(d) of this Annex E prior to the date of such
Holder’s forfeiture.

(d) “Register,” “registered,” and “registration” shall refer to a
registration effected by preparing and (A) filing a registration statement or amendment thereto in
compliance with the Securities Act and applicable rules and regulations thereunder, and the
declaration or ordering of effectiveness of such registration statement or amendment thereto or
(B) filing a prospectus and/or prospectus supplement in respect of an appropriate effective
registration statement on Form S-3.

(e) “Registrable Securities” means (A) all CDCI Preferred Shares and (B) any equity
securities issued or issuable directly or indirectly with respect to the securities referred to in
the foregoing clause (A) by way of conversion, exercise or exchange thereof, or share dividend or
share split or in connection with a combination of shares, recapitalization, reclassification,
merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once
issued, such securities will not be Registrable Securities when (1) they are sold pursuant to an
effective registration statement under the Securities Act, (2) they shall have ceased to be
outstanding or (3) they have been sold in any transaction in which the transferor’s rights under
this Agreement are not assigned to the transferee of the securities. No Registrable Securities may
be registered under more than one registration statement at any one time.

(f) “Registration Expenses” mean all expenses incurred by the Company in effecting
any registration pursuant to this Agreement (whether or not any registration or prospectus becomes
effective or final) or otherwise complying with its obligations under this Annex E, including all
registration, filing and listing fees, printing expenses, fees and disbursements of counsel for
the Company, blue sky fees and expenses, expenses incurred in connection with any “road show”, the
reasonable fees and disbursements of Holders’ Counsel, and expenses of the Company’s independent
accountants in connection with any regular or

 

E-1

 

special reviews or audits incident to or required by any such registration, but shall not include
Selling Expenses.

(g) “Rule 144”,
“Rule 144A”, “Rule 159A”, “Rule 405” and
“Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any
successor provision), as the same shall be amended from time to time.

(h) “Selling Expenses” mean all discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for
any Holder (other than the fees and disbursements of Holders’ Counsel included in Registration
Expenses).

(i) “Special Registration” means the registration of (A) equity securities and/or
options or other rights in respect thereof solely registered on Form S-4 or Form S-8 (or successor
form) or (B) shares of equity securities and/or options or other rights in respect thereof to be
offered to directors, members of management, employees, consultants, customers, lenders or vendors
of the Company or Company Subsidiaries or in connection with dividend reinvestment plans.

1.2 Registration.

(a) The Company covenants and agrees that as promptly as practicable after the date that the
Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
(and in any event no later than 30 days thereafter), the Company shall prepare and file with the
SEC a Shelf Registration Statement covering all Registrable Securities (or otherwise designate an
existing shelf registration on an appropriate form under Rule 415 under the Securities Act (a
“Shelf Registration Statement”) filed with the SEC to cover the Registrable Securities), and, to
the extent the Shelf Registration Statement has not theretofore been declared effective or is not
automatically effective upon such filing, the Company shall use reasonable best efforts to cause
such Shelf Registration Statement to be declared or become effective and to keep such Shelf
Registration Statement continuously effective and in compliance with the Securities Act and usable
for resale of such Registrable Securities for a period from the date of its initial effectiveness
until such time as there are no Registrable Securities remaining (including by refiling such Shelf
Registration Statement (or a new Shelf Registration Statement) if the initial Shelf Registration
Statement expires). Notwithstanding the foregoing, if the Company is not eligible to file a
registration statement on Form S-3, then the Company shall not be obligated to file a Shelf
Registration Statement unless and until requested to do so in writing by the Investor.

(b) Any registration pursuant to Section 1.2(a) of this Annex E shall be effected by means of
a Shelf Registration Statement on an appropriate form under Rule 415 under the Securities Act (a
“Shelf Registration Statement”). If the Investor or any other Holder intends to distribute
any Registrable Securities by means of an underwritten offering it shall promptly so advise the
Company and the Company shall take all reasonable steps to facilitate such distribution, including
the actions required pursuant to Section 1.2(d) of this Annex E; provided that the Company shall
not be required to facilitate an underwritten offering of Registrable Securities unless (i) the
expected gross proceeds from such offering exceed $200,000

 

E-2

 

or (ii) such underwritten offering includes all of the outstanding Registrable Securities held by
such Holder. The lead underwriters in any such distribution shall be selected by the Holders of a
majority of the Registrable Securities to be distributed.

(c) The Company shall not be required to effect a registration (including a resale of
Registrable Securities from an effective Shelf Registration Statement) or an underwritten offering
pursuant to Section 1.2 of this Annex E: (A) with respect to securities that are not Registrable
Securities; or (B) if the Company has notified the Investor and all other Holders that in the good
faith judgment of the Board of Directors, it would be materially detrimental to the Company or its
securityholders for such registration or underwritten offering to be effected at such time, in
which event the Company shall have the right to defer such registration for a period of not more
than 45 days after receipt of the request of the Investor or any other Holder; provided that such
right to delay a registration or underwritten offering shall be exercised by the Company (1) only
if the Company has generally exercised (or is concurrently exercising) similar black-out rights
against holders of similar securities that have registration rights and (2) not more than three
times in any 12-month period and not more than 90 days in the aggregate in any 12-month period.

(d) If during any period when an effective Shelf Registration Statement is not available, the
Company proposes to register any of its equity securities, other than a registration pursuant to
Section 1.2(a) of this Annex E or a Special Registration, and the registration form to be filed may
be used for the registration or qualification for distribution of Registrable Securities, the
Company will give prompt written notice to the Investor and all other Holders of its intention to
effect such a registration (but in no event less than ten days prior to the anticipated filing
date) and will include in such registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within ten business days after the date
of the Company’s notice (a “Piggyback Registration”). Any such person that has made such a
written request may withdraw its Registrable Securities from such Piggyback Registration by giving
written notice to the Company and the managing underwriter, if any, on or before the fifth business
day prior to the planned effective date of such Piggyback Registration. The Company may terminate
or withdraw any registration under this Section 1.2(d) prior to the effectiveness of such
registration, whether or not Investor or any other Holders have elected to include Registrable
Securities in such registration.

(e) If the registration referred to in Section 1.2(d) of this Annex E is proposed to be
underwritten, the Company will so advise Investor and all other Holders as a part of the written
notice given pursuant to Section 1.2(d) of this Annex E. In such event, the right of Investor and
all other Holders to registration pursuant to Section 1.2 of this Annex E will be conditioned upon
such persons’ participation in such underwriting and the inclusion of such person’s Registrable
Securities in the underwriting if such securities are of the same class of securities as the
securities to be offered in the underwritten offering, and each such person will (together with the
Company and the other persons distributing their securities through such underwriting) enter into
an underwriting agreement in customary form with the underwriter or underwriters selected for such
underwriting by the Company; provided that the Investor (as opposed to other Holders) shall not be
required to indemnify any person in connection with any registration. If any participating person
disapproves of the terms of the underwriting, such person

 

E-3

 

may elect to withdraw therefrom by written notice to the Company, the managing underwriters and
the Investor (if the Investor is participating in the underwriting).

(f) If either (x) the Company grants “piggyback” registration rights to one or more third
parties to include their securities in an underwritten offering under the Shelf Registration
Statement pursuant to Section 1.2(b) of this Annex E or (y) a Piggyback Registration under Section
1.2(d) of this Annex E relates to an underwritten offering on behalf of the Company, and in either
case the managing underwriters advise the Company that in their reasonable opinion the number of
securities requested to be included in such offering exceeds the number which can be sold without
adversely affecting the marketability of such offering (including an adverse effect on the per
share offering price), the Company will include in such offering only such number of securities
that in the reasonable opinion of such managing underwriters can be sold without adversely
affecting the marketability of the offering (including an adverse effect on the per share offering
price), which securities will be so included in the following order of priority: (A) first, in the
case of a Piggyback Registration under Section 1.2(d) of this Annex E, the securities the Company
proposes to sell, (B) then the Registrable Securities of the Investor and all other Holders who
have requested inclusion of Registrable Securities pursuant to Section 1.2(b) or Section 1.2(d) of
this Annex E, as applicable, pro rata on the basis of the aggregate number of such securities or
shares owned by each such person and (C) lastly, any other securities of the Company that have been
requested to be so included, subject to the terms of this Agreement; provided, however, that if the
Company has, prior to the Signing Date, entered into an agreement with respect to its securities
that is inconsistent with the order of priority contemplated hereby then it shall apply the order
of priority in such conflicting agreement to the extent that it would otherwise result in a breach
under such agreement.

1.3 Expenses of Registration. All Registration Expenses incurred in connection with
any registration, qualification or compliance hereunder shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder shall be borne by the holders of
the securities so registered pro rata on the basis of the aggregate offering or sale price of the
securities so registered.

1.4 Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an
effective Shelf Registration Statement, the Company shall, as expeditiously as reasonably
practicable:

(a) Prepare and file with the SEC a prospectus supplement or post-effective amendment with
respect to a proposed offering of Registrable Securities pursuant to an effective registration
statement, subject to Section 1.4 of this Annex E, keep such registration statement effective and
keep such prospectus supplement current until the securities described therein are no longer
Registrable Securities.

(b) Prepare and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement used in connection with such
registration statement as may be necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration statement.

 

E-4

 

(c) Furnish to the Holders and any underwriters such number of copies of the applicable
registration statement and each such amendment and supplement thereto (including in each case all
exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

(d) Use its reasonable best efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders or any managing underwriter(s), to keep such registration
or qualification in effect for so long as such registration statement remains in effect, and to
take any other action which may be reasonably necessary to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such Holder; provided that the
Company shall not be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states or jurisdictions.

(e) Notify each Holder of Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of any event as a
result of which the applicable prospectus, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then existing.

(f) Give written notice to the Holders:

(i) when any registration statement filed pursuant to Section 4.1(j) of the Agreement
or any amendment thereto has been filed with the SEC (except for any amendment effected by
the filing of a document with the SEC pursuant to the Exchange Act) and when such
registration statement or any post-effective amendment thereto has become effective;

(ii) of any request by the SEC for amendments or supplements to any registration
statement or the prospectus included therein or for additional information;

(iii) of the issuance by the SEC of any stop order suspending the effectiveness of
any registration statement or the initiation of any proceedings for that purpose;

(iv) of the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the applicable Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for such
purpose;

(v) of the happening of any event that requires the Company to make changes in any
effective registration statement or the prospectus related to the registration statement
in order to make the statements therein not misleading (which notice shall be accompanied
by an instruction to suspend the use of the prospectus until the requisite changes have
been made); and

 

E-5

 

(vi) if at any time the representations and warranties of the Company contained in any
underwriting agreement contemplated by Section 1.4(j) of this Annex E cease to be true and
correct.

(g) Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any
order suspending the effectiveness of any registration statement referred to in Section
1.4(f)(iii) of this Annex E at the earliest practicable time.

(h) Upon the occurrence of any event contemplated by Section 1.4(e) or 1.4(f)(v) of this
Annex E, promptly prepare a post-effective amendment to such registration statement or a
supplement to the related prospectus or file any other required document so that, as thereafter
delivered to the Holders and any underwriters, the prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. If the Company notifies the
Holders in accordance with Section 1.4(f)(v) to suspend the use of the prospectus until the
requisite changes to the prospectus have been made, then the Holders and any underwriters shall
suspend use of such prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file copies then in such
Holders’ or underwriters’ possession. The total number of days that any such suspension may be in
effect in any 12-month period shall not exceed 90 days.

(i) Use reasonable best efforts to procure the cooperation of the Company’s transfer agent in
settling any offering or sale of Registrable Securities, including with respect to the transfer of
physical stock certificates into book-entry form in accordance with any procedures reasonably
requested by the Holders or any managing underwriter(s).

(j) If an underwritten offering is requested pursuant to Section 1.2(b) of this Annex E, enter
into an underwriting agreement in customary form, scope and substance and take all such other
actions reasonably requested by the Holders of a majority of the Registrable Securities being sold
in connection therewith or by the managing underwriter(s), if any, to expedite or facilitate the
underwritten disposition of such Registrable Securities, and in connection therewith in any
underwritten offering (including making members of management and executives of the Company
available to participate in “road shows”, similar sales events and other marketing activities), (A)
make such representations and warranties to the Holders that are selling stockholders and the
managing underwriter(s), if any, with respect to the business of the Company and its subsidiaries,
and the Shelf Registration Statement, prospectus and documents, if any, incorporated or deemed to
be incorporated by reference therein, in each case, in customary form, substance and scope, and, if
true, confirm the same if and when requested, (B) use its reasonable best efforts to furnish the
underwriters with opinions of counsel to the Company, addressed to the managing underwriter(s), if
any, covering the matters customarily covered in such opinions requested in underwritten offerings,
(C) use its reasonable best efforts to obtain “cold comfort” letters from the independent certified
public accountants of the Company (and, if necessary, any other independent certified public
accountants of any business acquired by the Company for which financial statements and financial
data are included in the Shelf Registration Statement) who have certified the financial statements
included in such Shelf Registration Statement, addressed to each of the managing underwriter(s), if
any, such letters to be in customary form and covering matters of the type customarily covered in
“cold comfort”

 

E-6

 

letters, (D) if an underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures customary in underwritten offerings (provided that the Investor shall
not be obligated to provide any indemnity), and (E) deliver such documents and certificates as may
be reasonably requested by the Holders of a majority of the Registrable Securities being sold in
connection therewith, their counsel and the managing underwriter(s), if any, to evidence the
continued validity of the representations and warranties made pursuant to clause (A) above and to
evidence compliance with any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.

(k) Make available for inspection by a representative of Holders that are selling
stockholders, the managing underwriter(s), if any, and any attorneys or accountants retained by
such Holders or managing underwriter(s), at the offices where normally kept, during reasonable
business hours, financial and other records, pertinent corporate documents and properties of the
Company, and cause the officers, directors and employees of the Company to supply all information
in each case reasonably requested (and of the type customarily provided in connection with due
diligence conducted in connection with a registered public offering of securities) by any such
representative, managing underwriter(s), attorney or accountant in connection with such Shelf
Registration Statement.

(l) Use reasonable best efforts to cause all such Registrable Securities to be listed on each
national securities exchange on which similar securities issued by the Company are then listed or,
if no similar securities issued by the Company are then listed on any national securities
exchange, use its reasonable best efforts to cause all such Registrable Securities to be listed on
such securities exchange as the Investor may designate.

(m) If requested by Holders of a majority of the Registrable Securities being registered
and/or sold in connection therewith, or the managing underwriter(s), if any, promptly include in a
prospectus supplement or amendment such information as the Holders of a majority of the
Registrable Securities being registered and/or sold in connection therewith or managing
underwriter(s), if any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus supplement or
such amendment as soon as practicable after the Company has received such request.

(n) Timely provide to its security holders earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.

1.5 Suspension of Sales. Upon receipt of written notice from the Company that a
registration statement, prospectus or prospectus supplement contains or may contain an untrue
statement of a material fact or omits or may omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that circumstances exist
that make inadvisable use of such registration statement, prospectus or prospectus supplement, the
Investor and each Holder of Registrable Securities shall forthwith discontinue disposition of
Registrable Securities until the Investor and/or Holder has received copies of a supplemented or
amended prospectus or prospectus supplement, or until the Investor and/or such Holder is advised
in writing by the Company that the use of the prospectus and, if applicable, prospectus supplement
may be resumed, and, if so directed by the Company, the Investor and/or such Holder shall deliver
to the Company (at the Company’s expense) all copies, other than

 

E-7

 

permanent file copies then in the Investor and/or such Holder’s possession, of the prospectus and,
if applicable, prospectus supplement covering such Registrable Securities current at the time of
receipt of such notice. The total number of days that any such suspension may be in effect in any
12-month period shall not exceed 90 days.

1.6 Termination of Registration Rights. A Holder’s registration rights as to any
securities held by such Holder (and its Affiliates, partners, members and former members) shall
not be available unless such securities are Registrable Securities.

1.7 Furnishing Information.

(a) Neither the Investor nor any Holder shall use any free writing prospectus (as defined in
Rule 405) in connection with the sale of Registrable Securities without the prior written consent
of the Company.

(b) It shall be a condition precedent to the obligations of the Company to take any action
pursuant to Section 1.4 of this Annex E that Investor and/or the selling Holders and the
underwriters, if any, shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of such securities as
shall be required to effect the registered offering of their Registrable Securities.

1.8 Indemnification.

(a) The Company agrees to indemnify each Holder and, if a Holder is a person other than an
individual, such Holder’s officers, directors, employees, agents, representatives and Affiliates,
and each person, if any, that controls a Holder within the meaning of the Securities Act (each, an
“Indemnitee’’), against any and all losses, claims, damages, actions, liabilities, costs and
expenses (including reasonable fees, expenses and disbursements of attorneys and other
professionals incurred in connection with investigating, defending, settling, compromising or
paying any such losses, claims, damages, actions, liabilities, costs and expenses), joint or
several, arising out of or based upon any untrue statement or alleged untrue statement of material
fact contained in any registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto or any documents incorporated
therein by reference or contained in any free writing prospectus (as such term is defined in Rule
405) prepared by the Company or authorized by it in writing for use by such Holder (or any
amendment or supplement thereto); or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the Company shall not be liable to such
Indemnitee in any such case to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon (A) an untrue statement
or omission made in such registration statement, including any such preliminary prospectus or final
prospectus contained therein or any such amendments or supplements thereto or contained in any free
writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by
it in writing for use by such Holder (or any amendment or supplement thereto), in reliance upon and
in conformity with information regarding such Indemnitee or its plan of distribution or ownership
interests which was furnished in writing to the Company by such Indemnitee for use in connection
with such registration

 

E-8

 

statement, including any such preliminary prospectus or final prospectus contained therein or any
such amendments or supplements thereto, or (B) offers or sales effected by or on behalf of such
Indemnitee “by means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in Rule
405) that was not authorized in writing by the Company.

(b) If the indemnification provided for in Section 1.8(a) of this Annex E is unavailable to an
Indemnitee with respect to any losses, claims, damages, actions, liabilities, costs or expenses
referred to therein or is insufficient to hold the Indemnitee harmless as contemplated therein,
then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or
payable by such Indemnitee as a result of such losses, claims, damages, actions, liabilities, costs
or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnitee,
on the one hand, and the Company, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, actions, liabilities, costs or expenses as well as
any other relevant equitable considerations. The relative fault of the Company, on the one hand,
and of the Indemnitee, on the other hand, shall be determined by reference to, among other factors,
whether the untrue statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the Indemnitee and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission;
the Company and each Holder agree that it would not be just and equitable if contribution pursuant
to this Section 1.8(b) of this Annex E were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations referred to in
Section 1.8(a) of this Annex E. No Indemnitee guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company
if the Company was not guilty of such fraudulent misrepresentation.

1.9 Assignment of Registration Rights. The rights of the Investor to registration of
Registrable Securities pursuant to Section 1.2 of this Annex E may be assigned by the Investor to
any transferee or assignee of Registrable Securities; provided, however, the transferor shall,
within ten days after such transfer, furnish to the Company written notice of the name and address
of such transferee or assignee and the number and type of Registrable Securities that are being
assigned.

1.10 Clear Market. With respect to any underwritten offering of Registrable Securities
by the Investor or other Holders pursuant to this Annex E, the Company agrees not to effect (other
than pursuant to such registration or pursuant to a Special Registration) any public sale or
distribution, or to file any Shelf Registration Statement (other than such registration or a
Special Registration) covering any preferred stock of the Company or any securities convertible
into or exchangeable or exercisable for preferred stock of the Company, during the period not to
exceed ten days prior and 60 days following the effective date of such offering or such longer
period up to 90 days as may be requested by the managing underwriter for such underwritten
offering. The Company also agrees to cause such of its directors and senior executive officers to
execute and deliver customary lock-up agreements in such form and for such time period up to 90
days as may be requested by the managing underwriter.

1.11 Forfeiture of Rights. At any time, any holder of Registrable Securities
(including any Holder) may elect to forfeit its rights set forth in this Annex E from that date

 

E-9

 

forward; provided, that a Holder forfeiting such rights shall nonetheless be entitled to
participate under Section 1.2(d) — (f) of this Annex E in any Pending Underwritten Offering to the
same extent that such Holder would have been entitled to if the holder had not withdrawn; and
provided, further, that no such forfeiture shall terminate a Holder’s rights or obligations under
Section 1.7 of this Annex E with respect to any prior registration or Pending Underwritten
Offering.

1.12 Specific Performance. The parties hereto acknowledge that there would be no
adequate remedy at law if the Company fails to perform any of its obligations under this Annex E
and that the Investor and the Holders from time to time may be irreparably harmed by any such
failure, and accordingly agree that the Investor and such Holders, in addition to any other remedy
to which they may be entitled at law or in equity, to the fullest extent permitted and enforceable
under applicable law shall be entitled to compel specific performance of the obligations of the
Company under this Annex E in accordance with the terms and conditions of this Annex E.

1.13 No Inconsistent Agreements. The Company shall not, on or after the Signing Date,
enter into any agreement with respect to its securities that may impair the rights granted to the
Investor and the Holders under this Annex E or that otherwise conflicts with the provisions hereof
in any manner that may impair the rights granted to the Investor and the Holders under this Annex
E. In the event the Company has, prior to the Signing Date, entered into any agreement with
respect to its securities that is inconsistent with the rights granted to the Investor and the
Holders under this Annex E (including agreements that are inconsistent with the order of priority
contemplated by Section 1.2(f) of Annex E) or that may otherwise conflict with the provisions
hereof, the Company shall use its reasonable best efforts to amend such agreements to ensure they
are consistent with the provisions of this Annex E.

1.14 Certain Offerings by the Investor. An “underwritten” offering or other
disposition shall include any distribution of such securities on behalf of the Investor by one or
more broker-dealers, an “underwriting agreement” shall include any purchase agreement entered into
by such broker-dealers, and any “registration statement” or “prospectus” shall include any
offering document approved by the Company and used in connection with such distribution.

 

E-10

 

ANNEX F

OFFICER’S CERTIFICATE

OF

[COMPANY]

In connection with that certain letter agreement, dated [                    ], 2010
(the “Agreement”) by and between [COMPANY] (the “Company”) and the United States
Department of the Treasury (“Investor”) which incorporates that certain Exchange Agreement
— Standard Terms referred to therein (the “Standard Terms”), the undersigned does hereby
certify as follows:

1. I am a duly elected/appointed [                    ] of the Company.

2. Each Certified Entity (as defined in the Standard Terms) (A) is certified by the Community
Development Financial Institution Fund (the “Fund”) of the United States Department of the
Treasury as a regulated community development financial institution
(a “CDFI”); (B) together with
its Affiliates collectively meets the eligibility requirements of 12
C.F.R. 1805.200(b); (C) has a
primary mission of promoting community development, as may be determined by Investor from time to
time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (D) provides Financial Products,
Development Services, and/or other similar financing as a predominant business activity in
arm’s-length transactions; (E) serves a Target Market by serving one or more Investment Areas
and/or Targeted Populations in the manner set forth in 12 C.F.R. 1805.201(b)(3); (F) provides
Development Services in conjunction with its Financial Products, directly, through an Affiliate or
through a contract with a third-party provider; (G) maintains accountability to residents of the
applicable Investment Area(s) or Targeted Population(s) through representation on its governing
Board of Directors or otherwise; and (H) remains a non-governmental entity which is not an agency
or instrumentality of the United States of America, or any State or political subdivision thereof,
as described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any supplemental regulations or
interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental regulations published by the Fund.
As used herein, the terms “Affiliates”; “Financial Products”; “Development Services”; “Target
Market”; “Investment Areas”; and “Targeted Populations” have the meanings ascribed to such terms
in 12 C.F.R. 1805.104.

3. The information set forth in the CDFI Certification Application delivered to the Investor
pursuant to Section 1.2(c)(xii) of the Standard Terms (the “CDFI Application”), as
modified by any updates to the CDFI Application provided on
[Insert Date(s)] by the Company to the
Investor on or prior to the date hereof, with respect to the covenants set forth in Section
4.1(d)(i)(B) and Section 4.1(d)(i)(D) of the Standard Terms remains true, correct and complete as
of the date hereof.

 

F-1

 

4. The contracts and material agreements entered into by each Certified Entity with respect
to Development Services previously disclosed to the Investor remain in effect and copies of any
new contracts and material agreements entered into by the Certified Entity with respect to
Development Services are attached hereto as Exhibit A.

5. Attached hereto as Exhibit B is (A) a list of the names and addresses of the individuals
which comprise the board of directors of each Certified Entity as of the date hereof, (B) to the
extent any member of the board of directors listed on Exhibit B was not a member of the board of
directors as of the last certification provided to the Investor pursuant to Section 4.1(d)(ii) of
the Standard Terms, a narrative describing such individual’s relationship to the applicable
Investment Area(s) and Targeted Population(s) and (C) to the extent any Certified Entity maintains
accountability to residents of the applicable Investment Area(s) or Target Population(s) through
means other than representation on its governing board of directors and such means have changed
since the date of the last certification provided to the Investor pursuant to Section 4.1(d)(ii) of
the Standard Terms on [Insert Date], a narrative describing such change.

6. Each Certified Entity is not an agency of the United States of America, or any State or
political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within the meaning of
any supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or such supplemental
regulations published by the Fund.

7. [Insert
if the Company was a Bank Holding Company or a Savings and Loan Holding Company on
the Signing Date: The Company is and has been at all times since the date of the last
certification provided to the Investor pursuant to Section 4.1(d)(ii) of the Standard Terms, a
[Insert if the Company is a Bank Holding Company:
Bank Holding Company] [Insert if the Company is
a Savings and Loan Holding Company: Savings and Loan Holding
Company].] The Company is not, and
has not been at any time since the date of the last certification provided to the Investor
pursuant to Section 4.1(d)(ii) of the Standard Terms on [Insert Date], controlled (within the
meaning of [Insert for banks and Bank Holding Companies: the Bank Holding Company Act of 1956 (12
U.S.C. 1841(a)(2)) and 12 C.F.R. 225(a)(i)] [Insert for savings associations and Savings and Loan
Holding Companies: the Home Owners’ Loan Act of 1933 (12 U.S.C. 1467a (a)(2)) and 12 C.F.R.
583.7]) by a foreign bank or company.

The
foregoing certifications are made and delivered as of [___] pursuant
to Section 4.1(d)(ii) of the Standard Terms.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to
them in the Standard Terms.

[SIGNATURE PAGE FOLLOWS]

 

F-2

 

IN WITNESS WHEREOF, this Officer’s Certificate has been duly executed and
delivered as of the [_____] 
day of [                    ],
20[_____].

	 	 	 	 	 
	 	[COMPANY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

F-3

 

EXHIBIT A

NEW CONTRACTS AND MATERIAL AGREEMENTS

 

Exh. A-1

 

EXHIBIT B

BOARD OF DIRECTORS

CERTIFIED ENTITY: [CERTIFIED ENTITY]1

	 	 	 	 	 
	NAME	 	ADDRESS	 	NARRATIVE2
	 
	 	 	 	 

 

	 	 	 
	1	 	Include chart for each Certified Entity.

	 
	2	 	To the extent (x) any of the individuals was not a member of the board of directors
of such Certified
Entity as of the last certification to the Investor, include a narrative describing such
individual’s
relationship to the applicable Investment Area(s) and Targeted Population(s) or, (y) if such
Certified
Entity maintains accountability to residents of the applicable Investment Area(s) or Target
Population(s)
through means other than representation on its governing board of directors and such means have
changed
since the date of the last certification to the Investor, a narrative describing such change.

 

Exh. B-1

 

UST Seq. 413

SCHEDULE A

ADDITIONAL TERMS AND CONDITIONS

Company Information:

Name of the Company: Carver Bancorp, Inc.

Corporate or other organizational form of Company: Corporation

Jurisdiction of Organization of Company: Delaware

Appropriate Federal Banking Agency of Company: Office of Thrift Supervision

Name of Certified Entities:

Corporate or other organizational form of each Certified Entity:

Jurisdiction of Organization of each Certified Entity:

Appropriate Federal Banking Agency of each Certified Entity:

	 	 	 	 	 
	 

	Notice Information:
	 	Mark A. Ricca

Executive Vice President, Chief Risk Officer

     And General Counsel
 75 West
125th Street 
New York,
NY 10027

Terms of the Exchange:

Series of CDCI Preferred Stock Exchanged: Fixed Rate Cumulative Perpetual Preferred Stock,
Series B

Per Share Liquidation Preference of CDCI Preferred Stock: $1,000 per share

Number of Shares of CDCI Preferred Stock Exchanged: 18,980

Dividend Payment Dates on the CDCI Preferred Stock: Payable quarterly in arrears on February
15, May 15, August 15 and November 15 of each year.

Series of CPP Preferred Stock Exchanged: Fixed Rate Cumulative Perpetual Preferred Stock,
Series A

Number of Shares of CPP Preferred Stock Exchanged: 18,980

Date of Letter Agreement pursuant to which CPP Preferred Shares were purchased: January
16, 2010

 

 

 

UST Seq. 413

Closing:

Location of Closing: Telephonic

Time of Closing: 12:00 p.m. ET

Date of Closing: August 27, 2010

 

 

 

UST Seq. 413

SCHEDULE B

CAPITALIZATION

Capitalization Date: July 31, 2010

Common Stock

Par value: $0.01

Total Authorized: 10,000,000

Outstanding: 2,524,691

Subject to warrants, options, convertible securities, etc.: 69, 267

Reserved for benefit plans and other issuances: 190,731

Remaining authorized but unissued: 7,215,311

Shares issued after Capitalization Date (other
than pursuant to warrants, options,
convertible securities, etc. as set forth
above): None

Preferred Stock

Par value: $0.01

Total Authorized: 2,000,000

Outstanding (by series): 18,980 shares of Fixed Rate Cumulative Perpetual Preferred
Stock, Series A

Reserved for issuance: 2,000,000

Remaining authorized but unissued: 1,981,020

Holders of 5% or more of any class of capital stock Primary Address

Wellington Management Company, LLP

75 State Street 

Boston, MA 02109

Donald Leigh Koch

c/o Koch Asset Management, L.L.C.

1293 Mason Road

Town & Country, MO 63131

 

 

 

UST Seq. 413

Third Avenue Management LLC 
622
Third Avenue, 32nd Floor

New York, NY 10017

Deborah C. Wright

c/o Carver Federal Savings Bank

75 West 125th Street

New York, NY 1027

Northstar Investment Corp.

20 North Wacker Drive, Suite 1416

Chicago, IL 60606

Kuby Gottlieb Special Value Fund, LP 
20
North Wacker Drive, Suite 1416 
Chicago,
IL 60606

Keefe, Bruyette & Woods 
787
Seventh Avenue 
New York, NY
10019

All of the above holders own 5% or more of Carver Bancorp, Inc. common stock.

 

 

 

UST Seq. 413

SCHEDULE C

MATERIAL ADVERSE EFFECT

List
any exceptions to the representation and warranty in Section 3.6 of the Exchange Agreement —
Standard Terms.

If none, please so indicate by checking the box: þ.

 

 

 

UST Seq. 413

SCHEDULE D

LITIGATION

List any exceptions to the representation and warranty in Section 3.10 of the Exchange
Agreement — Standard Terms.

Carver Federal-Savings Bank (“Carver”), a wholly owned subsidiary of the Company, is a defendant in
a lawsuit filed in November 2009 in the United States District Court, Southern District of New York
by Mariner’s Bank (“Mariner’s”) as Plaintiff. Mariner’s alleges, among other things, that Carver,
as loan servicer, breached a loan servicing agreement entered into with Mariner’s and that Carver
serviced the subject loan in a grossly negligent manner. The subject loan is a mortgage loan
secured by multi-family property located in Monticello, NY. Mariner’s is seeking damages in excess
of $500,000. Carver has counter sued Mariner’s for payment of loan advances for real estate taxes
and hazard insurance. Carver believes it has a meritorious defense in this matter, but is unable to
determine the outcome of this case at this time.

If none, please so indicate by checking the box: o.

 

 

 

UST Seq. 413

SCHEDULE E

COMPLIANCE WITH LAWS

List any exceptions to the representation and warranty in the second sentence of Section 3.11 of
the Exchange Agreement — Standard Terms.

If none, please so indicate by checking the box: þ.

List any exceptions to the representation and warranty in the last sentence of Section 3.11 of the
Exchange Agreement — Standard Terms.

Please see Schedule F

If
none, please so indicate by checking the box: o.

 

 

 

UST Seq. 413

SCHEDULE F

REGULATORY AGREEMENTS

List any exceptions to the representation and warranty in Section 3.17 of the Exchange
Agreement — Standard Terms.

On February 23, 2010, Carver Bancorp, Inc. and Carver Federal Savings Bank (the “Bank”) entered
into a Memorandum of Understanding (“MOU”) with the Office of Thrift Supervision (the “OTS”). The
MOU, among other things, restricts the Bank’s ability to make a variety of non-residential loans,
requires to comply with the provisions of 12 C.F.R. sections 363.2(b)(3) and 363.3(b) regarding
internal controls over financial reporting and limits the amount of brokered deposits.

If
none, please so indicate by checking the box: o.exv10w1

Exhibit 10.1

EXECUTION COPY

 

$725,000,000

TERM LOAN AGREEMENT

Dated as of August 17, 2007

among

Collective Brands Finance, Inc.

as Borrower

and

The Lenders Party Hereto

and

Citicorp North America, Inc. 

as Administrative Agent and Collateral Agent

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.

as Joint Bookrunners and Joint Lead Arrangers

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153-0119

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	Section 1.1 Defined Terms
	 	 	1	 
	Section 1.2 Computation of Time Periods
	 	 	29	 
	Section 1.3 Accounting Terms and Principles
	 	 	29	 
	Section 1.4 Conversion of Foreign Currencies
	 	 	30	 
	Section 1.5 Certain Terms
	 	 	30	 
	 
	 	 	 	 
	A. ARTICLE II THE TERM LOAN FACILITY
	 	 	31	 
	 
	 	 	 	 
	Section 2.1 The Term Loans
	 	 	31	 
	Section 2.2 Borrowing Procedures
	 	 	33	 
	Section 2.3 Reduction and Termination of the Term Loan Commitments
	 	 	34	 
	Section 2.4 Repayment of Term Loans
	 	 	34	 
	Section 2.5 Evidence of Debt
	 	 	35	 
	Section 2.6 Optional Prepayments
	 	 	36	 
	Section 2.7 Mandatory Prepayments
	 	 	37	 
	Section 2.8 Interest
	 	 	38	 
	Section 2.9 Conversion/Continuation Option
	 	 	39	 
	Section 2.10 Fees
	 	 	39	 
	Section 2.11 Payments and Computations
	 	 	39	 
	Section 2.12 Special Provisions Governing Eurodollar Rate Loans
	 	 	42	 
	Section 2.13 Capital Adequacy
	 	 	43	 
	Section 2.14 Taxes
	 	 	44	 
	Section 2.15 Substitution of Lenders
	 	 	46	 
	 
	 	 	 	 
	B. ARTICLE III CONDITIONS TO TERM LOANS
	 	 	47	 
	 
	 	 	 	 
	Section 3.1 Conditions Precedent to Closing Date Term Loans
	 	 	47	 
	Section 3.2 Conditions Precedent to Incremental Term Loans
	 	 	51	 
	Section 3.3 Determinations of Borrowing Conditions
	 	 	53	 
	 
	 	 	 	 
	C. ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	53	 
	 
	 	 	 	 
	Section 4.1 Corporate Existence; Compliance with Law
	 	 	54	 
	Section 4.2 Corporate Power; Authorization; Enforceable Obligations
	 	 	54	 
	Section 4.3 Ownership of Subsidiaries
	 	 	55	 
	Section 4.4 Financial Statements
	 	 	55	 
	Section 4.5 Material Adverse Change
	 	 	56	 
	Section 4.6 Solvency
	 	 	56	 

1

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 

	Section 4.7 Litigation
	 	 	56	 
	Section 4.8 Taxes
	 	 	57	 
	Section 4.9 Full Disclosure
	 	 	57	 
	Section 4.10 Margin Regulations
	 	 	57	 
	Section 4.11 No Burdensome Restrictions; No Defaults
	 	 	58	 
	Section 4.12 Investment Company Act
	 	 	58	 
	Section 4.13 Use of Proceeds
	 	 	58	 
	Section 4.14 Insurance
	 	 	59	 
	Section 4.15 Labor Matters
	 	 	59	 
	Section 4.16 ERISA
	 	 	59	 
	Section 4.17 Environmental Matters
	 	 	60	 
	Section 4.18 Intellectual Property
	 	 	60	 
	Section 4.19 Title; Real Property
	 	 	61	 
	Section 4.20 Related Documents
	 	 	62	 
	 
	 	 	 	 
	D. ARTICLE V FINANCIAL COVENANT
	 	 	63	 
	 
	 	 	 	 
	Section 5.1 Maximum Leverage Ratio
	 	 	63	 
	 
	 	 	 	 
	E. ARTICLE VI REPORTING COVENANTS
	 	 	63	 
	 
	 	 	 	 
	Section 6.1 Financial Statements
	 	 	63	 
	Section 6.2 Default Notices
	 	 	64	 
	Section 6.3 Litigation
	 	 	65	 
	Section 6.4 SEC Filings; Press Releases
	 	 	65	 
	Section 6.5 Insurance
	 	 	65	 
	Section 6.6 ERISA Matters
	 	 	65	 
	Section 6.7 Environmental Matters
	 	 	66	 
	Section 6.8 Other Information
	 	 	67	 
	 
	 	 	 	 
	F. ARTICLE VII AFFIRMATIVE COVENANTS
	 	 	67	 
	 
	 	 	 	 
	Section 7.1 Preservation of Corporate Existence, Etc.
	 	 	67	 
	Section 7.2 Compliance with Laws, Etc.
	 	 	68	 
	Section 7.3 Conduct of Business
	 	 	68	 
	Section 7.4 Payment of Taxes, Etc.
	 	 	68	 
	Section 7.5 Maintenance of Insurance
	 	 	68	 
	Section 7.6 Access
	 	 	68	 
	 
	 	 	 	 

2

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 

	 
	 	 	 	 
	Section 7.7 Keeping of Books
	 	 	69	 
	Section 7.8 Maintenance of Properties, Etc.
	 	 	69	 
	Section 7.9 Application of Proceeds
	 	 	69	 
	Section 7.10 Environmental
	 	 	69	 
	Section 7.11 Additional Collateral and Guaranties
	 	 	69	 
	Section 7.12 Designation of Subsidiaries
	 	 	71	 
	 
	 	 	 	 
	G. ARTICLE VIII NEGATIVE COVENANTS
	 	 	72	 
	 
	 	 	 	 
	Section 8.1 Indebtedness
	 	 	72	 
	Section 8.2 Liens, Etc.
	 	 	73	 
	Section 8.3 Investments
	 	 	74	 
	Section 8.4 Sale of Assets
	 	 	75	 
	Section 8.5 Restricted Payments
	 	 	75	 
	Section 8.6 Prepayment of Indebtedness
	 	 	76	 
	Section 8.7 Restriction on Fundamental Changes
	 	 	76	 
	Section 8.8 Change in Nature of Business
	 	 	76	 
	Section 8.9 Transactions with Affiliates
	 	 	77	 
	Section 8.10 Limitations on Restrictions on Subsidiary Distributions; No New
Negative Pledge
	 	 	77	 
	Section 8.11 Modification of Constituent Documents
	 	 	77	 
	Section 8.12 Modification of Related Documents
	 	 	77	 
	Section 8.13 Accounting Changes; Fiscal Year
	 	 	78	 
	Section 8.14 Margin Regulations
	 	 	78	 
	Section 8.15 No Speculative Transactions
	 	 	79	 
	Section 8.16 Compliance with ERISA
	 	 	79	 
	 
	 	 	 	 
	H. ARTICLE IX EVENTS OF DEFAULT
	 	 	79	 
	 
	 	 	 	 
	Section 9.1 Events of Default
	 	 	79	 
	Section 9.2 Remedies
	 	 	81	 
	Section 9.3 Rescission
	 	 	82	 
	 
	 	 	 	 
	I. ARTICLE X THE ADMINISTRATIVE AGENT
	 	 	82	 
	 
	 	 	 	 
	Section 10.1 Authorization and Action
	 	 	82	 
	Section 10.2 Administrative Agent’s Reliance, Etc.
	 	 	83	 
	Section 10.3 Posting of Approved Electronic Communications
	 	 	84	 
	Section 10.4 The Administrative Agent Individually
	 	 	85	 
	Section 10.5 Lender Credit Decision
	 	 	85	 

3

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 

	Section 10.6 Indemnification
	 	 	85	 
	Section 10.7 Successor Administrative Agent
	 	 	86	 
	Section 10.8 Concerning the Collateral and the Collateral Documents; Releases
	 	 	86	 
	Section 10.9 Collateral Matters Relating to Related Obligations
	 	 	87	 
	 
	 	 	 	 
	J. ARTICLE XI MISCELLANEOUS
	 	 	88	 
	 
	 	 	 	 
	Section 11.1 Amendments, Waivers, Etc.
	 	 	88	 
	Section 11.2 Assignments and Participations
	 	 	90	 
	Section 11.3 Costs and Expenses
	 	 	92	 
	Section 11.4 Indemnities
	 	 	93	 
	Section 11.5 Limitation of Liability
	 	 	94	 
	Section 11.6 Right of Set-off
	 	 	95	 
	Section 11.7 Sharing of Payments, Etc.
	 	 	95	 
	Section 11.8 Notices, Etc.
	 	 	96	 
	Section 11.9 No Waiver; Remedies
	 	 	97	 
	Section 11.10 Binding Effect
	 	 	98	 
	Section 11.11 Governing Law
	 	 	98	 
	Section 11.12 Submission to Jurisdiction; Service of Process
	 	 	98	 
	Section 11.13 Waiver of Jury Trial
	 	 	99	 
	Section 11.14 Marshaling; Payments Set Aside
	 	 	99	 
	Section 11.15 Section Titles
	 	 	99	 
	Section 11.16 Execution in Counterparts
	 	 	99	 
	Section 11.17 Entire Agreement
	 	 	100	 
	Section 11.18 Confidentiality
	 	 	100	 
	Section 11.19 Patriot Act Notice.
	 	 	100	 

Schedules

	 	 	 	 	 

	Schedule I

	 	—
	 	Term Loan Commitments
	Schedule II

	 	—
	 	Applicable Lending Offices and Addresses for Notices
	Schedule 4.2

	 	—
	 	Consents
	Schedule 4.3

	 	—
	 	Ownership of Subsidiaries

4

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 

	Schedule 4.7

	 	—
	 	Litigation
	Schedule 4.8

	 	—
	 	Taxes
	Schedule 4.15

	 	—
	 	Labor Matters
	Schedule 4.16

	 	—
	 	List of Plans
	Schedule 4.17

	 	—
	 	Environmental Matters
	Schedule 4.18

	 	—
	 	Intellectual Property
	Schedule 4.19

	 	—
	 	Real Property
	Schedule 7.13

	 	—
	 	Post-Closing Covenants
	Schedule 8.1

	 	—
	 	Existing Indebtedness
	Schedule 8.2

	 	—
	 	Existing Liens
	Schedule 8.3

	 	—
	 	Existing Investments
	Schedule 8.4

	 	—
	 	Asset Sales
	Schedule 8.9

	 	—
	 	Transactions with Affiliates
	Schedule 8.13

	 	—
	 	Accounting Change; Fiscal Year

Exhibits

	 	 	 	 	 

	Exhibit A

	 	—
	 	Form of Assignment and Acceptance
	Exhibit B

	 	—
	 	Form of Term Note
	Exhibit C

	 	—
	 	Form of Notice of Borrowing
	Exhibit D

	 	—
	 	Form of Notice of Conversion or Continuation
	Exhibit E

	 	—
	 	Form of Opinion of counsel for the Loan Parties
	Exhibit F

	 	—
	 	Form of Guaranty
	Exhibit G

	 	—
	 	Form of Pledge and Security Agreement
	Exhibit H

	 	—
	 	Form of Intercreditor Agreement

5

 

          Term Loan Agreement, dated as of August 17, 2007, among Collective Brands
Finance, Inc., a Nevada corporation (formerly known as “Payless ShoeSource Finance, Inc.”, the
“Borrower”), Collective Brands, Inc., a Delaware corporation (the name “Collective Brands,
Inc.” to be changed on or prior to the Closing Date from “Payless ShoeSource, Inc.”, the
“Parent”), the Lenders (as defined below) and Citicorp North America, Inc., as
administrative agent and collateral agent for the Lenders (in such capacity, the
“Administrative Agent”).

W i t n e s s e t h

          Whereas, the Borrower has requested that the Lenders make term loans available for
the purposes specified in this Agreement; and

          Whereas, the Lenders are willing to make available to the Borrower such term loans
upon the terms and subject to the conditions set forth herein;

          Now, Therefore, in consideration of the premises and the covenants and agreements
contained herein, the parties hereto hereby 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 (such meanings to
be equally applicable to both the singular and plural forms of the terms defined):

          “Acquisition Subsidiary” means San Jose Acquisition Corp., a Massachusetts corporation and a
Wholly-Owned Subsidiary of the Parent.

          “Administrative Agent” has the meaning specified in the preamble to this Agreement.

          “Affected Lender” has the meaning specified in Section 2.15 (Substitution of Lenders).

          “Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling or that is controlled by or is under common control with such Person, each officer,
director, general partner or joint-venturer of such Person, and each Person that is the beneficial
owner of 15% or more of any class of Voting Stock of such Person; provided, however, “Affiliate”
shall not include any holder of a minority interest in any Subsidiary of the Parent. For the
purposes of this definition, “control” means the possession of the power to direct or cause the
direction of the management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

          “Agent Affiliate” has the meaning specified in Section 10.3 (Posting of Approved Electronic
Communications).

 

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Agreement” means this Term Loan Agreement.

          “Alternative Currency” means any lawful currency other than Dollars that is freely
transferable into Dollars.

          “Applicable Amount” shall mean, at any time (the “Reference Time”), an amount equal to (a) the
sum, without duplication, of:

          (i) an amount equal to the greater of (x) zero and (y) 50% of cumulative Consolidated
Net Income for the period from the Closing Date until the last day of the then most recent
fiscal quarter for which Financial Statements have been delivered pursuant to Section 6.1
(Financial Statements); provided that, the amount in this clause (i) shall only be
available if the Parent would be in compliance with the financial covenant contained in
Section 5.1 (Financial Covenant) for the most recently ended Test Period, determined on a
Pro Forma Basis after giving effect to any Investment, Restricted Payment or Optional Debt
Prepayment actually made pursuant to Sections 8.3(j)(ii) (Investments), 8.5(d)(ii)
(Restricted Payments) and Section 8.6(g)(ii) (Prepayment of Indebtedness); and

          (ii) the amount of any capital contributions (other than any such contribution
consisting of Disqualified Stock) made in cash to, or any proceeds of an Equity Issuance
received by, the Parent (and contributed as common equity to the Borrower) from and
including the Closing Date through and including the Reference Time,

minus (b) the sum, without duplication, of:

          (i) the aggregate amount of Investments made pursuant to Section 8.3(j)(ii)
(Investments) following the Closing Date and prior to the Reference Time;

          (ii) the aggregate amount of Restricted Payments pursuant to Section 8.5(d)(ii)
(Restricted Payments) following the Closing Date and prior to the Reference Time; and

          (iii) the aggregate amount of Optional Debt Prepayments made pursuant to Section
8.6(g)(ii) (Prepayment of Indebtedness) following the Closing Date and prior to the
Reference Time.

          “Applicable Lending Office” means, with respect to each Lender, its Domestic Lending Office in
the case of a Base Rate Loan, and its Eurodollar Lending Office in the case of a Eurodollar Rate
Loan.

          “Applicable Margin” means (a) with respect to (i) Closing Date Term Loans
maintained as Base Rate Loans, a rate equal to 1.75% per annum and (ii) Closing Date Term Loans
maintained as Eurodollar Rate Loans, a rate equal to 2.75% per annum and (b) with respect to
Incremental Term Loans, at the rates per annum for Base Rate Loans
and Eurodollar Rate Loans to be agreed by the Administrative Agent, the Incremental Term Loan Lenders providing
such Incremental Term Loans and the Borrower prior to the applicable Facility Increase Date.

2

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Approved Electronic Communications” means each notice, demand, communication, information,
document and other material that any Loan Party is obligated to, or otherwise chooses to, provide
to the Administrative Agent pursuant to any Loan Document or the transactions contemplated therein,
including (a) any supplement to the Guaranty, any joinder to the Pledge and Security Agreement and
any other written Contractual Obligation delivered or required to be delivered in respect of any
Loan Document or the transactions contemplated therein and (b) any Financial Statement, financial
and other report, notice, request, certificate and other information material; provided, however,
that, “Approved Electronic Communication” shall exclude (i) any Notice of Borrowing, Notice of
Conversion or Continuation, Facility Increase Notice and any other notice, demand, communication,
information, document and other material relating to a request for a new, or a conversion of an
existing, Borrowing, (ii) any notice pursuant to Section 2.6 (Optional Prepayments) and Section 2.7
(Mandatory Prepayments) and any other notice relating to the payment of any principal or other
amount due under any Loan Document prior to the scheduled date therefor, (iii) all notices of any
Default or Event of Default and (iv) any notice, demand, communication, information, document and
other material required to be delivered to satisfy any of the conditions set forth in Article III
(Conditions To Term Loans) or any other condition to any Borrowing or other extension of credit
hereunder or any condition precedent to the effectiveness of this Agreement.

          “Approved Electronic Platform” has the meaning specified in Section 10.3 (Posting of Approved
Electronic Communications).

          “Approved Fund” means any Fund that is advised or managed by (a) a Lender, (b) an Affiliate of
a Lender or (c) an entity or Affiliate of an entity that administers or manages a Lender.

          “Approved Securities Intermediary” means a “securities intermediary” or “commodity
intermediary” (as such terms are defined in the UCC) selected or reasonably approved by the
Administrative Agent.

          “Arrangers” means, collectively, Citigroup Global Markets Inc. and J.P. Morgan Securities
Inc., each in its capacity as joint lead arranger and joint bookrunner.

          “Asset Sale” has the meaning specified in Section 8.4 (Sale of Assets).

          “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an
Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit A
(Form of Assignment and Acceptance).

          “Attributable Debt” in respect of a Permitted Sale Leaseback transaction, as at the time of
determination, the present value (discounted at the interest rate then borne by the Term Loans,
compounded annually) of the total obligations of the lessee for rental payments during the
remaining term of the lease included in such Sale Leaseback transaction (including any period for
which such lease has been extended); provided, however, that if such Permitted Sale Leaseback
transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby
will be determined in accordance with the definition of “Capital Lease Obligations”.

3

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Base Rate” means, for any period, a fluctuating interest rate per annum as shall be in effect
from time to time, which rate per annum shall be equal at all times to the higher of the following:

     (a) the rate of interest announced publicly by Citibank in New York, New York, from
time to time, as Citibank’s base rate; and

     (b) 0.5% per annum plus the Federal Funds Rate.

          “Base Rate Loan” means any Term Loan during any period in which it bears interest based on the
Base Rate.

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

          “Borrower” has the meaning specified in the preamble to this Agreement.

          “Borrower’s Accountants” means Deloitte Touche LLP or other independent nationally-recognized
public accountants reasonably acceptable to the Administrative Agent.

          “Borrowing” means any Closing Date Term Loan Borrowing or any borrowing under the Facility
Increase, as the context may require.

          “Business Day” means a day of the year on which banks are not required or authorized to close
in New York City and, if the applicable Business Day relates to notices, determinations, fundings
and payments in connection with the Eurodollar Rate or any Eurodollar Rate Loans, a day on which
dealings in Dollar deposits are also carried on in the London interbank market.

          “Capital Expenditures” means, for any Person for any period, the aggregate of amounts that
would be reflected as capital expenditures on a statement of cash flows of such Person prepared in
conformity with GAAP.

          “Capital Lease” means, with respect to any Person, any lease of, or other arrangement
conveying the right to use, property by such Person as lessee that would be accounted for as a
capital lease on a balance sheet of such Person prepared in conformity with GAAP.

          “Capital Lease Obligations” means, with respect to any Person, the capitalized amount of all
Consolidated obligations of such Person or any of its Subsidiaries under Capital Leases.

          “Cash Equivalents” means, as of any date of determination, (i) marketable securities (a)
issued or directly and unconditionally guaranteed as to interest and principal by the federal
government of the United States or (b) issued by any agency of the United States in each case
maturing within thirteen months after such date; (ii) marketable direct obligations issued by any
state of the United States or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within thirteen months after such date and having,

4

 

Term Loan Agreement

Collective Brands Finance, Inc.

at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody’s; (iii) (a) commercial paper maturing no more than thirteen months from the date of creation
thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at
least P-1 from Moody’s and (b) other corporate obligations maturing no more than thirteen months
from the acquisition thereof and having, at the time of the acquisition thereof, a rating of at
least AA from S&P or at least Aa2 from Moody’s; (iv) variable rate demand notes and auction rate
securities maturing no more than thirteen months from the date of creation thereof; (v)
certificates of deposit or bankers’ acceptances maturing within thirteen months after such date and
issued or accepted by any Lender or by any commercial bank organized under the laws of the United
States or any state thereof or the District of Columbia that (a) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking regulator) and (b) has
Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (vi) shares of
any money market mutual fund that (a) has substantially all of its assets invested continuously in
the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less
than $500,000,000 and (c) has the highest rating obtainable from either S&P or Moody’s.

          “Change of Control” means any event or circumstance after which (a) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Act of 1934, as amended) of more than 50% of the Voting Stock of the Parent,
(b) a majority of the board of directors of the Parent shall not be Continuing Directors or (c) the
Borrower shall cease to be a direct Wholly Owned Subsidiary of the Parent.

          “Citi” means Citicorp North America, Inc., a Delaware corporation.

          “Citibank” means Citibank, N.A., a national banking association.

          “Closing Date” means August 17, 2007.

          “Closing Date Term Loan” has the meaning specified in Section 2.1(a) (The Term Loans).

          “Closing Date Term Loan Borrowing” means a borrowing consisting of Closing Date Term Loans
made on the Closing Date by the Lenders ratably according to their respective Term Loan
Commitments.

          “Closing Date Term Loan Maturity Date” means the 7th anniversary of the Closing Date.

          “Code” means the U.S. Internal Revenue Code of 1986, as currently amended.

          “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 under any Collateral
Document.

          “Collateral Documents” means the Pledge and Security Agreement, other pledge or security
agreements (including those in respect of Intellectual Property), the Mortgages, the Deposit
Account Control Agreements, the Securities Account Control Agreements and any other

5

 

Term Loan Agreement

Collective Brands Finance, Inc.

document executed and delivered by a Loan Party granting a Lien on any of its property to
secure payment of the Secured Obligations.

          “Commitment Letter” shall mean the letter dated May 22, 2007 addressed to the Borrower from
the Arrangers and accepted by the Borrower on May 22, 2007, with respect to certain terms and
conditions of the Term Loan Facility.

          “Compliance Certificate” has the meaning specified in Section 6.1(c) (Financial Statements).

          “Consolidated” means, with respect to any Person, the consolidation of accounts of such Person
and its Subsidiaries.

          “Consolidated Current Assets” means, with respect to any Person at any date, the total
Consolidated current assets (other than cash and Cash Equivalents) of such Person and its
Subsidiaries at such date.

          “Consolidated Current Liabilities” means, with respect to any Person at any date, all
liabilities of such Person and its Subsidiaries at such date that should be classified as current
liabilities on a Consolidated balance sheet of such Person and its Subsidiaries, but excluding, in
the case of the Parent the sum of (a) the principal amount of any current portion of long-term
Consolidated Funded Indebtedness and (b) (without duplication of clause (a) above) the then
outstanding principal amount of the Term Loans.

          “Consolidated EBITDA” means Consolidated EBITDAR minus the amount, if any, of rental expense
added to Consolidated Net Income in calculating Consolidated EBITDAR.

          “Consolidated EBITDAR” means, with respect to any Person for any period, Consolidated Net
Income for such Person and its Subsidiaries for such period, plus (a) the sum of the following,
without duplication and, in each case, to the extent deducted in determining such Consolidated Net
Income: (i) any provision for income taxes, (ii) all interest expense (net of interest income),
(iii) depreciation, amortization and rental expense, (iv) extraordinary, unusual or non-recurring
charges, expenses or losses (including, whether or not otherwise includable as a separate item in
the statement of such Consolidated Net Income for such period, losses on the sales of assets
outside of the ordinary course of business), (v) losses or charges resulting from hedging
activities, including but not limited to any decrease in the fair value of interest rate swap
agreements and any losses on foreign currency contracts not entered into for speculative purposes,
(vi) the amount of all non-cash charges for such period (including any impairment or writeoff of
goodwill or other intangible assets but excluding any such non-cash charge, expense or loss to the
extent that it represents an accrual of or reserve for cash expenses in any future period or an
amortization of a prepaid cash expense that was paid in a prior period), (vii) the amortization of
any financing costs or fees or original issue discount incurred in connection with any
Indebtedness, (viii) any non-cash expenses due to purchase accounting associated with the
Transactions and any future Permitted Acquisitions, (ix) any non-cash compensation charge or
expense arising from any grant of stock, stock options or other equity based awards and (x) to the
extent non-recurring and not capitalized, costs, fees, charges and expenses (including legal and
consulting fees) incurred in connection with or written off as a result of (A) the Term Loan
Facility, the Merger or the other Transactions, (B) Permitted Acquisitions and other investments
permitted under this Agreement, (C) issuances of Stock or Stock Equivalents, and (D) disposition,
incurrence or refinancing of any Indebtedness, including in each case, all deferred financing costs

6

 

Term Loan Agreement

Collective Brands Finance, Inc.

written off and premiums paid or other expenses incurred directly in connection with any early
extinguishment of Indebtedness and any net loss from any write-off or forgiveness of Indebtedness;
minus (b) the sum of the following to the extent included in determining Consolidated Net Income
(i) income tax benefits for such period, (ii) any extraordinary, unusual or non-recurring income or
gains for such period (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of assets outside of
the ordinary course of business and any net gain from any write-off or forgiveness of
Indebtedness), (iii) other non-cash income or gains (other than the accrual of revenue in the
ordinary course), and (iv) gains resulting from hedging activities, including but not limited to
any increase in the fair value of interest rate swap agreements and any gains on foreign currency
contracts not entered into for speculative purpose.

          “Consolidated Funded Indebtedness” means, as of any date of determination, the sum (without
duplication) of (a) the aggregate principal amount of Indebtedness of the Parent and the Restricted
Subsidiaries outstanding as of such date, in the amount that would be reflected on a balance sheet
prepared as of such date on a Consolidated basis in accordance with GAAP, and (b) the aggregate
principal amount of Indebtedness outstanding as of such date of Persons other than the Parent or a
Restricted Subsidiary, in the amount that would be reflected on a balance sheet of any such Person
prepared as of such date on a Consolidated basis in accordance with GAAP, to the extent such
Indebtedness is guaranteed by the Parent or a Restricted Subsidiary. For purposes of determining
the Senior Secured Leverage Ratio and the Total Leverage Ratio for any Test Period, Consolidated
Funded Indebtedness in respect of Indebtedness outstanding under the Revolving Credit Agreement
shall be the average outstanding amount of such Indebtedness during such Test Period.

          “Consolidated Net Income” means, with respect to any Person and its Subsidiaries, for any
period, the net income (or loss) of such Person and its Subsidiaries for such period, determined on
a Consolidated basis in accordance with GAAP; provided that there shall be excluded from the
calculation of Consolidated Net Income (a) except as otherwise provided in the credit documentation
with respect to calculations to be made on a Pro Forma Basis, the net income (or loss) of any other
Person accrued prior to the date it became a Subsidiary of, or was merged or consolidated into,
such Person or any of such Person’s Subsidiaries, (b) the net income (or loss) of any Person that
is an Unrestricted Subsidiary or in which such Person has a minority ownership interest, except to
the extent any such income has actually been received by such Person in the form of cash dividends
or distributions, and (c) the cumulative effect of a change in accounting principles.

          “Constituent Documents” means, with respect to any Person, (a) the articles of incorporation,
certificate of incorporation, constitution or certificate of formation (or the equivalent
organizational documents) of such Person, (b) the by-laws or operating agreement (or the equivalent
governing documents) of such Person and (c) any document setting forth the manner of election or
duties of the directors or managing members of such Person (if any) and the designation, amount or
relative rights, limitations and preferences of any class or series of such Person’s Stock.

          “Continuing Directors” shall mean the directors of the Parent on the Closing Date and each
other director of the Parent, if, in each case, such other director’s nomination for election to
the board of directors of the Parent is recommended by at least 51% of the then Continuing
Directors.

7

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Contractual Obligation” of any Person means any obligation, agreement, undertaking or similar
provision of any Security issued by such Person or of any agreement, undertaking, contract, lease,
indenture, mortgage, deed of trust or other instrument (excluding 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.

          “Corporate Chart” means a corporate organizational chart, list or other similar document in
each case in form reasonably acceptable to the Administrative Agent and setting forth, for each
Person that is a Loan Party, that is subject to Section 7.11 (Additional Collateral and Guaranties)
or that is a Subsidiary of any of them, (a) the full legal name of such Person (and any trade name,
fictitious name or other name such Person may have had or operated under), (b) the jurisdiction of
organization, the organizational number (if any) and the tax identification number (if any) of such
Person, (c) the location of such Person’s chief executive office (or sole place of business) and
(d) the number of shares of each class of such Person’s Stock authorized (if applicable), the
number outstanding as of the date of delivery 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.

          “Customary Permitted Liens” means, with respect to any Person, any of the following Liens:

          (a) Liens with respect to the payment of taxes, assessments or governmental charges in
each case that are not yet due or that are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate provisions are
being maintained to the extent required by GAAP;

          (b) Liens of landlords arising by statute and liens of suppliers, mechanics, carriers,
materialmen, warehousemen or workmen and other similar Liens, in each case (i) imposed by
law or arising in the ordinary course of business, (ii) for amounts not yet due or that are
being contested in good faith by appropriate proceedings and (iii) with respect to which
adequate reserves or other appropriate provisions are being maintained to the extent
required by GAAP;

          (c) deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance or other types of social security benefits or to
secure the performance of bids, tenders, sales, contracts (other than for the repayment of
borrowed money) and surety, appeal, customs or performance bonds;

          (d) encumbrances arising by reason of zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility easements, building restrictions and other
similar encumbrances on the use of real property not materially detracting from the value
of such real property or not materially interfering with the ordinary conduct of the
business conducted and proposed to be conducted at such real property;

          (e) encumbrances arising under leases or subleases of real property that do not, in
the aggregate, materially detract from the value of such real property or interfere with
the ordinary conduct of the business conducted and proposed to be conducted at such real
property; and

8

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (f) financing statements with respect to a lessor’s rights in and to personal property
leased to such Person in the ordinary course of such Person’s business other than through a
Capital Lease.

          “Debt Issuance” means the incurrence of Indebtedness of the type specified in clause (a) or
(b) of the definition of “Indebtedness” by the Parent or any Restricted Subsidiary.

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

          “Deposit Account” has the meaning given to such term in the UCC.

          “Deposit Account Bank” means a financial institution selected or approved by the
Administrative Agent.

          “Deposit Account Control Agreement” has the meaning specified in the Pledge and Security
Agreement.

          “Disqualified Stock” shall mean any Stock or Stock Equivalent which, by its terms (or by the
terms of any Security into which it is convertible or for which it is exchangeable), or upon the
happening of any event, (a) matures (excluding any maturity as the result of an optional redemption
by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior
to the first anniversary of the Term Loan Maturity Date, (b) is convertible into or exchangeable
(unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Stock or
Stock Equivalent referred to in clause (a) above, in each case at any time on or prior to the first
anniversary of the Term Loan Maturity Date, or (c) contains any repurchase obligation which may
come into effect prior to payment in full of all Obligations; provided, however, that any Stock or
Stock Equivalents that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof (or the holders of any security into or for which such Stock or Stock Equivalents
is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such
Stock or Stock Equivalents upon the occurrence of a change in control or an asset sale occurring
prior to the first anniversary of the Term Loan Maturity Date shall not constitute Disqualified
Stock if such Stock or Stock Equivalents provide that the issuer thereof will not redeem any such
Stock or Stock Equivalents pursuant to such provisions prior to the repayment in full of the
Obligations; provided further, however, that any Stock or Stock Equivalents owned by a Group Member
in a Joint Venture shall not constitute Disqualified Stock solely due to repurchase obligations
triggered upon such Group Member’s failure to make a required capital contribution.

          “Dollar Equivalent” of any amount means, at the time of determination thereof, (a) if such
amount is expressed in Dollars, such amount, (b) if such amount is expressed in an Alternative
Currency, the equivalent of such amount in Dollars determined by using the rate of exchange quoted
by Citibank in New York, New York at 11:00 a.m. (New York time) on the date of determination (or,
if such date is not a Business Day, the last Business Day prior thereto) to prime banks in New York
for the spot purchase in the New York foreign exchange market of such amount of Dollars with such
Alternative Currency and (c) if such amount is denominated in any other currency, the equivalent of
such amount in Dollars as reasonably determined by the Administrative Agent using any method of
determination it deems appropriate.

9

 

Term Loan Agreement

Collective Brands Finance, Inc.

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

          “Domestic Lending Office” means, with respect to any Lender, the office of such Lender
specified as its “Domestic Lending Office” opposite its name on Schedule II (Applicable Lending
Offices and Addresses for Notices) or on the Assignment and Acceptance by which it became a Lender
or such other office of such Lender as such Lender may from time to time specify to the Borrower
and the Administrative Agent.

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

          “Domestic Subsidiary” means any Restricted Subsidiary of the Parent that was formed under the
laws of the United States or any state of the United States or the District of Columbia.

          “EDGAR” means the Electronic Data-Gathering, Analysis, and Retrieval System maintained by the
Securities and Exchange Commission.

          “Eligible Assignee” means (a) a Lender or an Affiliate or Approved Fund of any Lender, (b) a
commercial bank having total assets whose Dollar Equivalent exceeds $5,000,000,000, (c) a finance
company, insurance company or any other financial institution or Fund, in each case reasonably
acceptable to the Administrative Agent and regularly engaged in making, purchasing or investing in
loans and having a net worth, determined in accordance with GAAP, whose Dollar Equivalent exceeds
$250,000,000 (or, to the extent net worth is less than such amount, a finance company, insurance
company, other financial institution or Fund, reasonably acceptable to the Administrative Agent and
the Borrower) or (d) a savings and loan association or savings bank organized under the laws of the
United States or any State thereof having a net worth, determined in accordance with GAAP, whose
Dollar Equivalent exceeds $250,000,000.

          “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 (a) from any assets,
properties, or businesses of any Group Member, or any of their predecessors in interest, or (b)
from or onto any facilities which received Hazardous Materials generated by any Group Member, or
any of their predecessors in interest.

          “Environmental Laws” means all applicable Requirements of Law now or hereafter in effect and
as amended or supplemented from time to time, relating to pollution or the regulation and
protection of human or animal health, safety, the environment or natural resources, including the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. § 9601 et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C. § 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. § 6901 et seq.); the Toxic
Substance Control Act, as amended (15 U.S.C. § 2601 et seq.); the Clean Air Act, as amended (42
U.S.C. § 7401 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. § 651 et seq.); the Safe
Drinking Water Act, as amended (42 U.S.C. § 300f et seq.); and

10

 

Term Loan Agreement

Collective Brands Finance, Inc.

each of their state and local counterparts or equivalents and any transfer of ownership
notification or approval statute, including the Industrial Site Recovery Act (N.J. Stat. Ann. §
13:1K-6 et seq.).

          “Environmental Liabilities and Costs” means, with respect to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by any other Person,
whether based in contract, tort, implied or express warranty, strict liability, criminal or civil
statute and whether arising under any Environmental Law, Permit, order or agreement with any
Governmental Authority or other Person, in each case relating to any environmental, health or
safety condition or to any Release or threatened Release and resulting from the past, present or
future operations of, or ownership of property by, such Person or any of its Subsidiaries.

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

          “Equity Issuance” means the issue or sale of any Stock of the Borrower, the Parent, or any
Restricted Subsidiary of the Parent to any Person other than the Borrower, the Parent or any
Restricted Subsidiary of the Parent.

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

          “ERISA Affiliate” means any trade or business (whether or not incorporated) under common
control or treated as a single employer with any Group Member within the meaning of Section 414(b),
(c), (m) or (o) of the Code.

          “ERISA Event” means (a) a reportable event described in Section 4043(b) or 4043(c)(1), (2),
(3), (5), (6), (8) or (9) of ERISA with respect to a Title IV Plan or a Multiemployer Plan, (b) the
withdrawal of the Borrower, the Parent, any of the Restricted Subsidiaries or any ERISA Affiliate
from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA, (c) the complete or partial
withdrawal of the Borrower, the Parent, any of the Restricted Subsidiaries or any ERISA Affiliate
from any Multiemployer Plan, (d) notice of reorganization or insolvency of a Multiemployer Plan,
(e) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA, (f) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC, (g) the failure to timely make any
required contribution to a Title IV Plan or Multiemployer Plan, (h) the imposition of a lien under
Section 412 of the Code or Section 302 of ERISA on the Borrower, the Parent, any of the Restricted
Subsidiaries or any ERISA Affiliate, (i) any other event or condition that might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or the imposition
of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA or (j) the acceleration of an obligation to pay a pension shortfall with
respect to a Foreign Plan.

          “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the
Federal Reserve Board.

11

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Eurodollar Base Rate” means, with respect to any Interest Period for any Eurodollar Rate
Loan, the offered rate for deposits in Dollars for the applicable Interest Period appearing on the
Reuters Screen LIBOR01 Page as of 11:00 a.m. (London time) 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 Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen), the Eurodollar Base Rate for
the purposes of this definition shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be reasonably selected by the
Administrative Agent, or, in the absence of such availability, the Eurodollar Base Rate shall be
the rate of interest as reasonably determined by the Administrative Agent to be the rate per annum
at which deposits in Dollars are offered by the principal office of Citibank in London to major
banks in the London interbank market at 11:00 a.m. (London time) two Business Days before the first
day of such Interest Period in an amount substantially equal to the Eurodollar Rate Loan of
Citibank for a period equal to such Interest Period.

          “Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender
specified as its “Eurodollar Lending Office” opposite its name on Schedule II (Applicable Lending
Offices and Addresses for Notices) or on the Assignment and Acceptance by which it became a Lender
(or, if no such office is specified, its Domestic Lending Office) or such other office of such
Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent.

          “Eurodollar Rate” means, with respect to any Interest Period for any Eurodollar Rate Loan, an
interest rate per annum equal to the rate per annum obtained by dividing (a) the Eurodollar Base
Rate by (b)(i) a percentage equal to 100% minus (ii) the reserve percentage applicable two Business
Days before the first day of such Interest Period under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System
in New York City with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that includes deposits by
reference to which the Eurodollar Rate is determined) having a term equal to such Interest Period.

          “Eurodollar Rate Loan” means any Term Loan that, for an Interest Period, bears interest based
on the Eurodollar Rate.

          “Event of Default” has the meaning specified in Section 9.1 (Events of Default).

          “Excess Cash Flow” means, for the Borrower, the Parent and the Restricted Subsidiaries for any
period, (a) Consolidated EBITDAR of the Parent and the Restricted Subsidiaries for such period plus
(b) the excess, if any, of Working Capital at the beginning of such period over Working capital at
the end of such period for the Borrower, the Parent and the Restricted Subsidiaries minus (c) the
sum of (without duplication) the following: (i) scheduled cash principal payments on the Term Loans
during such period and optional cash principal payments on the Term Loans during such period, (ii)
cash principal payments made by the Borrower, the Parent or any Restricted Subsidiary during such
period on other Indebtedness to the extent such other Indebtedness and payments are permitted
hereunder (to the extent (x) not financed by the incurrence of Indebtedness or an Equity Issuance
and (y) in the case of optional cash payments of loans made under the Revolving Credit Agreement,
accompanied by permanent reductions of commitments under the Revolving Credit Agreement in amounts
corresponding to such payments), (iii) payments made by the Borrower, the Parent or any Restricted
Subsidiary

12

 

Term Loan Agreement

Collective Brands Finance, Inc.

during such period on Capital Lease Obligations to the extent such Capital Lease Obligations
and payments are permitted hereunder (to the extent not financed by the incurrence of Indebtedness
or an Equity Issuance), (iv) Capital Expenditures (to the extent not financed by the incurrence of
Indebtedness or an Equity Issuance) made by the Borrower, the Parent or any Restricted Subsidiary
during such period to the extent permitted hereunder, (v) cash payments made by the Borrower, the
Parent or any Restricted Subsidiary to satisfy tax obligations, (vi) cash interest expense of the
Borrower, the Parent or any Restricted Subsidiary during such period, (vii) rental expense of the
Borrower, the Parent or any Restricted Subsidiary during such period, and (vii) the excess, if any,
of Working Capital at the end of such period over Working Capital at the beginning of such period.

          “Excluded Assets” means (a) any lease, license, contract, property right or agreement to which
any Loan Party is a party or any of its rights or interests thereunder if and to the extent that a
security interest is prohibited by or in violation of (i) any law, rule or regulation applicable to
such Loan Party, or (ii) a term, provision or condition of or under, any such lease, license,
contract, property right or agreement (unless in either clause (i) or (ii) above such law, rule or
regulation or such term, provision or condition would be rendered unenforceable against the Term
Loans pursuant to Sections 9-406, 9-407, or 9-408 of the applicable Uniform Commercial Code); (b)
any Stock or Stock Equivalents representing more than 66% of the outstanding Voting Stock issued by
any Person that is not a “United States person” under and as defined in Section 7701(a)(30) of the
IRC; (c) any assets of an Unrestricted Subsidiary or any assets of or Stock or Stock Equivalents in
any of an Unrestricted Subsidiary’s direct or indirect subsidiaries; or (d) any assets of any
Immaterial Subsidiary that is not a Loan Party.

          “Existing Agent” means Bank of America, N.A., in its capacity as administrative agent under
the Target Credit Agreement.

          “Existing Revolving Credit Agreement” means that certain Loan, Guaranty and Security
Agreement, dated as of January 15, 2004 (as amended and otherwise modified up to but not including
the Closing Date), among the Borrower, the institutions party thereto as lenders and Wells Fargo
Retail Finance, LLC, as administrative agent thereunder.

          “Facility Increase” has the meaning specified in Section 2.1(b) (The Term Loans).

          “Facility Increase Date” has the meaning specified in Section 2.1(b) (The Term Loans).

          “Facility Increase Notice” means a notice from the Borrower to the Administrative Agent
requesting a Facility Increase, which may include any proposed term and condition for such proposed
Facility Increase but shall include in any event the amount of such proposed Facility Increase.

          “Fair Market Value” means (a) with respect to any asset or group of assets (other than a
marketable Security) at any date, the value of the consideration obtainable in a sale of such asset
at such date assuming a sale by a willing seller to a willing purchaser dealing at arm’s length and
arranged in an orderly manner over a reasonable period of time having regard to the nature and
characteristics of such asset, determined by the Board of Directors or a Responsible Officer of the
Borrower or Parent or, if such asset shall have been the subject of a relatively contemporaneous
appraisal by an independent third party appraiser, the basic assumptions

13

 

Term Loan Agreement

Collective Brands Finance, Inc.

underlying which have not materially changed since its date, the value set forth in such
appraisal and (b) with respect to any marketable Security at any date, the closing sale price of
such Security on the Business Day next preceding such date, as appearing in any published list of
any national securities exchange or the NASDAQ Stock Market or, if there is no such closing sale
price of such Security, the final price for the purchase of such Security at face value quoted on
such Business Day by a financial institution of recognized standing regularly dealing in Securities
of such type and selected by the Administrative Agent.

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

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

          “Fee Letter” shall mean (a) the letter dated May 22, 2007 addressed to the Borrower from the
Arrangers and accepted by the Borrower on May 22, 2007, with respect to certain fees to be paid
from time to time to the Arrangers and (b) if applicable, any additional fee letter entered into as
part of any Facility Increase and executed by, among others, the Borrower and the Administrative
Agent.

          “Financial Asset” has the meaning given to such term in the UCC.

          “Financial Statements” means the financial statements of the Parent and its Subsidiaries
delivered in accordance with Section 4.4 (Financial Statements) and Section 6.1 (Financial
Statements).

          “Foreign Plan” means any defined benefit pension plan maintained by the Borrower, the Parent
or any of the Restricted Subsidiaries that is mandated or governed by any law, rule or regulation
of any Government Authority other than the United States, any state thereof or any other political
subdivision thereof.

          “Foreign Subsidiary” means any Subsidiary of the Parent that is not organized under the laws
of any state of the United States of America or the District of Columbia.

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

          “GAAP” means 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 and the statements and
pronouncements of the Financial Accounting Standards Board, or 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.

14

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Governmental Authority” means any nation, sovereign or government, any state or other
political subdivision thereof and any entity or authority exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government, including any
central bank or stock exchange.

          “Group Members” means, collectively, the Borrower, the Parent and each Restricted Subsidiary.

          “Guarantor” means Parent and each Wholly Owned Domestic Subsidiary of the Parent that is a
Restricted Subsidiary or any Restricted Subsidiary of the Parent that guarantees or otherwise
provides direct credit support for any Indebtedness of the Parent of the type listed in clause (a)
or (b) of the definition of Indebtedness, each party to the Guaranty.

          “Guaranty” means the guaranty, in substantially the form of Exhibit F (Form of Guaranty),
executed by the Guarantors.

          “Guaranty Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of such Person with respect to any Indebtedness of another Person, if the
purpose or intent of such Person in incurring the Guaranty Obligation is to provide assurance to
the obligee of such Indebtedness that such Indebtedness will be paid or discharged, that any
agreement relating thereto will be complied with, or that any holder of such Indebtedness will be
protected (in whole or in part) against loss in respect thereof, 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
Indebtedness of another Person and (b) any liability of such Person for Indebtedness of another
Person through any agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise
acquire such Indebtedness or any security therefor or to provide funds for the payment or discharge
of such Indebtedness (whether in the form of a loan, advance, stock purchase, capital contribution
or otherwise), (ii) to maintain the solvency or any balance sheet item, level of income or
financial condition of another Person, (iii) to make take-or-pay or similar payments, if required,
regardless of non-performance by any other party or parties to an agreement, (iv) to purchase, sell
or lease (as lessor or lessee) property, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss or (v) to supply funds to, or in any other manner invest in, such other
Person (including to pay for property or services irrespective of whether such property is received
or such services are rendered), if in the case of any agreement described under clause (b)(i),
(ii), (iii), (iv) or (v) above the primary purpose or intent thereof is to provide assurance that
Indebtedness of another Person will be paid or discharged, that any agreement relating thereto will
be complied with or that any holder of such Indebtedness will be protected (in whole or in part)
against loss in respect thereof. The amount of any Guaranty Obligation shall be equal to the
amount of the Indebtedness so guaranteed or otherwise supported.

          “Hazardous Materials” means any material, substance or waste that is classified, regulated or
otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant or a
pollutant or by other words of similar meaning or regulatory effect, including any petroleum or
petroleum-derived substance or waste, asbestos and polychlorinated biphenyls.

          “Hedging Contracts” means all Interest Rate Contracts, foreign exchange contracts, currency
swap or option agreements, forward contracts, commodity swap, purchase or option agreements, other
commodity price hedging arrangements and all other similar agreements

15

 

Term Loan Agreement

Collective Brands Finance, Inc.

or arrangements designed to alter the risks of any Person arising from fluctuations in
interest rates, currency values or commodity prices.

          “Immaterial Subsidiary” means any Domestic Subsidiary of the Parent designated in writing by
the Borrower to the Administrative Agent whose total assets or revenues (in each case on a
Consolidated basis with its Subsidiaries) are less than 3% of the total assets or revenues of the
Parent and the Restricted Subsidiaries, taken as a whole; provided, however, that the aggregate
total assets or revenues of all such subsidiaries designated as “Immaterial Subsidiaries” (on a
Consolidated basis with their Subsidiaries), shall not exceed 5% of the total assets or revenue of
the Parent and the Restricted Subsidiaries, taken as a whole.

          “Incremental Term Loan” has the meaning set forth in Section 2.1(b) (The Term Loans).

          “Incremental Term Loan Lender” has the meaning set forth in Section 2.1(b) (The Term Loans).

          “Incremental Term Loan Maturity Date” the date that is agreed to for such Incremental Term
Loan by the Administrative Agent and the Borrower at the time the applicable Facility Increase
becomes effective; provided, that no such date shall be earlier than the Closing Date Term Loan
Maturity Date.

          “Included Asset Sale” means any Asset Sale by the Parent or any of the Restricted Subsidiaries
other than Asset Sales permitted pursuant to clauses (a) through (i), (l) and (n) of Section 8.4
(Sale of Assets).

          “Indebtedness” 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 Attributable Debt in respect of Sale Leaseback transactions, (g) all
obligations owing under Hedging Contracts, and (h) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with
recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a)
through (g) above.

          “Indemnified Matter” has the meaning specified in Section 11.4 (Indemnities).

          “Indemnitee” has the meaning specified in Section 11.4 (Indemnities).

          “Intellectual Property” has the meaning given such term in the Pledge and Security Agreement.

          “Intercreditor Agreement” means an agreement, in substantially the form of Exhibit H (Form of
Intercreditor Agreement), among the Administrative Agent, the Revolving Credit Agent and each Loan
Party.

16

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Interest Period” means, in the case of any Eurodollar Rate Loan, (a) initially, the period
commencing on the date such Eurodollar Rate Loan is made or on the date of conversion of a Base
Rate Loan to such Eurodollar Rate Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its Notice of Borrowing or Notice of Conversion or Continuation given
to the Administrative Agent pursuant to Section 2.2 (Borrowing Procedures) or Section 2.9
(Conversion/Continuation Option) and (b) thereafter, if such Term Loan is continued, in whole or in
part, as a Eurodollar Rate Loan pursuant to Section 2.9 (Conversion/Continuation Option), a period
commencing on the last day of the immediately preceding Interest Period therefor and ending one,
two, three or six months thereafter, as selected by the Borrower in its Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.9 (Conversion/Continuation
Option); provided, however, that all of the foregoing provisions relating to Interest Periods in
respect of Eurodollar Rate Loans are subject to the following:

     (a) if any Interest Period would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day, unless the
result of such extension would be to extend such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately preceding Business
Day;

     (b) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of a calendar month; and

     (c) the Borrower may not select any Interest Period that ends after the date of a
scheduled principal payment on the Term Loans as set forth in Article II (The Term Loan
Facility) unless, after giving effect to such selection, the aggregate unpaid principal
amount of the Term Loans for which Interest Periods end after such scheduled principal
payment shall be equal to or less than the principal amount to which the Term Loans are
required to be reduced after such scheduled principal payment is made.

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

          “Inventory” has the meaning given to such term in the UCC.

          “Investment” means, with respect to any Person, (a) any purchase or other acquisition by such
Person of (i) any Security issued by, (ii) a beneficial interest in any Security issued by, or
(iii) any other equity ownership interest in, any other Person, (b) any purchase by such Person of
all or a significant part of the assets of a business conducted by any other Person, or all or
substantially all of the assets constituting the business of a division, branch or other unit
operation of any other Person, (c) any loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses, accounts receivable and similar
items made or incurred in the ordinary course of business as presently conducted) or capital
contribution by such Person to any other Person, including all Indebtedness of any other Person to
such Person arising from a sale of property by such Person other than in the ordinary course of its
business, and (d) any Guaranty Obligation incurred by such Person in respect of Indebtedness of any
other Person. For purposes of determining the value of any Investment outstanding for purposes of
any subclause of Section 8.3 (Investments), such amount, when

17

 

Term Loan Agreement

Collective Brands Finance, Inc.

aggregated with the amount of all other Investments made pursuant to such subclause, shall
deemed to be the amount of all such Investments when made, purchased or acquired less any returns
on such Investments (not to exceed the aggregate of the original amounts invested pursuant to such
subclause).

          “IRS” means the Internal Revenue Service of the United States or any successor thereto.

          “Joint Venture” means a corporation, limited liability company, joint venture or similar
limited liability legal entity formed in order to conduct a common venture or enterprise between
two or more Persons.

          “Land” of any Person means all of those plots, pieces or parcels of land now owned, leased or
hereafter acquired or leased or purported to be owned, leased or hereafter acquired or leased
(including, in respect of the Loan Parties, as reflected in the most recent Financial Statements)
by such Person.

          “Lender” means each financial institution or other entity that (a) is listed on the signature
pages hereof as a “Lender”, (b) from time to time becomes a party hereto by execution of an
Assignment and Acceptance or (c) from time to time becomes a party hereto in connection with a
Facility Increase by execution of an assumption agreement, in form and substance reasonably
satisfactory to the Administrative Agent and the Borrower.

          “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or
other security agreement or preferential arrangement of any kind or nature whatsoever intended to
assure payment of any Indebtedness or the performance of any other obligation, including any
conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease
and any financing lease having substantially the same economic effect as any of the foregoing, and
the filing of any financing statement under the UCC or comparable law of any jurisdiction naming
the owner of the asset to which such Lien relates as debtor.

          “Loan Documents” means, collectively, this Agreement, the Notes (if any), the Intercreditor
Agreement, the Guaranty, the Fee Letter, each Hedging Contract between any Loan Party and any
Person that was a Lender or an Affiliate of a Lender at the time it entered into such Hedging
Contract, the Collateral Documents and each certificate, agreement or 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.

          “Loan Party” means each of the Borrower, each Guarantor and each other Subsidiary of the
Parent that executes and delivers a Loan Document.

          “Material Adverse Change” means (a) a material adverse change in the business, operations,
results of operations, assets, liabilities or condition (financial or otherwise) of the Borrower,
the Parent and the Restricted Subsidiaries taken as a whole, (b) a material impairment of the Loan
Parties’ ability to perform their obligations under the Loans Documents to which they are parties
or of the Administrative Agent or the Lenders to enforce the Obligations or realize upon the
Collateral or (c) a material impairment of the enforceability or priority of the Administrative
Agent’s Liens with respect to the Collateral as a result of an action or failure to act on the part
of any Loan Party.

18

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Material Adverse Effect” means an effect that results in or causes, or would reasonably be
expected to result in or cause, a Material Adverse Change.

          “Merger” means the merger of the Acquisition Subsidiary with and into the Target, with the
Target being the surviving corporation, whereupon the outstanding shares of the Target will be
converted into the right to receive the purchase price, in cash, and on terms and conditions
otherwise set forth in the Merger Agreement.

          “Merger Agreement” means that certain Agreement and Plan of Merger dated as of May 22, 2007
among the Borrower, the Acquisition Subsidiary and the Target.

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

          “Mortgage Supporting Documents” means, with respect to any Mortgage for a parcel of owned Real
Property, 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 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 and enforceable first priority Lien on such parcel of owned Real Property in favor of the
Administrative Agent for the benefit of the Secured Parties, subject only to such Liens as the
Administrative Agent may approve.

          “Mortgages” means the mortgages, deeds of trust or other real estate security documents made
or required herein to be made by the Borrower or any other Loan Party, each in form and substance
reasonably satisfactory to the Administrative Agent.

          “Multiemployer Plan” means a multiemployer plan, as defined in Section 400l(a)(3) of ERISA, to
which any Group Member or any ERISA Affiliate has any obligation or liability, contingent or
otherwise.

          “Net Cash Proceeds” means (a) with respect to any Included Asset Sale or Recovery Event, in
each case, of Term Priority Collateral, the proceeds thereof received by any Group Member in the
form of cash and Cash Equivalents (including any such proceeds subsequently received (as and when
received) in respect of noncash consideration initially received) not reinvested in assets used or
useful in the business of any Group Member within 365 days of receipt, net of (i) selling, recovery
or other transactional expenses payable by any Group Member in connection with obtaining such
proceeds (including reasonable and customary broker’s or investment banker’s fees or commissions,
legal fees, transfer and similar taxes incurred in connection therewith and the Borrower’s good
faith estimate of income taxes paid or payable in connection with such sale or other transaction),
(ii) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations or purchase price adjustment associated with such Included Asset Sale
or Recovery Event (provided that, to the extent and at the time any such amounts are released from
such reserve, such amounts shall constitute Net Cash Proceeds) and (iii) the principal amount,
premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which
is secured by the asset sold in such Included Asset Sale or involved in such Recovery Event and
which is repaid with such

19

 

Term Loan Agreement

Collective Brands Finance, Inc.

proceeds (other than, in connection with an Included Asset Sale, any such Indebtedness assumed
by the purchaser of such asset) or (b) with respect to any Debt Issuance, the proceeds received by
any Group Member in cash or Cash Equivalents, net of reasonable and customary broker’s or advisor’s
fees and other costs and expenses (including attorneys’ fees) incurred in connection therewith
(including, if applicable, the cost of any Note Hedge Transaction entered into in connection with
such Debt Issuance).

          “Non-Consenting Lender” has the meaning specified in Section 11.1(c) (Amendments, Waivers,
Etc.).

          “Non-U.S. Lender” means each Lender (or the Administrative Agent) that is a Non-U.S. Person.

          “Non-U.S. Person” means any Person that is not a Domestic Person.

          “Note” means a promissory note of the Borrower payable to the order of any Lender in a
principal amount equal to the amount of the Term Loan owing to such Lender.

          “Note Hedge Transaction” means any note hedge transaction entered into in connection with the
issuance of Qualified Refinancing Indebtedness and which shall be paid for with the proceeds of
such Qualified Refinancing Indebtedness.

          “Notice of Borrowing” has the meaning specified in Section 2.2(a) (Borrowing Procedures).

          “Notice of Conversion or Continuation” has the meaning specified in Section 2.9
(Conversion/Continuation Option).

          “Obligations” means the Term Loans and all other amounts, obligations, covenants and duties
owing by any Loan Party to the Administrative Agent, any Lender any Affiliate of any of them or any
Indemnitee, of every type and description (whether by reason of an extension of credit or payment
of any draft drawn or other payment thereunder, loan, guaranty, indemnification, foreign exchange
or currency swap transaction, interest rate hedging transaction or otherwise), present or future,
arising under this Agreement, any other Loan Document, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter
arising and however acquired and whether or not evidenced by any note, guaranty or other instrument
or for the payment of money, including all fees, interest, charges, expenses, attorneys’ fees and
disbursements and other sums chargeable to the Loan Parties under this Agreement and any other Loan
Document (including Hedging Contracts that are Loan Documents).

          “Optional Debt Prepayment” has the meaning specified in Section 8.6 (Prepayment of
Indebtedness).

          “Parent” has the meaning specified in the preamble to this Agreement.

          “Patriot Act” means the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.).

          “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

20

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Permit” means any permit, approval, authorization, license, variance or permission required
from a Governmental Authority under an applicable Requirement of Law.

          “Permitted Acquisition” means any Proposed Acquisition subject to the satisfaction of each of
the following conditions at or prior to the consummation of the Proposed Acquisition:

          (a) the Administrative Agent shall receive prior written notice of such Proposed
Acquisition, which notice shall include, without limitation, a reasonably detailed
description of such Proposed Acquisition;

          (b) the Investment in such Permitted Acquisition is permitted under clause (i) or (j)
of Section 8.3 (Investments);

          (c) the Borrower (or the Parent or the Subsidiary making such Proposed Acquisition)
and the Proposed Acquisition Target shall have executed such documents and taken such
actions as may be required under Section 7.11 (Additional Collateral and Guaranties);

          (d) the Administrative Agent shall have received copies of the agreements, related
contracts, instruments and all opinions, certificates, lien search results and other
documents, in each case to the extent actually received by any Loan Party (and subject to
agreement to such additional confidentiality requirements as may be required to permit such
Loan Party to deliver such copies), in each case reasonably requested by the Administrative
Agent; and

          (e) at the time of such Proposed Acquisition and after giving effect thereto, (i) no
Default or Event of Default shall have occurred and be continuing and (ii) all
representations and warranties contained in Article IV (Representations and Warranties) and
in the other Loan Documents shall be true and correct in all material respects and (iii)
the Parent would be in compliance with the financial covenant contained in Section 5.1
(Financial Covenant) for the most recently ended Test Period, determined on a Pro Forma
Basis after giving effect to such Proposed Acquisition (and the transactions contemplated
thereby, including the incurrence or assumption of any Indebtedness in connection
therewith).

          “Permitted Payment Restriction” means any consensual encumbrance or restriction (each, a
“restriction”) on the ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on its Stock or Stock Equivalent to the Borrower, the Parent or a Restricted
Subsidiary or pay any Indebtedness owed to the Parent or a Restricted Subsidiary or (b) make any
loans or advances to the Parent or a Restricted Subsidiary, which restriction (i) satisfies all of
the following conditions: (x) such restriction becomes effective only upon the occurrence of (1)
specified events under its charter or (2) a default by such Restricted Subsidiary in the payment of
principal of or interest, a bankruptcy default, a default on any financial covenant or any other
material default, in each case on Indebtedness that was incurred by such Restricted Subsidiary in
compliance with Section 8.1 (Indebtedness) and (y) such restriction would not materially impair the
Borrower’s ability to make scheduled payments of cash interest and to make required principal
payments on the Term Loans, as determined in good faith by a Responsible Officer of the Parent or
the Borrower or (ii) represents customary provisions of a Joint Venture and relates solely to the
assets, revenues and business of such Joint Venture.

21

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Permitted Refinancing” means Indebtedness constituting a refinancing or extension of
Indebtedness permitted under this Agreement that (a) has an aggregate outstanding principal amount
not greater than the aggregate principal amount of such Indebtedness outstanding at the time of
such refinancing or extension, (b) has a weighted average maturity (measured as of the date of such
refinancing or extension) no shorter than that of such Indebtedness, (c) has a maturity date no
earlier than the stated maturity of such Indebtedness; provided, however, that the maturity date of
any Permitted Refinancing of the Subordinated Notes shall have a maturity date no earlier than the
Term Loan Maturity Date at the time of such refinancing or extension, (d) has Lien and payment
subordinated terms, if applicable, that are no less favorable to the Lenders, in each case, than
the corresponding terms of such Indebtedness and (e) is otherwise on terms, taken as a whole, no
less favorable to the Group Members than those of such Indebtedness, other than market interest
rates and fees. 

          “Permitted Sale Leaseback” shall mean any Sale Leaseback consummated by the Borrower or any of
the Restricted Subsidiaries with any Person that is not an Affiliate of the Borrower after the
Closing Date; provided that (i) after giving effect to such Sale Leaseback, no Default or Event of
Default shall have occurred and be continuing and (ii) any such Sale Leaseback shall be consummated
for fair value as determined at the time of consummation in good faith by a Responsible Officer of
the Borrower or the Parent.

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

          “Pledge and Security Agreement” means an agreement, in substantially the form of Exhibit G
(Form of Pledge and Security Agreement), executed by the Borrower and each Guarantor.

          “Pledged Debt Instruments” has the meaning specified in the Pledge and Security Agreement.

          “Pledged Stock” has the meaning specified in the Pledge and Security Agreement.

          “Proceeds” has the meaning given to such term in the UCC.

          “Pro Forma Basis” means, as to any Person, for any events as described in clauses (i) and (ii)
below that occur subsequent to the commencement of a period for which the financial effect of such
events is being calculated, and giving effect to the events for which such calculation is being
made, such calculation as will give pro forma effect to such events as if such events occurred on
the first day of the applicable Test Period:

          (i) in making any determination of Consolidated EBITDA or Consolidated EBITDAR, pro
forma effect shall be given to any Asset Sale and to any Permitted Acquisition (or to any
similar transaction or transactions that require a waiver or consent of the Required
Lenders pursuant to Section 8.3 (Investments) or 8.4 (Asset Sales)), in each case that
occurred during the Test Period (or, in the case of determinations made pursuant to the
definition of “Permitted Acquisition” occurring during the Test Period or thereafter and
through and including the date upon which the respective Permitted Acquisition is
consummated); and

22

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (ii) in making any determination on a Pro Forma Basis, (x) all Indebtedness
(including Indebtedness incurred or assumed and for which the financial effect is being
calculated, whether incurred under this Agreement or otherwise incurred or permanently
repaid during the Test Period (or, in the case of determinations made pursuant to the
definition of “Permitted Acquisition”, occurring during the Test Period and through and
including the date upon which the respective Permitted Acquisition is consummated) shall be
deemed to have been incurred or repaid at the beginning of such period (if such
Indebtedness was incurred under the Revolving Credit Agreement, such Indebtedness shall be
deemed to be outstanding for the entire Test Period for purposes of determining the Senior
Secured Leverage Ratio and the Total Leverage Ratio) and (y) interest expense of such
Person attributable to interest on any Indebtedness, for which pro forma effect is being
given as provided in preceding clause (x), bearing floating interest rates shall be
computed on a pro forma basis as if the rates that would have been in effect during the
period for which pro forma effect is being given had been actually in effect during such
periods.

Pro forma calculations made pursuant to the definition of “Pro Forma Basis” shall be determined in
good faith by a Responsible Officer of the Borrower and, for any fiscal period ending on or prior
to the first anniversary of a Permitted Acquisition or Asset Sale (or any similar transaction or
transactions that require a waiver or consent of the Required Lenders pursuant to Section 8.3
(Investments) or 8.4 (Asset Sales)), may include adjustments to reflect operating expense
reductions and other operating improvements or synergies implemented or planned to be implemented
and reasonably expected to result from such Permitted Acquisition, Asset Sale or other similar
transaction, to the extent that the Borrower delivers to the Administrative Agent (i) a certificate
of the Borrower signed by a Responsible Officer setting forth such operating expense reductions and
other operating improvements or synergies and (ii) information and calculations supporting in
reasonable detail such estimated operating expense reductions and other operating improvements or
synergies.

               “Projections” means the then most recent financial projections of the Parent, the Target and
their respective Subsidiaries (on a combined basis) through the fiscal year ending 2014, prepared
for each fiscal quarter through the end of fiscal year ending 2007 (and annually thereafter), to be
delivered to the Lenders by the Borrower.

               “Proposed Acquisition” means the proposed acquisition by the Borrower, the Parent or any of
the Restricted Subsidiaries of all or substantially all of the assets or Stock of any Proposed
Acquisition Target, or the merger of any Proposed Acquisition Target with or into the Borrower, the
Parent or any Subsidiary of the Parent (and, in the case of a merger with the Borrower, with the
Borrower being the surviving corporation).

               “Proposed Acquisition Target” means any Person or group of Persons engaged in a particular
line of business or any operating division thereof subject to a Proposed Acquisition.

               “Purchasing Lender” has the meaning specified in Section 11.7 (Sharing of Payments, Etc.).

               “Qualified Capital Stock” of any Person shall mean any Stock or Stock Equivalents of such
Person that is not Disqualified Stock.

23

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Qualified Refinancing Indebtedness” means Indebtedness incurred pursuant to Section 8.1(m)
(Indebtedness) to refinance, in part, the Obligations, in an aggregate principal amount not to
exceed $450,000,000.

          “Qualified Restricted Subsidiary” means any Restricted Subsidiary that is not a Loan Party
and that satisfies each of the following requirements: (i) except for Permitted Payment
Restrictions, there are no restrictions, directly or indirectly, on the ability of such Restricted
Subsidiary to pay dividends or make distributions to the holders of its Stock and Stock
Equivalents; and (ii) the Stock and Stock Equivalents of such Restricted Subsidiary consist of
Stock and Stock Equivalents majority owned by the Parent and its Qualified Restricted Subsidiaries.

          “Ratable Portion” or (other than in the expression “equally and ratably”) “ratably” means,
with respect to any Lender, the percentage obtained by dividing (a) the Term Loan Commitment of
such Lender by (b) the aggregate Term Loan Commitments of all Lenders (or, at any time after the
funding of the Closing Date Term Loans, the percentage obtained by dividing the principal amount of
such Lender’s Term Loans by the aggregate Term Loans of all Lenders).

          “Real Property” of any Person means the Land of such Person, together with the right, title
and interest of such Person, if any, in and to the streets, the Land lying in the bed of any
streets, roads or avenues, opened or proposed, in front of, the air space and development rights
pertaining to the Land and the right to use such air space and development rights, all rights of
way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining thereto, all fixtures, all easements now or hereafter benefiting the Land and all
royalties and rights appertaining to the use and enjoyment of the Land, including all alley, vault,
drainage, mineral, water, oil and gas rights, together with all of the buildings and other
improvements now or hereafter erected on the Land and any fixtures appurtenant thereto.

          “Recovery Event” means any settlement of or payment in respect of any property or casualty
insurance claim or any taking under power of eminent domain or by condemnation or similar
proceeding of or relating to any property or asset of the Parent or any of the Restricted
Subsidiaries other than any settlement, payment, taking or proceeding that results in cash
consideration of less than $1,000,000, individually.

          “Register” has the meaning specified in Section 2.5(b) (Evidence of Debt).

          “Regulation S-X” means Regulation S-X under the Securities Act of 1933, as amended from time
to time, and any successor statute.

          “Related Documents” means the Merger Agreement, the Subordinated Notes Indenture, the
Revolving Credit Agreement and each other document and instrument executed with respect to any of
the foregoing.

          “Release” means, with respect to any Person, any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration, in each case, of any
Hazardous Material into the indoor or outdoor environment or into or out of any property owned,
leased or operated by such Person, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water or property.

24

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Remedial Action” means all actions required to (a) clean up, remove, treat or in any
other way address any Hazardous Material in the indoor or outdoor environment, (b) prevent the
Release or threat of Release or minimize the further Release so that a Hazardous Material does not
migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and post-remedial monitoring and
care.

          “Requirement of Law” means, with respect to any Person, the common law and all federal, state,
local and foreign laws, treaties, rules and regulations, orders, judgments, decrees and other
determinations of, concessions, grants, franchises, licenses and other Contractual Obligations
with, any Governmental Authority or arbitrator, applicable to or binding upon such Person or any of
its property or to which such Person or any of its property is subject.

          “Requisite Lenders” means, collectively, Lenders having more than 50% of the aggregate
outstanding amount of the Term Loan Commitments or, after the funding of the Closing Date Term
Loans, more than fifty percent (50%) of the principal amount of all Term Loans then outstanding.

          “Responsible Officer” means, with respect to any Person, any of the principal executive
officers, managing members or general partners of such Person but, in any event, with respect to
financial matters, the chief financial officer, treasurer or controller of such Person.

          “Restricted Payment” means (a) any dividend, distribution or any other payment whether direct
or indirect, on account of any Stock or Stock Equivalent of the Borrower, the Parent or any
Restricted Subsidiary now or hereafter outstanding and (b) any redemption, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect, of any Stock or
Stock Equivalent of the Borrower, the Parent or any Restricted Subsidiary now or hereafter
outstanding.

          “Restricted Subsidiary” means each direct and indirect Subsidiary of the Parent other than one
that has been designated as an Unrestricted Subsidiary by the Parent in accordance with the terms
of this Agreement.

          “Revolving Credit Agent” means Wells Fargo Retail Finance, LLC, in its capacity as
administrative agent under the Revolving Credit Agreement.

          “Revolving Credit Agreement” means that certain Amended and Restated Loan and Guaranty
Agreement, dated as of the date hereof, among the Borrower, the institutions party thereto as
lenders, the Revolving Credit Agent, and Citigroup Global Markets Inc., as co-lead arranger
thereunder.

          “Revolving Credit Loan Documents” means, collectively, the Revolving Credit Agreement, all
guaranties, pledges, security agreements and similar agreements entered into in connection
therewith to guaranty or secure any Revolving Credit Obligations and each other certificate,
agreement and other document entered into in connection therewith (other than the Intercreditor
Agreement).

          “Revolving Credit Obligations” means the “Obligations” under and as defined in the Revolving
Credit Agreement.

25

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “S&P” means Standard & Poor’s Rating Services.

          “Sale Leaseback” shall mean any transaction or series of related transactions pursuant to
which the Borrower or any of the Restricted Subsidiaries (i) sells, transfers or otherwise disposes
of any property, real or personal, whether now owned or hereafter acquired, and (ii) as part of
such transaction, thereafter rents or leases such property or other property that it intends to use
for substantially the same purpose or purposes as the property being sold, transferred or disposed.

          “Sarbanes-Oxley Act” means the United States Sarbanes-Oxley Act of 2002.

          “Secured Obligations” means, in the case of the Borrower, the Obligations and, in the case of
any other Loan Party, the obligations of such Loan Party under the Guaranty and the other Loan
Documents to which it is a party.

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

          “Securities Account” has the meaning given to such term in the UCC.

          “Securities Account Control Agreement” has the meaning specified in the Pledge and Security
Agreement.

          “Security” means any Stock, Stock Equivalent, voting trust certificate, bond, debenture, note
or other evidence of Indebtedness, whether secured, unsecured, convertible or subordinated, or any
certificate of interest, share or participation in, any temporary or interim certificate for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing, but shall not include any evidence of the Obligations.

          “Selling Lender” has the meaning specified in Section 11.7 (Sharing of Payments, Etc.).

          “Senior Secured Leverage Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness of the Parent and the Restricted Subsidiaries that is secured by
Liens outstanding as of such date (minus the cash and Cash Equivalents of the Loan Parties that are
not subject to any Lien securing Indebtedness other than the Obligations or Revolving Credit
Obligations) to (b) the aggregate amount of Consolidated EBITDA of the Parent and the Restricted
Subsidiaries for the most recently ended Test Period.

          “Solvent” means, with respect to any Person as of any date of determination, that, as of such
date, (a) 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, (b) such Person is able to pay all liabilities of such Person as such
liabilities mature and (c) such Person 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.

          “Special Purpose Vehicle” means any special purpose funding vehicle identified as such in
writing by any Lender to the Administrative Agent.

26

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “Stock” means shares of capital stock (whether denominated as common stock or preferred
stock), beneficial, partnership or membership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited liability company or
equivalent entity, whether voting or non-voting.

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

          “Subordinated Notes” means the 8.25% Senior Subordinated Notes due 2013 issued pursuant to the
Subordinated Notes Indenture.

          “Subordinated Notes Indenture” means the Indenture, dated as of July 28, 2003, between the
Borrower and Wells Fargo Bank Minnesota, National Association, as trustee.

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

          “Substitute Institution” has the meaning specified in Section 2.15 (Substitution of Lenders).

          “Substitution Notice” has the meaning specified in Section 2.15 (Substitution of Lenders).

          “Target” means The Stride Rite Corporation, a Massachusetts corporation.

          “Target Credit Agreement” means that certain Credit Agreement, dated as of September 16, 2005,
among the Target, the institutions party thereto as lenders and Bank of America, N.A. as
administrative agent thereunder, among others.

          “Tax Affiliate” means, with respect to any Person, (a) any Subsidiary of such Person and (b)
any Affiliate of such Person with which such Person files or is eligible to file consolidated,
combined or unitary tax returns; provided, that when used with respect the Borrower or Parent, the
term “Tax Affiliate” shall not include any Unrestricted Subsidiary.

          “Tax Return” has the meaning specified in Section 4.8(a) (Taxes).

          “Taxes” has the meaning specified in Section 2.14(a) (Taxes).

          “Term Loans” means, collectively, the Closing Date Term Loans and the Incremental Term Loans.

          “Term Loan Commitment” means, with respect to each Lender, (a) the commitment of such Lender
to make its Term Loans to the Borrower in the aggregate principal amount not to exceed the amount
set forth opposite such Lender’s name on Schedule I (Term
Loan Commitments) under the caption “Term Loan Commitment” as amended to reflect each
Assignment and Acceptance executed by such Lender and as such amount may be reduced pursuant to
this Agreement, and (b) any commitment by such Lender that is included as part of a

27

 

Term Loan Agreement

Collective Brands Finance, Inc.

Facility Increase to make its Incremental Term Loans to the Borrower on any Facility
Increase Date, as such amount may be reduced pursuant to this Agreement. “Term Loan Commitments”
means the aggregate Term Loan Commitments of all Lenders.

          “Term Loan Facility” means the Term Loan Commitments, the facility described in Section 2.1(a)
(The Term Loans) providing for Closing Date Term Loans to the Borrower by the Lenders on the
Closing Date in an aggregate principal amount of $725,000,000 and the facility described in Section
2.1(b) (The Term Loans) providing for one or more Incremental Term Loans to the Borrower by the
Incremental Term Loan Lenders in an aggregate principal amount not to exceed $200,000,000.

          “Term Loan Maturity Date” means (i) with respect to the Closing Date Term Loan, the Closing
Date Term Loan Maturity Date and (ii) with respect to each Incremental Term Loan, the Incremental
Term Loan Maturity Date.

          “Test Period” shall mean, for any determination under this Agreement, the period of the most
recently ended four consecutive fiscal quarters of the Parent for which Financial Statements have
been delivered to the Administrative Agent pursuant to Section 6.1 (Financial Statements).

          “Title IV Plan” means a pension plan, other than a Multiemployer Plan, covered by Title IV of
ERISA and to which any Group Member or any ERISA Affiliate has any obligation or liability,
contingent or otherwise.

          “Total Assets” means the total amount of all assets of the Borrower, the Parent and the
Restricted Subsidiaries, determined on a Consolidated basis as shown on the most recent balance
sheet of the Parent.

          “Total Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated
Funded Indebtedness of the Parent and the Restricted Subsidiaries outstanding as of such date
(minus the cash and Cash Equivalents of the Loan Parties that are not subject to any Lien securing
Indebtedness other than the Obligations or Revolving Credit Obligations) to (b) the aggregate
amount of Consolidated EBITDA of the Parent and the Restricted Subsidiaries for the most recently
ended Test Period.

          “Total Liabilities” of any Person means, at any date, all obligations that would be included
in determining total liabilities as shown on the liabilities side of a Consolidated balance sheet
of such Person and its Subsidiaries at such date; provided, however, that, regardless of whether
the same would be so shown, “Total Liabilities” of any Person shall include all Indebtedness of
such Person or any of its Subsidiaries at such date (other than intercompany Indebtedness) and
shall exclude the greater of the liquidation preference and the redemption price of any outstanding
Disqualified Stock of such Person at such date.

          “Transactions” means, collectively, the transactions contemplated in the Merger Agreement, the
amendment and restatement of the Existing Revolving Credit Agreement pursuant to Revolving Credit
Agreement, the refinancing in full of the Target Credit Agreement, the Borrowing of the Closing
Date Term Loans under this Agreement and the payment of related
fees and expenses.

          “UCC” has the meaning specified in the Pledge and Security Agreement.

28

 

Term Loan Agreement

Collective Brands Finance, Inc.

          “United States” means the United States of America.

          “Unrestricted Subsidiary” means each direct and indirect Subsidiary of the Parent that is
designated by the board of directors of the Parent as an Unrestricted Subsidiary pursuant to a
Section 7.12 (Designation of Subsidiaries) on or after the Closing Date and any Subsidiary of such
Unrestricted Subsidiary.

          “U.S. Lender” means each Lender (or the Administrative Agent) that is a Domestic Person.

          “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 happening of any contingency).

          “Wholly-Owned” means, with respect to a Subsidiary of any Person, any Subsidiary of such
Person, all of the Stock of which (other than director’s qualifying shares, as may be required by
law) is owned by such Person, either directly or indirectly through one or more Wholly-Owned
Subsidiaries of such Person.

          “Withdrawal Liability” means, with respect to the Parent or any of the Restricted Subsidiaries
at any time, the aggregate liability incurred (whether or not assessed) with respect to all
Multiemployer Plans pursuant to Section 4201 of ERISA or for increases in contributions required to
be made pursuant to Section 4243 of ERISA.

          “Working Capital” means, for any Person at any date, the amount, if any, by which the
Consolidated Current Assets of such Person at such date exceeds the Consolidated Current
Liabilities of such Person at such date.

     Section 1.2 Computation of Time Periods

          In this Agreement, in the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including” and the words “to” and “until” each mean
“to but excluding” and the word “through” means “to and including.”

     Section 1.3 Accounting Terms and Principles

          (a) Except as set forth below, all accounting terms not specifically defined herein
shall be construed in conformity with GAAP and all accounting determinations required to be made
pursuant hereto shall, unless expressly otherwise provided herein, be made in conformity with GAAP.

          (b) If any change in the accounting principles used in the preparation of the most
recent Financial Statements referred to in Section 6.1 (Financial Statements) is hereafter required
or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or any
successors thereto) and such change is adopted by the Borrower with the agreement of the
Borrower’s Accountants and results in a change in any of the calculations required by Article VIII
(Negative Covenants) that would not have resulted had such accounting change not occurred, the
parties hereto agree to enter into negotiations in order to amend such provisions so as to

29

 

Term Loan Agreement

Collective Brands Finance, Inc.

equitably reflect such change such that the criteria for evaluating compliance with such
covenants by the Borrower shall be the same after such change as if such change had not been made;
provided, however, that no change in GAAP that would affect a calculation that measures compliance
with any covenant contained in Article VIII (Negative Covenants) shall be given effect until such
provisions are amended to reflect such changes in GAAP.

     Section 1.4 Conversion of Foreign Currencies

          (a) Consolidated Funded Indebtedness. Consolidated Funded Indebtedness denominated
in any currency other than Dollars shall be calculated using the Dollar Equivalent thereof as of
the date of the Financial Statements on which such Consolidated Funded Indebtedness is reflected.

          (b) Dollar Equivalents. The Administrative Agent shall reasonably determine the
Dollar Equivalent of any amount as required hereby, and a determination thereof by the
Administrative Agent shall be conclusive absent manifest error. The Administrative Agent may, but
shall not be obligated to, rely on any determination made by any Loan Party in any document
delivered to the Administrative Agent. The Administrative Agent may determine or redetermine the
Dollar Equivalent of any amount on any date either in its own discretion or upon the request of any
Lender.

          (c) Rounding-Off. The Administrative Agent may set up appropriate rounding off
mechanisms or otherwise round-off amounts hereunder to the nearest higher or lower amount in whole
Dollar or cent to ensure amounts owing by any party hereunder or that otherwise need to be
calculated or converted hereunder are expressed in whole Dollars or in whole cents, as may be
reasonably necessary or appropriate.

     Section 1.5 Certain Terms

          (a) The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms refer
to this Agreement as a whole and not to any particular Article, Section, subsection or clause in,
this Agreement.

          (b) Unless otherwise expressly indicated herein, (i) references in this Agreement to
an Exhibit, Schedule, Article, Section, clause or sub-clause refer to the appropriate Exhibit or
Schedule to, or Article, Section, clause or sub-clause in this Agreement and (ii) the words “above”
and “below”, when following a reference to a clause or a sub-clause of any Loan Document, refer to
a clause or sub-clause within, respectively, the same Section or clause.

          (c) Each agreement defined in this ARTICLE I shall include all appendices, exhibits
and schedules thereto. Unless the prior written consent of the Requisite Lenders or the
Administrative Agent is required hereunder or under the Intercreditor Agreement for an amendment,
restatement, supplement or other modification to any such agreement and such consent is not
obtained, references in this Agreement to such agreement shall be to such agreement as so amended,
restated, supplemented or modified.

          (d) References in this Agreement to any statute shall be to such statute as amended
or 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.

30

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (e) The term “including” when used in any Loan Document means “including without
limitation” except when used in the computation of time periods.

          (f) The terms “Lender” and “Administrative Agent” include, without limitation, their
respective successors.

          (g) Upon the appointment of any successor Administrative Agent pursuant to Section
10.7 (Successor Administrative Agent), references to Citi in Section 10.4 (The Administrative Agent
Individually) and to Citibank in the definitions of Base Rate, Dollar Equivalent, and Eurodollar
Rate shall be deemed to refer to the financial institution then acting as the Administrative Agent
or one of its Affiliates if it so designates.

ARTICLE II

The Term Loan Facility

     Section 2.1 The Term Loans

          (a) Closing Date Term Loans. On the terms and subject to the conditions contained
in this Agreement, each Lender severally agrees to make a loan (each a “Closing Date Term Loan”) in
Dollars to the Borrower on the Closing Date, in an amount not to exceed such Lender’s Term Loan
Commitment. No amount of the Closing Date Term Loan repaid or prepaid by the Borrower may be
reborrowed hereunder, and no Borrowing under the Term Loan Facility shall be allowed other than the
advance set forth in the first sentence of this Section 2.1(a) and any Incremental Term Loan
advanced as part of any Facility Increase.

          (b) Incremental Term Loans.

          (i) The Borrower shall have the right to send to the Administrative Agent,
after the Closing Date but on or prior to the Closing Date Term Loan Maturity Date, a
Facility Increase Notice to request an increase in the aggregate principal amount of the
Term Loan Facility (each a “Facility Increase”) to be effectuated by the disbursement of
one or more additional Term Loans (each an “Incremental Term Loan”) in excess of the
Closing Date Term Loans, in a principal amount not to exceed $200,000,000 in the aggregate
for all such requests. The Administrative Agent shall promptly notify each Lender of the
proposed Facility Increase and of the proposed terms and conditions therefor agreed between
the Borrower and the Administrative Agent. Each such Lender (and each of their Affiliates
and Approved Funds) may, in its sole discretion, commit to participate in such Facility
Increase by forwarding its commitment therefor to the Administrative Agent in form and
substance reasonably satisfactory to the Administrative Agent. The Administrative Agent
shall allocate, in its discretion (after consultation with the Borrower) but in amounts not
to exceed for each such Lender the commitment received from such Lender, Affiliate or
Approved Fund, the Term Loan Commitments to be made as part of the Facility Increase to the
Lenders from which it has received such written commitments; provided, however, the
Administrative Agent shall
be entitled, after consultation with the Borrower, to allocate to any Eligible
Assignee any amount of such Facility Increase whether or not it has obtained commitments
from existing Lenders. Each Facility Increase shall become effective on a date agreed by
the Borrower and the Administrative Agent (each a “Facility Increase Date”), which shall be

31

 

Term Loan Agreement

Collective Brands Finance, Inc.

in any case on or after the date of satisfaction of the conditions precedent set
forth in Section 3.2 (Conditions Precedent to Incremental Term Loans). The Administrative
Agent shall notify the Lenders and the Borrower, on or before 1:00 p.m. (New York time) on
the day following the Facility Increase Date of the effectiveness of the Facility Increase
on the Facility Increase Date and shall record in the Register all applicable additional
information in respect of such Facility Increase.

          (ii) (A) The Incremental Term Loans and Term Loan Commitments extended
pursuant to any Facility Increase shall rank pari passu in right of payment with all other
Term Loans and Term Loan Commitments, (B) the weighted average life to maturity of the
Incremental Term Loans shall not be shorter than the remaining average life to maturity of
the Term Loans prior to giving effect to such Facility Increase, (C) the Incremental Term
Loan Maturity Date for such Incremental Term Loans shall not be earlier than the Closing
Date Term Loan Maturity Date, (D) the interest rate margins or yield to maturity applicable
to such Incremental Term Loans shall not be more than 0.50% per annum higher than the
interest rate margins or yield to maturity applicable to the Term Loans prior to giving
effect to such Facility Increase, unless the interest rate margins or yield to maturity
with respect to the Term Loans are increased by an amount equal to the difference between
the interest rate margins or yield to maturity with respect to the Incremental Term Loans
and the corresponding interest rate margins or yield to maturity for the Term Loans minus
0.50%, (E) all other terms of such Incremental Term Loans, if not consistent with the terms
of the existing Term Loan Facility, shall be as agreed between the Borrower and the Lenders
providing such Incremental Term Loans, and (F) after giving effect to such Facility
Increase, the Senior Secured Leverage Ratio, determined on a Pro Forma Basis, shall be less
than 3.0 to 1.

          (iii) Any Facility Increase will be effected in accordance with procedures
reasonably satisfactory to the Administrative Agent. Nothing in this Agreement shall be
construed to obligate any Lender to negotiate for (whether or not in good faith), solicit,
provide or consent to any increase in the Term Loan Commitments, and any such increase may
be subject to changes in any term of this Agreement reasonably acceptable to the
Administrative Agent and the Borrower.

     Section 2.2 Borrowing Procedures

          (a) Each Borrowing shall be made on notice given by the Borrower to the
Administrative Agent not later than 11:00 a.m. (New York time) (i) one Business Day, in the case of
a Borrowing of Base Rate Loans and (ii) three Business Days, in the case of a Borrowing of
Eurodollar Rate Loans, prior to the date of the proposed Borrowing. Each such notice shall be in
substantially the form of Exhibit C (Form of Notice of Borrowing) (a “Notice of Borrowing”),
specifying, (A) the date of such proposed Borrowing (which, in the case of the Closing Date Term
Loan Borrowing, shall be the Closing Date), (B) the aggregate amount of such proposed Borrowing,
(C) whether any portion of the proposed Borrowing will be of Base Rate Loans or Eurodollar Rate
Loans and (D) for each Eurodollar Rate Loan, the initial Interest Period or Periods thereof. Term
Loans shall be made as Base Rate Loans unless, subject to Section 2.12
(Special Provisions Governing Eurodollar Rate Loans), the Notice of Borrowing specifies that
all or a portion thereof shall be Eurodollar Rate Loans.

32

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (b) The Administrative Agent shall give to each Lender prompt notice of the
Administrative Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate Loans are properly
requested in such Notice of Borrowing, the applicable interest rate determined pursuant to Section
2.12(a) (Determination of Interest Rate). Each Lender shall, before 11:00 am. (New York time) on
the date of the proposed Borrowing, make available to the Administrative Agent at its address
referred to in Section 11.8 (Notices, Etc.), in immediately available funds, such Lender’s Ratable
Portion of such proposed Borrowing. Upon fulfillment (or due waiver in accordance with Section
11.1 (Amendments, Waivers, Etc.)) (i) on the Closing Date, of the applicable conditions set forth
in Section 3.1 (Conditions Precedent to Closing Date Term Loans) and (ii) at any time (including
the Closing Date), of the applicable conditions set forth in Section 3.2 (Conditions Precedent to
Incremental Term Loans), and after the Administrative Agent’s receipt of such funds, the
Administrative Agent shall make such funds available to the Borrower.

          (c) Unless the Administrative Agent shall have received notice from a Lender prior
to the date of any proposed Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s Ratable Portion of such Borrowing (or any portion thereof), the
Administrative Agent may assume that such Lender has made such Ratable Portion available to the
Administrative Agent on the date of such Borrowing in accordance with this Section 2.2 and the
Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not have so made such
Ratable Portion available to the Administrative Agent, such Lender and the Borrower severally agree
to repay to the Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the
interest rate applicable at the time to the Term Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate for the first Business Day and thereafter at the
interest rate applicable at the time to the Term Loans comprising such Borrowing. If such Lender
shall repay to the Administrative Agent such corresponding amount, such corresponding amount so
repaid shall constitute such Lender’s Term Loan as part of such Borrowing for purposes of this
Agreement. If the Borrower shall repay to the Administrative Agent such corresponding amount, such
payment shall not relieve such Lender of any obligation it may have hereunder to the Borrower.

          (d) The failure of any Lender to make on the date specified any Term Loan or any
payment required by it shall not relieve any other Lender of its obligations to make such Term Loan
or payment on such date but no such other Lender shall be responsible for the failure of any Lender
to make a Term Loan or payment required under this Agreement.

     Section 2.3 Reduction and Termination of the Term Loan Commitments

          (a) Any unused Term Loan Commitment (other than with respect to a Facility Increase)
shall terminate on the Closing Date.

     Section 2.4 Repayment of Term Loans

          (a) The Borrower promises to repay the Closing Date Term Loans at the
dates and in the amounts set forth below:

33

 

Term Loan Agreement

Collective Brands Finance, Inc.

	 	 	 	 	 
	DATE	 	AMOUNT	 
	December 31, 2007
	 	$	1,812,500	 
	 
	 	 	 	 
	March 31, 2008
	 	$	1,812,500	 
	June 30, 2008
	 	$	1,812,500	 
	September 30, 2008
	 	$	1,812,500	 
	December 31, 2008
	 	$	1,812,500	 
	 
	 	 	 	 
	March 31, 2009
	 	$	1,812,500	 
	June 30, 2009
	 	$	1,812,500	 
	September 30, 2009
	 	$	1,812,500	 
	December 31, 2009
	 	$	1,812,500	 
	 
	 	 	 	 
	March 31, 2010
	 	$	1,812,500	 
	June 30, 2010
	 	$	1,812,500	 
	September 30, 2010
	 	$	1,812,500	 
	December 31, 2010
	 	$	1,812,500	 
	 
	 	 	 	 
	March 31, 2011
	 	$	1,812,500	 
	June 30, 2011
	 	$	1,812,500	 
	September 30, 2011
	 	$	1,812,500	 
	December 31, 2011
	 	$	1,812,500	 
	 
	 	 	 	 
	March 31, 2012
	 	$	1,812,500	 
	June 30, 2012
	 	$	1,812,500	 
	September 30, 2012
	 	$	1,812,500	 
	December 31, 2012
	 	$	1,812,500	 
	 
	 	 	 	 
	March 31, 2013
	 	$	1,812,500	 
	June 30, 2013
	 	$	1,812,500	 
	September 30, 2013
	 	$	1,812,500	 
	December 31, 2013
	 	$	1,812,500	 
	 
	 	 	 	 
	March 31, 2014
	 	$	1,812,500	 
	June 30, 2014
	 	$	1,812,500	 
	 
	 	 	 	 
	Term Loan Maturity Date
	 	$	676,062,500;	 

provided, however, that the Borrower shall repay the entire unpaid principal amount of the
Term Loans on the Closing Date Term Loan Maturity Date.

          (b) The Borrower promises to repay the Incremental Term Loans on the dates and in
the amounts to be agreed by the Administrative Agent and the Borrower prior to the applicable
Facility Increase Date; provided, however, that the Borrower shall repay the entire unpaid
principal amount of each such Incremental Term Loan on the Incremental Term Loan Maturity Date.

          (c) Payless ShoeSource, Inc., a Missouri corporation, and Payless ShoeSource
Distribution, Inc., a Kansas corporation, hereby agree that, in addition to and without limitation
to the obligations of such parties as Guarantors pursuant to the Guaranty, such parties hereby
agree, in respect to the Obligations, to be jointly and severally liable with the Borrower as if
such parties were borrowers hereunder.

34

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 2.5 Evidence of Debt

          (a) Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing Indebtedness of the Borrower to such Lender resulting from each Term Loan of
such Lender from time to time, including the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.

          (b) (i) The Administrative Agent, acting as agent of the Borrower solely for this
purpose and for tax purposes, shall establish and maintain at its address referred to in Section
11.8 (Notices, Etc.) a record of ownership (the “Register”) in which the Administrative Agent
agrees to register by book entry the Administrative Agent’s, each Lender’s interest in each Term
Loan and in the right to receive any payments hereunder and any assignment of any such interest or
rights. In addition, the Administrative Agent, acting as agent of the Borrower solely for this
purpose and for tax purposes, shall establish and maintain accounts in the Register in accordance
with its usual practice in which it shall record (i) the names and addresses of the Lenders, (ii)
the Term Loan Commitments of each Lender from time to time, (iii) the amount of each Term Loan made
and, if a Eurodollar Rate Loan, the Interest Period applicable thereto, (iv) the amount of any
principal or interest due and payable, and paid, by the Borrower to, or for the account of, each
Lender hereunder and (v) the amount of any sum received by the Administrative Agent hereunder from
the Borrower, whether such sum constitutes principal or interest (and the type of Term Loan to
which it applies), fees, expenses or other amounts due under the Loan Documents and each Lender’s
share thereof, if applicable.

               (ii) Notwithstanding anything to the contrary contained in this Agreement, the Term
Loans (including the Notes evidencing such Term Loans) are registered obligations and the right,
title, and interest of the Lenders and their assignees in and to such Term Loans, as the case may
be, shall be transferable only upon notation of such transfer in the Register. A Note shall only
evidence the Lender’s or a registered assignee’s right, title and interest in and to the related
Term Loan. This Section 2.5(b) and Section 11.2 (Assignments and Participations) shall be
construed so that the Term 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 (or any
successor provisions of the Code or such regulations).

          (c) The entries made in the Register and in the accounts therein maintained pursuant
to clauses (a) and (b) above shall, to the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations recorded therein; provided, however, that
the failure of any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay the Term Loans in
accordance with their 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 inspection by the Borrower, the Administrative Agent or such Lender at any reasonable
time and from time to time upon reasonable prior notice.

          (d) Notwithstanding any other provision of the Agreement, in the event that any
Lender requests that the Borrower execute and deliver a promissory note or notes payable to such
Lender in order to evidence the Indebtedness owing to such Lender by the Borrower hereunder, the
Borrower shall promptly execute and deliver a Note or Notes to such Lender

35

 

Term Loan Agreement

Collective Brands Finance, Inc.

evidencing any Term Loans of such Lender, substantially in the forms of Exhibit B (Form of
Term Note).

     Section 2.6 Optional Prepayments

          (a) The Borrower may, upon at least three Business Days’ prior notice to the
Administrative Agent stating the proposed date and aggregate principal amount of the prepayment,
prepay the outstanding principal amount of the Term Loans, in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount prepaid; provided, however,
that if any prepayment of any Eurodollar Rate Loan is made by the Borrower other than on the last
day of an Interest Period for such Term Loan, the Borrower shall also pay any amounts owing
pursuant to Section 2.12(e) (Breakage Costs); and, provided, further, that each partial prepayment
shall be in an aggregate amount not less than $1,000,000 or integral multiples of $500,000 in
excess thereof and that any such partial prepayment shall be applied to reduce ratably the
remaining installments of such outstanding principal amount of the Term Loans in the stated order
of their maturities. Upon the giving of such notice of prepayment, the principal amount of the
Term Loans specified to be prepaid shall become due and payable on the date specified for such
prepayment.

          (b) The Borrower shall have no right to prepay the principal amount of any Term Loan
other than as provided in this Section 2.6.

     Section 2.7 Mandatory Prepayments

          (a) Upon receipt by the Borrower, the Parent or any of the Restricted Subsidiaries
of Net Cash Proceeds arising from an Included Asset Sale, Recovery Event or Debt Issuance (other
than (i) a Debt Issuance permitted pursuant to clauses (a) through (l) of Section 8.1
(Indebtedness) and (ii) any Debt Issuance permitted pursuant to clause (m) of Section 8.1
(Indebtedness) in excess of the first $450,000,000 in principal amount thereof) the Borrower shall
prepay the Term Loans. Any such mandatory prepayment shall be applied in accordance with clause
(c) below.

          (b) The Borrower shall prepay the Term Loans within 120 days after the last day of
each fiscal year (beginning with the fiscal year ended January 31, 2009), in an amount equal to 25%
of Excess Cash Flow for such fiscal year; provided, that the amount of such prepayment shall be
reduced to 0% of such Excess Cash Flow if the Total Leverage Ratio of the Borrower at the end of
such fiscal year is less than 2.0 to 1. Any such mandatory prepayment shall be applied in
accordance with clause (c) below.

          (c) Subject to the provisions of Section 2.11(g) (Payments and Computations), any
prepayments made by the Borrower required to be applied in accordance with this clause (c) shall be
applied to reduce ratably the remaining installments of such outstanding principal amount of the
Term Loans on a pro rata basis.

     Section 2.8 Interest

          (a) Rate of Interest. All Term Loans and the outstanding amount of all other
Obligations (other than pursuant to Hedging Contracts that are Loan Documents, to the extent such
Hedging Contracts provide for the accrual of interest on unpaid obligations) shall bear

36

 

Term Loan Agreement

Collective Brands Finance, Inc.

interest, in the case of Term Loans, on the unpaid principal amount thereof from the date such
Term Loans are made and, in the case of such other Obligations, from the date such other
Obligations are due and payable until, in all cases, paid in full, except as otherwise provided in
clause (c) below, as follows:

          (i) if a Base Rate Loan or such other Obligation, at a rate per annum equal
to the sum of (A) the Base Rate as in effect from time to time and (B) the Applicable
Margin in effect from time to time; and

          (ii) if a Eurodollar Rate Loan, at a rate per annum equal to the sum of (A)
the Eurodollar Rate determined for the applicable Interest Period and (B) the Applicable
Margin in effect from time to time during such Eurodollar Interest Period.

          (b) Interest Payments. (i) Interest accrued on each Base Rate Loan shall be payable
in arrears (A) on the first Business Day of each calendar month, commencing on the first such day
following the making of such Base Rate Loan, (B) upon the payment or prepayment thereof in full or
in part and (C) if not previously paid in full, at maturity (whether by acceleration or otherwise)
of such Base Rate Loan, (ii) interest accrued on each Eurodollar Rate Loan shall be payable in
arrears (A) on the last day of each Interest Period applicable to such Eurodollar Rate Loan and, if
such Interest Period has a duration of more than three months, on each date during such Interest
Period occurring every three months from the first day of such Interest Period, (B) upon the
payment or prepayment thereof in full or in part and (C) if not previously paid in full, at
maturity (whether by acceleration or otherwise) of such Eurodollar Rate Loan and (iii) interest
accrued on the amount of all other Obligations shall be payable on demand from and after the time
such Obligation becomes due and payable (whether by acceleration or otherwise).

          (c) Default Interest. Notwithstanding the rates of interest specified in clause (a)
above or elsewhere herein, if the Borrower shall default in the payment of the principal of or
interest on any Term Loan or any other amount becoming due hereunder, by acceleration or otherwise,
the Borrower shall on demand from time to time pay interest on such defaulted amount up to (but not
including) the date of actual payment (after as well as before judgment) at a rate that is two
percent per annum in excess of the rate of interest applicable to such Term Loan or other
Obligation from time to time. Such interest shall be payable on the date that would otherwise be
applicable to such interest pursuant to clause (b) above or otherwise on demand.

     Section 2.9 Conversion/Continuation Option

          (a) The Borrower may elect (i) at any time on any Business Day to convert Base Rate
Loans or any portion thereof to Eurodollar Rate Loans and (ii) at the end of any applicable
Interest Period, to convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to
continue such Eurodollar Rate Loans or any portion thereof for an additional Interest Period;
provided, however, that the aggregate amount of the Eurodollar Rate Loans for each Interest Period
must be in the amount of at least $5,000,000 or an integral multiple of $1,000,000 in excess
thereof. Each conversion or continuation shall be allocated among the Term Loans of each Lender in
accordance with such Lender’s Ratable Portion. Each such election shall be in substantially the
form of Exhibit D (Form of Notice of Conversion or Continuation) (a “Notice of Conversion or
Continuation”) and shall be made by giving the Administrative Agent at least three Business Days’
prior written notice specifying (A) the amount and type of Term Loan being converted or continued,
(B) in the case of a conversion to or a continuation of Eurodollar Rate

37

 

Term Loan Agreement

Collective Brands Finance, Inc.

Loans, the applicable Interest Period and (C) in the case of a conversion, the date of such
conversion.

          (b) The Administrative Agent shall promptly notify each Lender of its receipt of a
Notice of Conversion or Continuation and of the options selected therein. Notwithstanding the
foregoing, no conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans and no
continuation in whole or in part of Eurodollar Rate Loans upon the expiration of any applicable
Interest Period shall be permitted at any time at which (A) a Default or an Event of Default shall
have occurred and be continuing or (B) the continuation of, or conversion into, a Eurodollar Rate
Loan would violate any provision of Section 2.12 (Special Provisions Governing Eurodollar Rate
Loans). If, within the time period required under the terms of this Section 2.9, the
Administrative Agent does not receive a Notice of Conversion or Continuation from the Borrower
containing a permitted election to continue any Eurodollar Rate Loans for an additional Interest
Period or to convert any such Term Loans, then, upon the expiration of the applicable Interest
Period, such Term Loans shall be automatically converted to Base Rate Loans. Each Notice of
Conversion or Continuation shall be irrevocable.

     Section 2.10 Fees

          The Parent has agreed to pay to the Administrative Agent and the Arrangers additional fees,
the amount and dates of payment of which are embodied in the Fee Letter.

     Section 2.11 Payments and Computations

          (a) The Borrower shall make each payment hereunder (including fees and expenses) not
later than 11:00 a.m. (New York time) on the day when due, in the currency specified herein (or, if
no such currency is specified, in Dollars) to the Administrative Agent at its address referred to
in Section 11.8 (Notices, Etc.) in immediately available funds without set-off or counterclaim.
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 clause (f) or (g) below, as applicable, for the account of
their respective Applicable Lending Offices; provided, however, that amounts payable pursuant to
Section 2.13 (Capital Adequacy), Section 2.14 (Taxes) or Section 2.12(c) or (d) (Special Provisions
Governing Eurodollar Rate Loans) shall be paid only to the affected Lender or Lenders. Payments
received by the Administrative Agent after 11:00 a.m. (New York time) shall be deemed to be
received on the next Business Day.

          (b) All computations of interest and of fees shall be made by the Administrative
Agent on the basis of a year of 360 days (or, in the case of Term Loans bearing interest based on
Citibank’s base rate, 365 days), in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest and fees are
payable. Each determination by the Administrative Agent of a rate of interest hereunder shall be
conclusive and binding for all purposes, absent manifest error.

          (c) Each payment by the Borrower of any Term Loan (including interest or fees in
respect thereof) and each reimbursement of various costs, expenses or other Obligation shall be
made in the currency in which such Term Loan was made or such cost, expense or other Obligation was
incurred; provided, however, that other than for payments in respect of a Term Loan, Loan Documents
duly executed by the Administrative Agent or any Hedging Contract may

38

 

Term Loan Agreement

Collective Brands Finance, Inc.

specify other currencies of payment for Obligations created by or directly related to such
Loan Document or Hedging Contract.

          (d) 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,
and such extension of time shall in such case be included in the computation of payment of interest
or fees, as the case may be; provided, however, that if such extension would cause payment of
interest on or principal of any Eurodollar Rate Loan to be made in the next calendar month, such
payment shall be made on the immediately preceding Business Day. All repayments of any Term Loans
shall be applied as follows: first, to repay such Term Loans outstanding as Base Rate Loans and
then, to repay such Term Loans outstanding as Eurodollar Rate Loans, with those Eurodollar Rate
Loans having earlier expiring Eurodollar Interest Periods being repaid prior to those having later
expiring Eurodollar Interest Periods.

          (e) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due hereunder that the Borrower will not make such
payment in full, the Administrative Agent may assume that the Borrower 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 Borrower shall not have made such
payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with interest thereon (at the
Federal Funds Rate for the first Business Day and thereafter, at the rate applicable to Base Rate
Loans) 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.

          (f) Except for payments and other amounts received by the Administrative Agent and
applied in accordance with the provisions of clause (g) below (or required to be applied in
accordance with Section 2.7(c) (Mandatory Prepayments)), all payments and any other amounts
received by the Administrative Agent from or for the benefit of the Borrower shall be applied as
follows: first, to pay principal of, and interest on, any portion of the Term Loans the
Administrative Agent may have advanced pursuant to the express provisions of this Agreement on
behalf of any Lender, for which the Administrative Agent has not then been reimbursed by such
Lender or the Borrower, second, to pay all other Obligations then due and payable and third, as the
Borrower so designates. Payments in respect of the Term Loans received by the Administrative Agent
shall be distributed to each Lender in accordance with such Lender’s Ratable Portion of the Term
Loans and all payments of fees and all other payments in respect of any other Obligation shall be
allocated among such of the Lenders as are entitled thereto and, for such payments allocated to the
Lenders, in proportion to their respective Ratable Portions.

          (g) The Borrower hereby irrevocably waives the right to direct the application of
any and all payments in respect of the Obligations and any proceeds of Collateral after the
occurrence and during the continuance of an Event of Default and agrees that, notwithstanding the
provisions of Section 2.7(c) (Mandatory Prepayments) and clause (f) above, the Administrative Agent
may, and, upon either (A) the written direction of the Requisite Lenders or (B) the acceleration of
the Obligations pursuant to Section 9.2 (Remedies) shall, subject to the provisions of the
Intercreditor Agreement, apply all payments in respect of any Obligations and all other proceeds of
Collateral in the following order:

39

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (i) first, to pay Secured Obligations in respect of any expense
reimbursements or indemnities then due to the Administrative Agent;

          (ii) second, to pay Secured Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders;

          (iii) third, to pay Secured Obligations in respect of any fees then due to
the Administrative Agent and the Lenders;

          (iv) fourth, to pay interest then due and payable in respect of the Term
Loans;

          (v) fifth, to pay or prepay principal amounts on the Term Loans, ratably to
the aggregate principal amount of such Term Loans;

          (vi) sixth, to pay amounts owing with respect to Hedging Contracts, ratable
to the aggregate principal amount of such Obligations owing with respect to Hedging
Contracts; and

          (vii) seventh, to the ratable payment of all other Secured Obligations;

provided, however, that if sufficient funds are not available to fund all payments to be made in
respect of any Secured Obligation described in any of clauses (i), (ii), (iii), (iv), (v), (vi) and
(vi) above, the available funds being applied with respect to any such Secured Obligation (unless
otherwise specified in such clause) shall be allocated to the payment of such Secured Obligation
ratably, based on the proportion of the Administrative Agent’s and each Lender’s interest in the
aggregate outstanding Secured Obligations described in such clauses. The order of priority set
forth in clauses (i), (ii), (iii), (iv), (v), (vi) and (vi) above may at any time and from time to
time be changed by the agreement of the Requisite Lenders without necessity of notice to or consent
of or approval by the Borrower, any Secured Party that is not a Lender or by any other Person that
is not a Lender. The order of priority set forth in clauses (i), (ii) and (iii) above may be
changed only with the prior written consent of the Administrative Agent in addition to that of the
Requisite Lenders.

     Section 2.12 Special Provisions Governing Eurodollar Rate Loans

          (a) Determination of Interest Rate

          The Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be determined by
the Administrative Agent pursuant to the procedures set forth in the definition of “Eurodollar
Rate.” The Administrative Agent’s determination shall be presumed to be correct absent manifest
error and shall be binding on the Borrower.

          (b) Interest Rate Unascertainable, Inadequate or Unfair

          In the event that (i) the Administrative Agent determines that adequate and fair means do not
exist for ascertaining the applicable interest rates by reference to which the Eurodollar Rate then
being determined is to be fixed or (ii) the Requisite Lenders notify the Administrative Agent that
the Eurodollar Rate for any Interest Period will not adequately reflect

40

 

Term Loan Agreement

Collective Brands Finance, Inc.

the cost to the Lenders of making or maintaining such Term Loans for such Interest Period, the
Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon each
Eurodollar Rate Loan shall automatically, on the last day of the current Interest Period for such
Term Loan, convert into a Base Rate Loan and the obligations of the Lenders to make Eurodollar Rate
Loans or to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower that the Requisite Lenders have determined that the
circumstances causing such suspension no longer exist.

          (c) Increased Costs

          If at any time any Lender determines that the introduction of, or any change in or in the
interpretation of, any law, treaty or governmental rule, regulation or order (other than any change
by way of imposition or increase of reserve requirements included in determining the Eurodollar
Rate) or the compliance by such Lender with any guideline, request or directive from any central
bank or other Governmental Authority (whether or not having the force of law), shall have the
effect of increasing the cost to such Lender of agreeing to make or making, funding or maintaining
any Eurodollar Rate Loans, then the Borrower shall from time to time, upon demand by such Lender
(with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender additional amounts sufficient to compensate such Lender for such increased
cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the
Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent
manifest error. For the avoidance of any doubt, this clause (c) shall not apply to any increased
costs attributable to Taxes, which shall be governed by this Section 2.14 (Taxes).

          (d) Illegality

          Notwithstanding any other provision of this Agreement, if any Lender determines that the
introduction of, or any change in or in the interpretation of, any law, treaty or governmental
rule, regulation or order after the date of this Agreement shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund or maintain
Eurodollar Rate Loans, then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) the obligation of such Lender to make or to continue
Eurodollar Rate Loans and to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended,
and each such Lender shall make a Base Rate Loan as part of any requested Borrowing of Eurodollar
Rate Loans and (ii) if the affected Eurodollar Rate Loans are then outstanding, the Borrower shall
immediately convert each such Term Loan into a Base Rate Loan. If, at any time after a Lender
gives notice under this clause (d), such Lender determines that it may lawfully make Eurodollar
Rate Loans, such Lender shall promptly give notice of that determination to the Borrower and the
Administrative Agent, and the Administrative Agent shall promptly transmit the notice to each other
Lender. The Borrower’s right to request, and such Lender’s obligation, if any, to make Eurodollar
Rate Loans shall thereupon be restored.

          (e) Breakage Costs

          In addition to all amounts required to be paid by the Borrower pursuant to Section 2.8
(Interest), the Borrower shall compensate each Lender, upon demand, for all losses, expenses and
liabilities (including any loss or expense incurred by reason of the liquidation or

41

 

Term Loan Agreement

Collective Brands Finance, Inc.

reemployment of deposits or other funds acquired by such Lender to fund or maintain such
Lender’s Eurodollar Rate Loans to the Borrower but excluding any loss of the Applicable Margin on
the relevant Term Loans) that such Lender may sustain (i) if for any reason a proposed Borrowing,
conversion into or continuation of Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conversion or Continuation given by the Borrower
or in a telephonic request by it for borrowing or conversion or continuation or a successive
Interest Period does not commence after notice therefor is given pursuant to Section 2.9
(Conversion/Continuation Option), (ii) if for any reason any Eurodollar Rate Loan is prepaid
(including mandatorily pursuant to Section 2.7 (Mandatory Prepayments)) on a date that is not the
last day of the applicable Interest Period, (iii) as a consequence of a required conversion of a
Eurodollar Rate Loan to a Base Rate Loan as a result of any of the events indicated in clause (d)
above or (iv) as a consequence of any failure by the Borrower to repay Eurodollar Rate Loans when
required by the terms hereof. The Lender making demand for such compensation shall deliver to the
Borrower concurrently with such demand a written statement as to such losses, expenses and
liabilities, and this statement shall be conclusive as to the amount of compensation due to such
Lender, absent manifest error.

     Section 2.13 Capital Adequacy

          If at any time any Lender determines that (a) the adoption of, or any change in or in the
interpretation of, any law, treaty or governmental rule, regulation or order after the date of this
Agreement regarding capital adequacy, (b) compliance with any such law, treaty, rule, regulation or
order or (c) compliance with any guideline or request or directive from any central bank or other
Governmental Authority (whether or not having the force of law) shall have the effect of reducing
the rate of return on such Lender’s (or any corporation controlling such Lender’s) capital as a
consequence of its obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, compliance or interpretation, then,
upon demand from time to time by such Lender (with a copy of such demand to the Administrative
Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender, from
time to time as specified by such Lender, additional amounts sufficient to compensate such Lender
for such reduction. A certificate as to such amounts submitted to the Borrower and the
Administrative Agent by such Lender shall be conclusive and binding for all purposes absent
manifest error.

     Section 2.14 Taxes

          (a) Except as otherwise provided in this Section 2.14, any and all payments by any
Loan Party under each Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) in the case of each Lender and the Administrative
Agent (A) taxes measured by its net income, and franchise taxes imposed on it, and similar taxes
imposed by a jurisdiction (or any political subdivision thereof) under the laws of which such
Lender or the Administrative Agent (as the case may be) is organized, does business, or has an
office, and (B) any U.S. withholding taxes payable with respect to payments under the Loan
Documents under laws (including any statute, treaty or regulation) in effect on the Closing Date
(or, in the case of (x) an Eligible Assignee, the date of the Assignment and Acceptance, (y) a
successor Administrative Agent, the date of the appointment of such Administrative Agent or (z) a
Lender that changes its Applicable Lending Office, the date of such change) applicable to such
Lender or the Administrative Agent, as the case may be, but not

42

 

Term Loan Agreement

Collective Brands Finance, Inc.

excluding any U.S. withholding taxes payable as a result of any change in such laws occurring
after the Closing Date (or the date of such Assignment and Acceptance or the date of such
appointment of such Administrative Agent or the date of such change of the Applicable Lending
Office of a Lender) and (ii) in the case of each Lender or the Administrative Agent, taxes measured
by its net income, and franchise taxes imposed on it as a result of a present or former connection
between such Lender or the Administrative Agent and the jurisdiction of the Governmental Authority
imposing such tax or any taxing authority thereof or therein (other than any such connection
arising solely from such Lender or the Administrative Agent having executed, delivered or performed
its obligations or received a payment under, or having been a party or havng enforced this
Agreement or other Loan Document) (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If any Taxes
shall be required by law to be deducted from or in respect of any sum payable under any Loan
Document to any Lender or the Administrative Agent (w) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.14, such Lender or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no such deductions been
made, (x) the relevant Loan Party shall make such deductions, (y) the relevant Loan Party shall pay
the full amount deducted to the relevant taxing authority or other authority in accordance with
applicable law and (z) the relevant Loan Party shall deliver to the Administrative Agent evidence
of such payment.

          (b) In addition, each Loan Party agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar levies of the United
States or any political subdivision thereof or any applicable foreign jurisdiction, and all
liabilities with respect thereto, in each case arising from any payment made under any Loan
Document or from the execution, delivery or registration of, or otherwise with respect to, any Loan
Document (collectively, “Other Taxes”).

          (c) Each Loan Party shall, jointly and severally, indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including any Taxes and Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.14) paid by such Lender
or the Administrative Agent (as the case may be) and any liability (including for penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes written demand
therefor. Notwithstanding the foregoing, no Loan Party shall be required to indemnify any Lender
or the Administrative Agent for amounts paid by such Lender or the Administrative Agent for Taxes
to the extent such amounts are attributable to such Lender’s or the Administrative Agent’s failure
to comply with the requirements of Section 2.14(f).

          (d) Within 30 days after the date of any payment of Taxes or Other Taxes by any Loan
Party, the Borrower shall furnish to the Administrative Agent, at its address referred to in
Section 11.8 (Notices, Etc.), the original or a certified copy of a receipt evidencing payment
thereof.

          (e) Without prejudice to the survival of any other agreement of any Loan Party
hereunder or under the Guaranty, the agreements and obligations of such Loan Party contained in
this Section 2.14 shall survive the payment in full of the Obligations.

43

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (f) (i) Each Non-U.S. Lender that is entitled to an exemption from U.S. withholding
tax, or that is subject to such tax at a reduced rate under an applicable tax treaty, shall (v) on
or prior to the Closing Date in the case of each Non-U.S. lender that is a signatory hereto, (w) on
or prior to the date of the Assignment and Acceptance pursuant to which such Non-U.S. Lender
becomes a Lender or the date a successor Administrative Agent becomes the Administrative Agent
hereunder, (x) on or prior to the date on which any such form or certification expires or becomes
obsolete, (y) after the occurrence of any event requiring a change in the most recent form or
certification previously delivered by it to the Borrower and the Administrative Agent, and (z) from
time to time if requested by the Borrower or the Administrative Agent, provide the Administrative
Agent and the Borrower with two completed originals of each of the following, as applicable:

               (A) Form W-8ECI (claiming exemption from U.S. withholding tax because the
income is effectively connected with a U.S. trade or business) or any successor form;

               (B) Form W-8BEN (claiming exemption from, or a reduction of, U.S.
withholding tax under an income tax treaty) or any successor form;

               (C) in the case of a Non-U.S. Lender claiming exemption under Sections
871(h) or 881(c) of the Code, a Form W-8BEN (claiming exemption from U.S. withholding tax
under the portfolio interest exemption) or any successor form; or

               (D) any other applicable form, certificate or document prescribed by the IRS
certifying as to such Non-U.S. Lender’s entitlement to such exemption from U.S. withholding
tax or reduced rate with respect to all payments to be made to such Non-U.S. Lender under
the Loan Documents.

Unless the Borrower and the Administrative Agent have received forms or other documents
satisfactory to them indicating that payments under any Loan Document to or for a Non-U.S. Lender
are not subject to U.S. withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Loan Parties and the Administrative Agent shall withhold amounts
required to be withheld by applicable Requirements of Law from such payments at the applicable
statutory rate.

               (ii) Each U.S. Lender shall (v) on or prior to the Closing Date in the case of each
U.S. Lender that is a signatory hereto, (w) on or prior to the date of the Assignment and
Acceptance pursuant to which such U.S. Lender becomes a Lender or on or prior to the date a
successor Administrative Agent becomes the Administrative Agent hereunder, (x) on or prior to the
date on which any such form or certification expires or becomes obsolete, (y) after the occurrence
of any event requiring a change in the most recent form or certification previously delivered by it
to the Borrower and the Administrative Agent, and (z) from time to time if requested by the
Borrower or the Administrative Agent, provide the Administrative Agent and the Borrower with two
completed originals of Form W-9 (certifying that such U.S. Lender is entitled to an exemption from
U.S. backup withholding tax) or any successor form. Solely for purposes of this Section 2.14(f), a
U.S. Lender shall not include a Lender or an Administrative Agent that may be treated as an exempt
recipient based on the indicators described in Treasury Regulation section 1.6049-4(c)(1)(ii).

44

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (g) Any Lender claiming any additional amounts payable pursuant to this Section 2.14
shall use its reasonable efforts (consistent with its internal policies and Requirements of Law) to
change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts that would be payable or may
thereafter accrue and would not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender.

     Section 2.15 Substitution of Lenders

          (a) In the event that (i)(A) any Lender makes a claim under Section 2.12(c)
(Increased Costs) or Section 2.13 (Capital Adequacy), (B) it becomes illegal for any Lender to
continue to fund or make any Eurodollar Rate Loan and such Lender notifies the Borrower pursuant to
Section 2.12(d) (Illegality) or (C) any Loan Party is required to make any payment pursuant to
Section 2.14 (Taxes) that is attributable to a particular Lender, (ii) in the case of clause (i)(A)
above, as a consequence of increased costs in respect of which such claim is made, the effective
rate of interest payable to such Lender under this Agreement with respect to its Term Loans
materially exceeds the effective average annual rate of interest payable to the Requisite Lenders
under this Agreement and (iii) in the case of clauses (i)(A), (B) and (C) above, Lenders holding at
least 75% of the Term Loans are not subject to such increased costs or illegality, payment or
proceedings (any such Lender, an “Affected Lender”), the Borrower may substitute any Lender and, if
reasonably acceptable to the Administrative Agent, any other Eligible Assignee (a “Substitute
Institution”) for such Affected Lender hereunder, after delivery of a written notice (a
"Substitution Notice”) by the Borrower to the Administrative Agent and the Affected Lender within a
reasonable time (in any case not to exceed 90 days) following the occurrence of any of the events
described in clause (i) above that the Borrower intends to make such substitution; provided,
however, that, if more than one Lender claims increased costs, illegality or right to payment
arising from the same act or condition and such claims are received by the Borrower within 30 days
of each other, then the Borrower may substitute all, but not (except to the extent the Borrower has
already substituted one of such Affected Lenders before the Borrower’s receipt of the other
Affected Lenders’ claim) less than all, Lenders making such claims.

          (b) If the Substitution Notice was properly issued under this Section 2.15, the
Affected Lender shall sell, and the Substitute Institution shall purchase, all rights and claims of
such Affected Lender under the Loan Documents and the Substitute Institution shall assume, and the
Affected Lender shall be relieved of all prior unperformed obligations of the Affected Lender under
the Loan Documents (other than in respect of any damages (which pursuant to Section 11.5
(Limitation on Liability) do not include exemplary or punitive damages, to the extent permitted by
applicable law) in respect of any such unperformed obligations). Such purchase and sale (and the
corresponding assignment of all rights and claims hereunder) shall be recorded in the Register
maintained by the Administrative Agent and shall be effective on (and not earlier than) the later
of (i) the receipt by the Affected Lender of its Ratable Portion of the Term Loans, together with
any other Obligations owing to it, (ii) the receipt by the Administrative Agent of an agreement in
form and substance reasonably satisfactory to it and the Borrower whereby the Substitute
Institution shall agree to be bound by the terms hereof and (iii) the payment in full to the
Affected Lender in cash of all fees, unreimbursed costs and expenses and indemnities accrued and
unpaid through such effective date. Upon the effectiveness of such sale, purchase and assumption,
the Substitute Institution shall become a “Lender” hereunder for all purposes of this Agreement
having a Term Loan Commitment in the amount of such Affected Lender’s Term

45

 

Term Loan Agreement

Collective Brands Finance, Inc.

Loan Commitment assumed by it and such Term Loan Commitment of the Affected Lender shall be
terminated; provided, however, that all indemnities under the Loan Documents shall continue in
favor of such Affected Lender.

          (c) Each Lender agrees that, if it becomes an Affected Lender and its rights and
claims are assigned hereunder to a Substitute Institution pursuant to this Section 2.15, it shall
execute and deliver to the Administrative Agent an Assignment and Acceptance to evidence such
assignment, together with any Note (if such Term Loans are evidenced by a Note) evidencing the Term
Loans subject to such Assignment and Acceptance; provided, however, that the failure of any
Affected Lender to execute an Assignment and Acceptance shall not render such assignment invalid.

ARTICLE III

Conditions To Term Loans

     Section 3.1 Conditions Precedent to Closing Date Term Loans

          The obligation of each Lender to make the Closing Date Term Loans requested to be made by it
on the Closing Date is subject to the satisfaction or due waiver in accordance with Section 11.1
(Amendments, Waivers, Etc.) of each of the following conditions precedent on or prior to the
Closing Date:

          (a) Certain Documents. The Administrative Agent shall have received (and, to the
extent any Borrowing of any Eurodollar Rate Loans is requested to be made on the Closing Date, in
respect of the Notice of Borrowing for such Eurodollar Rate Loans, at least three Business Days
prior to the Closing Date) each of the following, each dated the Closing Date unless otherwise
indicated or agreed to by the Administrative Agent in its reasonable discretion, in form and
substance reasonably satisfactory to the Administrative Agent and in sufficient copies for each
Lender:

          (i) this Agreement, duly executed and delivered by the Borrower and, for the
account of each Lender requesting the same, a Note of the Borrower conforming to the
requirements set forth herein;

          (ii) the Intercreditor Agreement, duly executed and delivered by the
Revolving Credit Agent and each Loan Party party thereto;

          (iii) the Guaranty, duly executed and delivered by each Guarantor;

          (iv) except as set forth on Schedule 7.13 (Post-Closing Covenants) and
subject to the proviso in Section 7.11 (Additional Collateral and Guarantees), the Pledge
and Security Agreement, duly executed and delivered by the Borrower and each Guarantor,
together with each of the following:

                    (A) evidence reasonably satisfactory to the Administrative Agent that, upon
the filing and recording of instruments delivered on or before the Closing Date, the
Administrative Agent (for the benefit of the Secured Parties) shall have a valid and
perfected security interest (having the priority set forth in the

46

 

Term Loan Agreement

Collective Brands Finance, Inc.

Intercreditor Agreement) in the Collateral, including (x) the filing of financing
statements under the UCC, (y) copies of UCC search reports as of a recent date listing all
effective financing statements that name any Loan Party as debtor, together with copies of
such financing statements, none of which shall cover the Collateral except for those that
shall be terminated on the Closing Date or are otherwise permitted hereunder and (z) such
other such documents duly executed by each Loan Party as the Administrative Agent may
reasonably request with respect to the perfection of its security interests in the
Collateral (including patent, trademark and copyright security agreements suitable for
filing with the Patent and Trademark Office or the Copyright Office, as the case may be,
and other applicable documents under the laws of any jurisdiction with respect to the
perfection of Liens created by the Pledge and Security Agreement);

                    (B) all certificates, instruments and other documents representing all
Pledged Stock being pledged pursuant to such Pledge and Security Agreement and stock powers
for such certificates, instruments and other documents executed in blank;

                    (C) to the extent delivered in connection with the Revolving Credit
Agreement on the Closing Date or within such other time period as provided therein, all
Deposit Account Control Agreements, duly executed by the corresponding Deposit Account Bank
and the applicable Loan Party; and

                    (D) to the extent delivered in connection with the Revolving Credit
Agreement on the Closing Date or within such other time period as provided therein,
Securities Account Control Agreements, duly executed by the applicable Loan Party and (1)
all “securities intermediaries” (as defined in the UCC) with respect to all Securities
Accounts and securities entitlements of the Borrower and each Guarantor and (2) all
“commodities intermediaries” (as defined in the UCC) with respect to all commodities
contracts and commodities accounts held by the Borrower and each Guarantor;

          (v) except as set forth on Schedule 7.13 (Post-Closing Covenants) and
subject to the proviso in Section 7.11 (Additional Collateral and Guarantees), Mortgages
for all of the Real Property of the Loan Parties identified on Schedule 4.19 (Real
Property) (except as may be agreed to by the Administrative Agent), together with all
Mortgage Supporting Documents relating thereto;

          (vi) a favorable opinion of (A) Sullivan & Cromwell LLP, counsel to the Loan
Parties, in substantially the form of Exhibit E (Form of Opinion of counsel for the Loan
Parties), (B) counsel to the Borrower in Nevada, (C) counsel to Payless ShoeSource, Inc., a
Missouri corporation, in Missouri and (D) counsel to Payless ShoeSource Worldwide, Inc. and
Payless ShoeSource Distribution, Inc. each in Kansas, in each case addressed to the
Administrative Agent and the Lenders and addressing such other matters as any Lender
through the Administrative Agent may reasonably request;

          (vii) a copy of each Related Document certified as being complete and
correct by a Responsible Officer of the Borrower or other Loan Party as the case may be;

47

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (viii) a copy of the articles or certificate of incorporation (or equivalent
Constituent Document) of each Loan Party, certified as of a recent date by the Secretary of
State of the state of organization of such Loan Party, together with certificates of such
official attesting to the good standing of each such Loan Party;

          (ix) a certificate of the Secretary or an Assistant Secretary of each Loan
Party certifying (A) the names and true signatures of each officer of such Loan Party that
has been authorized to execute and deliver any Loan Document or other document required
hereunder to be executed and delivered by or on behalf of such Loan Party, (B) the by-laws
(or equivalent Constituent Document) of such Loan Party as in effect on the date of such
certification, (C) the resolutions of such Loan Party’s Board of Directors (or equivalent
governing body) approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party and (D) that there have been
no changes in the certificate of incorporation (or equivalent Constituent Document) of such
Loan Party from the certificate of incorporation (or equivalent Constituent Document)
delivered pursuant to clause (viii) above;

          (x) a certificate of a Responsible Officer of the Borrower, stating that the
Borrower is Solvent immediately before and after giving effect to the Closing Date Term
Loans, the application of the proceeds thereof in accordance with Section 7.9 (Application
of Proceeds), the payment of all estimated legal, accounting and other fees related hereto
and thereto and the other Transactions; and

          (xi) evidence reasonably satisfactory to the Administrative Agent that the
insurance policies required by Section 7.5 (Maintenance of Insurance) and any Collateral
Document are in full force and effect, together with, unless otherwise agreed by the
Administrative Agent, endorsements naming the Administrative Agent, on behalf of the
Secured Parties, as an additional insured or loss payee under all insurance policies to be
maintained with respect to the properties of the Borrower and each other Loan Party.

          (b) Fee and Expenses Paid. There shall have been paid to the Administrative Agent,
for the account of the Administrative Agent and the Lenders, as applicable, all fees and expenses
(including reasonable fees and expenses of counsel) invoiced at least two Business Days prior to
the Closing Date and due and payable on or before the Closing Date (including all such fees
described in the Fee Letter).

          (c) Refinancing of Target Credit Agreement. (i) The Administrative Agent shall have
received a payoff letter duly executed and delivered by the Target and the Existing Agent or other
evidence of such termination in each case in form and substance reasonably satisfactory to the
Administrative Agent; (ii) all obligations under the Target Credit Agreement shall have been repaid
in full and (iii) the Target Credit Agreement, all Loan Documents (as defined therein) and all
Liens granted in connection therewith shall have been terminated and released on terms reasonably
acceptable to the Administrative Agent.

          (d) Amendment and Restatement of Existing Revolving Credit Agreement. All
obligations and Liens under the Existing Revolving Credit Agreement and any other Loan Documents
(as defined therein) shall, through an amendment and restatement of such documents,

48

 

Term Loan Agreement

Collective Brands Finance, Inc.

become obligations and Liens under the Revolving Credit Loan Documents substantially on the
terms set forth in that certain commitment letter dated May 22, 2007 addressed to the Borrower from
Wells Fargo Retail Finance, LLC.

          (e) Related Documents. The Administrative Agent shall be satisfied (i) that the
terms and conditions of the Merger Agreement shall not have been amended, waived or modified
without the approval of the Administrative Agent (other than (A) with the prior written consent,
not to be unreasonably withheld, of the Arrangers and the Administrative Agent or (B) amendments,
waivers and modifications to such terms that do not, individually or in the aggregate, materially
and adversely affect the interests of the Lenders), (ii) that the Merger Agreement and the other
Related Documents shall have been approved by all corporate action of the Borrower and each of the
other parties thereto, shall have been executed and delivered by each such party and shall be in
full force and effect, (iii) that subject only to the funding of the Closing Date Term Loans
hereunder, all conditions precedent to the consummation of the Merger shall have been satisfied or
waived as set forth in clause (i) above, and (iv) that subject only to the funding of the Closing
Date Term Loans hereunder, the Merger shall have been consummated in accordance with the Merger
Agreement and all applicable Requirements of Law and all representations and warranties made by the
Target in the Merger Agreement as are material to the interests of the Lenders (but only to the
extent that the Borrower and/or the Acquisition Subsidiary has the right to terminate its
obligations under the Merger Agreement as a result of a breach of such representations and
warranties in the Merger Agreement), shall be true and correct in all material respects on the
Closing Date.

          (f) No Material Adverse Effect. Since May 22, 2007, there shall not have occurred
any change, event, circumstances or development that has had, or would reasonably be expected to
have, a Material Adverse Effect (as defined in the Merger Agreement as in effect on May 22, 2007).

          (g) Consents, Etc. All requisite material Governmental Authorities shall have
approved or consented to the Transactions to the extent required on or prior to the Closing Date,
all applicable governmental filings have been made and all applicable waiting periods shall have
expired without, in either case, any action being taken by any competent authority, all applicable
appeal periods shall have expired and there shall be no action by any Governmental Authority that
would reasonably be expected to restrain, prevent or impose burdensome conditions on such
Transactions.

          (h) Financial Statements of the Parent. The Lenders shall have received from the
Parent a Consolidated balance sheet as of May 5, 2007 and related statements of income and cash
flows of the Parent and its Subsidiaries on the Closing Date as of February 3, 2007 and May 5, 2007
and the trailing four quarters ended on May 5, 2007, each on a Pro Forma Basis after giving effect
to each of the Transactions, together with a certificate of the chief financial officer of the
Parent and its Subsidiaries on the Closing Date in accordance with GAAP and Regulation S-X.

          (i) Projections. The Borrower shall have delivered to the Lenders the Projections.

          (j) Request for Borrowing. With respect to the Closing Date Term Loans, the
Administrative Agent shall have received a duly executed Notice of Borrowing.

49

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (k) Representations and Warranties; No Defaults. Both before and after giving
effect thereto and to the application of the proceeds thereof, (i) the representations and
warranties set forth in Sections 4.1, 4.2, 4.6, 4.10, 4.12, 4.20(a)(iv) and (c) and Section 3.2 of
the Pledge and Security Agreement shall be true and correct on and as of the Closing Date and (ii)
no Default or Event of Default shall have occurred and be continuing.

          (l) No Legal Impediments. The making of the Closing Date Term Loans does not
violate any Requirement of Law on the date of or immediately following such Closing Date Term Loan
and is not enjoined, temporarily, preliminarily or permanently.

     Section 3.2 Conditions Precedent to Incremental Term Loans

          (a) Certain Documents. The Administrative Agent shall have received on or prior to
the Facility Increase Date for such Facility Increase each of the following, each dated such
Facility Increase Date unless otherwise indicated or agreed to by the Administrative Agent and each
in form and substance reasonably satisfactory to the Administrative Agent:

          (i) written commitments duly executed by the applicable Incremental Term
Loan Lenders in an aggregate amount equal to the amount of the proposed Facility Increase
(as agreed between the Borrower and the Administrative Agent but in any case not to exceed,
in the aggregate for all such Facility Increases, the maximum amount set forth in Section
2.1(b) (The Term Loans)) and, in the case of each Incremental Term Loan Lender that is not
an existing Lender at the time of the applicable Facility Increase, an assumption agreement
in form and substance reasonably satisfactory to the Administrative Agent and the Borrower
and duly executed by the Borrower, the Administrative Agent and such Incremental Term Loan
Lender;

          (ii) an amendment to this Agreement, effective as of the Facility Increase
Date and executed by the Borrower, the Administrative Agent and the applicable Incremental
Term Loan Lenders, to the extent necessary to implement the terms and conditions of the
Facility Increase (including interest rates, fees and scheduled repayment dates and
maturity), as agreed by the Borrower and the Administrative Agent but, which, in any case,
except for interest, fees, scheduled repayment dates and maturity, shall not be applied
materially differently to the Facility Increase and the existing Term Loan Facility;

          (iii) certified copies of resolutions of the Board of Directors (or
equivalent governing body) of each Loan Party approving the consummation of such Facility
Increase and the execution, delivery and performance of the corresponding amendments to
this Agreement and the other Loan Documents to be executed in connection therewith;

          (iv) a favorable opinion of (A) counsel to the Loan Parties that is
reasonably acceptable to Administrative Agent, in substantially the form of Exhibit E (Form
of Opinion of counsel for the Loan Parties), (B) counsel to the Borrower in Nevada, (C)
counsel to Payless ShoeSource, Inc. in Missouri and (D) counsel to Payless ShoeSource
Worldwide, Inc. and Payless ShoeSource Distribution, Inc. each in Kansas, in each case
addressed to the Administrative Agent and the Lenders and addressing such other matters as
any Lender through the Administrative Agent may reasonably request; and

50

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (v) such other documents as the Administrative Agent may reasonably request
or as any Incremental Term Loan Lender participating in such Facility Increase may
reasonably require as a condition to its commitment in such Facility Increase.

          (b) Fees and Expenses Paid. There shall have been paid to the Administrative Agent,
for the account of the Administrative Agent and the Lenders (including any Person becoming a Lender
as part of such Facility Increase on such Facility Increase Date), as applicable, all fees and
expenses (including attorney costs of the Administrative Agent) due and payable on or before the
Facility Increase Date (including all such fees described in the Fee Letters).

          (c) Other Conditions. As of the Facility Increase Date for such Facility Increase,
such Facility Increase shall be made on the terms and conditions set forth in Section 2.1(b) (The
Term Loans).

          (d) Representations and Warranties; Events of Default. Both before and after giving
effect to any Incremental Term Loan and to the application of the proceeds thereof, (i) the
representations and warranties set forth in Article IV (Representations and Warranties) and in the
other Loan Documents shall be true and correct in all material respects on and as of the date on
which such Incremental Term Loan is made with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall have been true and correct in all material
respects as of such earlier date and (ii) no Default or Event of Default shall have occurred and be
continuing.

          (e) Request for Borrowing. With respect to any Incremental Term Loan, the
Administrative Agent shall have received a duly executed Notice of Borrowing.

          (f) No Legal Impediments. The making of the Incremental Term Loans on such date
does not violate any Requirement of Law on the date of or immediately following such Incremental
Term Loan and is not enjoined, temporarily, preliminarily or permanently.

Each submission by the Borrower to the Administrative Agent of a Notice of Borrowing and the
acceptance by the Borrower of the proceeds of each Incremental Term Loan requested therein shall be
deemed to constitute a representation and warranty by the Borrower as to the matters specified in
clause (e) above on the date of the making of such Incremental Term Loan.

     Section 3.3 Determinations of Borrowing Conditions

          For purposes of determining compliance with the conditions specified in Section 3.1
(Conditions Precedent to Closing Date Term Loans) and Section 3.2 (Conditions Precedent to
Incremental Term Loans), each Lender shall be deemed to have consented to, approved, accepted or be
satisfied with, each document or other matter required thereunder to be consented to or approved by
or reasonably acceptable or reasonably satisfactory to the Lenders unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the applicable Term Loan Borrowing hereunder specifying
its objection thereto and such Lender shall not have made

51

 

Term Loan Agreement

Collective Brands Finance, Inc.

available to the Administrative Agent such Lender’s Ratable Portion of such Term Loan
Borrowing.

ARTICLE IV

Representations and Warranties

          To induce the Lenders and the Administrative Agent to enter into this Agreement, the Borrower
represents and warrants each of the following to the Lenders and the Administrative Agent, on and
as of the Closing Date and after giving effect to the Merger and the making of the Term Loans on
the Closing Date and on and as of each date as required by Section 3.2 (Conditions Precedent to
Incremental Term Loans):

     Section 4.1 Corporate Existence; Compliance with Law

          Each Group Member (a) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (b) is duly qualified to do business as a foreign entity
and in good standing under the laws of each jurisdiction where such qualification is necessary,
except where the failure to be so qualified or in good standing would not, in the aggregate, have a
Material Adverse Effect, (c) has all requisite power and authority and the legal right to own,
pledge, mortgage and operate its properties, to lease the property it operates under lease and to
conduct its business as now or currently proposed to be conducted, except where the failure to have
such power, authority and legal right would not, in the aggregate, have a Material Adverse Effect,
(d) is in compliance with its Constituent Documents, (e) is in compliance with all applicable
Requirements of Law except where the failure to be in compliance would not, in the aggregate, have
a Material Adverse Effect and (f) has all necessary Permits from or by, has made all necessary
filings with, and has given all necessary notices to, each Governmental Authority having
jurisdiction, to the extent required for such ownership, operation and conduct, except for Permits
or filings that can be obtained or made by the taking of ministerial action to secure the grant or
transfer thereof or the failure to obtain or make would not, in the aggregate, have a Material
Adverse Effect.

     Section 4.2 Corporate Power; Authorization; Enforceable Obligations

          (a) The execution, delivery and performance by each Loan Party of the Loan Documents
to which it is a party and the consummation of the transactions contemplated thereby:

          (i) are within such Loan Party’s corporate, limited liability company,
partnership or other powers;

          (ii) have been or, at the time of delivery thereof pursuant to Article III
(Conditions To Term Loans) will have been duly authorized by all necessary action,
including the consent of shareholders, partners and members where required;

          (iii) do not and will not (A) contravene or violate such Loan Party’s
respective Constituent Documents, (B) violate any other Requirement of Law applicable to
such Loan Party (including Regulations T, U and X of the Federal Reserve Board), or any
order or decree of any Governmental Authority or arbitrator applicable to such Loan Party,
(C) conflict with or result in the breach of, or constitute a default under, or result in

52

 

Term Loan Agreement

Collective Brands Finance, Inc.

or permit the termination or acceleration of, any Related Document or any other
material Contractual Obligation of such Loan Party or (D) result in the creation or
imposition of any Lien upon any property of such Loan Party, other than those in favor of
the Secured Parties pursuant to the Collateral Documents; and

          (iv) do not require the consent of, authorization by, approval of, notice
to, or filing or registration with, any Governmental Authority or any other Person, other
than those listed on Schedule 4.2 (Consents) and that have been or will be, prior to the
Closing Date, obtained or made, copies of which have been or will be delivered to the
Administrative Agent pursuant to Section 3.1 (Conditions Precedent to Closing Date Term
Loans), and each of which on the Closing Date will be in full force and effect and, with
respect to the Collateral, filings required to perfect the Liens created by the Collateral
Documents.

          (b) This Agreement has been, and each of the other Loan Documents will have been
upon delivery thereof pursuant to the terms of this Agreement, duly executed and delivered by each
Loan Party party thereto. This Agreement is, and the other Loan Documents will be, when delivered
hereunder, the legal, valid and binding obligation of each Loan Party party thereto, enforceable
against such Loan Party in accordance with its terms.

     Section 4.3 Ownership of Subsidiaries

          Set forth on Schedule 4.3 (Ownership of Subsidiaries) is a complete and accurate list showing,
as of the Closing Date, all Subsidiaries owned (directly or indirectly) by the Parent and, as to
each such Subsidiary, the jurisdiction of its organization, the number of shares of each class of
Stock authorized (if applicable), the number outstanding on the Closing Date and the number and
percentage of the outstanding shares of each such class owned (directly or indirectly) by the
Parent. No Stock of any Subsidiary owned (directly or indirectly) by the Parent is subject to any
outstanding option, warrant, right of conversion or purchase of any similar right. All of the
outstanding Stock of each owned (directly or indirectly) by the Parent has been validly issued, is
fully paid and non-assessable (to the extent applicable) and is owned by the Parent or a Subsidiary
of the Parent, free and clear of all Liens (other than the Lien in favor of the Secured Parties
created pursuant to the Pledge and Security Agreement and the Revolving Credit Loan Documents),
options, warrants, rights of conversion or purchase or any similar rights.

     Section 4.4 Financial Statements

          (a) All Financial Statements relating to the Group Members that have been provided
by Borrower to the Administrative Agent or the Lenders pursuant to Section 3.1(h) (Conditions
Precedent to Closing Date Term Loans) and Section 6.1 (Financial Statements) have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in all material
respects, the financial condition of the Borrower, the Parent and its Subsidiaries as of the date
thereof and results of operations for the period then ended.

          (b) The Projections have been prepared by the Parent in light of the past operations
of its business, and reflect projections for the seven year period beginning on February 4, 2007,
on a quarterly basis through the end of the fiscal year ending 2007 and on a year by year basis
thereafter. The Projections are based upon estimates and assumptions stated

53

 

Term Loan Agreement

Collective Brands Finance, Inc.

therein, all of which the Parent believes to be reasonable and fair in light of current conditions and current
facts known to the Parent and, as of the Closing Date, reflect the Parent’s good faith and
reasonable estimates of the future financial performance of the Parent and its Subsidiaries and of
the other information projected therein for the periods set forth therein.

          (c) The consolidated balance sheet as of May 5, 2007 and the related statements of
income and cash flows of the Borrower and its Subsidiaries on the Closing Date as of February 3,
2007 and May 5, 2007 and the trailing four quarters ended on May 5, 2007, in each case delivered to
the Administrative Agent pursuant to Section 3.1(h) (Conditions Precedent to Closing Date Term
Loans), reflects as of such date, on a Pro Forma Basis, the Consolidated financial condition of the
Borrower and its Subsidiaries, and the assumptions expressed therein were reasonable based on the
information available to the Borrower at the time so furnished and on the Closing Date.

     Section 4.5 Material Adverse Change

          Since May 5, 2007, there has been no Material Adverse Change and there have been no events or
developments that, in the aggregate, have had a Material Adverse Effect.

     Section 4.6 Solvency

          Both before and after giving effect to (a) the Term Loans to be made on the Closing Date or
such other date as Term Loans requested hereunder are made, (b) the disbursement of the proceeds of
such Term Loans pursuant to the instructions of the Borrower, (c) the Merger and the consummation
of the other financing transactions contemplated hereby and (d) the payment and accrual of all
transaction costs in connection with the foregoing, each Group Member is Solvent.

     Section 4.7 Litigation

          Except as set forth on Schedule 4.7 (Litigation), there are no pending or, to the knowledge of
the Borrower, threatened actions, investigations or proceedings affecting any of the Group Members
before any court, Governmental Authority or arbitrator other than those that, individually or when
considered in the aggregate with other related actions, investigations or proceedings, would not
have a Material Adverse Effect. The performance of any action by any Group Member required or
contemplated by any Loan Document or any Related Document is not restrained or enjoined (either
temporarily, preliminarily or permanently).

     Section 4.8 Taxes

          (a) All material federal, state, local and foreign income and franchise and other
material tax returns, reports and statements (collectively, the “Tax Returns”) required to be filed
by the Borrower or any of its Tax Affiliates have been filed with the appropriate Governmental
Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax
Returns are true and correct in all material respects, and all material taxes, charges and other
impositions reflected therein or otherwise due and payable have been paid prior to the date on
which any material fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof except where contested in good faith and by appropriate proceedings if adequate
reserves therefor have been established on the books of the Borrower or such Tax

54

 

Term Loan Agreement

Collective Brands Finance, Inc.

Affiliate in conformity with GAAP. Except as disclosed on Schedule 4.8, no Tax Return is
under audit or examination by any Governmental Authority and no written, and to the knowledge of
the Borrower oral, notice of such an audit or examination or any assertion of any claim for Taxes
has been received by the Borrower or any of its Tax Affiliates. Proper amounts have been withheld
by the Borrower and each of its Tax Affiliates from their respective employees for all periods in
full and complete compliance with the tax, social security and unemployment withholding provisions
of applicable Requirements of Law and such withholdings have been timely paid to the respective
Governmental Authorities, except those that, in the aggregate, would not result in a Material
Adverse Effect.

          (b) None of the Borrower or any of its Tax Affiliates has (i) executed or filed with
the IRS or any other Governmental Authority any agreement or other document extending, or having
the effect of extending, the period for the filing of any Tax Return or the assessment or
collection of any charges, (ii) incurred any obligation under any tax sharing agreement or
arrangement other than those of which the Administrative Agent has received a copy prior to the
date hereof, (iii) been a member of an affiliated, combined or unitary group other than the group
of which the Borrower (or its Tax Affiliate) is the common parent or (iv) participated in a “listed
transaction” within the meaning of Treasury Regulation section 1.6011-4((6)).

     Section 4.9 Full Disclosure

          The information prepared or furnished by or on behalf of the Borrower in connection with this
Agreement or the Related Documents or the consummation of the transactions contemplated hereunder
and thereunder taken as a whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein or herein not
misleading in any material respect at such time in light of the circumstances under which such
information was provided.

     Section 4.10 Margin Regulations

          The Borrower is not engaged in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board), and no
proceeds of any Term Loan will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin stock in contravention
of Regulation T, U or X of the Federal Reserve Board.

     Section 4.11 No Burdensome Restrictions; No Defaults

          (a) No Group Member (i) is a party to any Contractual Obligation the compliance with
one or more of which would have, in the aggregate, a Material Adverse Effect or the performance of
which by any thereof, either unconditionally or upon the happening of an event, would result in the
creation of a Lien (other than a Lien permitted under Section 8.2 (Liens, Etc.)) on the assets of
any thereof or (ii) is subject to one or more charter or corporate restrictions that would, in the
aggregate, have a Material Adverse Effect.

          (b) No Group Member is in default under or with respect to any Contractual
Obligation owed by it and, to the knowledge of the Borrower, no other party is in default under or
with respect to any Contractual Obligation owed to any of the Group Members, other than, in either
case, those defaults that, in the aggregate, would not have a Material Adverse Effect.

55

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (c) No Default or Event of Default has occurred and is continuing.

          (d) To the best knowledge of the Borrower, there are no Requirements of Law
applicable to any of the Group Members the compliance with which by such Group Member, as the case
may be, would, in the aggregate, have a Material Adverse Effect.

     Section 4.12 Investment Company Act

     No Group Member is an “investment company” or an “affiliated person” of, or “promoter” or
"principal underwriter” for, an “investment company,” as such terms are defined in the Investment
Company Act of 1940, as amended.

     Section 4.13 Use of Proceeds

     (a) The proceeds of the Closing Date Term Loans are being used by the Borrower (and,
to the extent distributed to them by the Borrower, each other Group Member) solely (a) to refinance
all Indebtedness and other obligations outstanding under the Target Credit Agreement, (b) to
finance the Merger and for the payment of related transaction costs, fees and expenses and (c) for
the payment of transaction costs, fees and expenses incurred in connection with this Agreement, the
Revolving Credit Agreement and the transactions contemplated hereby.

     (b) The proceeds of any Incremental Term Loans shall be used (a) to finance working capital
needs and (b) for general corporate purposes.

     Section 4.14 Insurance

          Each of the Group Members maintains in full force and effect such policies of insurance,
including policies of life, fire, theft, product liability, public liability, property damage,
other casualty, employee fidelity, workers’ compensation and employee health and welfare insurance,
of a nature and provide such coverage as is customarily carried by businesses of the size and
character of such Person, except to the extent that any failure to do so would not, individually or
in the aggregate, have a Material Adverse Effect.

     Section 4.15 Labor Matters

          (a) There are no strikes, work stoppages, slowdowns or lockouts pending or
threatened against or involving the Group Members, other than those that, in the aggregate, would
not have a Material Adverse Effect.

          (b) There are no unfair labor practices, grievances, complaints or arbitrations
pending, or, to the Borrower’s knowledge, threatened, against or involving any Group Members, nor
are there any arbitrations or grievances threatened involving any of the Group Members, other than
those that, in the aggregate, would not have a Material Adverse Effect.

          (c) Except as set forth on Schedule 4.15 (Labor Matters), as of the Closing Date,
there is no collective bargaining agreement covering any material number of employees of any Group
Member.

56

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 4.16 ERISA

          (a) Schedule 4.16 (List of Plans) separately identifies all Title IV Plans, all
Multiemployer Plans and all of the employee benefit plans within the meaning of Section 3(3) of
ERISA to which any Group Member has any obligation or liability, contingent or otherwise.

          (b) Each employee benefit plan of the Group Members intended to qualify under
Section 401 of the Code does so qualify, and any trust created thereunder is exempt from tax under
the provisions of Section 501 of the Code, except where such failures, in the aggregate, would not
have a Material Adverse Effect.

          (c) Each Title IV Plan is in compliance in all material respects with applicable
provisions of ERISA, the Code and other Requirements of Law except for noncompliances that, in the
aggregate, would not have a Material Adverse Effect.

          (d) There has been no, nor is there reasonably expected to occur, any ERISA Event
other than those that, in the aggregate, would not have a Material Adverse Effect.

          (e) Except to the extent set forth on Schedule 4.16 (List of Plans), none of the
Group Members or any ERISA Affiliate would have any Withdrawal Liability as a result of a complete
withdrawal as of the date hereof from any Multiemployer Plan.

     Section 4.17 Environmental Matters

          (a) The operations of the Group Members have been and are in compliance with all
Environmental Laws, including obtaining and complying with all required environmental, health and
safety Permits, other than non-compliances that, in the aggregate, would not have a reasonable
likelihood of the Group Members incurring Environmental Liabilities and Costs after the date hereof
that would have a Material Adverse Effect.

          (b) None of the Group Members or any Real Property currently or, to the knowledge of
the Borrower, previously owned, operated or leased by or for any of the Group Members is subject to
any pending or, to the knowledge of the Borrower, threatened, claim, order, agreement, notice of
violation, notice of potential liability or is the subject of any pending or threatened proceeding
or governmental investigation under or pursuant to Environmental Laws other than those that, in the
aggregate, are not reasonably likely to result in the Group Members incurring Environmental
Liabilities and Costs that would have a Material Adverse Effect.

          (c) There are no facts, circumstances or conditions arising out of or relating to
the operations or ownership of the Borrower or of Real Property owned, operated or leased by any of
the Group Members that are not specifically included in the financial information furnished to the
Lenders other than those that, in the aggregate, would not have a reasonable likelihood of the
Group Members incurring Environmental Liabilities and Costs that would have a Material Adverse
Effect.

          (d) The Group Members have provided the Lenders with copies of all material
environmental, health or safety audits, studies, assessments, inspections, investigations or other
environmental health and safety reports relating to the operations of the Group Members

57

 

Term Loan Agreement

Collective Brands Finance, Inc.

or any Real
Property of any of them that are in the possession, custody or control of the Group Members.

          (e) Except for other matters that would not reasonably be expected to result in a
Material Adverse Effect, (i) no owned Real Property of any Group Member has ever been used by any
Group Member or, to each Group Member’s knowledge, 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 or in a manner
likely to give rise to liability under any Environmental Law, (ii) no Group Member’s owned Real
Property and, to each Group Member’s knowledge, any leased Real Property has ever been designated
or identified in any manner pursuant to any environmental protection statute as a Hazardous
Materials disposal site, (iii) no Group Member 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
Group Member, and (iv) no Group Member has received a summons, citation, notice, or directive from
the U.S. Environmental Protection Agency or any other federal or state governmental agency
concerning any action or omission by any Group Member resulting in the releasing or disposing of
Hazardous Materials into the environment in violation of or in a manner likely to give rise to
liability under any Environmental Law.

     Section 4.18 Intellectual Property

          Except as disclosed on Schedule 4.18 (Intellectual Property), the Group Members own or license
or otherwise have the continuing right to use all licenses, permits, patents, patent applications,
trademarks, trademark applications, servicemarks, trade names, copyrights, copyright applications,
Internet domain names, franchises, authorizations and other intellectual property rights (including
all Intellectual Property) that are reasonably necessary for the operations of their respective
businesses, without infringement upon, misappropriation of, or conflict with the rights of any
other Person with respect thereto, including all trade names associated with any private label
brands of the Group Members, except where such failure to own or license, individually or in the
aggregate, would not have a Material Adverse Effect. To the Borrower’s knowledge no license,
permit, patent, patent application, trademark, trademark application, servicemark, tradename,
copyright, copyright application, Internet domain name, franchise authorization, other intellectual
property right (including all Intellectual Property), slogan or other advertising device, product,
process, method, substance, part or component, or other material now employed, by any of the Group
Members infringes upon, misappropriates, or conflicts with any rights owned by any other Person, in
any manner that would have a Material Adverse Effect and no claim or litigation regarding any of
the foregoing is pending or threatened, except (i) that which would not otherwise have a Material
Adverse Effect and (ii) as disclosed on Schedule 4.7 (Litigation).

     Section 4.19 Title; Real Property

          (a) Each Group Member has good and marketable title to, or valid leasehold interests
in, all Real Property and good title to, or valid leasehold interests in, all personal property, in
each case that is purported to be owned or leased by it, including those reflected on
the most recent Financial Statements delivered by the Borrower, and none of such properties
and assets is subject to any Lien; except (i) for Liens permitted under Section 8.2 (Liens, Etc.),
and (ii) where the loss thereof would not, individually or in the aggregate, result in a Material
Adverse

58

 

Term Loan Agreement

Collective Brands Finance, Inc.

Effect. The Group Members have received all deeds, assignments, waivers, consents,
non-disturbance and recognition or similar agreements, bills of sale and other documents in respect
of, and have duly effected all recordings, filings and other actions necessary to establish,
protect and perfect, such Group Member’s right, title and interest in and to all such property,
except where the lack thereof would not, individually or in the aggregate, result in a Material
Adverse Effect.

          (b) Set forth on Schedule 4.19 (Real Property) is a complete and accurate list of
all Real Property of each Loan Party, except for owned and leased Real Property the primary use of
which is as a retail store, and showing, as of the Closing Date, the current street address
(including, where applicable, county, state and other relevant jurisdictions), record owner and,
where applicable, lessee thereof.

          (c) All Permits required to have been issued or appropriate to enable all Real
Property of the Group Members to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used have been lawfully issued and are in full force and effect,
other than those that, in the aggregate, would not have a Material Adverse Effect.

          (d) No Group Member has received any notice, or has any knowledge, of any pending,
threatened or contemplated condemnation proceeding affecting any Real Property of any Group Member
or any part thereof, except those that, in the aggregate, would not have a Material Adverse Effect.

     Section 4.20 Related Documents

          (a) The execution, delivery and performance by each Group Member of the Related
Documents to which it is a party and the consummation of the transactions contemplated thereby by
such Group Member:

     (i) are within such Group Member’s respective corporate, limited liability
company, partnership or other powers;

     (ii) on or prior to the Closing Date will have been duly authorized by all
necessary corporate or other action, including the consent of stockholders where required;

     (iii) do not and will not (A) contravene or violate such Group Member’s
Constituent Documents, (B) violate any other Requirement of Law applicable to such Group
Member, or any order or decree of any Governmental Authority or arbitrator, except to the
extent that, in the aggregate, such violation would not have a Material Adverse Effect, (C)
conflict with or result in the breach of, constitute a default under, or result in or
permit the termination or acceleration of, any Contractual Obligation of such Group Member,
except for those that, in the aggregate, would not have a Material Adverse Effect or (D)
result in the creation or imposition of any Lien upon any property of such Group Member (or
any other Group Member) other than a Lien permitted under Section 8.2 (Liens, Etc.); and

     (iv) do not require the consent of, authorization by, approval of, notice
to, or filing or registration with, any Governmental Authority or any other Person, other
than those that (A) will have been obtained at the Closing Date, each of which will

59

 

Term Loan Agreement

Collective Brands Finance, Inc.

be in
full force and effect on the Closing Date, none of which will on the Closing Date impose
materially adverse conditions upon the exercise of control by the Borrower over any Group
Members and (B) in the aggregate, if not obtained, would not have a Material Adverse
Effect.

          (b) None of the Related Documents has been amended or modified in any respect and no
provision therein has been waived, except in each case to the extent permitted by Section 8.12
(Modification of Related Documents).

          (c) The Obligations constitute “Senior Debt” as defined in the Subordinated Notes
Indenture.

ARTICLE V

          The Borrower agrees with the Lenders and the Administrative Agent to each of the
following as long as any Obligation remains outstanding and, in each case, unless the Requisite
Lenders otherwise consent in writing:

     Section 5.1 Maximum Total Leverage Ratio

          The Borrower shall maintain, on the last day of each fiscal quarter set forth below, a Total
Leverage Ratio of not more than the maximum ratio set forth below opposite such fiscal quarter:

	 	 	 
	Fiscal Quarter Ending on or about	 	Maximum Leverage Ratio
	October 31, 2007, January 31, 2008, April 30,
2008, July 31, 2008, October 31, 2008 and
January 31, 2009

	 	4.7 to 1
	April 30, 2009, July 31, 2009, October 31,
2009 and January 31, 2010

	 	4.2 to 1
	April 30, 2010 and each fiscal quarter
thereafter

	 	4.0 to 1

ARTICLE VI

Reporting Covenants

          The Borrower agrees with the Lenders and the Administrative Agent to each of the following, as
long as any Obligation remains outstanding and, in each case, unless the Requisite Lenders
otherwise consent in writing:

     Section 6.1 Financial Statements

          The Borrower shall furnish to the Administrative Agent each of the following:

          (a) Quarterly Reports. Within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, financial information regarding the Parent and its
Subsidiaries
consisting of Consolidated unaudited balance sheets as of the close of such quarter and the
related statements of income and cash flow for such quarter and that portion of the fiscal year
ending as of the close of such quarter, setting forth in comparative form the figures for the
corresponding

60

 

Term Loan Agreement

Collective Brands Finance, Inc.

period in the prior year, in each case certified by the chief financial officer of
the Borrower as fairly presenting the Consolidated financial condition of the Parent and its
Subsidiaries as at the dates indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP (subject to the absence of footnote disclosure and normal
year-end audit adjustments).

          (b) Annual Reports. Within 90 days after the end of each fiscal year, financial
information regarding the Parent and its Subsidiaries consisting of Consolidated balance sheets of
the Parent and its Subsidiaries as of the end of such year and related statements of income and
cash flows of the Parent and its Subsidiaries for such fiscal year, all prepared in conformity with
GAAP and certified without qualification as to the scope of the audit or as to the Borrower being a
going concern by the Borrower’s Accountants, together with the report of such accounting firm
stating that (i) such Financial Statements fairly present the Consolidated financial condition of
the Parent and its Subsidiaries as at the dates indicated and the results of their operations and
cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except for changes with which the Borrower’s Accountants shall concur and that shall
have been disclosed in the notes to the Financial Statements) and (ii) the examination by the
Borrower’s Accountants in connection with such Consolidated Financial Statements has been made in
accordance with generally accepted auditing standards, and accompanied by a certificate stating
that in the course of the regular audit of the business of the Parent and its Subsidiaries such
accounting firm has obtained no knowledge that a Default or Event of Default has occurred and is
continuing, or, if in the opinion of such accounting firm, a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof.

          (c) Compliance Certificate. Together with each delivery of any Financial Statement
pursuant to clause (a) or (b) above, a certificate of a Responsible Officer of the Borrower (each,
a “Compliance Certificate”) (i) showing in reasonable detail the calculations used in determining
(A) the Total Leverage Ratio, (B) the Senior Secured Leverage Ratio, (C) the Applicable Amount, (D)
Excess Cash Flow (but only in connection with Financial Statements delivered pursuant to clause (b)
above for the preceding four fiscal quarters) and (E) compliance with the financial covenant
contained in Article V (Financial Covenant) and in Section 8.3 (Investments) (as applicable) and
(ii) stating that no Default or Event of Default has occurred and is continuing or, if a Default or
an Event of Default has occurred and is continuing, stating the nature thereof and the action that
the Borrower proposes to take with respect thereto.

          (d) Other Collateral Updates. Together with each delivery of any Financial
Statement pursuant to clause (a) or (b) above, a certificate of a Responsible Officer of the
Borrower in form and substance reasonably satisfactory to the Administrative Agent that, to the
knowledge of the Borrower, all certificates, statements, updates and other documents (including
updated schedules) required to be delivered pursuant to the Pledge and Security Agreement by any
Loan Party in the preceding fiscal quarter have been delivered thereunder (or such delivery
requirement was otherwise duly waived or extended). The reporting requirements set forth in this
clause (d) are in addition to, and are not intended to and shall not replace or otherwise modify,
any obligation of any Loan Party under any Loan Document (including other notice or reporting
requirements). Compliance with the reporting obligations in this clause (d) shall only provide
notice to the Administrative Agent and shall not, by itself, modify any obligation of any Loan
Party under any Loan Document, update any Schedule to this Agreement or any schedule to any
other Loan Document or cure, or otherwise modify in any way, any failure to comply with any

61

 

Term Loan Agreement

Collective Brands Finance, Inc.

covenant, or any breach of any representation or warranty, contained in any Loan Document or any
other Default or Event of Default.

          (e) Business Plan. As soon as approved by the board of directors of Parent and not
later than 60 days after the end of each fiscal year, and containing substantially the types of
financial information contained in the Projections, (i) the annual business plan of the Borrower,
the Parent and its Subsidiaries for the next succeeding fiscal year approved by the Board of
Directors of the Parent and (ii) forecasts prepared by management of the Parent for each of the
succeeding fiscal years through the fiscal year in which the Term Loan Maturity Date is scheduled
to occur, including, in each instance described in clauses (i) and (ii) above, (x) a projected
year-end Consolidated balance sheet and income statement and statement of cash flows and (y) a
statement of all of the material assumptions on which such forecasts are based.

     Section 6.2 Default Notices

          As soon as practicable, and in any event within five Business Days after a Responsible Officer
of the Parent or the Borrower has actual knowledge of the existence of any Default, Event of
Default or other event having had a Material Adverse Effect, the Borrower shall give the
Administrative Agent notice specifying the nature of such Default or Event of Default or other
event, including the anticipated effect thereof, which notice, if given by telephone, shall be
promptly confirmed in writing on the next Business Day.

     Section 6.3 Litigation

          Within 30 days after the later of (i) the service of process with respect thereto on any Loan
Party or (ii) such time as exposure of the Loan Party could be reasonably determined, the Borrower
shall give the Administrative Agent written notice of the commencement of all actions, suits and
proceedings before any domestic or foreign Governmental Authority or arbitrator affecting any of
the Group Members that (i) seeks injunctive or similar relief that could reasonably be expected to
have a Material Adverse Effect or (ii) in the reasonable judgment of such Group Member, expose any
of the Group Members to liability in an amount that, if adversely determined, would have a Material
Adverse Effect.

     Section 6.4 SEC Filings; Press Releases

          Promptly after the sending or filing thereof, the Borrower shall send notices to the
Administrative Agent of (a) all reports and registration statements that the Borrower, the Parent
or any of its Subsidiaries files with the Securities and Exchange Commission or any national or
foreign securities exchange or the National Association of Securities Dealers, Inc. on Form 10-K,
10-Q or 8-K, and (b) all other statements concerning material changes or developments in the
business of the Group Members made available by any Group Member to the public or its other
creditors generally, provided, however, that the Borrower shall provide copies to the
Administrative Agent of all (i) all documents listed in clauses (a) and (b) above that are not
publicly available or (ii) each document listed in clauses (a) and (b) above upon the request of
the Administrative Agent.

62

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 6.5 Insurance

           As soon as is practicable and in any event within 90 days after the end of each fiscal year,
the Borrower shall furnish the Administrative Agent (in sufficient copies for each of the Lenders)
with (a) a report in form and substance reasonably satisfactory to the Administrative Agent and the
Lenders outlining all material insurance coverage maintained as of the date of such report by any
Loan Party and the duration of such coverage and (b) an insurance broker’s statement that all
premiums then due and payable with respect to such coverage have been paid and confirming, with
respect to any insurance maintained by any Loan Party, that the Administrative Agent has been named
as loss payee or additional insured, as applicable.

     Section 6.6 ERISA Matters

          The Borrower shall furnish the Administrative Agent (with sufficient copies for each of the
Lenders) each of the following:

          (a) promptly and in any event within 30 days after any Group Member or any ERISA
Affiliate knows or has reason to know that any ERISA Event has occurred, written notice describing
such event;

          (b) promptly and in any event within 30 days after any Group Member or any ERISA
Affiliate knows or has reason to know that a request for a minimum funding waiver under Section 412
of the Code has been filed with respect to any Title IV Plan or Multiemployer Plan, a written
statement of a Responsible Officer of the Borrower describing such ERISA Event or waiver request
and the action, if any, the Group Members and ERISA Affiliates propose to take with respect thereto
and a copy of any notice filed with the PBGC or the IRS pertaining thereto; and

          (c) promptly and in any event within 5 days after the date that any Group Member or
any ERISA Affiliate files a notice of intent to terminate any Title IV Plan, if such termination
would require material additional contributions in order to be considered a standard termination
within the meaning of Section 4041(b) of ERISA, a copy of each notice.

     Section 6.7 Environmental Matters

          The Borrower shall provide the Administrative Agent promptly and in any event within 10 days
after any Group Member learning of any of the following, written notice of each of the following:

          (a) that an Environmental Lien has been filed against any of the real or personal
property of any Group Member;

          (b) commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Group Member;

          (c) the discovery by any Group Member of any condition that would reasonably be
expected to result in collective Environmental Liabilities and costs whose Dollar Equivalent would
have a Material Adverse Effect;

63

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (d) any proposed acquisition of stock, assets or real estate, any proposed leasing
of property or any other action by any Group Member other than those the consequences of which, in
the aggregate, have reasonable likelihood of subjecting the Group Members collectively to
Environmental Liabilities and Costs that would have a Material Adverse Effect;

          (e) any proposed action by any Group Member or any proposed change in Environmental
Laws that, in the aggregate, have a reasonable likelihood of requiring the Group Members to obtain
additional environmental, health or safety Permits or make additional capital improvements to
obtain compliance with Environmental Laws that, in the aggregate, would have a Material Adverse
Effect or that shall subject the Group Members to additional Environmental Liabilities and Costs
that would have a Material Adverse Effect;

          (f) notice of any violation citation or other administrative order received by any
Loan Party that, in the aggregate, would have a Material Adverse Effect; and

          (g) upon written request by any Lender through the Administrative Agent, a report
providing an update of the status of any environmental, health or safety compliance, hazard or
liability issue identified in any notice or report delivered pursuant to this Agreement.

     Section 6.8 Other Information

          The Borrower shall provide the Administrative Agent, or any Lender making a request through
the Administrative Agent, with such other information respecting the business, properties,
condition, financial or otherwise, or operations of the Borrower, the Parent or any Restricted
Subsidiary as the Administrative Agent or such Lender through the Administrative Agent may from
time to time reasonably request, including a Corporate Chart. Documents or notices required to be
delivered pursuant to this clauses (a) and (b) of Section 6.1 (Financial Statements) and Section
6.3 (Litigation), which are made available via EDGAR, or any successor system of the Securities and
Exchange Commission, in an annual or quarterly report of the Parent on Form 10-K or 10-Q or in a
current report of the Parent on Form 8-K, shall be deemed delivered to the Lenders on the date such
documents are made so available; provided that, (i) the Parent shall have provided notice to the
Administrative Agent that such document or notice is publicly available and (ii) upon the request
of the Administrative Agent, the Borrower shall deliver paper copies (or in any other manner
approved pursuant to Section 11.8 (Notices, Etc.) of such documents or notices to the
Administrative Agent.

ARTICLE VII

Affirmative Covenants

          Each of the Parent and the Borrower agrees with the Lenders and the Administrative Agent to
each of the following, as long as any Obligation remains outstanding and, in each case, unless the
Requisite Lenders otherwise consent in writing:

64

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 7.1 Preservation of Corporate Existence, Etc.

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to,
preserve and maintain its legal existence, rights (charter and statutory) and franchises, except as
permitted by Sections 8.4 (Sale of Assets), 8.7 (Restriction on Fundamental Changes) and Section
8.11 (Modification of Constituent Documents) and, in the case of statutory rights and franchises,
for those that would not, in the aggregate, have a Material Adverse Effect..

     Section 7.2 Compliance with Laws, Etc.

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to,
comply with all applicable Requirements of Law, Contractual Obligations and Permits, except where
the failure so to comply would not, in the aggregate, have a Material Adverse Effect.

     Section 7.3 Conduct of Business

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to, (a)
conduct its business in the ordinary course and (b) use its reasonable efforts, in the ordinary
course and consistent with past practice, to preserve its business and the goodwill and business of
the customers, advertisers, suppliers and others having business relations with the Borrower, the
Parent or any Restricted Subsidiary, except in each case where the failure to comply with the
covenants in each of clauses (a) and (b) above would not, in the aggregate, have a Material Adverse
Effect.

     Section 7.4 Payment of Taxes, Etc.

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to, pay
and discharge before the same shall become delinquent, all lawful governmental claims, taxes,
assessments, charges and levies, except (i) where contested in good faith, by proper proceedings
and adequate reserves therefor have been established on the books of the Borrower, the Parent or
the appropriate Restricted Subsidiary in conformity with GAAP or (ii) where the failure to do so,
individually or in the aggregate, would not result in a Material Adverse Effect.

     Section 7.5 Maintenance of Insurance

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to, (a)
maintain insurance with responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the Borrower, the Parent or such
Restricted Subsidiary operates, and such other insurance as may be required by any Collateral
Document and (b) cause all such insurance relating to the Borrower, the Parent or any Loan Party to
name the Administrative Agent on behalf of the Secured Parties as additional insured or loss payee,
as appropriate, and to provide that no cancellation, material addition in amount or material change
in coverage shall be effective until after 30 days’ written notice thereof to the Administrative
Agent.

65

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 7.6 Access

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to, from
time to time permit the Administrative Agent and the Lenders, or any agents or representatives
thereof, within five Business Days after written notification of the same (except that during the
continuance of an Event of Default, no such notice shall be required) to (a) examine and make
copies of and abstracts from the records and books of account of the Borrower, the Parent and each
Restricted Subsidiary, (b) visit the properties of the Borrower, the Parent and each Restricted
Subsidiary, (c) discuss the affairs, finances and accounts of the Borrower, the Parent and each
Restricted Subsidiary with any of their respective officers or directors and (d) communicate
directly with any of its certified public accountants (including the Borrower’s Accountants), if
any. The Borrower, the Parent and each Restricted Subsidiary shall authorize its certified public
accountants (including the Borrower’s Accountants), if any, to disclose to the Administrative Agent
or any Lender any and all financial statements and other information of any kind, as the
Administrative Agent or any Lender reasonably requests and that such accountants may have with
respect to the business, financial condition, results of operations or other affairs of the
Borrower, the Parent and each Restricted Subsidiary.

     Section 7.7 Keeping of Books

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to, keep
proper books of record and account, in which full and correct entries shall be made in conformity
with GAAP of all financial transactions and the assets and business of the Borrower, the Parent and
each Restricted Subsidiary.

     Section 7.8 Maintenance of Properties, Etc.

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to,
maintain and preserve (a) in good working order and condition all of its properties necessary in
the conduct of its business, (b) all rights, permits, licenses, approvals and privileges (including
all Permits) used or useful or necessary in the conduct of its business and (c) all registered
patents, trademarks, trade names, copyrights and service marks with respect to its business, except
where failure to so maintain and preserve the items set forth in clauses (a), (b) and (c) above
would not, in the aggregate, have a Material Adverse Effect.

     Section 7.9 Application of Proceeds

          The Borrower (and, to the extent distributed to them by the Borrower, the Parent and each
Restricted Subsidiary) shall use the entire amount of the proceeds of the Term Loans as provided in
Section 4.13 (Use of Proceeds).

     Section 7.10 Environmental

          The Borrower and Parent each shall, and Parent shall cause each Restricted Subsidiary to,
comply in all material respects with Environmental Laws and, without limiting the foregoing, the
Borrower shall, at its sole cost and expense, upon receipt of any notification or otherwise
obtaining knowledge of any Release or other event that has any reasonable likelihood of any of the
Borrower, the Parent or any Restricted Subsidiary incurring Environmental Liabilities and Costs
that would have a Material Adverse Effect, (a) conduct, or pay for

66

 

Term Loan Agreement

Collective Brands Finance, Inc.

consultants to conduct, tests or assessments of environmental conditions at such operations or
properties, including the investigation and testing of subsurface conditions and (b) take such
Remedial Action and undertake such investigation or other action as required by Environmental Laws
or as any Governmental Authority requires or as is appropriate and consistent with good business
practice to address the Release or event and otherwise ensure compliance with Environmental Laws.

     Section 7.11 Additional Collateral and Guaranties

          Unless otherwise agreed by the Administrative Agent in its reasonable discretion, subject to
Section 7.13 (Post-Closing Covenants), to the extent not delivered to the Administrative Agent on
or before the Closing Date (including in respect of after-acquired property and any Person (other
than an Immaterial Subsidiary) that becomes a Wholly-Owned Domestic Subsidiary of any Loan Party
after the Closing Date), the Borrower and Parent each agree promptly to do, or cause each other
Group Member to do, each of the following (including in respect of any after-acquired property) in
form and substance reasonably satisfactory to the Administrative Agent:

          (a) except for any Immaterial Subsidiary (other than with respect to its Stock or Stock
Equivalents under clause (B)(1) below), cause such Group Member to (A) become a party to a Guaranty
and applicable Collateral Documents or enter into new Collateral Documents and (B) take such other
actions necessary or, in the reasonable judgment of the Administrative Agent, advisable to grant to
the Administrative Agent for the benefit of the Secured Parties, subject only to the Liens
permitted under Section 8.2 (Liens, Etc.), a valid and enforceable perfected first-priority
security interest in (1) all of the Stock and Stock Equivalents of such Borrower, the Parent or
Restricted Subsidiary and (2) all property and assets of such Borrower, the Parent or Restricted
Subsidiary, including, if applicable, the filing of UCC financing statements (or the applicable
equivalent) and perfection (including, if applicable, the delivery of all certificates, together
with undated powers or endorsements in blank) of security interest on Stock, Stock Equivalents,
intercompany notes or debt Securities in such jurisdictions as may be required by the Collateral
Documents, by any Requirement of Law or as may be reasonably requested by the Administrative Agent;

          (b) upon written request of the Administrative Agent, execute and deliver to the
Administrative Agent, for the benefit of the Secured Parties, promptly and in any event not later
than 60 days after receipt of such notice, a Mortgage (or similar security document) on any owned
Real Property of any Loan Party with a fair market value of $10,000,000 or more, together with, if
requested by the Administrative Agent, all Collateral Documents (including any Mortgage Supporting
Documents) necessary or, in the reasonable judgment of the Administrative Agent, appropriate in the
applicable jurisdiction to obtain the equivalent in such jurisdiction of a valid and enforceable
perfected first-priority Lien on such Real Property, subject only to the Liens permitted under
Section 8.2 (Liens, Etc.);

          (c) to take such other actions necessary or, in the reasonable judgment of the Administrative
Agent, advisable to ensure the validity or continuing validity of the guaranties or to create,
maintain or perfect the security interest required to be granted pursuant to clauses (a) and (b)
above, including such actions as may be required by the Collateral Documents or by any Requirement
of Law or reasonably requested by the Administrative Agent; and

67

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (d) if requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Administrative Agent;

provided, however, that notwithstanding anything to the contrary contained in this Section 7.11 or
in Section 3.1 (Conditions Precedent to Closing Date Term Loans), (i) any security interest
required to be granted under the Loan Documents on any assets of a Group Member shall be subject to
the Intercreditor Agreement and any Liens permitted under Section 8.2 (Liens, Etc.), (ii) the Loan
Documents shall not require any Group Member to enter into any control agreement for the perfection
of security interests in Cash, Cash Equivalents or Securities in a deposit or securities account
(other than any Cash Collateral Account) except to the extent the same is required under the terms
of the Revolving Credit Agreement and (iii) the Loan Documents shall not require the creation or
perfection of, pledges of or security interests in, or the obtaining of title insurance or legal
opinions with respect to, any Excluded Assets or any leaseholds, commercial tort claims, motor
vehicles or any other asset subject to certificates of title or letter of credit rights (other than
any such rights constituting “supporting obligations” as defined in the UCC). Nothing herein shall
restrict any Group Member that is not a Loan Party on the Closing Date from becoming a Loan Party;
provided, however, that such Group Member shall have complied with the provisions of this Section
7.11 as if it were a new Restricted Subsidiary.

     Section 7.12 Designation of Subsidiaries

          The board of directors of the Parent may at any time designate any Restricted Subsidiary
(other than the Borrower) as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that (a) immediately before and after such designation, no Default
or Event of Default shall have occurred and be continuing, (b) no Restricted Subsidiary may be
designated an Unrestricted Subsidiary if it previously had been designated as an Unrestricted
Subsidiary, (c) any such designation shall be deemed to be an Investment requiring compliance with
Section 8.3 (Investments) (or reduction in an outstanding Investment, in the case of a designation
of an Unrestricted Subsidiary as a Restricted Subsidiary), on the date of such designation in an
amount equal to the sum of (i) the Parent’s direct or indirect equity ownership percentage of the
net worth of such designated Restricted Subsidiary immediately prior to such designation (such net
worth to be calculated without regard to any guarantee provided by such designated Restricted
Subsidiary of the Parent’s, Borrower’s or another Restricted Subsidiary’s Indebtedness) and
(ii) without duplication, the aggregate principal amount of any Indebtedness owed by such
designated Restricted Subsidiary to the Parent, Borrower or any other Restricted Subsidiary
immediately prior to such designation, all calculated, except as set forth in the parenthetical to
clause (i) above, on a Consolidated basis in accordance with GAAP, and (c) no Subsidiary may be
designated as an Unrestricted Subsidiary if it is a “Restricted Subsidiary” for the purpose of any
other Indebtedness of the Parent. The designation of any Unrestricted Subsidiary as a Restricted
Subsidiary shall constitute the incurrence at the time of designation of any Indebtedness or Liens
of such Subsidiary existing at such time.

     Section 7.13 Post-Closing Covenants

          Each of the Parent and the Borrower shall, and Parent shall cause each other Group Member to,
comply with the terms and conditions set forth on Schedule 7.13 (Post-Closing Covenants).

68

 

Term Loan Agreement

Collective Brands Finance, Inc.

ARTICLE VIII

Negative Covenants

          Each of the Parent and the Borrower agrees with the Lenders and the Administrative Agent to
each of the following, as long as any Obligation or any Term Loan Commitment remains outstanding
and, in each case, unless the Requisite Lenders otherwise consent in writing:

     Section 8.1 Indebtedness

          The Parent shall not, nor shall it permit the Borrower or any Restricted Subsidiary to,
directly or indirectly create, incur, assume or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness or Disqualified Stock, except for the following:

          (a) the Secured Obligations (other than in respect of Hedging Contracts not
permitted to be incurred pursuant to clause (i) below) and Guaranty Obligations in respect thereto
and Permitted Refinancings thereof;

          (b) the Revolving Credit Obligations and Permitted Refinancings thereof;

          (c) Indebtedness existing on the date of this Agreement and disclosed on
Schedule 8.1 (Existing Indebtedness) and Permitted Refinancings thereof;

          (d) Guaranty Obligations incurred by the Borrower or any Guarantor in respect of
Indebtedness of the Borrower or any Guarantor that is otherwise permitted by this Section 8.1
(other than clause (a) above);

          (e) Capital Lease Obligations, purchase money Indebtedness or other Indebtedness in
respect of industrial revenue or similar bonds, in each case incurred by the Parent or a Restricted
Subsidiary to finance the acquisition, construction or improvement of fixed assets and Permitted
Refinancings thereof; provided, however, that the aggregate outstanding principal amount of all
such Capital Lease Obligations, purchase money or other Indebtedness and Permitted Refinancings
thereof at the date such Capital Lease Obligation, purchase money or other Indebtedness is
incurred, and after giving effect thereto, shall not exceed the greater of (i) $50,000,000 and (ii)
2.0% of the Total Assets of the Borrower, the Parent and the Restricted Subsidiaries taken as a
whole;

          (f) Attributable Debt incurred by the Parent or any Restricted Subsidiary pursuant
to Permitted Sale Leaseback transactions; provided, however, that the aggregate principal amount
all such of Attributable Debt outstanding at the date such Permitted Sale Leaseback transaction is
consummated, and after giving effect thereto, shall not exceed the greater of (i) $50,000,000 and
(ii) 2.0% of Total Assets of the Borrower and the Restricted Subsidiaries taken as a whole at any
time;

          (g) Indebtedness arising from intercompany loans (i) among Loan Parties, (ii) among
Qualified Restricted Subsidiaries, (iii) among Restricted Subsidiaries that are not Qualified
Restricted Subsidiaries or Guarantors, (iv) from any Restricted Subsidiary to any Loan

69

 

Term Loan Agreement

Collective Brands Finance, Inc.

Party; provided, however, any such loans shall be subordinated to the Obligations on terms
that expressly prohibit payment of any amount thereof (including interest thereon) at any time an
Event of Default has occurred and is continuing, (v) from any Loan Party to any Qualified
Restricted Subsidiary, (vi) from any Loan Party or Qualified Restricted Subsidiary to any
Restricted Subsidiary that is not a Loan Party or Qualified Restricted Subsidiary or to any
Unrestricted Subsidiary and (vii) from any Restricted Subsidiary that is not a Qualified Restricted
Subsidiary or a Guarantor to any Unrestricted Subsidiary; provided, however, that, in the case of
clauses (v), (vi) and (vii) above, the Investment in such intercompany loan to such Subsidiary is
permitted under Section 8.3 (Investments);

          (h) Indebtedness of the Borrower and the Restricted Subsidiaries arising under any
performance or surety bond entered into in the ordinary course of business;

          (i) Obligations under Hedging Contracts permitted under Section 8.15 (No Speculative
Transactions);

          (j) other Indebtedness of the Parent and the Restricted Subsidiaries in an aggregate
principal amount not to exceed $100,000,000 at any time outstanding; provided, however, that
Indebtedness of Persons which are not Loan Parties pursuant to this clause (j) shall not exceed an
aggregate principal amount of $50,000,000 at any time outstanding;

          (k) Indebtedness of any Person that becomes a Restricted Subsidiary after the
Closing Date in connection with a Permitted Acquisition and any Permitted Refinancing thereof;
provided, that (i) such Indebtedness exists at the time such Person becomes a Restricted Subsidiary
and is not created in contemplation of or in connection with such Person becoming a Restricted
Subsidiary, (ii) after giving effect to the assumption of such Indebtedness (A) the Parent would be
in compliance with the financial covenant contained in Section 5.1 (Financial Covenant) for the
most recently ended Test Period, determined on a Pro Forma Basis, and (B) if such Indebtedness is
secured by a Lien on any assets of such Person, the Senior Secured Leverage Ratio would be less
than 3.0 to 1 on a Pro Forma Basis, (iii) such Indebtedness is not guaranteed in any respect by the
Borrower, any Guarantor or any Restricted Subsidiary (other than by any such Person that so becomes
a Restricted Subsidiary or is the survivor of a merger with such Person or any of its Subsidiaries)
and (iv) except for Indebtedness consisting of Capital Lease Obligations, revenue bonds, purchase
money Indebtedness or mortgages or other Liens on specific assets no portion of such Indebtedness
matures prior to the Term Loan Maturity Date;

          (l) Indebtedness of the Borrower or the Restricted Subsidiaries arising from the
issuance, for use in the ordinary course of business, of letters of credit in an aggregate amount
not to exceed at any one time outstanding $75,000,000; and

          (m) Indebtedness of the Loan Parties not otherwise permitted under this Section 8.1
and Permitted Refinancings thereof; provided, however, that after giving effect to the occurrence
of such Indebtedness (A) no Default or Event of Default shall have occurred and be continuing and
(B) the Parent would be in compliance with the financial covenant contained in Section 5.1
(Financial Covenant) for the most recently ended Test Period, determined on a Pro Forma Basis after
giving effect to the incurrence of such Indebtedness.

70

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 8.2 Liens, Etc.

          The Parent shall not, nor shall it permit any Restricted Subsidiary to, create or suffer to
exist, any Lien upon or with respect to any of their respective properties or assets, whether now
owned or hereafter acquired, or assign, or permit any Restricted Subsidiary to assign, any right to
receive income, except for the following:

          (a) Liens created pursuant to the Loan Documents;

          (b) Liens created pursuant to the Revolving Credit Loan Documents securing the
Revolving Credit Obligations, subject to the terms of the Intercreditor Agreement;

          (c) Liens existing on the date of this Agreement and disclosed on Schedule 8.2
(Existing Liens);

          (d) Customary Permitted Liens on the assets of the Borrower and the Restricted
Subsidiaries;

          (e) purchase money Liens or Liens in favor of any Governmental Authority or a
Subsidiary thereof granted by the Borrower or any of the Restricted Subsidiaries (including the
interest of a lessor under a Capital Lease and purchase money Liens or Liens in favor of such
Governmental Authority or Subsidiary thereof to which any property is subject at the time, on or
after the date hereof, of the Borrower’s or such Restricted Subsidiary’s acquisition thereof)
securing Indebtedness permitted under Section 8.1(e) (Indebtedness) and limited in each case to the
property purchased, constructed or improved with the proceeds of such purchase money or other
Indebtedness or subject to such Capital Lease;

          (f) any Lien securing the renewal, extension, refinancing or refunding of any
Indebtedness secured by any Lien permitted by clause (c) or (e) above or this clause (f) without
any change in the assets subject to such Lien and to the extent such renewal, extension,
refinancing or refunding is permitted by clause (c) or (e) of Section 8.1(Indebtedness);

          (g) Liens in favor of lessors securing operating leases or, to the extent such
transactions create a Lien hereunder, a Permitted Sale Leaseback, in each case to the extent such
operating leases or Permitted Sale Leasebacks are permitted hereunder;

          (h) Liens existing on the assets of any Person that becomes a Restricted Subsidiary
(or is a Restricted Subsidiary that survives a merger with such Person), or existing on assets
acquired, pursuant to a Permitted Acquisition to the extent the Liens on such assets secure
Indebtedness permitted by Section 8.1(k) (Indebtedness); provided that such Liens attach at all
times only to the same assets to which such Liens attached (and after-acquired property that is
affixed or incorporated into the property covered by such Lien), and secure only the same
Indebtedness or obligations that such Liens secured, immediately prior to such Permitted
Acquisition and any Permitted Refinancing thereof; and

          (i) Liens not otherwise permitted by the foregoing clauses of this Section 8.2
securing obligations or other liabilities of any Restricted Subsidiary; provided, however, that the
Dollar Equivalent of the aggregate outstanding amount of all such obligations and liabilities shall
not exceed $50,000,000 at any time.

71

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 8.3 Investments

          The Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary to make or
maintain, directly or indirectly, any Investment except for the following:

          (a) Investments existing on the date of this Agreement and disclosed on Error!
Reference source not found.3 (Existing Investments);

          (b) Investments in cash and Cash Equivalents;

          (c) Investments in payment intangibles, chattel paper (each as defined in the UCC)
and Accounts, notes receivable and similar items arising or acquired in the ordinary course of
business consistent with the past practice of the Group Members;

          (d) Investments received in settlement of amounts due to any Group Member effected
in the ordinary course of business;

          (e) Investments (i) among Loan Parties, (ii) among Qualified Restricted
Subsidiaries, (iii) among Restricted Subsidiaries that are not Qualified Restricted Subsidiaries or
Guarantors, (iv) from any Restricted Subsidiary to any Loan Party, (v) from any Loan Party to any
Qualified Restricted Subsidiary; provided, however, that at the date of, and after giving effect to
any such Investment made pursuant to this clause (v) or clause (i)(B) below, the Parent would be in
compliance with the financial covenant contained in Section 5.1 (Financial Covenant) for the most
recently ended Test Period, determined on a Pro Forma Basis, and provided further, that, the
aggregate outstanding amount of all such Investments permitted pursuant to this clause (v),
together with all such Investments in Permitted Acquisitions permitted pursuant to clause (i)(B)
below, shall not exceed $250,000,000;

          (f) Investments in respect of (i) Hedging Contracts permitted under Section 8.15 (No
Speculative Transactions) and (ii) any Note Hedge Transaction;

          (g) loans or advances to employees of the Borrower or any Restricted Subsidiary in
the ordinary course of business as presently conducted other than any loans or advances that would
be in violation of Section 402 of the Sarbanes-Oxley Act; provided, however, that the Dollar
Equivalent of the aggregate principal amount of all loans and advances permitted pursuant to this
clause (g) shall not exceed $10,000,000 at any time;

          (h) Guaranty Obligations permitted by Section 8.1 (Indebtedness);

          (i) Investments in any Person that becomes a Loan Party or a Qualified Restricted
Subsidiary or in any assets that are acquired by a Loan Party or a Qualified Restricted Subsidiary,
in each case, in connection with any Permitted Acquisition consummated after the Closing Date;
provided, however, that at the date of, and after giving effect to any such Investment made
pursuant to this clause (i), the Parent would be in compliance with the financial covenant
contained in Section 5.1 (Financial Covenant) for the most recently ended Test Period, determined
on a Pro Forma Basis, and provided further, that, (A) the fair market value (determined in good
faith by the Borrower) of such Investments (or portion thereof) in Persons that become Loan Parties
or in assets that are acquired by Loan Parties shall not exceed $500,000,000 in the aggregate,
except for any such Investment to the extent the consideration for

72

 

Term Loan Agreement

Collective Brands Finance, Inc.

which consists of Qualified Capital Stock of the Parent and (B) the fair market value
(determined in good faith by the Borrower) of such Investments (or portion thereof) in Persons that
become Qualified Restricted Subsidiaries or in assets that are acquired by Qualified Restricted
Subsidiaries shall not, together with all such Investments permitted pursuant to clause (e)(v)
above, exceed $250,000,000 in the aggregate (it being understood that additional Investments in
connection with Permitted Acquisitions, including Investments in Restricted Subsidiaries that are
not Loan Parties or Qualified Restricted Subsidiaries, may be made in reliance on clause (j)
below); and

          (j) Investments in an amount not to exceed at the date of, and after giving effect
to such Investment, the sum of (i) the greater of (a) $75,000,000 and (b) 2.5% of the Total Assets
of the Borrower and the Restricted Subsidiaries taken as a whole at such time and (ii) the
Applicable Amount in the aggregate at any time outstanding.

     Section 8.4 Sale of Assets

          The Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary to, sell,
convey, transfer, lease or otherwise dispose of, any of their respective assets or any interest
therein (including the sale or factoring at maturity or collection of any accounts) to any Person,
or permit or suffer any other Person to acquire any interest in any of their respective assets or,
except in the case of the Borrower, issue or sell any shares of their Stock or any Stock
Equivalents (any such disposition being an “Asset Sale”), except for the following:

          (a) the sale or disposition of Cash Equivalents, Inventory or other assets, in each case in
the ordinary course of business;

          (b) the sale or disposition of equipment that has become obsolete, damaged, surplus or
otherwise no longer used or useful in the ordinary course of business or is replaced in the
ordinary course of business;

          (c) any Recovery Event (without giving effect to the limitations in the definition thereof);

          (d) sales or other dispositions without recourse and in the ordinary course of business of
overdue accounts receivable in connection with the compromise or collection thereof;

          (e) the licensing, sublicensing or other similar ordinary course transfers (but not sales) of
intellectual property rights (on an exclusive or non-exclusive basis) to the extent that the
foregoing occurs on an arms-length basis;

          (f) the settlement, release or surrender of tort or other litigation claims;

          (g) asset contributions for no cash consideration (or its equivalent) to the extent
constituting an Investment permitted by Section 8.3(e) (Investments);

          (h) Assets Sales (i) among the Loan Parties, (ii) among Qualified Restricted Subsidiaries, and
(iii) among Restricted Subsidiaries that are not Qualified Restricted Subsidiaries or Loan Parties;

73

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (i) a true lease or sublease of Real Property not constituting Indebtedness and not
constituting a Sale Leaseback;

          (j) dispositions of property pursuant to a Permitted Sale Leaseback; provided, however, that
with respect to any such Asset Sale pursuant to this clause (j), an amount equal to all Net Cash
Proceeds of such Asset Sale are applied to the payment of the Obligations as set forth in, and to
the extent required by, Section 2.7 (Mandatory Prepayments);

          (k) as long as no Default or Event of Default is continuing or would result therefrom, any
other Asset Sale for Fair Market Value, 75% of which shall be payable in cash upon such sale;
provided, however, that with respect to any such Asset Sale pursuant to this clause (k), (i) the
Dollar Equivalent of the aggregate consideration received during any fiscal year for all such Asset
Sales shall not exceed 2.0% of the Total Assets of the Borrower and the Restricted Subsidiaries
taken as a whole at any time outstanding and (ii) an amount equal to all Net Cash Proceeds of such
Asset Sale are applied to the payment of the Obligations as set forth in, and to the extent
required by, Section 2.7 (Mandatory Prepayments);

          (l) any other sale or transfer or series of related sales or transfers that result in cash
consideration of less than $1,000,000;

          (m) termination, sale or closure of up to 500 stores, subleases and franchises per annum, net
of those acquired or opened; provided, however, that at no time shall the aggregate number of
stores owned or franchised by the Group Members be less than 3,500;

          (n) transfers to insurers as part of insurance settlements for losses to governmental
authority for condemned property; and

          (o) dispositions listed on Schedule 8.4 (Asset Sales).

     Section 8.5 Restricted Payments

          The Parent shall not, and shall not permit Borrower or any Restricted Subsidiary to, directly
or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment except for
the following:

          (a) Restricted Payments by any Subsidiary of the Parent to any Loan Party;

          (b) dividends and distributions declared and paid on the common Stock of the Parent
and payable only in common Stock of the Parent;

          (c) (i) payments of cash upon conversion, redemption, repayment, prepayment or
repurchase of any Indebtedness to the extent such payments would be permitted under Section 8.6(e)
(Prepayment of Indebtedness), (ii) deliveries of the Borrower’s common stock upon conversion of any
Qualified Refinancing Indebtedness to equity, (iii) payments of cash in respect of any interest
payments due on any Qualified Refinancing Indebtedness, (iv) Restricted Payments in respect of any
Note Hedge Transaction (including, but not limited to, the purchase and exercise of such Note Hedge
Transaction), and (v) Restricted Payments in respect of any warrant transaction entered into
concurrently with any Note Hedge Transaction;

74

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (d) as long as no Default or Event of Default has occurred and is continuing or
would result therefrom, Restricted Payments in an amount not to exceed, together with any payment
made pursuant to clause (g) of Section 8.6 (Prepayment of Indebtedness), the sum of (i) $50,000,000
and (ii) the Applicable Amount in the aggregate at any time outstanding;

          (e) repurchases of Parent stock in connection with the exercise of employee stock
options in the ordinary course of business on a basis that is “net of taxes” or any equivalent
gross exercise and repurchase to fund tax liabilities to the extent required under applicable
employee contractual arrangements; and

          (f) dividends or distributions by Restricted Subsidiaries to another Restricted
Subsidiary and to minority investors in such Restricted Subsidiary, in each case to the extent of
their interest therein, provided, however, that any such Restricted Payment shall be made pro rata
among all such investors.

     Section 8.6 Prepayment of Indebtedness

          The Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary to, prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any Indebtedness (each an
“Optional Debt Prepayment”); provided, however, that the Borrower, the Parent, and each Restricted
Subsidiary may (a) prepay the Obligations in accordance with the terms of this Agreement, (b)
prepay Indebtedness under the Target Credit Agreement with the proceeds of the Closing Date Term
Loans hereunder, (c) prepay any intercompany Indebtedness permitted under Section 8.1(g) and (j)
(Indebtedness), (d) enter into any Permitted Refinancing permitted under Section 8.1
(Indebtedness), (e) as long as no Default or Event of Default has occurred and is continuing or
would result therefrom, repay, redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof in any matter any senior unsecured, senior subordinated or other
subordinated Indebtedness in an aggregate principal amount not to exceed $450,000,000; provided
that, after giving effect to such payment, (i) the Senior Secured Leverage Ratio would not be
greater than 2.0 to 1 on a Pro Forma Basis, and (ii) the Parent would be in compliance with the
financial covenant contained in Section 5.1 (Financial Covenant) for the most recently ended Test
Period, determined on a Pro Forma Basis, (f) to the extent not otherwise permitted hereby and as
long as no Default or Event of Default has occurred and is continuing or would result therefrom,
prepay Indebtedness of any Foreign Subsidiary in an amount not to exceed in the aggregate
$10,000,000, and (g) to the extent not otherwise permitted hereby and as long as no Default or
Event of Default has occurred and is continuing or would result therefrom, prepay Indebtedness in
an amount not to exceed, together with any Restricted Payment made pursuant to Section 8.5(d)
(Restricted Payments), the sum of (i) $50,000,000 and (ii) the Applicable Amount in the aggregate
at any time outstanding.

     Section 8.7 Restriction on Fundamental Changes

          Except in connection with Investments in Permitted Acquisitions made pursuant to Section 8.3
(Investments) and Asset Sales expressly permitted under Section 8.4 (Sale of Assets), the Parent
shall not, nor shall it permit Borrower or any Restricted Subsidiary to, enter
into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), exchange, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any

75

 

Term Loan Agreement

Collective Brands Finance, Inc.

part of its business, assets or property of any kind whatsoever, whether real, personal
or mixed and whether tangible or intangible, whether now owned or hereafter acquired, or acquire by
purchase or otherwise (other than purchases or other acquisitions of inventory, materials and
equipment and Capital Expenditures in the ordinary course of business) the business, property or
fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division
or line of business or other business unit of any Person, except:

          (a) any Loan Party may be merged with or into any other Loan Party, 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 other Loan Party; provided, in the case of such a merger, the continuing or
surviving Person shall remain a Loan Party, provided, however, that if the Borrower is merged into
another Loan Party, the Borrower must be the surviving entity;

          (b) any Restricted Subsidiary that is not a Loan Party may be merged with or into
any other Restricted Subsidiary that is not a Loan Party or into any Loan Party, 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 other Restricted Subsidiary that is not a Loan Party or to a Loan Party; and

          (c) in the case of either clause (a) or (b) above, prior to and after giving effect
to any proposed transaction, no Default or Event of Default shall occur or be continuing.

     Section 8.8 Change in Nature of Business

          (a) The Parent shall not, and shall not permit Borrower or any of the Restricted
Subsidiaries to, make any material change in the nature or conduct of its business as carried on at
the date hereof, whether in connection with a Permitted Acquisition or otherwise.

          (b) The Parent shall not engage in any business (but may incur liabilities) or hold
any assets; provided, however, the Parent may (i) hold shares of Stock of the Borrower or
Unrestricted Subsidiaries and (ii) have employees and hold assets used to provide administrative
and operational support.

     Section 8.9 Transactions with Affiliates

          Other than as set forth on Schedule 8.9, the Parent shall not, nor shall it permit Borrower or
any Restricted Subsidiary to effect any transaction with any of its respective Affiliates that is
not a Restricted Subsidiary on a basis less favorable to the Borrower or such Restricted Subsidiary
than would at the time be obtainable for a comparable transaction in arms-length dealing with an
unrelated third party.

     Section 8.10 Limitations on Restrictions on Subsidiary Distributions; No New
Negative Pledge

          Except pursuant to the Loan Documents and any agreements governing purchase money Indebtedness
or Capital Lease Obligations permitted by Section 8.1(c) or (e) (Indebtedness) (in the case of agreements permitted by such clauses, any prohibition or
limitation shall only be effective against the assets financed thereby), the Parent shall not, and
shall not

76

 

Term Loan Agreement

Collective Brands Finance, Inc.

permit the Borrower or any of the Restricted Subsidiaries to, (a) agree to enter into or
suffer to exist or become effective any consensual encumbrance or restriction of any kind on the
ability of such Restricted Subsidiary, other than customary provisions in Joint Venture agreements
and other similar agreements relating solely to the securities, assets and revenues of such Joint
Venture, to pay dividends or make any other distribution or transfer of funds or assets or make
loans or advances to or other Investments in, or pay any Indebtedness owed to, the Borrower or any
other Restricted Subsidiary or (b) enter into or suffer to exist or become effective any agreement
prohibiting or limiting the ability of any Restricted Subsidiary, other than customary provisions
in Joint Venture agreements and other similar agreements relating solely to the securities, assets
and revenues of such Joint Venture, to create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired, to secure the
Obligations, including any agreement requiring any other Indebtedness or Contractual Obligation to
be equally and ratably secured with the Obligations.

     Section 8.11 Modification of Constituent Documents

          The Parent shall not, nor shall it permit any Restricted Subsidiary to, change its capital
structure (including in the terms of its outstanding Stock) or otherwise amend its Constituent
Documents, except for changes and amendments that do not materially affect the rights and
privileges of any Restricted Subsidiary and do not materially affect the interests of the Secured
Parties under the Loan Documents or in the Collateral.

     Section 8.12 Modification of Related Documents

          The Parent shall not, nor shall it permit any Restricted Subsidiary to, alter, rescind,
terminate, amend, supplement, waive or otherwise modify any provision of any Related Document
(except for modifications that do not materially affect the rights and privileges of any Restricted
Subsidiary under such Related Document and that do not materially affect the interests of the
Secured Parties under the Loan Documents or in the Collateral).

     Section 8.13 Accounting Changes; Fiscal Year

          The Parent shall not, nor shall it permit the Borrower to, change its (a) accounting treatment
and reporting practices or tax reporting treatment, except as required by GAAP or any Requirement
of Law and disclosed to the Lenders and the Administrative Agent or (b) fiscal year, in each case
other than as set forth on Schedule 8.13 (Accounting Changes; Fiscal Year).

     Section 8.14 Margin Regulations

          The Parent shall not, nor shall it permit any Restricted Subsidiary to, use all or any portion
of the proceeds of any 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 8.15 No Speculative Transactions

          The Parent shall not, nor shall it permit any Restricted Subsidiary to, engage in any
speculative transaction or in any transaction involving Hedging Contracts except for the sole

77

 

Term Loan Agreement

Collective Brands Finance, Inc.

purpose of hedging in the normal course of business and consistent with industry practices;
provided, for the avoidance of doubt, the provisions of this Section 8.15 shall not apply to (a)
any Note Hedge Transaction or (b) any warrant transaction entered into concurrently with any Note
Hedge Transaction.

     Section 8.16 Compliance with ERISA

          The Parent shall not, nor shall it permit any Restricted Subsidiary or any ERISA Affiliate to,
cause or permit to occur an ERISA Event (a) that could result in the imposition of a Lien that is
not permitted by Section 8.2(i) (Liens) or (b) that would have a Material Adverse Effect in the
aggregate.

ARTICLE IX

Events Of Default

     Section 9.1 Events of Default

          Each of the following events shall be an Event of Default:

          (a) the Borrower shall fail to pay any principal of any Term Loan when the same
becomes due and payable; or

          (b) the Borrower shall fail to pay any interest on any Term Loan, any fee under any
of the Loan Documents or any other Obligation (other than one referred to in clause (a) above) and
such non-payment continues for a period of three Business Days after the due date therefor; or

          (c) any representation or warranty made or deemed made by any Loan Party in any Loan
Document or by any Loan Party (or any of its officers) in connection with any Loan Document shall
prove to have been incorrect in any material respect when made or deemed made; or

          (d) any Loan Party shall fail to perform or observe (i) any term, covenant or
agreement contained in Sections 6.2 (Default Notices), 7.1 (Preservation of Corporate Existence,
Etc.), 7.6 (Access), 7.9 (Application of Proceeds), 7.11 (Additional Collateral and Guaranties),
7.12 (Designation of Subsidiaries) or Article VIII (Negative Covenants), (ii) any term, covenant or
agreement contained in Section 6.1 (Financial Statements) if such failure under this clause (ii)
shall remain unremedied for 15 days after the earlier of (A) the date on which a Responsible
Officer of the Borrower becomes aware of such failure and (B) the date on which written notice
thereof shall have been given to the Borrower by the Administrative Agent or any Lender or (iii)
any other term, covenant or agreement contained in this Agreement or in any other Loan Document if
such failure under this clause (iii) shall remain unremedied for 30 days after the earlier of (A)
the date on which a Responsible Officer of the Borrower becomes aware of such
failure and (B) the date on which written notice thereof shall have been given to the Borrower
by the Administrative Agent or any Lender; or

          (e) (i) the Borrower, the Parent or any Restricted Subsidiary shall fail to make any
payment on any Indebtedness of the Borrower, the Parent or any such Restricted

78

 

Term Loan Agreement

Collective Brands Finance, Inc.

Subsidiary (other than the Obligations) or any Guaranty Obligation in respect of Indebtedness of any other Person,
and, in each case, such failure relates to Indebtedness having a principal amount of $25,000,000 or
more, when the same becomes due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), (ii) any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Indebtedness, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness or
(iii) any such Indebtedness shall become or be declared to be due and payable, or be required to be
prepaid or repurchased (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof; provided, that other than with respect to payments defaults, any default
under the Revolving Credit Agreement shall remain unremedied for 30 days; or

          (f) (i) the Borrower, the Parent or any Restricted Subsidiary 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, (ii) any proceeding
shall be instituted by or against the Borrower, the Parent or any Restricted Subsidiary seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts, under any
Requirement of Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee or
other similar official for it or for any substantial part of its property; provided, however, that,
in the case of any such proceedings instituted against the Borrower, the Parent or any Restricted
Subsidiary (but not instituted by the Borrower, the Parent or any Restricted Subsidiary) either
such proceedings shall remain undismissed or unstayed for a period of 60 days or more or any action
sought in such proceedings shall occur or (iii) the Borrower, the Parent or any Restricted
Subsidiary shall take any corporate action to authorize any action set forth in clauses (i) and
(ii) above; or

          (g) any money judgment, writ or warrant of attachment or similar process involving
individually or in the aggregate, an amount in excess of $25,000,000 to the extent not adequately
covered by insurance shall be entered or filed against the Borrower, the Parent or any of the
Restricted Subsidiaries or any of their respective assets and shall remain unpaid, undischarged,
unvacated, unbonded or unstayed for a period of sixty days; or

          (h) an ERISA Event shall occur and the Dollar Equivalent of the amount of all
liabilities and deficiencies resulting therefrom, whether or not assessed, exceeds $25,000,000 in
the aggregate; or

          (i) any provision of any Loan Document after delivery thereof shall for any reason
fail or cease to be valid and binding on, or enforceable against, any Loan Party party thereto, or
any Loan Party shall so state in writing; or

          (j) any Collateral Document shall for any reason fail or cease to create a valid and
enforceable Lien on any Collateral purported to be covered thereby or, except as permitted by the Loan Documents, such Lien shall fail or cease to be a perfected Lien having
the priority set forth in the Intercreditor Agreement, or any Loan Party shall so state in writing;
or

          (k) there shall occur any Change of Control.

79

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 9.2 Remedies

          During the continuance of any Event of Default, the Administrative Agent (a) may, and, at the
request of the Requisite Lenders, shall, by notice to the Borrower declare that all or any portion
of the Term Loan Commitments be terminated, whereupon the obligation of each Lender to make any
Term Loan shall immediately terminate and (b) may and, at the request of the Requisite Lenders,
shall, by notice to the Borrower, declare the Term Loans, all interest thereon and all other
amounts and Obligations payable under this Agreement to be forthwith due and payable, whereupon the
Term Loans, all such interest and all such amounts and Obligations shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of the
Events of Default specified in Section 9.1(f) (Events of Default), (x) the Term Loan Commitments of
each Lender to make Term Loans shall each automatically be terminated and (y) the Term Loans, all
such interest and all such amounts and Obligations shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower. In addition to the remedies set forth above, the Administrative
Agent may exercise any remedies provided for by the Collateral Documents in accordance with the
terms thereof or any other remedies provided by applicable law.

     Section 9.3 Rescission

          If at any time after termination of the Term Loan Commitments or acceleration of the maturity
of the Term Loans, the Borrower shall pay all arrears of interest and all payments on account of
principal of the Term Loans that shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on overdue interest, at the rates
specified herein) and all Events of Default and Defaults (other than non-payment of principal of
and accrued interest on the Term Loans due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to Section 11.1 (Amendments, Waivers, Etc.), then upon the written
consent of the Requisite Lenders and written notice to the Borrower, the termination of the Term
Loan Commitments or the acceleration and their consequences may be rescinded and annulled;
provided, however, that such action shall not affect any subsequent Event of Default or Default or
impair any right or remedy consequent thereon. The provisions of the preceding sentence are
intended merely to bind the Lenders to a decision that may be made at the election of the Requisite
Lenders, and such provisions are not intended to benefit the Borrower and do not give the Borrower
the right to require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.

ARTICLE X

The Administrative Agent

     Section 10.1 Authorization and Action

          (a) Each Lender hereby appoints Citi as the Administrative Agent hereunder and each
Lender authorizes the Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are delegated to the
Administrative Agent under such agreements and to exercise such powers as are reasonably incidental
thereto. Without limiting the foregoing, each Lender hereby authorizes the

80

 

Term Loan Agreement

Collective Brands Finance, Inc.

Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the
Administrative Agent is a party, to exercise all rights, powers and remedies that the
Administrative Agent may have under such Loan Documents and, in the case of the Collateral
Documents, to act as agent for the Lenders and the other Secured Parties under such Collateral
Documents.

          (b) As to any matters not expressly provided for by this Agreement and the other
Loan Documents (including enforcement or collection), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from acting) upon the
instructions of the Requisite Lenders, and such instructions shall be binding upon all Lenders;
provided, however, that the Administrative Agent shall not be required to take any action that (i)
the Administrative Agent in good faith believes exposes it to personal liability unless the
Administrative Agent receives an indemnification reasonably satisfactory to it from the Lenders
with respect to such action or (ii) is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by any
Loan Party pursuant to the terms of this Agreement or the other Loan Documents.

          (c) In performing its functions and duties hereunder and under the other Loan
Documents, the Administrative Agent is acting solely on behalf of the Lenders except to the limited
extent provided in Section 2.5(b), and its duties are entirely administrative in nature. The
Administrative Agent does not assume and shall not be deemed to have assumed any obligation other
than as expressly set forth herein and in the other Loan Documents or any other relationship as the
agent, fiduciary or trustee of or for any Lender or other holder of any Obligation. The
Administrative Agent may perform any of its duties under any Loan Document by or through its agents
or employees.

          (d) The Arranger shall have no obligations or duties whatsoever in such capacity
under this Agreement or any other Loan Document and shall incur no liability hereunder or
thereunder in such capacity.

     Section 10.2 Administrative Agent’s Reliance, Etc.

          None of the Administrative Agent, any of its Affiliates or any of their respective directors,
officers, agents or employees shall be liable for any action taken or omitted to be taken by it,
him, her or them under or in connection with this Agreement or the other Loan Documents, except for
its, his, her or their own gross negligence or willful misconduct. Without limiting the foregoing,
the Administrative Agent (a) may rely on the Register to the extent set forth in Section
2.5 (Evidence of Debt), (b) may consult with legal counsel (including counsel to the Borrower
or any other Loan Party), independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts, (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements, warranties or representations
made by or on behalf of the Borrower, the Parent or any of its Subsidiaries in or in connection
with this Agreement or any other Loan Document, (d) shall not have any duty to ascertain or to
inquire either as to the performance or observance of any term, covenant or condition of this
Agreement or any other Loan Document, as to the financial condition of any Loan Party or as to the
existence or possible existence of any Default or Event of Default, (e) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,

81

 

Term Loan Agreement

Collective Brands Finance, Inc.

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, this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto and (f) shall incur no liability under or in respect
of this Agreement or any other Loan Document by acting upon any notice, consent, certificate or
other instrument or writing (which writing may be a telecopy or electronic mail) or any telephone
message believed by it to be genuine and signed or sent by the proper party or parties.

     Section 10.3 Posting of Approved Electronic Communications

          (a) Each of the Lenders, the Parent and the Borrower agree, and the Parent shall
cause each Guarantor to agree, that the Administrative Agent may, but shall not be obligated to,
make the Approved Electronic Communications available to the Lenders by posting such Approved
Electronic Communications on IntraLinksTM or a substantially similar electronic platform chosen by
the Administrative Agent to be its electronic transmission system (the “Approved Electronic
Platform”).

          (b) Although the Approved Electronic Platform and its primary web portal are secured
with generally-applicable security procedures and policies implemented or modified by the
Administrative Agent from time to time (including, as of the Closing Date, a dual firewall and a
User ID/Password Authorization System) and the Approved Electronic Platform is secured through a
single-user-per-deal authorization method whereby each user may access the Approved Electronic
Platform only on a deal-by-deal basis, each of the Lenders, the Parent and the Borrower
acknowledges and agrees, and the Parent shall cause each Guarantor to acknowledge and agree, that
the distribution of material through an electronic medium is not necessarily secure and that there
are confidentiality and other risks associated with such distribution. In consideration for the
convenience and other benefits afforded by such distribution and for the other consideration
provided hereunder, the receipt and sufficiency of which is hereby acknowledged, each of the
Lenders, the Parent and the Borrower hereby approves, and the Parent shall cause each Guarantor to
approve, distribution of the Approved Electronic Communications through the Approved Electronic
Platform and understands and assumes, and the Parent shall cause each Guarantor to understand and
assume, the risks of such distribution.

          (c) The Approved Electronic Platform and the Approved Electronic Communications are
provided “as is” and “as available”. None of the Administrative Agent or any of its Affiliates or
any of their respective officers, directors, employees, agents, advisors or representatives (the
“Agent Affiliates”) warrant the accuracy, adequacy or completeness of the Approved Electronic
Communications or the Approved Electronic Platform and each expressly disclaims liability for errors or omissions in the Approved Electronic Platform and the
Approved Electronic Communications. No warranty of any kind, express, implied or statutory,
including, without limitation, any warranty of merchantability, fitness for a particular purpose,
non-infringement of third party rights or freedom from viruses or other code defects, is made by
the Agent Affiliates in connection with the Approved Electronic Platform or the Approved Electronic
Communications.

          (d) Each of the Lenders, the Parent and the Borrower agree, and the Parent shall
cause each Guarantor to agree, that the Administrative Agent may, but (except as may be required by
applicable law) shall not be obligated to, store the Approved Electronic

82

 

Term Loan Agreement

Collective Brands Finance, Inc.

Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally-applicable document retention procedures and policies.

     Section 10.4 The Administrative Agent Individually

          With respect to its Ratable Portion, Citi shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as and to the extent set
forth herein for any other Lender. The terms “Lenders”, “Requisite Lenders” and any similar terms
shall, unless the context clearly otherwise indicates, include, without limitation, the
Administrative Agent in its individual capacity as a Lender or as one of the Requisite Lenders.
Citi and its Affiliates may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with, any Loan Party as if Citi were not acting as the
Administrative Agent.

     Section 10.5 Lender Credit Decision

          Each Lender acknowledges that it shall, independently and without reliance upon the
Administrative Agent or any other Lender, conduct its own independent investigation of the
financial condition and affairs of the Borrower and each other Loan Party in connection with the
making and continuance of the Term Loans. Each Lender also acknowledges that it shall,
independently and without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and other Loan Documents.
Except for the 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 or other condition or creditworthiness of any Loan Party
or any Affiliate of any Loan Party that may come into the possession of the Administrative Agent or
any Affiliate thereof or any employee or agent of any of the foregoing.

     Section 10.6 Indemnification

          Each Lender agrees to indemnify the Administrative Agent and each of its Affiliates, and each
of their respective directors, officers, employees, agents and advisors (to the extent not
reimbursed by the Borrower), from and against such Lender’s aggregate Ratable Portion of any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements (including fees, expenses and disbursements of financial and legal
advisors) of any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against, the Administrative Agent or any of its Affiliates, directors, officers, employees, agents
and advisors in any way relating to or arising out of this Agreement or the other Loan
Documents or any action taken or omitted by the Administrative Agent under this Agreement or the
other Loan Documents; provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent’s or such Affiliate’s gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including fees, expenses and disbursements of financial and legal advisors) incurred by the
Administrative Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal proceedings or

83

 

Term Loan Agreement

Collective Brands Finance, Inc.

otherwise) of, or legal advice in respect of its rights or responsibilities under, this Agreement
or the other Loan Documents, to the extent that the Administrative Agent is not reimbursed for such
expenses by the Borrower or another Loan Party.

     Section 10.7 Successor Administrative Agent

          The Administrative Agent may resign at any time by giving written notice thereof to the
Lenders and the Borrower. Upon any such resignation, the Requisite Lenders shall have the right to
appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Requisite Lenders, and shall have accepted such appointment, within 30 days after
the retiring Administrative Agent’s giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
selected from among the Lenders. In either case, such appointment shall be subject to the prior
written approval of the Borrower (which approval may not be unreasonably withheld and shall not be
required upon the occurrence and during the continuance of an Event of Default). Upon the
acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such
successor Administrative Agent shall succeed to, and become vested with, all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement and the other Loan
Documents. Prior to any retiring Administrative Agent’s resignation hereunder as Administrative
Agent, 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. After such resignation, the retiring Administrative Agent shall continue to have the
benefit of this Article X as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.

     Section 10.8 Concerning the Collateral and the Collateral Documents; Releases

          (a) Each Lender agrees that any action taken by the Administrative Agent or the
Requisite Lenders (or, where required by the express terms of this Agreement, a greater proportion
of the Lenders) in accordance with the provisions of this Agreement or of the other Loan Documents,
and the exercise by the Administrative Agent or the Requisite 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 Lenders and
other Secured Parties. Without limiting the generality of the foregoing, the Administrative Agent
shall have the sole and exclusive right and authority to (i) act as the disbursing and collecting
agent for the Lenders with respect to all payments and collections arising in connection herewith
and with the Collateral Documents, (ii) execute and deliver each Collateral Document and accept delivery of each such agreement delivered by any of the Group
Members, (iii) act as collateral agent for the Lenders and the other Secured Parties for purposes
of the perfection of all security interests and Liens created by such agreements and all other
purposes stated therein, provided, however, that the Administrative Agent hereby appoints,
authorizes and directs each Lender to act as collateral sub-agent for the Administrative Agent and
the Lenders for purposes of the perfection of all security interests and Liens with respect to the
Collateral, including any Deposit Accounts maintained by a Loan Party with, and cash and Cash
Equivalents held by, such Lender, (iv) manage, supervise and otherwise deal with the Collateral,
(v) take such action as is necessary or desirable to maintain the perfection and priority of the
security interests and Liens created or purported to be created by the Collateral Documents and

84

 

Term Loan Agreement

Collective Brands Finance, Inc.

(vi) except as may be otherwise specifically restricted by the terms hereof or of any other Loan
Document, exercise all remedies given to the Administrative Agent, the Lenders, and the other
Secured Parties with respect to the Collateral under the Loan Documents relating thereto,
applicable law or otherwise.

          (b) Each of the Lenders hereby consents to the release and hereby directs, in
accordance with the terms hereof, the Administrative Agent to release (or, in the case of clause
(ii) below, release or subordinate) any Lien held by the Administrative Agent for the benefit of
the Lenders against any of the following:

          (i) all of the Collateral and all Loan Parties, upon termination of the Term
Loan Commitments and payment and satisfaction in full of all Term Loans and all other
Obligations that the Administrative Agent has been notified in writing are then due and
payable;

          (ii) any assets that are subject to a Lien permitted by Section 8.2(e) or
(f) (Liens, Etc.);

          (iii) any part of the Collateral sold or disposed of by a Loan Party if such
sale or disposition is permitted by this Agreement (or permitted pursuant to a waiver of or
consent to a transaction otherwise prohibited by this Agreement);

          (iv) any Guarantor from its obligations under the Guaranty if in connection
with the sale or other disposition of such Guarantor (or all or substantially all of its
assets) permitted by this Agreement (or permitted pursuant to a waiver or consent of a
transaction otherwise prohibited by this Agreement); and

          (v) any Guarantor from its obligations under the Guaranty if such Person
ceases to be a Restricted Subsidiary as a result of a transaction or designation permitted
hereunder.

          (c) Each of the Lenders hereby directs the Administrative Agent to execute and
deliver the Intercreditor Agreement and to execute and deliver or file such termination and partial
release statements and do such other things as are necessary to release Liens and/or guarantees to
be released pursuant to this Section 10.8 or subordinated in accordance with, and subject to the
terms and conditions of, the Intercreditor Agreement promptly upon the effectiveness of any such
release.

     Section 10.9 Collateral Matters Relating to Related Obligations

          The benefit of the Loan Documents and of the provisions of this Agreement relating to the
Collateral shall extend to and be available in respect of any Secured Obligation arising under any
Hedging Contract or that is otherwise owed to Persons other than the Administrative Agent, the
Lenders (collectively, “Related Obligations”) solely on the condition and understanding, as among
the Administrative Agent and all Secured Parties, that (a) the Related Obligations shall be
entitled to the benefit of the Loan Documents and the Collateral to the extent expressly set forth
in this Agreement and the other Loan Documents and to such extent the Administrative Agent shall
hold, and have the right and power to act with respect to, the Guaranty and the Collateral on
behalf of and as agent for the holders of the Related Obligations,

85

 

Term Loan Agreement

Collective Brands Finance, Inc.

but the Administrative Agent is otherwise acting solely as agent for the Lenders and shall have no fiduciary duty, duty of loyalty,
duty of care, duty of disclosure or other obligation whatsoever to any holder of Related
Obligations, (b) all matters, acts and omissions relating in any manner to the Guaranty, the
Collateral, or the omission, creation, perfection, priority, abandonment or release of any Lien,
shall be governed solely by the provisions of this Agreement and the other Loan Documents and no
separate Lien, right, power or remedy shall arise or exist in favor of any Secured Party under any
separate instrument or agreement or in respect of any Related Obligation, (c) each Secured Party
shall be bound by all actions taken or omitted, in accordance with the provisions of this Agreement
and the other Loan Documents, by the Administrative Agent and the Requisite Lenders, each of whom
shall be entitled to act at its sole discretion and exclusively in its own interest given its own
Term Loan Commitments and its own interest in the Term Loans and other Obligations to it arising
under this Agreement or the other Loan Documents, without any duty or liability to any other
Secured Party or as to any Related Obligation and without regard to whether any Related Obligation
remains outstanding or is deprived of the benefit of the Collateral or becomes unsecured or is
otherwise affected or put in jeopardy thereby, (d) no holder of Related Obligations and no other
Secured Party (except the Administrative Agent and the Lenders, to the extent set forth in this
Agreement) shall have any right to be notified of, or to direct, require or be heard with respect
to, any action taken or omitted in respect of the Collateral or under this Agreement or the Loan
Documents and (e) no holder of any Related Obligation shall exercise any right of setoff, banker’s
lien or similar right except to the extent provided in Section 11.6 (Right of Set-off) and then
only to the extent such right is exercised in compliance with Section 11.7 (Sharing of Payments,
Etc.).

ARTICLE XI

Miscellaneous

     Section 11.1 Amendments, Waivers, Etc.

          (a) No amendment or waiver of any provision of this Agreement or any other Loan
Document nor consent to any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be in writing and (x) in the case of any such waiver or consent, signed by
the Requisite Lenders (or by the Administrative Agent with the consent of the Requisite Lenders),
(y) in the case of any amendment necessary to implement the terms of a Facility Increase in
accordance with the terms hereof, by the Borrower, the Parent, the Administrative Agent and the
Incremental Term Loan Lenders providing such Facility Increase, and (z) in the case of any other
amendment, by the Requisite Lenders (or by the Administrative Agent with the consent of the
Requisite Lenders), the Borrower and the Parent and then any such .waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by each Lender directly affected thereby, in addition to the Requisite Lenders
(or the Administrative Agent with the consent thereof), do any of the following:

          (i) waive any condition specified in Section 3.1 (Conditions Precedent to
Closing Date Term Loans) or 3.2 (Conditions Precedent to Incremental Term Loans), except
with respect to a condition based upon another provision hereof, the waiver of which
requires only the concurrence of the Requisite Lenders and, in the case of the conditions
specified in Section 3.1 (Conditions Precedent to Closing Date Term

86

 

Term Loan Agreement

Collective Brands Finance, Inc.

Loans) and 3.2 (Conditions Precedent to Incremental Loans), subject to the provisions of Section 3.3
(Determinations of Borrowing Conditions);

          (ii) except pursuant to a Facility Increase, increase the Term Loan
Commitment of such Lender or subject such Lender to any additional obligation;

          (iii) extend the scheduled final maturity of any Term Loan owing to such
Lender, or waive, reduce or postpone any scheduled date fixed for the payment or reduction
of principal or interest of any such Term Loan or fees owing to such Lender (it being
understood that Section 2.7 (Mandatory Prepayments) does not provide for scheduled dates
fixed for payment) or for the reduction of such Lender’s Term Loan Commitment;

          (iv) reduce, or release the Borrower from its obligations to repay, the
principal amount of any Term Loan owing to such Lender (other than by the payment or
prepayment thereof);

          (v) reduce the rate of interest on any Term Loan outstanding and owing to
such Lender or any fee payable hereunder to such Lender;

          (vi) postpone any scheduled date fixed for payment of interest or fees owing
to such Lender or waive any such payment;

          (vii) change the aggregate Ratable Portions of Lenders required for any or
all Lenders to take any action hereunder;

          (viii) release all or substantially all of the Collateral except as provided
in Section 8 (Release of Collateral) of the Intercreditor Agreement and except as provided
in Section 10.8(b) (Concerning the Collateral and the Collateral Documents; Releases) or
release the Borrower from its payment obligation to such Lender under this Agreement or the
Notes owing to such Lender (if any) or release any Guarantor from its obligations under the
Guaranty except as provided in Section 10.8(b) (Concerning the Collateral and the
Collateral Documents; Releases); or

          (ix) amend, Section 10.8(b) (Concerning the Collateral and the Collateral
Documents; Releases), Section 11.7 (Sharing of Payments, Etc.), this Section 11.1 or either
definition of the terms “Requisite Lenders” or “Ratable Portion”;

          (x) amend, Section 8 (Release of Collateral) of the Intercreditor Agreement;

and provided, further, that no amendment, waiver or consent shall, unless in writing and signed by
the Administrative Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Administrative Agent under this Agreement or the other Loan Documents; and
provided, further, that the Administrative Agent may, with the consent of the Borrower, amend,
modify or supplement this Agreement to cure any ambiguity, omission, defect or inconsistency, so
long as such amendment, modification or supplement does not adversely affect the rights of any
Lender.

87

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (b) The Administrative Agent may, but shall have no obligation to, with the written
concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such
Lender. Any waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or other circumstances.

          (c) If, in connection with any proposed amendment, modification, waiver or
termination requiring the consent of all Lenders, the consent of Requisite Lenders is obtained but
the consent of any Lender whose consent is required is not obtained (any such Lender whose consent
is not obtained as described in this Section 11.1 being referred to as a “Non-Consenting Lender”),
then, as long as the Lender acting as the Administrative Agent is not a Non-Consenting Lender, at
the Borrower’s request, an Eligible Assignee reasonably acceptable to the Administrative Agent
shall have the right with the Administrative Agent’s consent and in the Administrative Agent’s sole
discretion (but shall have no obligation) to purchase from such Non-Consenting Lender, and such
Non-Consenting Lender agrees that it shall, upon the Administrative Agent’s request, sell and
assign to the Lender acting as the Administrative Agent or such Eligible Assignee, all of the Term
Loans of such Non-Consenting Lender for an amount equal to the principal balance of all such Term
Loans held by the Non-Consenting Lender and all accrued and unpaid interest and fees with respect
thereto through the date of sale; provided, however, that such purchase and sale shall be recorded
in the Register maintained by the Administrative Agent and not be effective until (x) the
Administrative Agent shall have received from such Eligible Assignee an agreement in form and
substance reasonably satisfactory to the Administrative Agent and the Borrower whereby such
Eligible Assignee shall agree to be bound by the terms hereof and (y) such Non-Consenting Lender
shall have received payments of all Term Loans held by it and all accrued and unpaid interest and
fees with respect thereto through the date of the sale. Each Lender agrees that, if it becomes a
Non-Consenting Lender, it shall execute and deliver to the Administrative Agent an Assignment an
Acceptance to evidence such sale and purchase and shall deliver to the Administrative Agent any
Note (if the assigning Lender’s Term Loans are evidenced by Notes) subject to such Assignment and
Acceptance; provided, however, that the failure of any Non-Consenting Lender to execute an
Assignment and Acceptance shall not render such sale and purchase (and the corresponding
assignment) invalid and such assignment shall be recorded in the Register.

     Section 11.2 Assignments and Participations

          (a) Each Lender may sell, transfer, negotiate or assign to one or more Eligible
Assignees all or a portion of its rights and obligations hereunder (including all of its
rights and obligations with respect to the Term Loans); provided, however, that (i) if any
such assignment shall be of the assigning Lender’s Term Loans and Term Loan Commitment, such
assignment shall cover the same percentage of such Lender’s Term Loans and Term Loan Commitment,
(ii) the aggregate amount being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in no event (if less
than the Assignor’s entire interest) be less than $1,000,000 or an integral multiple of $1,000,000
in excess thereof, except, in either case, (A) with the consent of the Borrower and the
Administrative Agent or (B) if such assignment is being made to a Lender or an Affiliate or
Approved Fund of such Lender, and (iii) if such Eligible Assignee is not, prior to the date of such
assignment, a Lender or an Affiliate or Approved Fund of a Lender, such assignment shall be subject
to the prior consent of the Administrative Agent and the Borrower (which

88

 

Term Loan Agreement

Collective Brands Finance, Inc.

consents shall not be unreasonably withheld or delayed); and provided, further, that, notwithstanding any other provision
of this Section 11.2, the consent of the Borrower shall not be required for any assignment
occurring when any Event of Default shall have occurred and be continuing.

          (b) The parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note (if the assigning Lender’s Term Loans are evidenced by a Note)
subject to such assignment. Upon the execution, delivery, acceptance and recording in the Register
of any Assignment and Acceptance and, other than in respect of assignments made pursuant to Section
2.15 (Substitution of Lenders) and Section 11.1(c) (Amendments, Waivers, Etc.), the receipt by the
Administrative Agent from the assignee of an assignment fee in the amount of $3,500 from and after
the effective date specified in such Assignment and Acceptance, (i) the assignee thereunder 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 and Acceptance, have the rights and
obligations of a Lender, (ii) the Notes (if any) corresponding to the Term Loans assigned thereby
shall be transferred to such assignee by notation in the Register 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 and Acceptance, 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 and Acceptance 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).

          (c) The Administrative Agent shall maintain at its address referred to in Section
11.8 (Notices, Etc.) a copy of each Assignment and Acceptance delivered to and accepted by it and
shall record in the Register the names and addresses of the Lenders and the principal amount of the
Term Loans owing to each Lender from time to time and the Term Loan Commitments of each Lender.
Any assignment pursuant to this Section 11.2 shall not be effective until such assignment is
recorded in the Register.

          (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender
and an assignee, the Administrative Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record or cause to be recorded the
information contained therein in the Register and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at its own expense,
shall, if requested by such assignee, execute and deliver to the Administrative Agent new Notes to the order of such assignee in an amount equal to the Term Loan Commitments
and Term Loans assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has surrendered any Note for exchange in connection with the assignment and has retained
Term Loan Commitments or Term Loans hereunder, new Notes to the order of the assigning Lender in an
amount equal to the Term Loan Commitments and Term Loans retained by it hereunder. Such new Notes
shall be dated the same date as the surrendered Notes and be in substantially the form of Exhibit B
(Form of Term Note).

          (e) In addition to the other assignment rights provided in this Section 11.2, each
Lender may do each of the following:

89

 

Term Loan Agreement

Collective Brands Finance, Inc.

          (i) grant to a Special Purpose Vehicle the option to make all or any part of
any Term Loan that such Lender would otherwise be required to make hereunder and the
exercise of such option by any such Special Purpose Vehicle and the making of Term Loans
pursuant thereto shall satisfy (once and to the extent that such Term Loans are made) the
obligation of such Lender to make such Term Loans thereunder; provided, however, that
(x) nothing herein shall constitute a commitment or an offer to commit by such a Special
Purpose Vehicle to make Term Loans hereunder and no such Special Purpose Vehicle shall be
liable for any indemnity or other Obligation (other than the making of Term Loans for which
such Special Purpose Vehicle shall have exercised an option, and then only in accordance
with the relevant option agreement) and (y) such Lender’s obligations under the Loan
Documents shall remain unchanged, such Lender shall remain responsible to the other parties
for the performance of its obligations under the terms of this Agreement and shall remain
the holder of the Obligations for all purposes hereunder; and

          (ii) may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to (A) a Federal Reserve
Bank, (B) any holder of, or trustee for the benefit of, the holders of such Lender’s
Securities and (C) any Special Purpose Vehicle to which such Lender has granted an option
pursuant to clause (i) above;

provided, however, that no such assignment or grant shall release such Lender from any of its
obligations hereunder except as expressly provided in clause (i) above and except, in the case of a
subsequent foreclosure pursuant to an assignment as collateral, if such foreclosure is made in
compliance with the other provisions of this Section 11.2 other than this clause (e) or clause (f)
below. Each party hereto acknowledges and agrees that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other senior debt of any such
Special Purpose Vehicle, such party shall not institute against, or join any other Person in
instituting against, any Special Purpose Vehicle that has been granted an option pursuant to this
clause (e) any bankruptcy, reorganization, insolvency or liquidation proceeding (such agreement
shall survive the payment in full of the Obligations). The terms of the designation of, or
assignment to, such Special Purpose Vehicle shall not restrict such Lender’s ability to, or grant
such Special Purpose Vehicle the right to, consent to any amendment or waiver to this Agreement or
any other Loan Document or to the departure by the Borrower from any provision of this Agreement or
any other Loan Document without the consent of such Special Purpose Vehicle except, as long as the
Administrative Agent and the Lenders, Issuers and other Secured Parties shall continue to, and
shall be entitled to continue to, deal solely and directly with such Lender in connection with such Lender’s obligations under this Agreement, to the extent any such consent
would reduce the principal amount of, or the rate of interest on, any Obligations, amend this
clause (e) or postpone any scheduled date of payment of such principal or interest. Each Special
Purpose Vehicle shall be entitled to the benefits of Sections 2.13 (Capital Adequacy) and 2.14
(Taxes) and of 2.12(d) (Illegality) as if it were such Lender; provided, however, that anything
herein to the contrary notwithstanding, no Borrower shall, at any time, be obligated to make under
Section 2.13 (Capital Adequacy), 2.14 (Taxes) or 2.12(d) (Illegality) to any such Special Purpose
Vehicle and any such Lender any payment in excess of the amount the Borrower would have been
obligated to pay to such Lender in respect of such interest if such Special Purpose Vehicle had not
been assigned the rights of such Lender hereunder; and provided, further, that

90

 

Term Loan Agreement

Collective Brands Finance, Inc.

such Special Purpose Vehicle shall have no direct right to enforce any of the terms of this Agreement against the
Borrower, the Administrative Agent or the other Lenders.

          (f) Each Lender may sell participations to one or more Persons in or to all or a
portion of its rights and obligations under the Loan Documents (including all its rights and
obligations with respect to the Term Loans). The terms of such participation shall not, in any
event, require the participant’s consent to any amendments, waivers or other modifications of any
provision of any Loan Documents, the consent to any departure by any Loan Party therefrom, or to
the exercising or refraining from exercising any powers or rights such Lender may have under or in
respect of the Loan Documents (including the right to enforce the obligations of the Loan Parties),
except if any such amendment, waiver or other modification or consent would (i) reduce the amount,
or postpone any date fixed for, any amount (whether of principal, interest or fees) payable to such
participant under the Loan Documents, to which such participant would otherwise be entitled under
such participation or (ii) result in the release of all or substantially all of the Collateral
other than in accordance with Section 10.8(b) (Concerning the Collateral and the Collateral
Documents; Releases). In the event of the sale of any participation by any Lender, (w) such
Lender’s obligations under the Loan Documents shall remain unchanged, (x) such Lender shall remain
solely responsible to the other parties for the performance of such obligations, (y) such Lender
shall remain the holder of such Obligations for all purposes of this Agreement and (z) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under this Agreement.
Each participant shall be entitled to the benefits of Sections 2.13 (Capital Adequacy) and 2.14
(Taxes) and of 2.12(d) (Illegality) as if it were a Lender; provided, however, that anything herein
to the contrary notwithstanding, the Borrower shall not, at any time, be obligated to make under
Section 2.13 (Capital Adequacy), 2.14 (Taxes) or 2.12(d) (Illegality) to the participants in the
rights and obligations of any Lender (together with such Lender) any payment in excess of the
amount the Borrower would have been obligated to pay to such Lender in respect of such interest had
such participation not been sold and provided, further, that such participant in the rights and
obligations of such Lender shall have no direct right to enforce any of the terms of this Agreement
against the Borrower, the Administrative Agent or the other Lenders.

     Section 11.3 Costs and Expenses

          (a) The Borrower agrees, so long as no Default or Event of Default has occurred and
is continuing, within fifteen (15) days of receiving an invoice therefor and otherwise upon demand,
to pay, or reimburse the Administrative Agent for, all of the Administrative Agent’s reasonable
internal and external audit, legal, appraisal, valuation, filing, document duplication and
reproduction and investigation expenses and for all other reasonable out-of-pocket costs and expenses of every type and nature (including the reasonable fees, expenses
and disbursements of the Administrative Agent’s counsel, Weil, Gotshal & Manges LLP, local legal
counsel, auditors, accountants, appraisers, printers, insurance and environmental advisors, and
other consultants and agents) incurred by the Administrative Agent in connection with any of the
following: (i) the Administrative Agent’s audit and investigation of the Borrower, the Parent and
any of its Subsidiaries in connection with the preparation, negotiation or execution of any Loan
Document or the Administrative Agent’s periodic audits of the Borrower, the Parent or any of its
Subsidiaries, as the case may be, (ii) the preparation, negotiation, execution or interpretation of
this Agreement (including, without limitation, the satisfaction or attempted satisfaction of any
condition set forth in Article III (Conditions To Term Loans), any Loan Document or any

91

 

Term Loan Agreement

Collective Brands Finance, Inc.

proposal letter or commitment letter issued in connection therewith, or the making of the Term Loans
hereunder, (iii) the creation, perfection or protection of the Liens under any Loan Document
(including any reasonable fees, disbursements and expenses for local counsel in various
jurisdictions), (iv) the ongoing administration of this Agreement and the Term Loans, including
consultation with attorneys in connection therewith and with respect to the Administrative Agent’s
rights and responsibilities hereunder and under the other Loan Documents, (v) the protection,
collection or enforcement of any Obligation or the enforcement of any Loan Document, (vi) the
commencement, defense or intervention in any court proceeding relating in any way to the
Obligations, any Loan Party, any of the Parent’s Subsidiaries, the Merger, the Related Documents,
this Agreement or any other Loan Document, (vii) the response to, and preparation for, any subpoena
or request for document production with which the Administrative Agent is served or deposition or
other proceeding in which the Administrative Agent is called to testify, in each case, relating in
any way to the Obligations, any Loan Party, any of the Parent’s Subsidiaries, the Merger, the
Related Documents, this Agreement or any other Loan Document or (viii) any amendment, consent,
waiver, assignment, restatement, or supplement to any Loan Document or the preparation, negotiation
and execution of the same.

          (b) The Borrower further agrees to pay or reimburse the Administrative Agent and
each of the Lenders, so long as no Default or Event of Default has occurred and is continuing,
within fifteen (15) days of receiving an invoice therefor and otherwise upon demand, for all
out-of-pocket costs and expenses, including reasonable attorneys’ fees (including allocated costs
of internal counsel and costs of settlement), incurred by the Administrative Agent or such Lenders
in connection with any of the following: (i) in enforcing any Loan Document or Obligation or any
security therefor or exercising or enforcing any other right or remedy available by reason of an
Event of Default, (ii) in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a “work-out” or in any insolvency or bankruptcy
proceeding, (iii) in commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal proceeding relating to the
Obligations, any Loan Party, any of the Parent’s Subsidiaries and related to or arising out of the
transactions contemplated hereby or by any other Loan Document or Related Document or (iv) in
taking any other action in or with respect to any suit or proceeding (bankruptcy or otherwise)
described in clause (i), (ii) or (iii) above.

     Section 11.4 Indemnities

          (a) The Borrower agrees to indemnify and hold harmless the Administrative Agent and
each Lender (including each Person obligated on a Hedging Contract that is a Loan Document if such
Person was a Lender at the time of it entered into such Hedging Contract) and each of their
respective Affiliates, and each of the directors, officers, employees, agents, trustees,
representatives, attorneys, consultants and advisors of or to any of the foregoing (including
those retained in connection with the satisfaction or attempted satisfaction of any condition set
forth in Article III (Conditions To Term Loans) (each such Person being an “Indemnitee”) from and
against any and all claims, damages, liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, disbursements and expenses, joint or several, of any kind or nature
(including fees, disbursements and expenses of financial and legal advisors to any such Indemnitee)
that may be imposed on, incurred by or asserted against any such Indemnitee in connection with or
arising out of any investigation, litigation or proceeding, whether or not such investigation,
litigation or proceeding is brought by any such indemnitee or any of its directors, security
holders or creditors or any such Indemnitee, director, security holder or creditor is a party
thereto, whether direct,

92

 

Term Loan Agreement

Collective Brands Finance, Inc.

indirect, or consequential and whether based on any federal, state or local law or other statutory regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any manner relating to or arising
out of this Agreement, any other Loan Document, any Obligation, any Related Document, or any act,
event or transaction related or attendant to any thereof, or the use or intended use of the
proceeds of the Term Loans or in connection with any investigation of any potential matter covered
hereby (collectively, the “Indemnified Matters”); provided, however, that the Borrower shall not
have any liability under this Section 11.4 to an Indemnitee with respect to any Indemnified Matter
that has resulted primarily from the gross negligence or willful misconduct of that Indemnitee, as
determined by a court of competent jurisdiction in a final non-appealable judgment or order.
Without limiting the foregoing, “Indemnified Matters” include (i) all Environmental Liabilities and
Costs arising from or connected with the past, present or future operations of the Borrower, the
Parent or any of its Subsidiaries involving any property subject to a Collateral Document, or
damage to real or personal 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 any contiguous real
estate, (ii) any costs or liabilities incurred in connection with any Remedial Action concerning
the Borrower, the Parent or any of its Subsidiaries, (iii) any costs or liabilities incurred in
connection with any Environmental Lien and (iv) any costs or liabilities incurred in connection
with any other matter under any Environmental Law and applicable state property transfer laws,
whether, with respect to any such matter, such Indemnitee is a mortgagee pursuant to any leasehold
mortgage, a mortgagee in possession, the successor in interest to the Borrower, the Parent or any
of its Subsidiaries, or the owner, lessee or operator of any property of the Borrower, the Parent
or any of its Subsidiaries by virtue of foreclosure, except, with respect to those matters referred
to in clauses (i), (ii), (iii) and (iv) above, to the extent (x) incurred following foreclosure by
the Administrative Agent or any Lender, or the Administrative Agent or any Lender having become the
successor in interest to the Borrower, the Parent or any of its Subsidiaries and (y) attributable
solely to acts of the Administrative Agent, such Lender or any agent on behalf of the
Administrative Agent or such Lender.

          (b) The Borrower shall indemnify the Administrative Agent and the Lenders for, and
hold the Administrative Agent and the Lenders harmless from and against, any and all claims for
brokerage commissions, fees and other compensation made against the Administrative Agent and the
Lenders for any broker, finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of any Loan Party or any of its Subsidiaries in connection with
the transactions contemplated by this Agreement.

          (c) The Borrower, at the request of any Indemnitee, shall have the obligation to
defend against any investigation, litigation or proceeding or requested Remedial Action, in each
case contemplated in clause (a) above, and the Borrower, in any event, may participate in
the defense thereof with legal counsel of the Borrower’s choice. In the event that such
indemnitee requests the Borrower to defend against such investigation, litigation or proceeding or
requested Remedial Action, the Borrower shall promptly do so and such Indemnitee shall have the
right to have legal counsel of its choice participate in such defense. No action taken by legal
counsel chosen by such Indemnitee in defending against any such investigation, litigation or
proceeding or requested Remedial Action, shall vitiate or in any way impair the Borrower’s
obligation and duty hereunder to indemnify and hold harmless such Indemnitee.

          (d) The Borrower agrees that any indemnification or other protection provided to any
Indemnitee pursuant to this Agreement (including pursuant to this Section 11.4)

93

 

Term Loan Agreement

Collective Brands Finance, Inc.

or any other Loan Document shall (i) survive payment in full of the Obligations and (ii) inure to the benefit of any
Person that was at any time an Indemnitee under this Agreement or any other Loan Document.

     Section 11.5 Limitation of Liability

          (a) The Borrower agrees that no Indemnitee shall have any liability (whether in
contract, tort or otherwise) to any Loan Party or any of their respective Subsidiaries or any of
their respective equity holders or creditors for or in connection with the transactions
contemplated hereby and in the other Loan Documents and Related Documents, except to the extent
such liability is determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted primarily from such Indemnitee’s gross negligence or willful
misconduct. In no event, however, shall any Indemnitee be liable on any theory of liability for
any special, indirect, consequential or punitive damages (including, without limitation, any loss
of profits, business or anticipated savings). The Borrower hereby waives, releases and agrees
(each for itself and on behalf of its Subsidiaries) 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.

          (b) IN NO EVENT SHALL ANY AGENT AFFILIATE HAVE ANY LIABILITY TO ANY LOAN PARTY,
LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT OR CONTRACT OR OTHERWISE)
ARISING OUT OF ANY LOAN PARTY OR ANY AGENT AFFILIATE’S TRANSMISSION OF APPROVED ELECTRONIC
COMMUNICATIONS THROUGH THE INTERNET OR ANY USE OF THE APPROVED ELECTRONIC PLATFORM, EXCEPT TO THE
EXTENT SUCH LIABILITY OF ANY AGENT AFFILIATE IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT
OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FORM SUCH AGENT AFFILIATE’S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.

     Section 11.6 Right of Set-off

          Upon the occurrence and during the continuance of any Event of Default each Lender and each
Affiliate of a Lender is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other Indebtedness at any time owing by such Lender or
its Affiliates to or for the credit or the account of the Borrower against any and all of the
Obligations now or hereafter existing whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and even though such Obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such set-off 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 set-off and application. Each Lender agrees that it
shall not, without the express consent of the Requisite Lenders (and that, it shall, to the extent
lawfully entitled to do so, upon the request of the Requisite Lenders) exercise its set-off rights
under this Section 11.6 against any deposit accounts of the Loan Parties and their Subsidiaries
maintained with such Lender or any Affiliate thereof. The rights of each Lender under this Section
11.6 are in addition to the other rights and remedies (including other rights of set-off) that such
Lender may have.

94

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 11.7 Sharing of Payments, Etc.

          (a) If any Lender (directly or through an Affiliate thereof) obtains any payment
(whether voluntary, involuntary, through the exercise of any right of set-off (including pursuant
to Section 11.6 (Right of Set-off)) or otherwise) of the Term Loans owing to it, any interest
thereon, fees in respect thereof or amounts due pursuant to Section 11.3 (Costs and Expenses) or
11.4 (Indemnities) (other than payments pursuant to Section 2.12 (Special Provisions Governing
Eurodollar Rate Loans), 2.13 (Capital Adequacy) or 2.14 (Taxes) or otherwise receives any
Collateral or any “Proceeds” (as defined in the Pledge and Security Agreement) of Collateral (other
than payments pursuant to Section 2.12 (Special Provisions Governing Eurodollar Rate Loans), 2.13
(Capital Adequacy) or 2.14 (Taxes)) (in each case, whether voluntary, involuntary, through the
exercise of any right of set-off (including pursuant to Section 11.6 (Right of Set-off)) or
otherwise) in excess of its Ratable Portion of all payments of such Obligations obtained by all the
Lenders, such Lender (a “Purchasing Lender”) shall forthwith purchase from the other Lenders (each,
a “Selling Lender”) such participations in their Term Loans or other Obligations as shall be
necessary to cause such Purchasing Lender to share the excess payment ratably with each of them.

          (b) If all or any portion of any payment received by a Purchasing Lender is
thereafter recovered from such Purchasing Lender, such purchase from each Selling Lender shall be
rescinded and such Selling Lender shall repay to the Purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Selling Lender’s ratable share
(according to the proportion of (i) the amount of such Selling Lender’s required repayment in
relation to (ii) the total amount so recovered from the Purchasing Lender) of any interest or other
amount paid or payable by the Purchasing Lender in respect of the total amount so recovered.

          (c) The Borrower agrees that any Purchasing Lender so purchasing a participation
from a Selling Lender pursuant to this Section 11.7 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the Borrower in the amount of
such participation.

     Section 11.8 Notices, Etc.

          (a) Addresses for Notices. All notices, demands, requests, consents and other
communications provided for in this Agreement shall be given in writing, or by any
telecommunication device capable of creating a written record (including electronic mail), and
addressed to the party to be notified as follows:

95

 

Term Loan Agreement

Collective Brands Finance, Inc.

	 	(i)	 	if to the Borrower:
	 
	 	 	 	Payless ShoeSource, Inc.

3231 Southeast Sixth Avenue

Topeka, Kansas 66607-2207

	 	 	 	Attention: Rick Porzig, Chief Financial Officer

Copy: Michael Massey, General Counsel

Telecopy no: (785) 233-5171

E-Mail Addresses:

rick_porzig@payless.com; michael_massey@payless.com

               (ii) if to any Lender, at its Domestic Lending Office specified opposite its name on
Schedule II (Applicable Lending Offices and Addresses for Notices) or on the signature page of any
applicable Assignment and Acceptance;

	 
	 
	 	(iii)	 	if to the Administrative Agent:     

Citicorp North America, Inc.     

388 Greenwich Street, 20th Floor     

New York, New York 10013

Attention: Jeffrey Nitz

Telecopy no: (212) 816-7845

E-Mail Address: jeffrey.nitz@citigroup.com
	 
	 	 	 	                     with a copy to:
	 
	 	 	 	Citcorp North America, Inc. — Loan Administration

2 Penns Way — Suite 100

New Castle, Delaware 19720

Attention: Lisa Rodriguez

Telecopy no: (302) 894-6070

E-Mail Address: oploanswebadmin@citi.com
	 
	 	 	 	Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153-0119

Attention: Daniel S. Dokos

Telecopy no: (212) 310-8007

E-Mail Address: daniel.dokos@weil.com

or at such other address as shall be notified in writing (x) in the case of the Borrower and the
Administrative Agent, to the other parties and (y) in the case of all other parties, to the
Borrower and the Administrative Agent.

          (b) Effectiveness of Notices. All notices, demands, requests, consents and other
communications described in clause (a) above shall be effective (i) if delivered by hand, including
any overnight courier service, upon personal delivery, (ii) if delivered by mail, when deposited in
the mails, (iii) if delivered by posting to an Approved Electronic Platform (to the extent
permitted by Section 10.3 to be delivered thereunder), an Internet website or a similar
telecommunication device requiring a user prior access to such Approved Electronic Platform,
website or other device (to the extent permitted by Section 10.3 to be delivered thereunder), when
such notice, demand, request, consent and other communication shall have been made generally
available on such Approved Electronic Platform, Internet website or similar device to the class of
Person being notified (regardless of whether any such Person must accomplish, and whether or

96

 

Term Loan Agreement

Collective Brands Finance, Inc.

not any such Person shall have accomplished, any action prior to obtaining access to such
items, including registration, disclosure of contact information, compliance with a standard user
agreement or undertaking a duty of confidentiality) and such Person has been notified that such
communication has been posted to the Approved Electronic Platform and (iv) if delivered by
electronic mail or any other telecommunications device, when transmitted to an electronic mail
address (or by another means of electronic delivery) as provided in clause (a) above; provided,
however, that notices and communications to the Administrative Agent pursuant to Article II (The
Term Loan Facility) or Article X (The Administrative Agent) shall not be effective until received
by the Administrative Agent.

          (c) Use of Electronic Platform. Notwithstanding clause (a) and (b) above (unless
the Administrative Agent requests that the provisions of clause (a) and (b) above be followed) and
any other provision in this Agreement or any other Loan Document providing for the delivery of any
Approved Electronic Communication by any other means the Loan Parties shall deliver all Approved
Electronic Communications to the Administrative Agent by properly transmitting such Approved
Electronic Communications in an electronic/soft medium in a format reasonably acceptable to the
Administrative Agent to oploanswebadmin@Citi.com or such other electronic mail address (or similar
means of electronic delivery) as the Administrative Agent may notify the Borrower. Nothing in this
clause (c) shall prejudice the right of the Administrative Agent or any Lender to deliver any
Approved Electronic Communication to any Loan Party in any manner authorized in this Agreement or
to request that the Borrower effect delivery in such manner.

     Section 11.9 No Waiver; Remedies

          No failure on the part of any Lender or the Administrative Agent 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. The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

     Section 11.10 Binding Effect

          This Agreement shall become effective when it shall have been executed by the Borrower and the
Administrative Agent and when the Administrative Agent shall have been notified by each Lender that
such Lender has executed it and thereafter shall be binding upon and inure solely to the benefit of
the Borrower, the Administrative Agent and each Lender and, in each case, their respective
successors and assigns; provided, however, that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the Lenders.

     Section 11.11 Governing Law

          This Agreement and the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.

97

 

Term Loan Agreement

Collective Brands Finance, Inc.

     Section 11.12 Submission to Jurisdiction; Service of Process

          (a) Any legal action or proceeding with respect to this Agreement or any other Loan
Document may be brought in the courts of the State of New York located in the City of New York or
of the United States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, the Borrower hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto 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 respective jurisdictions.

          (b) The Borrower hereby irrevocably consents to the service of any and all legal
process, summons, notices and documents in any suit, action or proceeding brought in the United
States of America arising out of or in connection with this Agreement or any other Loan Document by
the mailing (by registered or certified mail, postage prepaid) or delivering of a copy of such
process to the Borrower at its address specified in Section 11.8 (Notices, Etc.). The Borrower
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.

          (c) Nothing contained in this Section 11.12 shall affect the right of the
Administrative Agent or any Lender to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against the Borrower or any other Loan Party in any
other jurisdiction.

          (d) If for the purposes of obtaining judgment in any court it is necessary to
convert a sum due hereunder in Dollars into another currency, the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Administrative Agent could purchase Dollars
with such other currency at the spot rate of exchange quoted by the Administrative Agent at 11:00
a.m. (New York time) on the Business Day preceding that on which final judgment is given, for the
purchase of Dollars, for delivery two Business Days thereafter.

     Section 11.13 Waiver of Jury Trial

          Each of the Administrative Agent, the Lenders, the Parent and the Borrower irrevocably
waives trial by jury in any action or proceeding with respect to this Agreement or any other Loan
Document.

     Section 11.14 Marshaling; Payments Set Aside

          None of the Administrative Agent or any Lender shall be under any obligation to marshal any
assets in favor of the Borrower or any other party or against or in payment of any or all of the
Obligations. To the extent that the Borrower makes a payment or payments to the Administrative
Agent or the Lenders or any such Person receives payment from the proceeds of the Collateral or
exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement
or setoff or any part thereof are subsequently 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

98

 

Term Loan Agreement

Collective Brands Finance, Inc.

satisfied, and all Liens, right and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.

     Section 11.15 Section Titles

          The section titles contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the parties hereto,
except when used to reference a Section. Any reference to the number of a clause, sub-clause or
subsection hereof immediately followed by a reference in parenthesis to the title of the Section
containing such clause, sub-clause or subsection is a reference to such clause, sub-clause or
subsection and not to the entire Section; provided, however, that, in case of direct conflict
between the reference to the title and the reference to the number of such Section, the reference
to the title shall govern absent manifest error. If any reference to the number of a Section (but
not to any clause, sub-clause or subsection thereof) is followed immediately by a reference in
parenthesis to the title of a Section, the title reference shall govern in case of direct conflict
absent manifest error.

     Section 11.16 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 so that all signature
pages are attached to the same document. Delivery of an executed signature page of this Agreement
by facsimile transmission, electronic mail or by posting on the Approved Electronic Platform shall
be as effective as delivery of a manually executed counterpart hereof. A set of the copies of this
Agreement signed by all parties shall be lodged with the Borrower and the Administrative Agent.

     Section 11.17 Entire Agreement

          This Agreement, together with all of the other Loan Documents and all certificates and
documents delivered hereunder or thereunder, embodies the entire agreement of the parties and
supersedes all prior agreements and understandings relating to the subject matter hereof. In the
event of any conflict between the terms of this Agreement and any other Loan Document, the terms of
this Agreement shall govern.

     Section 11.18 Confidentiality

          Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the
Information (as defined below) and not to use or disclose such Information, except that Information
may be used or disclosed (a) to its Affiliates and to its and its Affiliates’ respective managers,
administrators, trustees, partners, directors, officers, employees, agents, advisors and other
representatives (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto, (e) in

99

 

Term Loan Agreement

Collective Brands Finance, Inc.

connection with the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any
prospective Eligible Assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or party (or its managers, administrators, trustees, partners,
directors, officers, employees, agents, advisors and other representatives) to any swap or
derivative or similar transaction under which payments are to be made by reference to the Borrower
and its Obligations, this Agreement or payments hereunder, (iii) any rating agency (it being
understood that, prior to any such disclosure, such rating agency shall undertake to preserve the
confidentiality of any Information relating to the Loan Parties received by it from such Lender),
or (iv) the CUSIP Service Bureau or any similar organization, (g) with the written consent of the
Borrower or (h) to the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the Administrative Agent, any
Lender, or any of their respective Affiliates on a nonconfidential basis from a source other than
the Borrower.

          For purposes of this Section, “Information” means all information received from the Parent or
any of its Subsidiaries relating to the Parent or any of its Subsidiaries or any of their
respective businesses, other than any such information that is available to the Administrative
Agent or any Lender on a nonconfidential basis prior to disclosure by the Parent or any of its
Subsidiaries, provided that, in the case of information received from the Parent or any of its
Subsidiaries after the date hereof, such information is clearly identified at the time of delivery
as confidential. Any Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

     Section 11.19 Patriot Act Notice.

          Each Lender subject to the Patriot Act hereby notifies the Borrower that, pursuant to Section
326 of the Patriot Act, it is required to obtain, verify and record information that identifies the
Borrower, including the name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the Patriot Act.

[Signature Pages Follow]

100

 

          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.

	 	 	 	 	 
	 	Collective Brands Finance, Inc. (formerly

known as Payless ShoeSource Finance, Inc.),

as Borrower

 	 
	 	By:  	/s/ Ullrich E. Porzing
 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 
	 	Collective Brands, Inc.

(formerly known as Payless ShoeSource, Inc.)

as a Loan Party

 	 
	 	By:  	/s/ Ullrich E. Porzing
 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 
	 	PAYLESS SHOESOURCE, INC., a Missouri

corporation

as a Loan Party

 	 
	 	By:  	/s/ Ullrich E. Porzing
 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 
	 	PAYLESS SHOESOURCE DISTRIBUTION, INC.

as a Loan Party

 	 
	 	By:  	/s/ Ullrich E. Porzing
 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	Vice President 	 
	 

[SIGNATURE PAGE TO TERM LOAN AGREEMENT]

 

 

	 	 	 	 	 
	 	Citicorp North America, Inc.,

as Administrative Agent and Lender

 	 
	 	By:  	/s/ Michael M. Schadt
 	 
	 	 	Name:  	Michael M. Schadt 	 
	 	 	Title:  	Diector 	 
	 

[SIGNATURE PAGE TO TERM LOAN AGREEMENT]

 

 

	 	 	 	 	 
	 	J.P. Morgan Chase Bank,N.A.

as Lender

 	 
	 	By:  	/s/ Patrick J. Fravel
 	 
	 	 	Name:  	Patrick J. Fravel 	 
	 	 	Title:  	Vice Presdient 	 
	 

[SIGNATURE PAGE TO TERM LOAN AGREEMENT]

 

 

Schedule I

Term Loan Commitments

	 	 	 	 	 	 
	Lender	 	Term Loan Commitment	 
	1.	Citicorp North America, Inc.
	 	$	543,750,000	 
	2.	J.P. Morgan Securities Inc.
	 	$	181,250,000	 
	 	TOTAL
	 	$	725,000,000	 

 

 

Schedule II

Applicable Lending Offices and Addresses For Notices

	 	 	 	 	 
	Lender	 	Office for Notices	 	Domestic Lending Office
	Citicorp North America, Inc.

	 	Citicorp North America Inc.
	 	Citicorp North America, Inc
	 

	 	388 Greenwich Street, 20th Floor
	 	2 Penns Way, Suite 100
	 

	 	New York, NY 10013
	 	New Castle, DE 19720
	 
	 	 	 	 
	 

	 	Attn: Jeffrey Nitz
	 	Attn: Lisa Rodriguez
	 

	 	Email: jeffrey.nitz@citi.com
	 	Email: oploanswebadmin@citi.com
	 

	 	T: 212-816-7845
	 	T: 302-894-6070
	 

	 	F: 212-816-2613
	 	F: 212-994-0961
	 
	 	 	 	 
	J.P. Morgan Securities Inc.

	 	JPMorgan Chase Bank, NA
	 	JPMorgan Chase Bank, NA
	 

	 	120 South LaSalle Street, 8th Floor
	 	120 South LaSalle Street, 8th Floor
	 

	 	Chicago, IL 60603
	 	Chicago, IL 60603
	 

	 	Mail Code: IL1-1454
	 	Mail Code: IL1-1454
	 
	 	 	 	 
	 

	 	Attn: Patrick J. Fravel
	 	Attn: Patrick J. Fravel
	 

	 	Email: patrick.j.fravel@chase.com
	 	Email: patrick.j.fravel@chase.com
	 

	 	T: 312-661-6943
	 	T: 312-661-6943
	 

	 	F: 312-661-6929
	 	F: 312-661-6929

 

 

Schedule 4.2

Consents

None.

 

 

Schedule 4.3

Ownership of Subsidiaries

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Collective Brands Holdings Limited*

	 	Hong Kong 

2007
	 	1,000 shares
	 	100% — PSS Holdings
	 
	 	 	 	 	 	 
	Collective Brands Logistics Limited*

	 	Hong Kong 

2007
	 	1,000 shares
	 	100% — PSS Holdings
International Limited
	 
	 	 	 	 	 	 
	Collective Brands Services Limited*

	 	Hong Kong 

2007
	 	1,000 shares
	 	100% — PSS
International
Holdings Limited
	 
	 	 	 	 	 	 
	Collective Brands China Business Trust,
II*

	 	Hong Kong 

2007
	 	N/A
	 	100% — PSS Holdings
	 
	 	 	 	 	 	 
	Collective Brands, Inc.

	 	DE 

1998
	 	265,000,000 $0.01
par value
	 	N/A
	 

	 	 	 	25,000,000 shares of
Preferred Stock	 	 
	 

	 	 	 	Issued: 88,130,874	 	 
	 

	 	 	 	64,996,287
outstanding	 	 
	 

	 	 	 	$0.01 par value	 	 
	 
	 	 	 	 	 	 
	Collective Brands Finance, Inc.

	 	NV 
1992
	 	100 shares of common
stock
	 	100% — Collective Brands, Inc.
	 

	 	 	 	Issued: 99 shares of
common stock	 	 
	 

	 	 	 	$1.00 par value	 	 
	 
	 	 	 	 	 	 
	Collective International, LP

	 	Delaware 

2006
	 	N/A
	 	99.9% Payless
ShoeSource Worldwide,
Inc.
	 

	 	 	 	 	 	0.1% Payless
Collective GP, LLC
	 
	 	 	 	 	 	 
	Collective Licensing International, LLC

	 	Delaware 

2003
	 	N/A
	 	100% — Collective
International LP
	 
	 	 	 	 	 	 
	Dyelights, Inc.

	 	Delaware 

1999
	 	1,500 shares of
common stock $0.01
par value
	 	100% — Collective
Brands Finance, Inc.(NV)
	 

	 	 	 	Issued: 1,500 shares
of common stock	 	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Dynamic Assets Limited

	 	Hong Kong

 1999
	 	1,570,000 shares of
common stock HK$1.00
par value
	 	1% — Payless
International Finance
B.V. 99% — PSS Holdings
	 

	 	 	 	Issued: 1,570,000
shares of common
stock	 	 
	 
	 	 	 	 	 	 
	Eastborough, Inc.

	 	Kansas 

1999
	 	1,000 shares of
common stock $0.01
par value
	 	100% — Collective
Brands Finance,
Inc.(NV)
	 

	 	 	 	Issued: 1,000 shares
of common stock	 	 
	 
	 	 	 	 	 	 
	Import Solutions De Mexico, S. de R.L.
de C.V.

	 	Mexico 

2006
	 	$50,000 pesos $1.00
par value
	 	99% — Payless
International Finance B.V.
	 

	 	 	 	Issued: $50,000 pesos
	 	1% — Payless
ShoeSource Worldwide,
Inc.
	 
	 	 	 	 	 	 
	Lifestyle Brands Corporation

	 	Nova Scotia 

2006
	 	1,000,000 common
shares

Issued: 1,000 common
shares
	 	100% Collective
International LP
	 
	 	 	 	 	 	 
	Payless CA Management Limited

	 	British Virgin
Islands 2000
	 	50,000 common stock
par value US$1.00
	 	99% — PSS Latin
America Holdings, 1% — Payless ShoeSource, Inc. (MO)
	 

	 	 	 	Issued: 50,000
common stock	 	 
	 
	 	 	 	 	 	 
	Payless Collective GP, LLC

	 	Delaware 

2007
	 	N/A
	 	100% — Payless
ShoeSource Worldwide,
Inc.
	 
	 	 	 	 	 	 
	Payless Controladora, S.A. de C.V.

	 	Mexico 

1992
	 	50,000 shares common
No par value

Issued: 50,000 shares
	 	50% — PSS Investment
I, Inc. (NV), 50% PSS
Investment III, Inc.
(KS)

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Payless International Finance B.V.

	 	Netherlands 

2001
	 	90.000 EUR 

Issued: 18.000 EUR
	 	100% — PSS Holdings
	 
	 	 	 	 	 	 
	Payless NYC, Inc.

	 	KS 

1997
	 	100 shares of common
stock
	 	100% — Payless
ShoeSource, Inc. (MO)
	 

	 	 	 	$1.00 par value	 	 
	 

	 	 	 	Issued: 100 shares
of common stock	 	 
	 
	 	 	 	 	 	 
	Payless Purchasing Services, Inc.

	 	Kansas 

2001
	 	1,000 shares of
common stock$0.01
par
	 	100% — Collective
Brands Finance, Inc.
	 

	 	 	 	Issued: 1,000 shares
of common	 	 
	Payless Servicios, S.A. de C.V.

	 	Mexico 

1992
	 	50,000 shares common
No par value Issued: 50,000
shares common
	 	99.998% — Payless
Controladora, S.A. de C.V. (Mexico), 0.002% — PSS Investment I, Inc. (NV)
	 
	 	 	 	 	 	 
	Payless ShoeSource (BVI) Holdings, LTD

	 	British Virgin
Islands 

2000
	 	Class A — 60,003
shares of US$1.00
par value
Class B — 40,002
shares of US$1.00
par value 

Issued: 100,005
shares
	 	60% — Class A Members
- Payless CA
Management Limited 

40% — Class B Members
—PLP, S.A.
	 
	 	 	 	 	 	 
	Payless ShoeSource (Panama) S.A.

	 	Panama, Republic of
Panama 

2001
	 	500 shares without
par value

Issued: 500 shares
	 	Shares held in
Trust/Nominal
shareholders on
behalf of Payless
ShoeSource (BVI)
Holdings Ltd.
50% — John B. Foster
(250)
50% — Andres M.
Sanchez (250)
	 
	 	 	 	 	 	 
	Payless ShoeSource Asia PTE, Ltd.

	 	Singapore 

2003
	 	100,00 ordinary
shares S$1.00 each 

Issued: 100 ordinary
shares
	 	100% — Payless
ShoeSource Worldwide,
Inc.

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Payless ShoeSource Canada GP, Inc.

	 	Canada 

2005
	 	Unlimited common
shares $1.00 par
value 

Issued: 1 common
stock
	 	100% — Payless
ShoeSource Canada,
Inc.
	 
	 	 	 	 	 	 
	Payless ShoeSource Canada, Inc.

	 	Canada 

1997
	 	Unlimited shares of
common stock
$1.00 par value 

Issued: 100 common
stock
	 	100% PSS Canada, Inc.
(KS)
	Payless ShoeSource Canada, LP

	 	Ontario, Canada 

2005
	 	N/A
	 	GP 0.00001% — Payless
ShoeSource Canada GP,
Inc.
LP 99.99999% -
Payless ShoeSource
Canada, Inc.
	 
	 	 	 	 	 	 
	Payless ShoeSource de Guatemala LTDA

	 	Guatemala 

2001
	 	Quetzales: 15,537,200
	 	99.98% — Payless
ShoeSource (BVI)
Holdings, Ltd
0.02% — Payless
ShoeSource Limitada
	 
	 	 	 	 	 	 
	Payless ShoeSource De La República
Dominicana, S.A.

	 	Dominican Republic
2001
	 	Consisting of
200,000 shares of
DOP $5.00 each 

Issued: 100,000
shares
	 	99.94% — Payless
ShoeSource (BVI)
Holdings, Ltd.
0.01% — Payless
ShoeSource, Limitada
0.01% — Payless
ShoeSource Honduras,
S. de R.L.
0.01% — Payless
ShoeSource of El
Salvador, Ltda de
C.V.
0.01% — Payless
ShoeSource de
Guatemala Limitada
0.01% — Payless
ShoeSource Limitada &
Compañia Limitada
(Nicaragua)
0.01% — Payless
ShoeSource Overseas
S.R.L.

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Payless ShoeSource Distribution, Inc.

	 	KS 

1993
	 	100 shares of common
stock
	 	100% — Payless
ShoeSource, Inc. (MO)
	 

	 	 	 	$1.00 par value	 	 
	 

	 	 	 	Issued: 100 shares	 	 
	 
	 	 	 	 	 	 
	Payless ShoeSource Ecuador CIA, LTDA

	 	Ecuador 

2001
	 	US$7,005

Issued: US$7,005
	 	99.99% — Payless
ShoeSource Uruguay
SRL
0.01% — PSS Latin
America Holdings
	 
	 	 	 	 	 	 
	Payless ShoeSource Gold Value, Inc.

	 	Kansas 

2001
	 	1,000 shares of
common stock
	 	100% — Payless
ShoeSource, Inc. (MO)
	 

	 	 	 	$.01 par value	 	 
	 

	 	 	 	Issued: 1,000 shares
common stock	 	 
	 
	 	 	 	 	 	 
	Payless ShoeSource Honduras S De RL

	 	Republic of Honduras 

2002
	 	28,357,100 Lempiras

Issued: n/a
	 	98% — Payless
ShoeSource (BVI)
Holdings Ltd.
2% — Payless
ShoeSource, Ltda.
	 
	 	 	 	 	 	 
	Payless ShoeSource International Limited

	 	Hong Kong 

1970
	 	401,750 shares
HK$100 par value

Issued: 401,750
shares
	 	99.9998% — PSS
Holdings .0002% Payless
International Finance
B.V. in trust for
PSS Holdings
	 
	 	 	 	 	 	 
	Payless ShoeSource International
Servicos Tecnicos E Inspetoria De
Calcados S/C Ltda.

	 	Brazil 

1992
	 	100 quotas —
R$3,433.22 per quota
(Brazilian REALS) 

Issued: 100 quotas
	 	75% — Payless
ShoeSource, Inc.
(MO),
25% — PSS Investment
I, Inc. (NV)
	 
	 	 	 	 	 	 
	Payless ShoeSource Leasing, LLC

	 	Delaware 

2002
	 	N/A
	 	100% — Payless
ShoeSource, Inc.
(MO)
	 

	Payless ShoeSource Limitada & Compañia
Limitada (Nicaragua)

	 	Nicaragua 

2002
	 	33,050,000 Cordobas

Issued: n/a
	 	99.99% — Payless
ShoeSource (BVI)
Holdings Ltd.
0.01% Payless
ShoeSource, Limitada

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Payless ShoeSource Limitada (Costa Rica)

	 	Costa Rica 

2000
	 	10,000 Colones
(approx. US$20.00) 

Issued: n/a
	 	100% — Payless
ShoeSource (BVI)
Holdings, Ltd.
	 
	 	 	 	 	 	 
	Payless ShoeSource Merchandising, Inc.

	 	KS 

1993
	 	100 shares of common
stock
$1.00 par value 

Issued: 100 shares
of common stock
	 	100% — Payless
ShoeSource, Inc. (MO)
	 
	 	 	 	 	 	 
	Payless ShoeSource of El Salvador, LTDA
De C.V.

	 	El Salvador 

2001
	 	100,000 Salvadoran
Colones

Issued: 100,000
Salvadoran Colones
	 	99.99% — Payless
ShoeSource (BVI)
Holdings Ltd.
0.01% Payless
ShoeSource, Limitada
(Costa Rica)
	 
	 	 	 	 	 	 
	Payless ShoeSource of Puerto Rico, Inc.

	 	Puerto Rico 

1991
	 	1,000 shares of
common stock
$1.00 par value 

Issued: 1,000 shares
of common stock
	 	100% — Payless
ShoeSource, Inc. (MO)
	 
	 	 	 	 	 	 
	Payless ShoeSource of St. Lucia Ltd.

	 	St. Lucia 

2001
	 	10,000,000 shares
per value US$1.00

Issued: 300,000
shares @US$1.00 per
share
	 	100% — Payless
ShoeSource (BVI)
Holdings, Ltd.
	 
	 	 	 	 	 	 
	Payless ShoeSource of Trinidad Unlimited

	 	Trinidad and Tobago
2001
	 	300,000 ordinary
shares par value
US$1.00

Issued: N/A
	 	100% — Payless
ShoeSource of St.
Lucia Ltd.
	 
	 	 	 	 	 	 
	Payless ShoeSource Overseas S.R.L.

	 	Panama 

2002
	 	50,000
participations of
US$1.00

Issued: 50,000
participations
	 	99.99% — Payless
ShoeSource (BVI)
Holdings, Ltd
0.01% Payless
ShoeSource, Limitada

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Payless ShoeSource Saipan, Inc.

	 	Northern Mariana
Island 

1997
	 	10,000 shares common
stock
$1.00 par value 

Issued: 7,500 shares
common stock
	 	100% — Payless
ShoeSource Worldwide,
Inc. (KS)
	 
	 	 	 	 	 	 
	Payless ShoeSource Spain, S.L.

	 	Spain 

2004
	 	10,000 EUROS
Issued: N/A
	 	100% — Payless
ShoeSource Uruguay
S.R.L.
	 
	 	 	 	 	 	 
	Payless ShoeSource Uruguay S.R.L.

	 	Uruguay 

2002
	 	$600,000 (Uruguayan
pesos)

Issued: $300,000
	 	99.9333% — Payless
ShoeSource Andean
Holdings .0667% — PSS Latin
America Holdings
	 
	 	 	 	 	 	 
	Payless ShoeSource Worldwide, Inc.

	 	KS 

1993
	 	100 shares of common
stock
$1.00 par value 

Issued: 100 shares
of common stock
	 	100% — Payless
ShoeSource, Inc. (MO)
	 
	 	 	 	 	 	 
	Payless ShoeSource, Andean Holdings

	 	Cayman Islands 

2002
	 	160,000 Class A
Shares of a par
value of US$0.10 and
240,000 Class B
Shares of a par
value of US$0.10

Issued: 60,000
-Class A
40,000 — Class B
	 	60% — Class A — PSS
Latin America
Holdings
40% — Class B — South
America Local
Partners, S.A.
	 
	 	 	 	 	 	 
	Payless ShoeSource, Inc.

	 	MO 

1961
	 	10,000,000 shares of
common stock -
$0.01 par value 

Issued: 1 share
common stock
	 	100% — Collective
Brands Finance,
Inc.(NV)
	 
	 	 	 	 	 	 
	Payless ShoeSource, S.A. de C.V.

	 	Mexico 

1992
	 	50,000 shares common
No par value
	 	99.998% Payless
Controladora, S.A. de
C.V. (Mexico), 0.002%
PSS Investment I,
Inc. (KS)

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	PSS Canada Finance, LP

	 	New Brunswick, Canada

2003
	 	25,000,000 units
$1 par value Issued: 250,000
units PSS Canada,
Inc.
24,750,000 units —
Collective Brands
Finance, Inc.
	 	1% — Payless
ShoeSource Canada GP,
Inc.
99% — Collective
Brands Finance, Inc.
	 
	 	 	 	 	 	 
	PSS Canada, Inc.

	 	KS

 1997
	 	100 shares common
stock $1.00 par
value
	 	100% — Payless
ShoeSource Worldwide,
Inc. (KS)
	 
	 	 	 	 	 	 
	PSS Delaware Company 2, Inc.

	 	Delaware 

1999
	 	1,500 shares of
common stock $0.01
par value
	 	100% — Collective
Brands Finance,
Inc.(NV)
	 
	 	 	 	 	 	 
	PSS Delaware Company 3, Inc.

	 	Delaware 

1999
	 	1,500 shares of
common stock $0.01
par value
	 	100% Collective
Brands Finance,
Inc.(NV)
	 
	 	 	 	 	 	 
	PSS Delaware Company 4, Inc.

	 	Delaware 

1999
	 	1,500 shares of
common stock $0.01
par value
	 	100% — Collective
Brands Finance,
Inc.(NV)
	 
	 	 	 	 	 	 
	PSS Holdings

	 	Cayman Islands 

2002
	 	50,000 shares par
value of US$1.00
	 	100% — Payless
ShoeSource Worldwide,
Inc.
	 

	PSS International Holdings, Limited*

	 	Cayman Islands 

2007
	 	1,000 shares common
stock
	 	100% Payless
ShoeSource Worldwide,
Inc.
	 
	 	 	 	 	 	 
	PSS Investment I, Inc.

	 	NV 

1992
	 	100 shares of common
stock $1.00 par
value 

Issued: 100 shares
common stock
	 	100% — Payless
ShoeSource, Inc. (MO)
	 
	 	 	 	 	 	 
	PSS Investment III, Inc.

	 	KS 

1998
	 	100 shares of common
stock
Issued: 100 shares
common stock — $1.00
par value
	 	100% — Payless
ShoeSource, Inc. (MO)
	 
	 	 	 	 	 	 
	PSS Latin America Holdings

	 	Cayman Islands 

2002
	 	50,000 shares par
value of US$1.00

Issued: 100 shares
	 	100% — PSS Holdings

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	San Jose Acquisition Corp.

	 	Massachusetts 

2007
	 	100 shares of common
stock
$.25 par value 

Issued: 100 shares
common stock
	 	100% — Collective
Brands Finance,
Inc.(NV)
	 
	 	 	 	 	 	 
	Shenzhen footwear Consulting Company

	 	Shenzhen 

2003
	 	US$250,000

Issued: N/A
	 	100% — Payless
ShoeSource
International Limited
	 
	 	 	 	 	 	 
	Shoe Sourcing, Inc.

	 	Kansas 

2000
	 	1,000 shares of
common stock
$0.01 par value 

Issued: 1,000 shares
of common stock
	 	100% — Collective
Brands Finance,
Inc.(NV)
	 
	 	 	 	 	 	 
	PSS Canada Financial Management Corp.*

	 	Canada 

2007
	 	100 shares of common
stock
$1.00 par value 

Issued: 100 shares
common stock
	 	100% Collective
Brands Finance, Inc.
(NV)
	 
	 	 	 	 	 	 
	PSS Canada Financial Services Corp.*

	 	Canada 

2007
	 	100 shares of common
stock
$1.00 par value 

Issued: 100 shares
common stock
	 	100% Collective
Brands Finance, Inc.
(NV)
	 
	 	 	 	 	 	 
	PSS US Investments, LP*

	 	Nevada 

2007
	 	1,100 LP Units
100 GP Units
C$1 per unit on
formation of entity
	 	PSS Canada Financial
Services Corp.
	 
	 	 	 	 	 	 
	PSS US Holdings, LLC*

	 	Nevada 

2007
	 	1,200 Membership
Units
C$1 per unit on
formation of entity
	 	100% — PSS Canada
Holdings Corp.

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	PSS Canada Holdings Corp.*

	 	Canada
 2007
	 	1,200 common shares
without nominal or
par value
	 	100% — PSS US
Investments, LP
	 
	 	 	 	 	 	 
	PSS Canada Investments, LP*

	 	Canada
 2007
	 	1,098 LP Units
2 GP Units
	 	LP — PSS Canada, Inc.
GP — Collective
Brands Finance, Inc.
	 
	 	 	 	 	 	 
	The Stride Rite Corporation

	 	Massachusetts
11/14/1919
	 	CWP 135,000,000
PWP 1,000,000

Issued: 36,320,579
shares CWP
	 	Collective Brands,
Inc. (100%)
	 
	 	 	 	 	 	 
	Stride Rite Children’s Group, Inc.

	 	Massachusetts
11/18/1971
	 	150,000 shares of
common stock 

Issued: 10,000
shares common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	The Keds Corporation

	 	Massachusetts
8/09/1979
	 	250,000 shares of
common stock
Issued: 101,000
shares common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Sperry Top-Sider, Inc.

	 	Massachusetts
8/09/1979
	 	250,000 shares of
common stock 

Issued: 500 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Stride Rite Sourcing
International, Inc.

	 	Massachusetts
8/10/1979
	 	250,000 shares of
common stock 

Issued: 5,000 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	SRR, Inc.

	 	Delaware

9/27/1983
	 	1,000 shares of
common stock 

Issued: 100 shares
common stock
	 	SR Holdings, Inc.
(100%)

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Stride Rite Investment Corporation

	 	Massachusetts

3/30/1983
	 	300,000 shares of
common stock 

Issued: 1,000 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Stride Rite Canada Limited

	 	Canada
 9/19/1986
	 	Unlimited
	 	Saucony, Inc. (100%)
	 
	 	 	 	 	 	 
	S R Holdings Inc.

	 	Delaware

11/24/1987
	 	10,000 shares of
common stock 

Issued: 100 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Stride Rite International Corp.

	 	Massachusetts

4/04/1991
	 	200,000 shares of
common stock 

Issued: 10,000
shares common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	SRL, Inc.

	 	Delaware

7/08/1991
	 	10,000 shares of
common stock 

Issued: 10,000
shares common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Tommy Hilfiger Footwear, Inc.

	 	Massachusetts

3/22/1996
	 	100,000 shares of
common stock 

Issued: 1,000 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	SR/Ecom, Inc.

	 	Massachusetts

5/12/1997
	 	100,000 shares of
common stock 

Issued: 100 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	SRCG/Ecom, Inc.

	 	Delaware

2/12/2004
	 	100,000 shares of
common stock 

Issued: 100 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	STS/Ecom, Inc.

	 	Delaware

12/05/2005
	 	100,000 shares of
common stock 

Issued: 100 shares
common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Saucony, Inc.

	 	Massachusetts

5/14/1920
	 	CWP 20,000,000
CWP 20,000,000
PWP 500,000

Issued: 1 share CWP
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Saucony UK, Inc.

	 	Massachusetts

11/27/1991
	 	20,000 shares of
common stock 

Issued: 1,000 shares
common stock
	 	Saucony, Inc. (100%)
	 
	 	 	 	 	 	 
	Saucony/Ecom, Inc.

	 	Delaware

1/30/2007
	 	100 shares of common
stock 

Issued: 100 shares
of common stock
	 	The Stride Rite
Corporation (100%)
	 
	 	 	 	 	 	 
	Keds LLC

	 	Delaware

12/02/2002
	 	N/A
	 	The Keds Corp. (100%)
	 
	 	 	 	 	 	 
	Stride Rite LLC

	 	Delaware

12/02/2002
	 	N/A
	 	Stride Rite
Children’s Group,
Inc. (100%)
	 
	 	 	 	 	 	 
	SRCG LLC

	 	Delaware

12/02/2002
	 	N/A
	 	Stride Rite
Children’s Group,
Inc. (100%)

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Stride Rite International
Holdings, Inc.

	 	Delaware

11/21/2006
	 	10 shares of common
stock
	 	Saucony, Inc. (100%)
	 
	 	 	 	 	 	 
	Stride Rite Bermuda LP

	 	Bermuda
	 	N/A
	 	Stride Rite
International LLC
(100%)
	 
	 	 	 	 	 	 
	Stride Rite International LLC

	 	Delaware

11/16/2006
	 	N/A
	 	Stride Rite
International
Holdings, Inc. (100%)
	 
	 	 	 	 	 	 
	Stride Rite UK Limited

	 	UK
	 	1,000 Ordinary
Shares at 1.00 €
each 

Issued: 1 Ordinary
Share
	 	Stride Rite Bermuda
LP (100%)
	 
	 	 	 	 	 	 
	Robeez Australia Pty. Ltd.

	 	Australia
	 	100 Ordinary Shares
issued and
outstanding
	 	Saucony, Inc. (100%)
	 
	 	 	 	 	 	 
	Robeez Ltd.

	 	Ireland
	 	1,000,000 Ordinary
Shares at 1.00 €
each; 1,000
Preferred Shares at
1,000 € each;
1,000,000 “B”
Ordinary Shares at
1.00 € each;
1,000,000 “A”
Ordinary Shares at
1.00 € each
Issued: 100 Ordinary
Shares; 100 “B”
Ordinary Shares; 100
“A” Ordinary Shares
	 	Saucony, Inc. (100%)

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Robeez European Sales Ltd.

	 	UK
	 	10,000 Ordinary
Shares at 1.00 €
each
Issued: 100 Ordinary
Shares
	 	Stride Rite Bermuda
LP (100%)
	 
	 	 	 	 	 	 
	Robeez (UK) Ltd.

	 	UK
	 	1,000 Ordinary
Shares with a value
of 1.00 £ each
Issued: 100 Ordinary
Shares
	 	Stride Rite Bermuda
LP (100%)
	 
	 	 	 	 	 	 
	Stride Rite Europe B.V.

	 	Netherlands
	 	2,000 Ordinary Shares
Issued: 400 Ordinary
Shares
	 	Saucony UK, Inc.
(100%)
	 
	Saucony Deutschland Vertriebs GmbH

	 	Germany
	 	50,000 shares issued
and outstanding
	 	Saucony, Inc. (100%)
	 
	Saucony Asia Pacific Limited

	 	Hong Kong
	 	1,094,200 shares of
common stock with a
par value of HK
$1.00 per share:
	 	Saucony, Inc. (100%)
	 

	 	 	 	Issued: 1,094,000
shares	 	 
	 
	 	 	 	 	 	 
	Robeez Logistics Inc.

	 	Nevada
 8/16/2005
	 	75,000 shares of
common stock
Issued: 100 shares
	 	Saucony, Inc. (100%)

 

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of shares
	 	 	Jurisdiction of	 	 	 	of each class owned
	 	 	Organization	 	Capitalization	 	(directly or
	 	 	and Date of	 	of Parent’s	 	indirectly
	Name of Company	 	Incorporation	 	Subsidiaries	 	by Parent)
	Robeez U.S. Inc.

	 	Washington

11/29/2004
	 	50,000 Common Stock
without par value,
50,000 Preferred
Stock with a stated
value of $100.00 per
share
Issued: 1,000 Common
Stock
	 	Robeez US Holdings
Inc. (100%)
	 
	 	 	 	 	 	 
	Robeez US Holdings Inc.

	 	Nevada
 8/03/2004
	 	75,000 shares of
common stock 

Issued: 1,000 shares
	 	Saucony, Inc. (100%)
	 
	 	 	 	 	 	 
	Stride Rite Mexico

	 	Mexico
	 	500 shares issued
and outstanding
	 	The Stride Rite
Corporation (1%); S R
Holdings Inc. (99%)

 

			
	*	 	In the process of being organized in the noted jurisdiction in connection with the
China restructuring. The planned parent of each new subsidiary is set forth above. Upon
completion of setting up the organizations, the remaining information for each of these
subsidiaries will be provided as required.

 

 

Schedule 4.7

Litigation

	 	 	 	 	 	 	 
	Name of Suit	 	Controversy	 	Court	 	Date Filed/Case No.
	adidas America v.
Payless ShoeSource

	 	Intellectual property
	 	US District Court,
District of Oregon
	 	01-CV-01655
03-CV-01116
	 
	 	 	 	 	 	 
	Crocs, Inc. v.
Collective
Licensing
International, LLC
(and others)

	 	Intellectual property
	 	ITC
	 	337-TA-2478
	 
	 	 	 	 	 	 
	Crocs, Inc. v.
Collective
Licensing
International, LLC,
et al. (Stayed
pending outcome of
ITC case)

	 	Intellectual property
	 	US District Court,
District of
Colorado
	 	06-CV-00605
	 
	 	 	 	 	 	 
	K-Swiss v. Payless
ShoeSource

	 	Intellectual property
	 	US District Court,
Central District of
California
	 	CVO4-0779
RJK (RCx)
	 
	 	 	 	 	 	 
	Stride Rite
Corporation v.
Verotix Systems

	 	Declaratory judgment action brought
by Stride Rite seeking a
declaration that a Software
Licensing Agreement is not
enforceable against Stride Rite.
(Related to warehouse sorting
system)
	 	US District Court,
District of
Massachusetts
	 	12/22/05
1:05-cv-12575
	 
	 	 	 	 	 	 
	Lumino Designs,
Inc. v. Target
Corporation, et al.

	 	Patent Infringement (lighted shoes)
	 	US District Court,
Northern District
of Illinois
	 	6/24/05
1:05-cv-03699
	 
	 	 	 	 	 	 
	Cushion
Technologies, LLC
v. Adidas Salomon
North America,
Inc., et al.

	 	Patent Infringement (cushioning
technology)
	 	US District Court,
Eastern District of
Texas
	 	8/30/2006
2-06cv347 (TJW)
	 
	 	 	 	 	 	 
	Cushion
Technologies, LLC
v. American
Sporting Goods,
Corp, et al.

	 	Patent Infringement (cushioning
technology)
	 	US District Court,
Eastern District of
Texas
	 	3/30/2007 2:07cv109
(TJW)
	 
	 	 	 	 	 	 
	Dr. Steven E.
Robbins v. The
Stride Rite
Corporation

	 	Patent Infringement (resilient sole)
	 	US District Court,
Southern District
of New York
	 	8/8/2007
07-CIV-7069

 

 

Schedule 4.8

Taxes

Payless

SALES/USE TAX AUDITS

Georgia — 01/2003 — 09/2006 — A statue of limitations waiver has been executed for these tax
years. Therefore, the assessment period remains open beyond the statutory period.

Glendale, CO — 07/2003 — 06/2006

Manitoba — 05/1999 to 03/2006 (Payless ShoeSource Canada, Inc.)

Ohio — 10/2002 to 12/2005 — A statue of limitations waiver has been executed for these tax years.
Therefore, the assessment period remains open beyond the statutory period.

New York State — 03/2004 to 02/2007 — A statue of limitations waiver has been executed for these
tax years. Therefore, the assessment period remains open beyond the statutory period.

Texas — 02/2003 — 01/2007 — A statue of limitations waiver has been executed for these tax years.
Therefore, the assessment period remains open beyond the statutory period.

Washington — 01/2004 — 01/2007

Arvada, CO — 08/2004 — 07/2007

Northport, AL — 04/2004 — 03/2007

Virginia Dates not yet specified

Except of the Manitoba sales/use tax audit, all of the audits listed above are specific to Payless
ShoeSource, Inc. (Missouri).

INCOME/FRANCHISE TAX AUDITS

Guatemala — 2005 (Payless ShoeSource de Guatemala, Ltda.)

Dominican Republic — 2003 & 2004 (Payless ShoeSource de la Republic Dominicana S.A.)
Nicaragua — 2003 7 2004 (Payless ShoeSource Limitada & Compania Limitada)

New Mexico — 1996, 1997 & 1998 (Payless ShoeSource Worldwide, Inc.) — This audit is at the
appeals level. Therefore, the assessment period remains open beyond the statutory period.

Louisiana — 1998, 1999, 2000, 2001 & 2002 (Payless ShoeSource Worldwide, Inc.) — A statue of
limitations waiver has been executed for these tax years. Therefore, the assessment period remains
open beyond the statutory period.

Ohio — 1999, 2000, 2001 & 2002 (Payless ShoeSource, Inc. (MO))

Ontario, Canada — 2000, 2001, 2002 & 2003 (Payless ShoeSource Canada, Inc.)

Massachusetts — 2003 & 2004 (Payless ShoeSource, Inc. (MO) and Payless ShoeSource Worldwide, Inc.)

New York — 2002, 2003, 2004 & 2005 (Payless ShoeSource, Inc. (MO))

China — years not yet specified. The audit has not yet commenced, so specific legal entities are
not known at this time.

U.S. Federal (IRS) — A statue of limitations waiver has been executed for the 2001 tax year,
however no audit is currently being conducted. Therefore, the assessment period remains open
beyond the statutory period for that year.

Stride Rite

Washington State — Business and Occupation Tax Audit of all Stride Rite entities, 2003 — 2006 New
York State — Sales Tax Audit of Tommy Hilfiger Footwear, Inc., 2003 — 2006

Stride Rite signed a statute waiver for a federal tax return for Saucony, Inc. and its
subsidiaries, relating to Saucony chargebacks claimed on its 2005 tax return that went back to
2003.

 

 

Schedule 4.15

Labor Matters

	1.	 	Agreement between Payless ShoeSource Distribution, Inc. and Truck Drivers and Helpers,
Local Union No. 696, effective March 14, 2004, as revised by the Phase-Out, Severance and
Termination Agreement dated March 9, 2007.
	 
	2.	 	Collective Bargaining Agreement between Payless ShoeSource, Inc. and the United Food and
Commercial Workers Local No. 536-Retail Clothing and Shoe Division dated April 29, 2007.
	 
	3.	 	Agreement between Payless ShoeSource, Inc. and the United Food and Commercial Workers Union,
Local No. 655 dated May 7, 2006.
	 
	4.	 	Agreement between Payless ShoeSource, Inc. and the United Food and Commercial Workers
International Union, Local No. 881 dated June 26, 2005.

 

 

Schedule 4.16

List of Plans

Payless

          Payless ShoeSource does not have any Title IV Plans. Payless does have a Supplementary
Retirement Plan which is an unfunded nonqualified defined benefit plan offered to a select group of
management and highly compensated employees. This top hat plan is funded through the general assets
of the Corporation.

          Welfare Plans

	 	•	 	Payless ShoeSource, Inc. Medical Plan

	 
	 	•	 	Payless ShoeSource, Inc. Health Care Flexible Spending Account Plan     
	 
	 	•	 	Payless ShoeSource, Inc. Vision Plan
	 
	 	•	 	Payless ShoeSource, Inc. Employee Assistance Plan

	 	•	 	Payless ShoeSource, Inc. Dental Plan
	 
	 	•	 	Payless ShoeSource, Inc. Short Term Disability Plan
	 
	 	•	 	Payless ShoeSource, Inc. Long Term Disability Plan
	 
	 	•	 	Payless ShoeSource, Inc. Dependent Care Flexible Spending Account Plan
	 
	 	•	 	Payless ShoeSource, Inc. Company Paid Life Insurance Plan
	 
	 	•	 	Payless ShoeSource, Inc. Optional Life Insurance Plan
	 
	 	•	 	Payless ShoeSource, Inc. Business Travel Accident Plan
	 
	 	•	 	Payless ShoeSource, Inc. Severance Plan
	 
	 	•	 	Payless ShoeSource, Inc. Group Life AD & D Accident & Sickness Plan
	 
	 	•	 	Payless ShoeSource, Inc. Adoption Assistance Plan
	 
	 	•	 	Payless ShoeSource, Inc. Tuition Reimbursement Plan
	 
	 	•	 	Payless ShoeSource, Inc. Executive Post-Retirement Life & Medical Insurance Program
	 
	 	•	 	Payless ShoeSource, Inc. Supplementary Long-Term Disability Plan

          Pension Plans

	 	•	 	Payless ShoeSource, Inc. 401(k) Profit Sharing Plan
	 
	 	•	 	Payless ShoeSource, Inc. Profit Sharing Plan for Puerto Rico Associates
	 
	 	•	 	Payless ShoeSource, Inc. Deferred Compensation 401(k) Mirror Plan (a Rabbi
Trust exists for this plan)

Stride Rite

          Welfare Plans

	 	•	 	The Stride Rite Corporation Group Term Life and Accident and Sickness Plan
(January 1, 1993).
	 
	 	•	 	The Stride Rite Corporation Medical, Dental and Vision Plan (self-insured,
administered by CIGNA).
	 
	 	•	 	The Stride Rite Corporation Group Long Term Disability Insurance.
	 
	 	•	 	The Stride Rite Corporation Cafeteria Plan.

 

 

	 	•	 	The Stride Rite Corporation Executive Leadership Team Severance Guidelines.
	 
	 	•	 	The Stride Rite Corporation Severance Program for Full-Time, Regular Employees
in Positions of Director Level and Above.
	 
	 	•	 	The Stride Rite Corporation Severance Program for Full-Time, Regular Employees
in Positions Below Director Level.
	 
	 	•	 	Vacation policy.
	 
	 	•	 	Adoption assistance policy.
	 
	 	•	 	Tuition reimbursement policy.
	 
	 	•	 	Short-term disability program.
	 
	 	•	 	Employee assistance program.

          Pension Plans

	 	•	 	The Stride Rite Corporation Retirement Income Plan, as amended and restated as
of January 1, 2001, and as amended on December 23, 2002; April 13, 2005, February
1, 2006; and December 31, 2006.
	 
	 	•	 	The Stride Rite Corporation Employee Savings & Investment Plan, as amended and
restated as of January 1, 2001, and as amended on December 23, 2002; March 25,
2003; August 29, 2003; February 5, 2005; April 13, 2005; September 29, 2005; June
29, 2006; and November 17, 2006.
	 
	 	•	 	Deferred Compensation Plan for Key Employees of The Stride Rite Corporation, as
amended and restated as of January 1, 2007.
	 
	 	•	 	Saucony, Inc. Nonqualified Retirement Plan, restated as of January 1, 2004, and
as further amended.

          Stride Rite also makes contributions to the pension and welfare plans sponsored by Local 1102,
Retail Wholesale Department Stores Union on behalf of six employees covered under the Collective
Bargaining Agreement by and between Local 1102 RWDSU UFCW and Stride Rite Children’s Group, Inc.,
dated April 1, 2006-March 31, 2009.

          Supplemental Retirement Income Agreement by and between The Stride Rite Corporation
Supplemental and Arnold Hiatt, dated as of January 29, 1988. (This is a top hat non-qualified plan,
which is unfunded.)

 

 

Schedule 4.17

Environmental Matters

     In 2004, environmental contamination of soils and river sediments was discovered at the
facility owned by Stride Rite’s Saucony Inc. subsidiary in East Brookfield, Massachusetts.
Subsequent investigations, which are ongoing and incomplete at this time, have further defined the
extent of such contamination, which appears to extend beyond the Saucony facility’s property
boundaries within the East Brookfield River. On April 21, 2005, the Massachusetts Department of
Environmental Protection (MADEP) issued a notice of responsibility to Saucony stating that Saucony
is responsible for investigating and remediating the contamination. On April 4, 2006, Saucony was
issued a Tier IC response action Permit by the MADEP pursuant to Mass. Gen. Laws Ch. 21E and the
Massachusetts Contingency Plan regulations authorizing and requiring Saucony to conduct the
necessary response actions at the Site. In January, 2007, Saucony entered into a Joint Defense and
Cooperation Agreement with the Town of East Brookfield in which Saucony agreed to bear certain
costs of response actions at the site and the Town agreed to execute the MADEP Permit, which the
Town subsequently did. Stride Rite has established a reserve of approximately $1,680,000 for this
matter.

 

 

Schedule 4.18

Intellectual Property

All Intellectual Property claims and/or disputes are listed on Schedule 4.7, Litigation.

 

 

Schedule 4.19

Real Property

Leased Property.

Lessee: Collective Licensing International, LLC

Address: 800 Englewood Parkway

Suite C200

Englewood, CO 80110

Landlord: Miller Weingarten

Lessee: Payless NYC, Inc.

Address: 162 Fifth Avenue,

New York, New York 10010

Landlord: 162 Fifth Avenue Associates, LLC

Lessee: Payless ShoeSource Distribution, Inc.

Address: California Palm Building, 9520 Nevada Street

Redlands, California 92374

Landlord: TC Palms, LLC

Lessee: Payless ShoeSource, Inc. (MO)

Address: 120 SE Sixth St.

Topeka, KS 66603

Landlord: Security National Properties Funding II, LLC

Lessee: Payless ShoeSource Distribution, Inc.

Address: 1 Payless Way

Brookville, OH 45309

Landlord: CRG — OH, LLC

Lessee: The Stride Rite Corporation

Corporate Headquarters

Address: 191 Spring Street

Lexington, MA 2421

Landlord: 191 Spring Street Trust

Lessee: The Stride Rite Corporation

Richmond Customer Service

Address: 4200 South A Street

Richmond, IN 47374

Landlord: Legacy Development Company, LLC

Lessee: Tommy Hilfiger Footwear, Inc.

Tommy NY Showroom

Address: 37 West 39th Street

New York, NY 10018

Landlord: B W W 39 Co.

Lessee: The Keds Corporation

Keds NY Showroom

Address: 1414 Avenue of the Americas

New York, NY

Landlord: 1414 APF, LLC

 

 

Owned Property.

Roswell Town Center

Holcomb Bridge Rd./Alpharetta

Roswell, GA

Fulton County

Owner — Payless ShoeSource, Inc. (MO)

Common Address:

3231 SE Sixth Avenue

Topeka, KS 66220

Legal Description:

Lot 1, Block A, Distributors Industrial Plaza Subdivision No. 3, in the City of Topeka, Shawnee
County, Kansas EXCEPT the two tracts described on the attached Exhibit A, which are titled to the
City of Topeka.

Payless ShoeSource corporate headquarters (approximately 42 acres)
Owner — Payless ShoeSource Worldwide, Inc. / City of Topeka [see footnotes (1) and (2)]

Common Address:

5040 Northwest Highway 24

Topeka, KS 66618

Shawnee County

Legal Description:

Payless ShoeSource Distribution, Inc. is the title owner of tracts B, C and D of the real property
situated at the Common Address (see attached Exhibits B, C and D for legal descriptions). The City
of Topeka is the title holder of tract A of the real property situated at the Common Address. In
addition, Payless ShoeSource Distribution, Inc. is the title owner of a tract of land in Lot 5
situated at or near the Common Address (see attached Exhibit E for legal description).

Payless ShoeSource distribution center and adjacent land (approximately 150 acres)
Owner — Payless ShoeSource Distribution, Inc. / City of Topeka [see footnotes (1) and (3)]

1515 Riverfork Drive West

Huntington, IN 46750

Huntington County

Owner — Stride Rite Children’s Group

6001 Cane Run Road

Louisville, KY 40258

Jefferson County

Owner — The Keds Corporation

277 East Main Street

East Brookfield, MA 01515

Worcester County

Owner — Saucony, Inc. (4)

126 Mechanic Street

East Brookfield, MA 01515

Worcester County

Owner — Saucony, Inc. (4)

 

 

0 Mechanic Street

East Brookfield, MA 01515

Worcester County

Owner — Saucony, Inc. (4)

FOOTNOTES

	 	(1)	 	The City of Topeka is the legal title holder of certain tracts of land at these two
locations: (i) (the Payless ShoeSource corporate headquarters (3231 SE Sixth Ave., Topeka,
KS 66607) and (ii) the Topeka distribution center (5040 Northwest Highway 24, Topeka, KS
66618)). These tracts are titled to the City of Topeka as a result of Industrial Revenue
Bonds that were issued by the City of Topeka on behalf of Payless ShoeSource, Inc. and
Payless ShoeSource Distribution, Inc. (i.e., Payless ShoeSource, Inc. and Payless
ShoeSource Distribution, Inc. are liable for repayment of the Bonds — see Schedule 8.1,
Existing Indebtedness). All of the outstanding Industrial Revenue Bonds, however, are
owned by Collective Brands Finance, Inc. Upon repayment of the Bonds by Payless
ShoeSource, Inc. and Payless ShoeSource Distribution, Inc. to Collective Brands Finance,
Inc., the title to the real property will be conveyed to Payless ShoeSource Worldwide, Inc.
and Payless ShoeSource Distribution, Inc., respectively, upon payment of a nominal amount
(e.g., $100) to the City of Topeka pursuant to the applicable Bond documents.
	 
	 	(2)	 	Certain portions of this property are leased from Payless ShoeSource Worldwide, Inc. to
affiliated Payless entities. Specifically, Payless ShoeSource Worldwide, Inc. leases space
to the following entities:

	 	a.	 	Eastborough, Inc.
	 
	 	b.	 	Payless ShoeSource Gold Value, Inc.
	 
	 	c.	 	Payless ShoeSource Finance, Inc.
	 
	 	d.	 	Payless ShoeSource Merchandising, Inc.
	 
	 	e.	 	Payless ShoeSource, Inc. (MO)
	 
	 	f.	 	Shoe Sourcing, Inc.

	 	(3)	 	Approximately 46.1 acres of this property are leased to Greg Meier (who is an unrelated
third party). The lease agreement expires on November 25, 2008. In addition,
approximately 18 acres are leased to Randy Wolf (who is an unrelated third party).
	 
	 	(4)	 	These properties are collectively referred to as the East Brookfield Property.

 

 

	 	 	 

	Lawyers
Title of Topeka, Inc.

	 	Shawnee County, Kansas
	(785) 271-9500

	 	Register of Deeds
	C. N. 24071

	 	Marilyn L. Nichols
	Entered in Transfer Record in my office AUG 14 2007

	 	Book: 4518 Page: 3
	 
	/s/ Cynthia A. Beck
 

	 	Line #: 20070019307 
	County Clerk

	 	Date Recorded: 08/14/2007
04:14:09.857 PM
	 
	Mail
Tax Statement to:
	 	 
	Same as Now
	 	 
	 
	 	 
	0190634

	 	Schedule 4.19
	 

	 	Exhibit A

CORPORATION
DEED-General Warranty

The Grantor,  Payless ShoeSource, Inc.

a corporation duly organized, incorporated, and existing under and by virtue of the laws
of the State of Missouri, and having its principal place of business at Topeka in the State of
Kansas, hereby CONVEYS AND WARRANTS to

Payless ShoeSource Worldwide, Inc., a Kansas corporation

of the County of Shawnee, State
of Kansas, the following described real estate, situated in the County of Shawnee, State
of Kansas, to-wit:

(See Exhibit A attached)

(Subject
to easements, restrictions, and reservations of record, and all taxes and assessments
that may be levied, imposed, or become payable hereafter.)

(THIS DEED IS BEING RECORDED PURSUANT TO KSA 79-147e AS AMENDED, EXEMPTION #3)

for the sum of One Dollar and Other Valuable Consideration

Dated this
13th day of August AD. 2007

Corporate Seal

	 	 	 	 	 
	[SEAL] 	PAYLESS SHOESOURCE, INC.

 	 
	 	/s/  Douglas G. Boessen
 	 
	 	Douglas G. Boessen 	 
	 	Vice President 	 
	 

STATE OF
KANSAS, SHAWNEE COUNTY, ss

     BE IT REMEMBERED, That on this 13th day of August, A.D. 2007 before me, the
undersigned a Notary Public in and for the County and State aforesaid, came Douglas G.
Boessen,

Vice-President of Payless ShoeSource, Inc., a corporation duly organized, incorporated, and
existing under virtue of the laws of the State of Missouri, who is/are personally known to me to
be the such officer, and who is/are personally known to me to be such person(s) who executed, as
such officer(s), the within instrument of  writing on behalf of said corporation, and such
person(s) duly acknowledged the execution of the same to be the act and deed of said
corporation.

     IN TESTIMONY WHEREOF, I have hereunto set my  hand and affixed my seal the day
and year last above written.

[SEAL]

	 	 	 	 	 
	My Term expires: January 12, 2009 	/s/ Pamela M. Nichol
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

EXHIBIT A

Lot 1, Block A, Distributors Industrial Plaza Subdivision No. 3, in the City of
Topeka, Shawnee County, Kansas, EXCEPT two tracts described as follows:

(Exception #1)

Beginning
at the Northeast corner of said Lot 1, Block A, Distributors Industrial Plaza
Subdivision No. 3, in the City of Topeka, Shawnee County, Kansas; thence South on Az
181 degrees 46 minutes 29 seconds, 114.95 feet coincident with the East line of said
Lot 1; thence on Az 270 degrees 00 minutes 00 seconds, 6.00 feet coincident with said
East line; thence on Az 181 degrees 46 minutes 29 seconds, 391.32 feet
coincident with
said East line; thence of Az 270 degrees 00 minutes 00 seconds, 317.07 feet to a point
on the centerline of vacated Fairfax Avenue; thence following a curve to the right,
coincident with said centerline, with a radius of 808.50 feet, an arc distance of
13.01 feet, a central angle of 0 degrees 55 minutes 19 seconds, said curve having a
long chord on Az 0 degrees 27 minutes 40 seconds, 13.01 feet; thence on Az 0 degrees 00
minutes 00 seconds, 493.02 feet coincident with said centerline to the North line of
said Lot 1; thence of Az 90 degrees 00 minutes 00 seconds, 338.64 feet coincident with
North line to the point of beginning.

(Exception #2)

Commencing
at the Northeast corner of said Lot 1, Block A, Distributors Industrial Plaza Subdivision
No.
3, in the City of Topeka, Shawnee County, Kansas; thence West on AZ 270 degrees 00 minutes 00
seconds,
338.64 feet coincident with the North line of said Lot 1 to a point on the centerline of vacated
Fairfax
Avenue; thence on Az 180 degrees 00 minutes 00 seconds, 148.11 feet coincident with said
centerline to the
point of beginning; thence continuing on Az 180 degrees 00 minutes 00
seconds, 344.91 feet
coincident with
said centerline; thence following a curve to the left, coincident with said centerline, with a
radius of 808.50
feet, an arc distance of 13.01 feet, a central angle of 0 degrees 55 minutes 19 seconds, said curve
having a
long chord on Az 180 degrees 27 minutes 40 seconds, 13.01 feet;
thence on Az 270 degrees 00
minutes 00
seconds, 54.58 feet; thence on Az 359 degrees 57 minutes 22 seconds, 214.00 feet;
thence on Az 269 degrees 57 minutes 22 seconds, 20.00 feet to a point on the face of
an existing building; thence on Az 359 degrees 57 minutes 22 seconds, 24.00 feet;
thence on Az 89 degrees 57 minutes 22 seconds, 20.00 feet; thence on Az 359 degrees 57
minutes 22 seconds, 119.92 feet; thence on Az 90 degrees 00 minutes 00 seconds,
54.95 feet to the point of beginning.

 

 

	 	 	 

	Lawyers Title of Topeka, Inc.

	 	Shawnee County, kansas
	(785) 271-9500

	 	Register of Deeds
	C. N. 15018

	 	Marilyn L. Nichols
	Entered in Transfer Record in my office AUG. 14 2007

	 	Book: 4518 Page: 7
	/s/ Cynthia A. Beck
 

	 	Line #: 20070019311 
	County Clerk

	 	Date Recorded: 08/14/2007 04:10:22:400 PM
	 
	Mail Tax Statement to:
	 	 
	Same as Now
	 	 
	 
	 	 
	0190638

	 	Schedule 4.19
	 

	 	Exhibit B

CORPORATION DEED—General Warranty
 The Grantor, Payless ShoeSource, Inc.

a
corporation duly organized, incorporated, and existing under and by virtue of the laws of the State
of Missouri, and having its principal place of business at Topeka in the State of Kansas, hereby
CONVEYS AND WARRANTS to

Payless ShoeSource Distribution Inc. a Kansas corporation
of the County of Shawnee, State of
Kansas, the following described real estate, situated in the County of Shawnee, State of Kansas,
to-wit:

A tract of land lying in the Southwest Quarter of Section 15, Township 11 South, Range 15 East of
the 6th P.M., Shawnee County, Kansas, more particularly described as follows: Commencing at the
Northeast corner of said Southwest Quarter; thence South on Az 178 degrees 29 minutes 14 seconds,
11.01 feet coincident with the East line of said Southwest Quarter to the South right of way line
of Northwest 25th Street; thence on Az 268 degrees 54 minutes 17 seconds, 680.02 feet coincident
with said South right of way line to the Point of Beginning; thence South on Az 178 degrees 29
minutes 14 seconds, 319.00 feet; thence on Az 268 degrees 54 minutes 17 seconds, 150.15 feet;
thence on Az 358 degrees 29 minutes 14 seconds, 5.54 feet; thence on Az 268 degrees 19 minutes 35
seconds, 259.85 feet; thence on Az 358 degrees 29 minutes 14 seconds,
316.08 feet to said South
right of way line; thence on Az 88 degrees 54 minutes 17 seconds 410.01 feet coincident with said
South right of way line to the Point of Beginning.

(Subject to casements, restrictions, and reservations of record, and all taxes and assessments
that may be levied, imposed, or become payable hereafter.)

(THIS DEED IS BEING RECORDED PURSUANT TO KSA 79-147e AS AMENDED, EXEMPTIONS#3)

for the sum of One Dollar and Other Valuable Consideration

Dated this 13th day of August A.D. 2007

	 	 	 	 	 
	[SEAL] 	PAYLESS SHOESOURCE, INC.

 	 
	 	/s/  Douglas G. Boessen
 	 
	 	Douglas G. Boessen 	 
	 	Vice President 	 
	 

STATE OF KANSAS, SHAWNEE COUNTY, ss

     BE
IT REMEMBERED, That on this 13th day of August, A.D.2007 before me, the
undersigned a Notary Public in and for the County and State aforesaid, came Douglas G. Boessen,

Vice-President of Payless ShoeSource, Inc, a corporation duly organized, incorporated, and
existing under virtue of the laws of the State of Missouri, who is/are personally known to me to
be the such officer, and who is/are personally known to me to be such person(s) who executed, as
such officer(s), the Within instrument of writing on behalf of said corporation, and such
person(s) duly acknowledged the execution of same to be the act and
deed of said corporation.

     IN
TESTIMONY WHEREOF, I have hereunto set my hand and affixed my seal
the day and year last a
written.

[SEAL]

	 	 	 	 	 
	My Term expires:

 January 12, 2009 	/s/ Pamela M. Nichol
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 

	Lawyers
Title of Topeka, Inc.

	 	Shawnee County, Kansas
	(785) 271-9500

	 	Register of Deeds
	C. N. 15364

	 	Marilyn L. Nichols
	Entered in Transfer Record in my office AUG 14 2007

	 	Book: 4518 Page: 6
	/s/ Cynthia A. Beck
 

	 	Line #: 20070019310 
	County Clerk

	 	Date Recorded: 08/14/2007
04:17:32:988 PM
	 
	Mail Tax Statement to:
	 	Schedule 4.19
	Same as Now
	 	Exhibit C
	 
	 	 
	0190637

	 	 
	 

	 	 

CORPORATION DEED-General Warranty

The Grantor, Payless Shoesource, Inc.

a corporation duly organized, incorporated, and existing under and by virtue of the laws of the State
of Missouri, and having its principal place of business at Topeka in the State of Kansas,
hereby CONVEYS AND WARRANTS to

Payless ShoeSource Distribution, Inc. a Kansas corporation

of the County of Shawnee, State of
Kansas, the following described real estate, situated in the County of Shawnee, State of Kansas,
to-wit:

(See Exhibit A attached)

(Subject to easements, restrictions, and reservations of record, and all taxes and assessments that
may be levied, imposed, or become payable hereafter.)

(THIS DEED IS BEING RECORDED PURSUANT TO KSA 79-147e AS AMENDED, EXEMPTION #3)

for the sum of One Dollar and Other Valuable Consideration

Dated this 13th day of August A.D. 2007

	 	 	 	 	 
	[SEAL] 	PAYLESS SHOESOURCE, INC.

 	 
	 	/s/  Douglas G. Boessen
 	 
	 	Douglas G. Boessen 	 
	 	Vice President 	 
	 

STATE OF KANSAS, SHAWNEE COUNTY, ss

     BE IT REMEMBERED, That on this 13th day of August, A.D. 2007 before me, the undersigned a
Notary Public in and for the County and State aforesaid, came Douglas G. Boessen,

Vice-President of
Payless ShoeSource, Inc., a corporation duly organized, incorporated, and existing under virtue of the
laws of the State of Missouri, who is/are personally known to me to be the such officer, and who
is/are personally known to me to be such person(s) who executed, as such
officer(s), the within instrument of writing on behalf of said corporation, and such person(s)
duly acknowledged the execution of the same to be the act and deed of said corporation.

     IN TESTIMONY
WHEREOF, I have hereunto set my hand and affixed my seal the day and year last above written.

[SEAL]

	 	 	 	 	 
	 	 	 
	My Term expires: 

January 12, 2009 	/s/ Pamela M. Nichol
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

Lawyers Title of Topeka, Inc.

C.N. 18364

Exhibit A — Legal Description

A Tract of land in the East Half of the Southeast Quarter of Section 16, Township 11 South, Range
15 East of the Sixth P.M., Shawnee County, Kansas, described as follows: Beginning at the Northeast
Corner of said Southeast Quarter; thence South 0 degrees 05 minutes 46 seconds West along the East line
of said Southeast Quarter, 1432.59 feet to the North right of way line of U.S. Highway No. 24 as taken
in Condemnation Case #71464; thence North 89 degrees 33 minutes 45 seconds West along the North
right-of-way line of said highway. 1317.46 feet to the West line of said East Half of the Southeast
Quarter, thence North 0 degree 05 minutes 00 second West along said West line 1,403,89 feet to the
Northwest Corner of said East Half; thence North 89 degrees 11 minutes 32 seconds East along the
North line of said Southeast Quarter 1,322.00 feet to the place of beginning, EXCEPT road right of way
along the North and West sides of said tract; AND EXCEPT any abutters rights of access, appurtenant
to the East Half (E 1/2) of the Southeast
Quarter (S.E.1/4) of Section Sixteen (16), Township Eleven (11) South, Range Fifteen (15) East, in
and to said highway, over and across a line described as follows: Beginning at a point on the East
line 1,213.0 feet North of the Southeast Corner of said Quarter Section thence West to a point
1,235.3 feet North and 30 feet East of the Southwest of said East Half (E. 1/2)of the Southeast
Quarter (S.E. 1/4) Section, taken in Condemnation Case No. 78563.

 

 

	 	 	 

	Lawyers Title of Topeka, Inc.

	 	Shawnee County, Kansas
	(785) 271-9500

	 	Register of Deeds
	C.N. 15017

	 	Marilyn L. Nichols
	Entered in Transfer Record in my office AUG 14 2007

	 	Book: 4518 Page: 4
	 
	/s/ Cynthia A. Beck
 

	 	Line #: 20070019308 
	County Clerk

	 	Date Recorded: 08/14/2007 04:15:42.670 PM
	 
	Mail Tax Statement to:
	 	 
	Same as Now
	 	 
	 
	 	 
	0190635

	 	Schedule 4.19
	 

	 	Exhibit D

CORPORATION DEED—General Warranty

The Grantor, Payless ShoeSource, Inc.

a corporation duly organized, incorporated, and existing under and by virtue of the laws of the
State of Missouri, and having its principal place of business at Topeka in the State of Kansas,
hereby CONVEYS AND WARRANTS to

Payless ShoeSource Distribution, Inc. a Kansas corporation

of the County of Shawnee, State of Kansas, the following described real estate, situated in the
County of Shawnee, State of Kansas, to-wit:

(See Exhibit A attached)

(Subject to easements, restrictions, and reservations of record, and all taxes and
assessments that may be levied, imposed, or become payable hereafter.)

(THIS DEED
IS BEING RECORDED PURSUANT TO KSA 79-1437e AS AMENDED, EXEMPTION #3)

for the sum of One Dollar and Other Valuable Consideration

Dated this 13th day of August A.D. 2007

	 	 	 	 	 
	[SEAL] 	PAYLESS SHOESOURCE, INC.

 	 
	 	/s/  Douglas C. Boessen
 	 
	 	Douglas C. Boessen 	 
	 	Vice President 	 
	 

STATE OF KANSAS, SHAWNEE COUNTY, ss

     BE IT REMEMBERED, That on this 13th day of August A.D.2007 before me, the undersigned a Notary
Public in and for the County and State aforesaid, came Douglas G. Boessen,

Vice-President
of Payless ShoeSource, Inc., a corporation duly organized, incorporated, and existing
under virtue of the laws of the State of Missouri, who is/are personally known to me to be such
officer, and who is/are personally known to me to be such person(s) who executed, as such officer(s), the
within instrument of writing on behalf of said corporation, and such person(s) duly acknowledged
the execution of the same to be the act and deed of said corporation.

     IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my seal the day
and year last above written.

[SEAL]

	 	 	 	 	 
	 	 	 
	My Term expires: January 12, 2009 	/s/ Pamela M. Nichol
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

Lawyers Title of Topeka, Inc.

C.N. 15017

Exhibit A — Legal Description

A Tract of land in the Southwest Quarter of Section 15, Township 11 South, Range 15 East
of the 6th P.M., in
Shawnee County, Kansas, described as follows: Commencing at the Northeast Corner of
said Southwest
Quarter; thence South 1 degree 30 minutes 46 seconds East, along the East
line of said Southwest Quarter, a
distance of 504.22 feet; thence South 88 degrees 19 minutes 35 seconds West, a
distance of 1090.00 feet for a
point of beginning; thence South 88 degrees 19 minutes 35 seconds West, a
distance of 409.91 feet; thence North 1 degree 30 minutes 46 seconds West,
parallel to the East line of said Southwest Quarter, a distance of 507.13 feet to a
point on the South right of way line of Old U.S. Highway Number 24
that is 19.90 feet South of the North line of said Southwest Quarter;
thence North, 88 degrees 30 minutes 34 seconds East, along said South right of way
line, a distance of 177.30 feet to a point 17.70 feet South of the Northwest
Corner of the East Half of said Southwest Quarter; thence North 88 degrees 54 minutes 17 seconds East, along said South right
of way line, a distance of 232.61 feet to a point 16.52 feet South of the North line
of said Southwest Quarter; thence South 1 degree 30 minutes 46 seconds East, parallel
to the East line of said Southwest Quarter, a distance of 504.21 feet to the point of
beginning, LESS the South 188.13 feet thereof.

 

 

	 	 	 

	Lawyers
Title of Topeka, Inc.

	 	Shawnee County, Kansas
	(785) 271-9500

	 	Register of Deeds
	C. N. 18613

	 	Marilyn L. Nichols
	Entered in Transfer Record in my office AUG 14 2007

	 	Book: 4518 Page: 5
	 
	/s/ Cynthia A. Beck
 

	 	Line #: 20070019309 
	County Clerk

	 	Date Recorded: 08/14/2007
04:16:55:848 PM
	 
	Mail
Tax Statement to:
	 	 
	Same as Now
	 	 
	 
	 	 
	0190636

	 	Schedule 4.19
	 

	 	Exhibit E

CORPORATION
DEED-General Warranty

The
Grantor, Payless ShoeSource, Inc.

a corporation duly organized, incorporated, and existing under and by virtue of the laws of the
State of Missouri, and having its principal place of business at Topeka in the State of Kansas,
hereby CONVEYS AND WARRANTS to

Payless
ShoeSource Distribution, Inc. a Kansas corporation

of the
County of Shawnee, State of Kansas, the following described real estate, situated in the
County of Shawnee, State of Kansas, to-wit:

(See Exhibit A attached)

(Subject
to easements, restrictions, and reservation of record, and all taxes and
assessments that may be levied, imposed, or become payable hereafter.)

(THIS DEED
IS BEING RECORDED PURSUANT TO KSA 79–147e AS AMENDED, EXEMPTION #3)

for the sum of One Dollar and Other Valuable Consideration

Dated this
13th day of August A.D. 2007

	 	 	 	 	 
	[SEAL] 	PAYLESS SHOESOURCE, INC.

 	 
	 	/s/  Douglas G. Boessen
 	 
	 	Douglas G. Boessen 	 
	 	Vice President 	 
	 

STATE OF
KANSAS, SHAWNEE COUNTY, ss

     BE
IT REMEMBERED, That on this 13th day of August, A.D. 2007 before me,
the undersigned a Notary Public in and for the County and State
aforesaid, come Douglas G. Boessen.

Vice-President
of Payless ShoeSource, Inc., a corporation duly organized, incorporated, and
existing under virtue of the laws of the State of Missouri., who is/are personally known to me to
be the such officer, and who is/are personally known to me to be such
person(s) who executed, as
such officer(s), the within instrument of writing on behalf of said corporation, and such
person(s) duly acknowledged the execution of the same to be the act and deed of said corporation.

     IN
TESTIMONY WHEREOF, I have hereunto set my hand and affixed my seal the day and year last above
written.

[SEAL]

	 	 	 	 	 
	 	 	 
	My Term expires: 

January 12, 2009 	/s/ Pamela M. Nichol
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

Lawyers
Title of Topeka, Inc.

C.N. 18613

Exhibit A — Legal Description

	 	 	A tract of land situated in Lot 5, according to the Government Survey of the Pottawattomie Reserve
in the Southeast Quarter of Section 15, Township 11 South, Range 15 East of
the 6th P.M., Shawnee, County, Kansas, described as follows: Beginning at the Northwest corner of Lot
5; thence on an assumed bearing of South 89 degrees 45 minutes 37 seconds
East, a distance of 207.36 feet along the North line of said Lot 5; thence
South 00 degrees 14 minutes 23 seconds West, a distance of 204.03 feet; thence
South 89 degrees 45 minutes 37 seconds East, a distance of 206.00 feet; thence South 00 degree 14
minutes 23 seconds West, a distance of 8.68 feet; thence South 89
degrees 45 minutes
37 seconds East, a distance of 222.00 feet; thence North 00 degrees 14 minutes 23
seconds East, a distance of 9.53 feet; thence South 89 degrees 58 minutes 45 seconds East,
a distance of 225.00 feet; thence North 00 degrees 14 minutes 23 seconds East, a
distance of 202.32 feet to the North line of said Lot 5; thence South 89 degrees 45
minutes 37 seconds East, a distance of 149.53 feet along the North line of said Lot 5 to the
Northeast corner thereof; thence South 00 degrees 08 minutes 09
Seconds East, a distance of
1,221.86 feet along the East line, of said Lot 5 to the Northerly right of way line
of US 24 Highway; thence Westerly along a curve to the right an are distance of
485.57 feet along said Northerly right of way line, said curve having a radius of 1055.92
feet, a chord bearing South 76 degrees 12 minutes 51 seconds West and a chord length of
481.30 feet; thence South 87 degrees 23 minutes 24 seconds West, a distance of
534.21 feet along said Northerly right of way line to the West line of said Lot 5; thence North
00 degrees 29 minutes 25 seconds West, a distance of 1,365.15 feet along
said West line to POINT OF BEGINNING.

 

 

Schedule 7.13

Post-Closing Covenants

          (a) Mortgages. As soon as possible, but in any event no later than 60 days after the
Closing Date (unless such time period is extended by the Agent in its reasonable discretion), the
Borrower shall deliver evidence, in form and substance satisfactory to the Agent, title insurance
for and the proper recording of the mortgages, together with any supporting documentation related
thereto, upon the property of the Borrower and its subsidiaries located at:

3231 SE Sixth Avenue, Topeka, Kansas;

6001 Can Run Rd., Louisville, Kentucky; and

1515 Riverfolk Drive West, Huntington, Indiana.

          (b) Mortgages. As soon as possible, but in any event no later than 180 days after the
Closing Date (unless such time period is extended by the Agent in its reasonable discretion), the
Borrower shall deliver evidence, in form and substance satisfactory to the Agent, title insurance
for and the proper recording of the mortgages, together with any supporting documentation related
thereto, upon the property, owned by the Borrower in fee, located at or around 5040 NW Highway 24,
Topeka, Kansas, unless such property is sold or otherwise disposed of prior to such time.

          (c) Account Control Agreements. As soon as possible, but in any event no later than
30 days after the Closing Date (unless such time period is extended by the Agent in its reasonable
discretion), the Agent shall have received account control agreements for the following accounts:

	 	•	 	That certain securities account of the Borrower, held by Wells Fargo
Capital Management Inc. (Account #***)†.
	 
	 	•	 	That certain deposit account of Collective Brands, Inc., held by
JPMorgan Chase Bank, N.A. (Account #***)†.
	 
	 	•	 	That certain deposit account of The Stride Rite Corporation,
held by Bank of America, N.A. (Account #***)†.
	 
	 	•	 	That certain securities account of the Borrower, held by
JPMorgan Chase Bank (Account #***)†;

provided that, if Borrower is unable to deliver such account control agreements within such time
frame, then Borrower will have the option of closing such account and transferring the funds
therefrom into an account subject to such a control agreement, in form and substance reasonably
satisfactory to the Agent.

          (d) Collateral Access Agreements. The Borrower shall use commercially reasonable
efforts to, as soon as possible, but in any event no later than 90 days after the Closing Date
(unless such time period is extended by the Agent in its reasonable discretion), deliver to the
Agent the following:

	 	•	 	Collateral Access Agreements relating to the inventory of Collective
Brands, Inc. held by each of the following entities:

	 	•	 	Expeditors International of Washington, Inc.

(***)† This informiaton has been omitted based on a request for confidential treatment. The
omitted portions have been separately filed with the Securities and Exchange Commission.

 

 

	 	•	 	The lessor of the California Palms Distribution Center,
as disclosed to the Agent prior to the Closing Date.

          (e) Customs Broker Agreements. The Borrower shall use commercially reasonable efforts
to, as soon as possible, but in any event no later than 90 days after the Closing Date (unless such
time period is extended by the Agent in its reasonable discretion), deliver to the Agent a customs
broker agreement relating to the inventory of The Stride Rite Corporation held by Carmichael
International Service, Inc.

          (f) Bank of America Lockbox Account Control Agreements. As soon as possible, but in
any event no later than 30 days after the Closing Date (unless such time period is extended by the
Agent in its reasonable discretion), the Agent shall have received a lockbox account control
agreement for that certain lockbox account of The Stride Rite Corporation or one of its
subsidiaries, held by Bank of America, N.A. or one of its affiliates and as disclosed to the Agent
prior to the Closing Date; provided that, if Borrower is unable to deliver such a lockbox account
control agreement within such time frame, then Borrower will have the option of closing such
account and transferring the funds therefrom into an lockbox account subject to such a control
agreement, in form and substance reasonably satisfactory to the Agent.

          (g) Insurance Certificates Reflecting Name Change. As soon as possible, but in any
event no later than 60 days after the Closing Date (unless such time period is extended by the
Agent in its reasonable discretion), the Agent shall have received updated insurance endorsements
reflecting the change of name of Collective Brands, Inc. from Payless ShoeSource, Inc.

          (h) Pledged Shares. As soon as possible, but in any event no later than 90 days after
the Closing Date (unless such time period is extended is extended by the Agent in its reasonable
discretion), the Agent shall have received share certificates evidencing the Pledged Certificated
Stock (as defined in the Pledge and Security Agreement) to the extent required to be delivered
pursuant to Sections 3.5(d) and 4.4(a) of the Pledge and Security Agreement, unless, prior to such
date, the pledge of such Pledged Certificated Stock ceases to be required under the Pledge and
Security Agreement, of each of the following entities:

	 	 	 	 	 

	 

	 	STS/Ecom, Inc.
	 	Stride Rite Deutschland Vertriebs Gmbh
	 

	 	Saucony/Ecom, Inc.
	 	Saucony Asia Pacific Limited
	 

	 	Stride Rite International Holdings, Inc.
	 	Stride Rite UK Limited
	 

	 	Robeez Logistics Inc.
	 	Stride Rite Europe B.V.
	 

	 	Robeez US Holdings Inc.
	 	Stride Rite Bermuda LP
	 

	 	Robeez U.S., Inc.
	 	Lifestyle Brands Corporation
	 

	 	Stride Rite International LLC
	 	PSS International Holdings Limited
	 

	 	Stride Rite Mexico	 	 

          (i) Schedules. As soon as possible, but in any event by no later than August 24,
2007, the Borrower shall deliver schedules to the Credit Agreement corrected in the manner
previously discussed with Agent’s counsel.

 

 

Schedule 8.1

Existing Indebtedness

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Maturity	 	 	 	 	 	 
	Debt	 	Debtor	 	Date	 	 	Amount	 	 	Currency
	External Debt
	 	 	 	 	 	 	 	 	 	 	 	 
	8.25% Senior Subordinated Notes due 2013
	 	Payless ShoeSource Inc. (DE)	 	 	8/1/2013	 	 	 	200,000,000.00	 	 	USD
	Loan from Promerica Limited Partners
	 	Payless ShoeSource (BVI) Holdings, Ltd.	 	 	12/15/2009	 	 	 	2,000,000.00	 	 	USD
	Loan from Republic Bank of Trinidad & Tobago
	 	Payless ShoeSource of Trinidad Unlimited	 	 	9/7/2009	 	 	 	2,000,000.00	 	 	USD
	Aggregate of various capitalized lease obligations
	 	Payless ShoeSource Inc. (MO)	 	Various	 	 	 	324,688.93	 	 	USD
	West Coast DC Tenant Improvement Loan
	 	Payless ShoeSource Distribution Inc.	 	 	10/5/2021	 	 	 	1,151,043.79	 	 	USD
	Letter of Credit — Credit and Guarantee Agreement 4/17/00
	 	Payless ShoeSource Finance, Inc.	 	Various	 	 	 	25,810,876.00	 	 	USD
	IRB Series A2002
	 	Payless ShoeSource Inc. (MO)	 	 	10/1/2012	 	 	 	8,000,000.00	 	 	USD
	IRB Series A2000
	 	Payless ShoeSource Inc. (MO)	 	 	1/1/2011	 	 	 	4,220,000.00	 	 	USD
	IRB Series A1998
	 	Payless ShoeSource Inc. (MO)	 	 	9/1/2008	 	 	 	2,640,000.00	 	 	USD
	IRB Series B2000
	 	Payless ShoeSource Distribution Inc.	 	 	1/1/2011	 	 	 	4,160,000.00	 	 	USD
	IRB Series A1999
	 	Payless ShoeSource Distribution Inc.	 	 	10/1/2009	 	 	 	1,145,000.00	 	 	USD
	 
	 
	 	 	 	 	 	 	 	$	251,451,608.72	 	 	 
	 
	Total External Debt

	 		 	   	 	 	  	 	 
	 
	International Intercompany Debt
	 	 	 	 	 	 	 	 	 	 	 	 
	Loan from Payless ShoeSource Uruguay SRL
	 	Payless ShoeSource of Ecuador	 	Demand Note         	 	 	 2,000,000.00	 	USD
	Loan from Payless ShoeSource (BVI) Holdings, Ltd.
	 	Payless ShoeSource Panama	 	 	4/1/2008	 	 	 	7,250,000.00	 	 	USD
	Loan from Payless ShoeSource (BVI) Holdings, Ltd.
	 	Payless ShoeSource Panama	 	 	4/1/2008	 	 	 	3,000,000.00	 	 	USD
	Loan from Payless ShoeSource (BVI) Holdings, Ltd.
	 	Payless ShoeSource Limitada y Compania Limitada	 	 	12/7/2009	 	 	 	500,000.00	 	 	USD
	Loan from Payless CA Management Limited
	 	Payless ShoeSource (BVI) Holdings, Ltd.	 	 	12/15/2009	 	 	 	3,000,000.00	 	 	USD
	Loan from PSS Canada Finance LP
	 	Payless ShoeSource Canada, Inc	 	 	1/24/2013	 	 	 	38,075,000.00	 	 	CAD
	 
	Loan from Saucony, Inc.
	 	Stride Rite Canada, Ltd.	 	Demand Note	 	 	 	17,000,000.00	 	 	USD
	 
	 	 	 	 	 	 	 	$	70,825,000.00	 	 	 
	 
	Total International Intercompany Debt
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Domestic Intercompany Debt
	 	 	 	 	 	 	 	 	283,145,337.00	 	 	USD
	Loan from Payless ShoeSource Finance, Inc
	 	Payless ShoeSource, Inc (DE)	 	 	4/11/2010	 	 	 	 	 	 	 
	Loan from Payless ShoeSource Finance, Inc
	 	Payless ShoeSource, Inc (MO)	 	 	10/31/2008	 	 	 	302,250,000.00	 	 	USD
	 
	 
	 	 	 	 	 	 	 	 	585,395,337.00	 	 	 
	Total Domestic Intercompany Debt
	 	 	 	 	 	 	 	 	 	 	 	 

Letters of credit in the ordinary course of business between Stride Rite and The Bank of New
York and Bank of America, N.A. in the principal amount of approximately $6.1 million.

 

 

Schedule 8.2

Existing Liens

	1.	 	Certain liens granted pursuant to that certain Pledge and Security Agreement, dated as of
August 17, 2007, among Collective Brands Finance, Inc., as a Grantor, and each other Grantor
from time to time party thereto and Wells Fargo Retail Finance, LLC, as Administrative Agent.
For this purpose, the Credit Parties include:

Collective Brands Finance, Inc.

Collective International, LP

Collective Licensing International, LLC

Dyelights, Inc. (formerly PSS Delaware 1, Inc.)

Eastborough, Inc.

Payless Collective GP, LLC

Payless NYC, Inc

Payless Purchasing Services, Inc.

Payless ShoeSource Distribution, Inc.

Payless ShoeSource Gold Value, Inc.

Payless ShoeSource Leasing, LLC

Payless ShoeSource Merchandising, Inc.

Payless ShoeSource Worldwide, Inc.

Payless ShoeSource, Inc.

PSS Canada, Inc.

PSS Delaware Company 2, Inc.

PSS Delaware Company 3, Inc.

PSS Delaware Company 4, Inc.

PSS Investment I, Inc.

PSS Investment III, Inc.

San Jose Acquisition Corp.

Shoe Sourcing, Inc.

	2.	 	The City of Topeka has liens in certain real and personal property interests of Payless
ShoeSource, Inc. and Payless ShoeSource Distribution, Inc. at the Payless ShoeSource corporate
headquarters (3231 SE Sixth Ave., Topeka, KS 66607) and the Topeka distribution center (5040
Northwest Highway 24, Topeka, KS 66618). These liens are a result of Industrial Revenue Bonds
that were issued by the City of Topeka to

 

 

	 	 	Payless ShoeSource, Inc. and Payless ShoeSource Distribution, Inc. All of the outstanding
Industrial Revenue Bonds, however, are owned by Collective Brands Finance, Inc. Upon repayment
of the Bonds by Payless ShoeSource, Inc. and Payless ShoeSource Distribution, Inc. to
Collective Brands Finance, Inc., the liens will be released upon payment of a nominal amount
(e.g., $100) to the City of Topeka.

	3.	 	Collective Brands, Inc.’s international subsidiaries currently have outstanding liens on
certain bank accounts securing an equal amount of indebtedness. From time-to-time, as part of
the ordinary course of business, international subsidiaries will enter into loan agreements
secured by an equal amount of cash to more efficiently operate their business.

	4.	 	As security for existing and future indebtedness and obligations of the Borrower, to
Expeditors International of Washington, Inc. (“Expeditors”), including claims for charges,
expenses or advances incurred by Expeditors in connection with any shipment or transaction of
the Borrower, the Borrower has granted to Expeditors a continuing lien and security interest
in any and all property of the Borrower (including goods and documents relating thereto) in
the possession of Expeditors.

	5.	 	Numerous liens by Payless ShoeSource, Inc. (MO) and Collective Brands, Inc. (f/k/a Payless
ShoeSource, Inc. (DE)) in favor of IOS Capital, LLC

Collective Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	32399999	 	 	09/16/03
	 	UCC
	 	IOS Capital, LLC
	 	The terms “Debtor” and “Secured Party” shall mean
“Lessor” and “Lessee”, respectively. This financial
statement covers the following types (or items) of
property: All equipment now or hereafter leased in an
equipment leasing transaction in connection with that
certain Schedule No. 1005350-150664AQ to that certain
Master Agreement No. 150664 (“Lease”), as amended from
time to time, between IOS Capital, LLC as lessor, and
the above referenced Lessee/Debtor, including without
limit, the equipment listed below, and all additions,
improvements, attachments, accessories, accessions,
upgrades and replacements related thereto, and any and
all substitutions or exchanges, and any and all
products, insurance and/or other proceeds (cash and
non-cash) therefrom...

 

 

    Collective Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	32729377	 	 	10/08/03
	 	UCC
	 	IOS Capital
	 	The terms “Debtor” and “Secured Party” shall mean
“Lessor” and “Lessee”, respectively. This financial
statement covers the following types (or items) of
property: All equipment now or hereafter leased in an
equipment leasing transaction in connection with that
certain Master Agreement No. see below. Product Schedule
No./Agreement No. see below (“Lease”), as amended from
time to time, between IOS Capital, LLC as lessor, and
the above referenced Lessee/Debtor, including without
limit, the equipment listed below, and all additions,
improvements, attachments, accessories, accessions,
upgrades and replacements related thereto, and any and
all substitutions or exchanges, and any and all
products, insurance and/or other proceeds (cash and
non-cash) there from...
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	32729468	 	 	10/08/03
	 	UCC
	 	IOS Capital
	 	‘’     ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	32731639	 	 	10/08/03
	 	UCC
	 	IOS Capital
	 	‘’     ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	32762188	 	 	10/14/03
	 	UCC
	 	IOS Capital
	 	‘’     ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	32762402	 	 	10/14/03
	 	UCC
	 	IOS Capital
	 	‘’     ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	32764036	 	 	10/14/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	32764192	 	 	10/14/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	32764283	 	 	10/14/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’

 

 

Collective Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	33119149	 	 	11/19/03
	 	UCC
	 	IOS Capital
	 	‘’       ‘’       ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40389363	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	The terms “Debtor” and “Secured Party” shall mean
“Lessor” and “Lessee”, respectively. This financial
statement covers the following types (or items) of
property: All equipment now or hereafter leased in an
equipment leasing transaction in connection with that
certain Master Agreement No. see below. Product Schedule
No./Agreement No. see below (“Lease”), as amended from
time to time, between IOS Capital, LLC as lessor, and
the above referenced Lessee/Debtor, including without
limit, the equipment listed below, and all additions,
improvements, attachments, accessories, accessions,
upgrades and replacements related thereto, and any and
all substitutions or exchanges, and any and all
products, insurance and/or other proceeds (cash and
non-cash) there from...
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40389454	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’       ‘’       ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40389520	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’       ‘’       ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40389595	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’       ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40391310	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40391369	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40391443	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	40391633	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392060	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392243	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392276	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392318	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392383	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392466	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392508	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392557	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392581	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392607	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392664	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392680	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective
Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	40392722	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392771	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392920	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40392946	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40394819	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40394934	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40394967	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40394991	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40395170	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40395188	 	 	01/22/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	40565574	 	 	02/19/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41133935	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41133950	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective
Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	41133992	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134032	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134057	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134081	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134115	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134149	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134164	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134172	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134222	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41134305	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41137258	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41137274	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41137282	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective
Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	41137308	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41138884	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140062	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140088	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140096	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140146	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140393	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140427	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140450	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140476	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140484	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140831	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140864	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective
Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	41140880	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140906	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140914	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140948	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41140963	 	 	04/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41145756	 	 	04/08/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41145798	 	 	04/08/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41352428	 	 	04/28/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41366543	 	 	04/03/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41599671	 	 	05/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41599721	 	 	05/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	41933334	 	 	07/07/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42726752	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective
Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	42728576	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42728790	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42728832	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42728881	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42728980	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729152	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729160	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729343	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729384	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729418	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729434	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729475	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729509	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective
Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	42729517	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729541	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729574	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729590	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729632	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729665	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729699	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729707	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729749	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729756	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42729772	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42730432	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42730549	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Collective
Brands, Inc. (f/k/a Payless ShoeSource, Inc.)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	42730606	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42730812	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42730838	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42730879	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42730978	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42730994	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731356	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731380	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731398	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731414	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731430	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731463	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731471	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Collective Brands, Inc. (f/k/a Payless ShoeSource, Inc.)
	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	DE-Secretary of State

	 	 	42731489	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731497	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DE-Secretary of State

	 	 	42731539	 	 	09/21/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’     ‘’

	 	 	 	 	 	 	 	 	 	 	 
	Payless ShoeSource, Inc.
	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	MO-Secretary of State

	 	20030128941A
	 	12/16/03
	 	UCC
	 	IOS Capital

	 	 The terms “Debtor” and “Secured Party” shall mean
“Lessor” and “Lessee”, respectively. This financial
statement covers the following types (or items) of
property: All equipment now or hereafter leased in an
equipment leasing transaction in connection with that
certain Master Agreement No. see below. Product Schedule No./Agreement No. see below (“Lease”), as amended from
time to time, between IOS Capital, LLC as lessor, and
the above referenced Lessee/Debtor, including without
limit, the equipment listed below, and all additions,
improvements, attachments, accessories, accessions,
upgrades and replacements related thereto, and any and
all substitutions or exchanges, and any and all
products, insurance and/or other proceeds (cash and
non-cash) there from...
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128949K
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	 ‘’      ‘’     ‘’

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Payless ShoeSource, Inc.
	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	MO-Secretary of State

	 	20030128946G
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128952C
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128960B
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128951B
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128955G
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128939J
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128961C
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128959M
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128947H
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128963F
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128954F
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128958K
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128953E
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Payless ShoeSource, Inc.
	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	MO-Secretary of State

	 	20030128962E
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’          
‘’           ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128957J
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’          
‘’           ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128965H
	 	12/16/03
	 	UCC
	 	IOS Capital
	 	‘’          
‘’           ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128940M
	 	12/16/03
	 	UCC
	 	IOS Capital	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20030128956H
	 	12/16/03
	 	UCC
	 	IOS Capital	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094227A
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	The terms “Debtor” and “Secured Party” shall mean
“Lessor” and “Lessee”, respectively. This financial
statement covers the following types (or items) of
property: All equipment now or hereafter leased in an
equipment leasing transaction in connection with that
certain Master Agreement No. see below. Product Schedule
No./Agreement No. see below (“Lease”), as amended from
time to time, between IOS Capital, LLC as lessor, and
the above referenced Lessee/Debtor, including without
limit, the equipment listed below, and all additions,
improvements, attachments, accessories, accessions,
upgrades and replacements related thereto, and any and
all substitutions or exchanges, and any and all
products, insurance and/or other proceeds (cash and
non-cash) there from...
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094277G
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’          
‘’           ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094144K
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’          
‘’           ‘’

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Payless ShoeSource, Inc.
	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	MO-Secretary of State

	 	20040094258F
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094273B
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094225K
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094224J
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094231G
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094222G
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094251J
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094229C
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094266E
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094272A
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094143J
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094241H
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094254A
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Payless ShoeSource, Inc.
	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	MO-Secretary of State

	 	20040094250H
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094136M
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094255B
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094252K
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094138B
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094269H
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094243K
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094267F
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094146A
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094271M
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094139C
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094137A
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094253M
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Payless ShoeSource, Inc.
	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	MO-Secretary of State

	 	20040094141G
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094232H
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094145M
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094276F
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094268G
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094242J
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094275E
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094279J
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094270K
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094278H
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094249F
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094226M
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’
	 
	 	 	 	 	 	 	 	 	 	 
	MO-Secretary of State

	 	20040094248E
	 	09/01/04
	 	UCC
	 	IOS Capital
	 	‘’      ‘’      ‘’

 

 

Payless ShoeSource, Inc.

	 	 	 	 	 	 	 	 	 	 	 
	JURISDICTION	 	File #	 	File Date	 	Type	 	Secured Party	 	Collateral Description
	MO-Secretary of State

	 	20060058371C
	 	05/15/06
	 	UCC
	 	IOS Capital
	 	‘’       ‘’      ‘’

 

			
	6.	 	UCC Financing Statement #5823992, naming Payless ShoeSource Worldwide, Inc., as Debtor and
UMB Bank, N.A. as Secured Party, for certain electronic equipment, furniture, and
miscellaneous assets located at Topeka, Kansas facility.
	 
	7.	 	UCC-1 Filing No. 200320959330, naming Saucony, Inc. as Debtor and IOS Capital, LLC as Secured
Party, for IKON office copier.
	 
	8.	 	UCC-1 Filing No. 200645123250, naming Stride Rite Children’s Group as Debtor and IOS Capital
as Secured Party, for IKON office copier.
	 
	9.	 	UCC-1 Filing No. 200536411170, naming Tommy Hilfiger Footwear, Inc. as Debtor and Wells Fargo
Equipment Finance, Inc. as Secured Party, for trade show booth.
	 
	10.	 	Equipment Schedule No. 25 (Schedule Ref. No. 67810306) dated June 24, 2003, pursuant to
Master Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for 750 printer.
	 
	11.	 	Equipment Schedule No. 26 (Schedule Ref. No. 678190307) dated July 25, 2003, pursuant to
Master Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for P650 4-Way System for Louisville.
	 
	12.	 	Equipment Schedule No. 28 (Schedule Ref. No. 67960308) dated August 8, 2003, pursuant to
Master Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for tape subsystem.
	 
	13.	 	Equipment Schedule No. 29 (Schedule Ref. No. 68700401) dated January 12, 2004, pursuant to
Master Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for 6 Compaq computers.
	 
	14.	 	Equipment Schedule No. 31 (Schedule Ref. No. 69840411) dated November 17, 2004, pursuant to
Master Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for EMC CX-700.
	 
	15.	 	Equipment Schedule No. 32 (Schedule Ref. No. 69850411) dated November 18, 2004, pursuant to
Master Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for 520 one-way processor.

 

 

			
	16.	 	Equipment Schedule No. 33 (Schedule Ref. No. 70720506) dated June 6, 2005, pursuant to Master
Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for Oracle software package.
	 
	17.	 	Equipment Schedule No. 34 (Schedule Ref. No. 721206041) dated April 25, 2006, pursuant to
Master Lease Agreement dated March 23, 1999 between ComSource, Inc. as Lessor and Stride Rite
Children’s Group, Inc. as Lessee, for JDA/RI Application and LPAR Consolidation; IBM 9409-550.
	 
	18.	 	UCC-1 Filing (Ref. No. 200757998140) dated June 28, 2007, naming Stride Rite Investment
Corporation as Debtor and IOS Capital as Secured Party, for IKON office copier.

 

 

Schedule 8.3

Existing Investments

	 	 	 	 	 
	Investments:
	 	 	 	 
	 
	 	 	 	 
	Foreign Subsidiaries
	 	 	 	 
	PSS Holdings (for Central and South America) — (Investment made by Payless ShoeSource Worldwide)
	 	 	$97,543,833.00	 
	Payless ShoeSource Asia Ltd. (for Japan) — (Investment made by Payless ShoeSource Worldwide)
	 	 	$6,760,000.00	 
	Payless ShoeSource Canada, Inc. — (Investment made by PSS Canada Inc.)
	 	 	$43,949,115.00	 
	Other Investments in Foreign Subsidiaries
	 	As set forth in the column entitled “Non-Guarantor

	 
	 	Subsidiaries” in note 19 to Payless ShoeSource, Inc.

	 
	 	Form 10-Q for the quarter ending May 5, 2007 (such

	 
	 	information includes all Puerto Rican subsidiaries).
	 
	 	 	 	 
	All Other Investments of Payless ShoeSource Finance, Inc.
	 	 	 	 
	City of Topeka Industrial Revenue Bonds
	 	 	 	 
	Payless ShoeSource Inc. (MO) Series A2002
	 	 	$14,000,000.00	 
	Payless ShoeSource Inc. (MO) Series A2000
	 	 	$10,563,000.00	 
	Payless ShoeSource Distribution Inc. Series B2000
	 	 	$10,393,000.00	 
	Payless ShoeSource Distribution Inc. Series A1999
	 	 	$3,844,000.00	 
	Payless ShoeSource Inc. (MO) Series A1998
	 	 	$13,200,000.00	 

 

 

Schedule 8.4

Assets Sales

Topeka Distribution Center and adjacent land

5040 NW Highway 24

Topeka, Kansas 66618

Stride Rite Canada, Limited to a Restricted Subsidiary.

The transfer of the China branch/representative office of Stride Rite Sourcing International, Inc.
and some or all of its assets and/or employees to the Shenzhen Footwear Consulting Company or
another entity which is owned 100% by a Restricted Subsidiary of Borrower.

Potential sale of Stride Rite’s East Brookfield, Massachusetts property to a third party. See
Schedule 4.19.

55

 

Schedule 8.9

Transactions with Affiliates

None.

56

 

Schedule 8.13

Accounting Changes; Fiscal Year

     The fiscal year for each Stride Rite domestic entity will be changed to conform to
Borrower’s fiscal year, as required by law. Borrower is still examining whether the fiscal year of
any Stride Rite foreign entity will be changed, either as a legal requirement or otherwise.

	 	 	 	 	 
	 	 	Organizational	 	 
	Company	 	Chart	 	EIN
	The Stride Rite Corporation
	 	41399290	 	04-1399290
	Stride Rite Children’s Group, Inc.
	 	1015284	 	04-2491044
	The Keds Corporation
	 	42677616	 	04-2677616
	Sperry Top-Sider, Inc.
	 	42677615	 	04-2677615
	Stride Rite Sourcing International, Inc.
	 	42677617	 	04-2677617
	SRR, Inc.
	 	2017888	 	04-2796613
	Stride Rite Investment Corporation
	 	42782171	 	04-2782171
	S R Holdings Inc.
	 	2144545	 	04-2989593
	Stride Rite International Corp.
	 	43111232	 	04-3111232
	SRL, Inc.
	 	2267764	 	06-1325016
	Tommy Hilfiger Footwear, Inc.
	 	43315283	 	04-3315283
	SR/Ecom, Inc.
	 	43374293	 	04-3374293
	SRCG/Ecom, Inc.
	 	3764131	 	45-0534031
	STS/Ecom, Inc.
	 	4071197	 	20-3907823
	Saucony, Inc.
	 	41465840	 	04-1465840
	Saucony UK, Inc.
	 	43137847	 	04-337847
	Saucony/Ecom, Inc.
	 	4292944	 	22-3952827
	Keds LLC
	 	3597771	 	35-2189538
	Stride Rite LLC
	 	3597737	 	35-2189534
	SRCG LLC
	 	3597734	 	35-3189539
	Stride Rite International Holdings, Inc.
	 	4255643	 	61-1525483
	Stride Rite International LLC
	 	4252859	 	61-1525486
	Robeez Logistics Inc.
	 	E0533982005-9	 	98-0471845
	Robeez U.S., Inc.
	 	602449259	 	72-1589676
	Robeez US Holdings Inc.
	 	C20675-2004	 	83-0409654

57

 

EXHIBIT A

Exhibit A

to

Term Loan Agreement

Form of Assignment and Acceptance

          Assignment
and Acceptance, dated as of
                                   ,                      (this “Assignment and
Acceptance”) (between [Name of Assignor] (the “Assignor”) and [Name of Assignee]
(the “Assignee”).

          Reference is made to the Term Loan Agreement, dated as of August 17, 2007 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), among Collective Brands Finance, Inc., a Nevada corporation (the “Borrower”), the
Lenders party thereto, Citicorp North America, Inc., as agent for the Lenders (in such capacity,
the “Administrative Agent”) and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as
Joint Bookrunners and Joint Lead Arrangers. Capitalized terms used herein and not otherwise
defined herein are used herein as defined in the Term Loan Agreement.

          The Assignor and the Assignee hereby agree as follows:

	1.	 	As of the Effective Date (as defined below), the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, all of the
Assignor’s rights and obligations under the Term Loan Agreement to the extent related to the
amounts and percentages specified in Section 1 of Schedule I hereto.
	 
	2.	 	The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any
adverse claim and (ii) it has full power and authority, and has taken all actions necessary,
to execute and deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby, (b) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in connection with
the Term Loan Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Term Loan Agreement or any other Loan Document, any other
instrument or document furnished pursuant thereto or any collateral thereunder, (c) makes no
representation or warranty and assumes no responsibility with respect to the financial
condition of the Borrower and any other Loan Party or the performance or observance by the
Borrower and any other Loan Party of any of its obligations under the Term Loan Agreement or
any other Loan Document or any other instrument or document furnished pursuant thereto and
(iv) attaches the Note(s), if any, held by the Assignor and requests that the Administrative
Agent exchange such Note(s) for a new Note or Notes in accordance with Section 11.2
(Assignments and Participations) of the Term Loan Agreement.
	 
	3.	 	The Assignee (a) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Term Loan Agreement, (b) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to

A-1

 

assignment and acceptance

	 	 	exercise such powers under the Term Loan Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, (c) agrees that it will perform in accordance with their
terms all of the obligations that, by the terms of the Term Loan Agreement, are required to
be performed by it as a Lender, (d) represents and warrants that it (i) is an Eligible
Assignee, (ii) has full power and authority, and has taken all actions necessary, to
execute and deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby and (iii) is sophisticated with respect to decisions to acquire assets
of the type represented by the Assigned Interest and either it or the Person exercising
discretion in making the decision to acquire the Assigned Interest is experienced in
acquiring assets of such type, (e) confirms it has received or has been given the
opportunity to receive such documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and Acceptance and to
purchase the Assigned Interest independently and without reliance upon the Administrative
Agent, the Assignor or any Lender, (f) specifies as its Domestic Lending Office (and
address for notices) and Eurodollar Lending Office the offices set forth beneath its name
on the signature pages hereof and (g) if applicable, attaches two properly completed Forms
W-8BEN, W-8ECI or successor or form prescribed by the Internal Revenue Service of the
United States, certifying that such Assignee is entitled to receive all payments under the
Term Loan Agreement and the Notes payable to it without deduction or withholding of any
United States federal income taxes.
	 
	4.	 	Following the execution of this Assignment and Acceptance by the Assignor and the Assignee,
it will be delivered to the Administrative Agent (together with an assignment fee in the
amount of $3,500 payable by the Assignee to the Administrative Agent if required pursuant to
Section 11.2(b)(Assignments and Participations)) for acceptance and recording by the
Administrative Agent. The effective date of this Assignment and Acceptance shall be the
effective date specified in Section 2 of Schedule I hereto (the “Effective Date”).
	 
	5.	 	Upon such acceptance and recording by the Administrative Agent, then, as of the Effective
Date, (a) the Assignee shall be a party to the Term Loan Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations under the Term Loan
Agreement of a Lender and (b) the Assignor shall, to the extent provided in this Assignment
and Acceptance, relinquish its rights (except 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 the Effective Date.
	 
	6.	 	Upon such acceptance and recording by the Administrative Agent, from and after the Effective
Date, the Administrative Agent shall make all payments under the Loan Documents in respect of
the interest assigned hereby (a) to the Assignee, in the case of amounts accrued with respect
to any period on or after the Effective Date, and (b) to the Assignor, in the case of amounts
accrued with respect to any period prior to the Effective Date.
	 
	7.	 	This Assignment and Acceptance shall be governed by, and be construed and interpreted in
accordance with, the law of the State of New York.

	8.	 	This Assignment and Acceptance may be executed in any number of counterparts and by different
parties on separate counterparts, each of which when so executed shall be

A-2

 

assignment and acceptance

	 	 	deemed to be an
original and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of this Assignment and Acceptance by telecopier shall be
effective as delivery of a manually executed counterpart of this Assignment and Acceptance.

[Signature Pages Follow]

A-3

 

	 	 	 	 	 
	 	In witness whereof, the parties hereto have 

caused this Assignment and Acceptance to

be executed by their respective officers

thereunto duly authorized, as of the date first

above written.

[name of assignor],

as Assignor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[name of assignee],

as Assignee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Domestic Lending Office (and
address for notices):

[Insert Address (including contact name, fax
number and 
e-mail address)]

Eurodollar Lending Office:

[Insert Address (including contact name, fax
number and 
e-mail address)]

 	 
	 	 	 

[Signature Page to Assignment and Acceptance

 

 

					
	 	

Accepted and Agreed

this __ day of
                     :

Citicorp North America, Inc.,

as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Collective Brands Finance, Inc.1

as Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

			
	1	 	If required pursuant to Section 11.2 of the
Credit Agreement.

[Signature
Page to Assignment and Acceptance]

 

 

Schedule I

to

Assignment and Acceptance

Section 1.

	 	 	 	 	 
	Ratable Portion assigned to Assignee: 
	 	 	 	 
	 
	 	 	 	 
	Term Loan Facility
	 	 	                    	%
	 
	 	 	 	 
	Aggregate outstanding principal amount of
Term Loans assigned to Assignee:
	 	$	                    	 

Section 2.

	 	 	 	 	 

	Effective Date:
	 	 	        
            ,
        	    

A-6

 

EXHIBIT B

Exhibit B

to

Term Loan Agreement

Form of Term Note

	 	 	 
	Lender: [Name of Lender]

	 	New York, New York
	Principal Amount: [$                     ]

	 	          
          ,                     

          For value received, the undersigned, Collective Brands Finance, Inc., a
Nevada corporation (the “Borrower”), hereby promises to pay to the order of the Lender set forth
above (the “Lender”) the Principal Amount set forth above, or, if less, the aggregate unpaid
principal amount of the Term Loan (as defined in the Term Loan Agreement referred to below) of the
Lender to the Borrower, payable at such times, and in such amounts, as are specified in the Term
Loan Agreement.

          The Borrower promises to pay interest on the unpaid principal amount of such Term Loan from
the date made until such principal amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Term Loan Agreement.

          Both principal and interest are payable in Dollars to Citicorp North America, Inc., as
Administrative Agent, at 388 Greenwich Street, New York, New York 10013, in immediately available
funds.

          This Note is one of the Notes referred to in, and is entitled to the benefits of, the Term
Loan Agreement, dated as of August 17, 2007 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Term Loan Agreement”), among the Borrower, the Lenders
party thereto, Citicorp North America, Inc., as agent for the Lenders and Citigroup Global Markets
Inc. and J.P. Morgan Securities Inc., as Joint Bookrunners and Joint Lead Arrangers. Capitalized
terms used herein and not defined herein are used herein as defined in the Term Loan Agreement.

          The Term Loan Agreement, among other things, (a) provides for the making of a Term Loan by the
Lender to the Borrower in an aggregate amount not to exceed at any time outstanding the Principal
Amount set forth above, the indebtedness of the Borrower resulting from such Term Loan being
evidenced by this Note and (b) contains provisions for acceleration of the maturity of the unpaid
principal amount of this Note upon the happening of certain stated events and also for prepayments
on account of the principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.

          This Note is entitled to the benefits of the Guaranty and is secured as provided in the
Collateral Documents.

          Demand, diligence, presentment, protest and notice of non-payment and protest are hereby
waived by the Borrower.

          This Note shall be governed by, and construed and interpreted in accordance with, the law of
the State of New York.

B-1-1

 

          In witness whereof, the Borrower has caused this Note to be executed and delivered by
its duly authorized officer as of the day and year and at the place set forth above.

	 	 	 	 	 
	 	Collective Brands Finance, 

Inc.Collective Brands Finance, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page To Term Note]

 

 

EXHIBIT C

Exhibit C

to

Term Loan Agreement

Form of Notice of Borrowing

_________ __, ____

Citicorp North America, Inc.,

as Administrative Agent under the

Term Loan Agreement referred to below

388 Greenwich Street

New York, New York 10013

Attention:

			
	           Re:	 	Collective Brands Finance, Inc. (the “Borrower”)

          Reference is made to the Term Loan Agreement, dated as of August 17, 2007 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), among the Borrower, the Lenders party thereto, Citicorp North America, Inc., as agent
for the Lenders and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Joint
Bookrunners and Joint Lead Arrangers. Capitalized terms used herein and not otherwise defined
herein are used herein as defined in the Term Loan Agreement.

          The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.2 (Borrowing
Procedures) of the Term Loan Agreement that the undersigned hereby requests a Borrowing under the
Term Loan Agreement and, in connection therewith, sets forth below the information relating to such
Borrowing (the “Proposed Borrowing”) as required by Section 2.2 (Borrowing Procedures) of the Term
Loan Agreement:

     K. The date of the Proposed Borrowing is ________ __, ____ (the “Funding Date”).

     L.
The aggregate amount of the Borrowing is $
          ,
of which amount [$            consists
of Base Rate Loans] [and $            consists of Eurodollar Rate Loans having an initial Interest
Period of [one] [two] [three] [six] month[s]].

          The undersigned hereby certifies that the following statements are true on the date hereof and
shall be true on the Funding Date both before and after giving effect to the Proposed Borrowing and
to the application of the proceeds therefrom:

     A. [the representations and warranties set forth in Sections 4.1, 4.2, 4.6, 4.10,
4.12, 4.20(a)(iv) and (c) of the Term Loan Agreement and [Section __ of the Pledge and
Security Agreement] shall be true and correct on and as of the Closing Date;]2

     B. [the representations and warranties set forth in Article IV (Representations and
Warranties) of the Term Loan Agreement and the other Loan Documents are true and correct in
all material respects on and as of the Funding Date

 

			
	2	 	Insert for any Closing Date Term Loan

C-1

 

EXHIBIT C

with the same effect as
though made on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such representations and
warranties shall have been true and correct as of such date; and]3

     C. no Default or Event of Default has occurred and is continuing on the Funding Date.

     The Borrower agrees to compensate each Lender, upon written request, for all losses,
expenses and liabilities (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Lender’s Eurodollar Rate Loans to the Borrower but excluding any loss of the
Applicable Margin on the relevant Term Loans) that such Lender may sustain if for any
reason the Proposed Borrowing does not occur on the Funding Date. The Lender making demand
for such compensation shall deliver to the Borrower concurrently with such demand a written
statement as to such losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to such Lender, absent manifest error.

 

			
	3	 	Insert for any Proposed Borrowing after the
Closing Date.

C-2

 

	 	 	 	 	 
	 	Collective Brands Finance, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE
PAGE TO NOTICE OF BORROWING]

 

 

EXHIBIT D

[SIGNATURE PAGE TO NOTICE OF BORROWING]

 

 

EXHIBIT D

Exhibit D

to

Term Loan Agreement

Form of Notice of Conversion or Continuation

_________ __, ____

Citicorp USA, Inc.,

     as Administrative Agent under the

     Term Loan Agreement referred to below

388 Greenwich Street

New York, New York 10013

Attention:

			
	          Re:	 	Collective Brands Finance, Inc.(the “Borrower”)

          Reference is made to the Term Loan Agreement, dated as of August 17, 2007 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), among the Borrower, the Lenders party thereto, Citicorp North America, Inc., as agent
for the Lenders and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Joint
Bookrunners and Joint Lead Arrangers. Capitalized terms used herein and not otherwise defined
herein are used herein as defined in the Term Loan Agreement.

          The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.9
(Conversion/Continuation Option of the Term Loan Agreement that the undersigned hereby requests a
[conversion] [continuation] on ________ __, ____ of $____________ in principal amount of presently
outstanding Term Loans that are [Base Rate Loans] [Eurodollar Rate Loans] having an Interest Period
ending on ______ __, ____ [to] [as] [Base Rate][Eurodollar Rate] Loans. [The Interest Period for
such amount requested to be converted to or continued as Eurodollar Rate Loans is [one] [two]
[three] [six] month[s]].]

[Signature Page Follows]

D-1

 

          In connection herewith, the undersigned hereby certifies that no Default or Event of
Default has occurred and is continuing on the date hereof.

	 	 

	 	 	 	 	 
	 	Collective Brands Finance, Inc.Collective Brands Finance, Inc.	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE
PAGE TO NOTICE OF  CONVERSION OR/CONTINUATION]

 

 

Exhibit E

TO

TERM LOAN AGREEMENT

FORM OF OPINION OF COUNSEL FOR THE LOAN PARTIES

 

 

Exhibit E

Form of Option

August 17, 2007

Citicorp North America, Inc.,

     as Administrative Agent and Collateral Agent.

The Lenders party to the Credit Agreement defined below.

Ladies and Gentlemen:

          We have acted as special counsel to (a) Collective Brands Finance, Inc. (formerly known as
Payless ShoeSource Finance, Inc.), a Nevada corporation (the “Borrower”), and its parent Collective
Brands, Inc. (formerly known as Payless ShoeSource, Inc.), a Delaware corporation (the “Parent”),
(b) certain of the wholly owned subsidiaries of the Parent and the Borrower organized under the
laws of the State of Delaware consisting of Collective International LP, Collective Licensing
International LLC, Dyelights, Inc., Payless Collective GP, LLC, Payless ShoeSource Leasing, LLC,
PSS Delaware Company 2, Inc., PSS Delaware Company 3, Inc., PSS Delaware Company 4, Inc.,
Saucony/Ecom, Inc., S R Holdings Inc., SRCG LLC, SRCG/Ecom, Inc., SRL, Inc., SRR, Inc., Stride Rite
International Holdings, Inc., Stride Rite International LLC, Stride Rite LLC and STS/ECOM, Inc. and
Keds LLC, each a Delaware company (each of the above named subsidiaries, a “Delaware Subsidiary,”
together “the Delaware Subsidiaries” and, together with Parent an “Opinion Party”, together the
“Opinion Parties”) and (c) certain other wholly owned subsidiaries of the Parent and the Borrower
consisting of Payless NYC, Inc., Payless Purchasing Services, Inc., Payless ShoeSource
Distribution, Inc., Payless ShoeSource Gold Value, Inc., Payless ShoeSource Merchandising, Inc.,
Payless ShoeSource Worldwide, Inc., Payless ShoeSource, Inc., PSS Canada, Inc., PSS Investment I,
Inc., PSS Investment III, Inc., Robeez Logistics Inc., Robeez U.S. Holdings Inc., Robeez US, Inc.,
San Jose Acquisition Corporation, Saucony UK, Inc., Saucony, Inc., Shoe Sourcing, Inc., Sperry
Top-Sider, Inc., Stride Rite International Corp., SR/Ecom, Inc., Stride Rite Children’s Group,
Inc., Stride Rite Investment Corporation, Stride Rite Sourcing International, Inc., The Keds
Corporation, Tommy Hilfiger Footwear, Inc. and Eastborough, Inc. (each a “Guarantor”, together the
“Guarantors” and together with the Borrower and the Opinion Parties, each a “Payless Company,”
together the “Payless Companies”), in connection with the following:

 

 

Citicorp North America, Inc.

The Lenders party to the Term Credit Agreement

Page -2-

          (1) the Term Loan Agreement, dated as of August 17, 2007 (the “Term Credit Agreement”), among
Borrower, the Parent, the several banks and other financial institutions or entities from time to
time party thereto (the “Term Lenders”), Citicorp North America, Inc., as administrative agent and
collateral agent (in such capacity, the “Term Facility Agent”), and Citigroup Global Markets Inc.
and J.P. Morgan Securities Inc. as Joint Bookrunners and Joint Lead Arrangers,

          (2) the Guaranty, dated as of August 17, 2007 (the “Guaranty”), made by and among the Term
Facility Agent, the Term Lenders, the Borrower, the Opinion Parties, and the Guarantors, and

          (3) the Pledge and Security Agreement, dated as of August 17, 2007 (the “Term Security
Agreement”), made by the Payless Companies constituting Grantors thereunder in favor of the Term
Facility Agent.

          For purposes of this opinion letter, (a) the term “Financing Statements” means the twenty
financing statements relating to the Parent and the Delaware Subsidiaries in the form attached as
Exhibits hereto, (b) the term “Intellectual Property Security Agreements” means the following: (1)
the Trademark Security Agreement dated as of August 17, 2007, by Collective Licensing
International, LLC, Payless ShoeSource Worldwide, Inc., Saucony, Inc., S R Holdings Inc. and SRL,
Inc. in favor of Citicorp North America, Inc., as the Administrative Agent for the Lenders parties
to the Term Credit Agreement (the “Trademark Security Agreement”), (2) the Patent Security
Agreement, dated as of August 17, 2007 made by Payless ShoeSource, Inc., Payless ShoeSource
Worldwide, Inc., The Keds Corporation, SRL, Inc., Sperry Top-Sider, Inc., and Saucony, Inc. in
favor of Citicorp North America, Inc., as the Administrative Agent for the Lenders parties to the
Term Credit Agreement (the “Patent Security Agreement”), and (3) the Copyright Security Agreement
dated as of August 17, 2007, made by Payless ShoeSource, Inc., Payless ShoeSource Worldwide, Inc.,
S R Holdings Inc., The Keds Corporation, SRL, Inc. and Stride Rite Children’s Group, Inc. in favor
of Citicorp North America Inc., as the Administrative Agent for the Lenders parties to the Term
Credit Agreement (the “Copyright Security Agreement”), (c) the term “Constituent Documents” means
(i) with respect to a corporation, the articles of incorporation or other charter and the bylaws of
such corporation, (ii) with respect to a limited partnership, the limited partnership agreement of
such partnership, and (iii) with respect to a limited liability company, the certificate of
formation of such limited liability company, and (d) the term “Indenture” means that certain
Indenture, dated as of July 28, 2003, between the Borrower and Wells Fargo Bank Minnesota, National
Association, as trustee for the issuance of 8.25% Senior Subordinated Notes due 2013. Capitalized
terms used herein but not defined herein have the meanings assigned to them in the Term Credit
Agreement.

          We have examined executed counterparts of the Term Credit Agreement, the Guaranty, the Term
Security Agreement and the Intellectual Property Security Agreements and originals or certified,
conformed or photographic copies of such corporate records, certificates, and other documents, and
such matters of law as we have deemed necessary or appropriate for purposes of this opinion.

          Upon the basis of such examination, it is our opinion that:

     1. Each of the Parent and each Delaware Subsidiary is either a validly existing
corporation, a validly existing limited partnership or a validly existing limited liability
company, each in good standing under the laws of the State of Delaware.

 

 

Citicorp North America, Inc.

The Lenders party to the Term Credit Agreement

Page -3-

     2. Each of the Term Credit Agreement, the Guaranty, the Term Security Agreement and
each Intellectual Property Security Agreement has been duly authorized, executed and
delivered by the Parent and each Delaware Subsidiary party thereto.

     3. Assuming (but without detracting from the opinions expressed in paragraphs 1 and 2
with respect to the Opinion Parties) that each Payless Company has duly authorized,
executed and delivered each of the Term Credit Agreement, the Guaranty, the Term Security
Agreement and each Intellectual Property Security Agreement to which such Payless Company
is a party, each of the Term Credit Agreement, the Guaranty, the Term Security Agreement
and each Intellectual Property Security Agreement to which such Payless Company is a party
constitutes a valid and legally binding obligation of each Payless Company party thereto
enforceable against such Payless Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general principles
of equity. Our opinions in this paragraph 3 are limited to the laws of the State of New
York.

     4. The execution and delivery by the Parent and each Delaware Subsidiary of the Term
Credit Agreement and the Guaranty to which the Parent or such Delaware Subsidiary is a
party, the borrowings in accordance with the terms of the Term Credit Agreement and the
performance of the payment obligations of the Parent and each Delaware Subsidiary
thereunder will not result in a violation by the Parent or such Delaware Subsidiary of any
Federal laws of the United States or laws of the State of New York or the provisions of the
Delaware General Corporation Law.

     5. The execution and delivery by the Parent and each Delaware Subsidiary of the Term
Credit Agreement, the Guaranty, the Term Security Agreement and the Intellectual Property
Security Agreements to which the Parent or such Delaware Subsidiary is a party and the
granting of the security interests to be granted by the Parent and each Delaware Subsidiary
pursuant thereto will not result in a violation by the Parent or such Delaware Subsidiary
of (a) any United States Federal or New York state statute or the provisions of the
Delaware General Corporation Law, (b) its Constituent Documents, or (c) the Indenture.

     6. The Term Security Agreement is effective under the Uniform Commercial Code as in
effect in the State of New York (the “UCC”) to create in favor of the Term Facility Agent
for the benefit of the Term Lenders, a security interest (the “Term Security Interest”) in
each Grantor’s right, title and interest, if any, in the Collateral as defined and
described therein (the “Collateral”) to the extent a security interest in such Collateral
may be created under the UCC.

     7. Each of the Financing Statements is in appropriate form for filing in the office of
the Secretary of State of the State of Delaware. Upon the filing in the office of the
Secretary of State of the State of Delaware of each of the Financing Statements, the Term
Security Interest in Collateral owned by the Grantor named as the “Debtor” in each such
Financing Statement will be perfected in that portion of the Collateral in which a security
interest may be perfected by the filing of a financing statement under the Uniform
Commercial Code of the State of Delaware.

 

 

Citicorp North America, Inc.

The Lenders party to the Term Credit Agreement

Page -4-

     8. Upon delivery in the State of New York to the Term Facility Agent for the benefit
of the Term Lenders of the certificates representing the investment property identified on
Schedule 2 to the Term Security Agreement (the “Pledged Securities”) in registered form,
indorsed in blank by an effective indorsement or accompanied by undated stock powers with
respect thereto duly indorsed in blank by an effective indorsement, the Term Facility Agent
for the benefit of the Term Lenders will have a perfected security interest in the Pledged
Securities under the UCC. Assuming neither the Term Facility Agent nor any of the Secured
Parties has notice of any adverse claim to the Pledged Securities, the Term Facility Agent
will acquire the security interest in the Pledged Securities free of any adverse claim.

     9. None of the Parent nor any of its majority-owned subsidiaries is required to
register as an “investment company” under the Investment Company Act of 1940, as amended.
As used in this opinion, the term “majority-owned subsidiaries” includes all companies 50
per centum or more of the outstanding voting securities of which are owned by the Parent,
or by a company which, within the meaning of this paragraph, is a majority-owned subsidiary
of the Parent.

     10. Assuming the Borrower uses the proceeds received under the Term Credit Agreement
in accordance with Section 7.9 of the Term Credit Agreement, such use of proceeds by the
Borrower will not violate Regulations T, U or X of the Board of Governors of the Federal
Reserve System.

     11. The Security Interest in that portion of the Collateral consisting of copyrights
registered with the United States Copyright Office (with the exception of any such
Collateral that has expired, lapsed or been abandoned) that are owned by Parent or by any
Delaware Subsidiary may be perfected by the proper filing and recordation of the Copyright
Security Agreement (with the applicable registered owner and of each such registered
copyright identified in the schedules thereto) in the United States Copyright Office using
appropriate recordation cover sheets and paying all necessary recordation fees, together
with the filing the applicable Financing Statement in the Office of the Secretary of State
of the State of Delaware.

     12. The Security Interest in that portion of the Collateral consisting of patents
issued by the United States Patent and Trademark Office (with the exception of any such
Collateral that has expired, lapsed or been abandoned) that are owned by Parent or any
Delaware Subsidiary may be perfected by the proper filing and recordation of the Patent
Security Agreement (with the applicable owner of each such registered patent and
application therefor identified in the schedules thereto) in the United States Patent and
Trademark Office using appropriate recordation cover sheets and paying all necessary
recordation fees, together with the filing of the applicable Financing Statement in the
Office of the Secretary of State of the State of Delaware.

     13. The Security Interest in that portion of the Collateral consisting of trademark and/or
service mark registrations issued by the United States Patent and Trademark Office (with
the exception of any such Collateral that has expired, lapsed or been abandoned and the
further exception of any United States intent-to-use trademark or service mark application)
that are owned by Parent or any Delaware Subsidiary may be perfected by the proper filing
and recordation of the Trademark Security Agreement (with the applicable owner and each
such trademark and/or service mark registration and

 

 

Citicorp North America, Inc.

The Lenders party to the Term Credit Agreement

Page -5-

application therefor identified in the schedules thereto) in the United States Patent and
Trademark Office using appropriate recordation cover sheets and paying all necessary
recordation fees, together with the filing of the applicable Financing Statement in the
Office of the Secretary of State of the State of Delaware.

The foregoing opinions are subject to the following:

	 	A.	 	     The obligations of the Parent, the Borrower and the Delaware Subsidiaries and the
rights and remedies of the Secured Parties under the Credit Agreement, the Guarantee, the
Term Security Agreement and the Intellectual Property Security Agreements (i) may be
subject to possible limitations upon the exercise of remedial or procedural provisions
contained therein, provided that such limitations do not, in our opinion (but subject to
the other comments and qualifications set forth in this opinion) make the remedies and
procedures that will be afforded to the Secured Parties inadequate for the practical
realization of the substantive benefits purported to be provided to the Secured Parties
pursuant to such agreement, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general principles of equity; and (ii) are subject to
limitations on the perfection of security interests in proceeds under UCC Section 9-315.
	 
	 	B.	 	     We have assumed that none of the Collateral consists, or will consist of “as
extracted Collateral” crops, timber to be cut, consumer goods or farm products and we
express no opinion as to any fixtures or goods that are to become fixtures.
	 
	 	C.	 	     Our opinions with respect to the validity and attachment of the grant by the
Secured Parties of a security interest in Copyrights and proceeds thereof is qualified as
set forth in this paragraph. Although there is case law supporting the conclusion that
Copyrights and proceeds thereof are general intangibles for purposes of the UCC, the law
is unclear as to whether a security interest in a Copyright and proceeds thereof is
perfected before the United States Copyright Office issues a valid Certificate of
Registration for the Copyright and a fully executed document substantially in the form of
the Copyright Security Agreement and identifying such Copyright has been filed within one
month of its execution in the United States and duly recorded in the United States
Copyright Office, including with a properly completed “Document Cover Sheet” identifying
each work of ownership that is the subject of each respective Certificate of Registration
by its title and Certificate of Registration number. We express no opinion with respect
to the perfection of any security interest in any Copyright or proceeds thereof unless
and until the United States Copyright office has issued a valid Certificate of
Registration for the Copyright and a related, fully executed Copyright Security Agreement
has been duly recorded as specified above.
	 
	 	D.	 	     We note that the transfer upon foreclosure of any Trademarks might be invalid
unless accompanied by sufficient assets and goodwill of the business with which the
Trademarks are associated, or in the case of certain U.S. trademark and service mark
applications, unless accompanied by a transfer of the business, or the relevant
portion thereof, of the applicant.

 

 

Citicorp North America, Inc.

The Lenders party to the Term Credit Agreement

Page -6-

	 	E.	 	     We note that certain licenses of Intellectual Property may be found to be
unassignable or otherwise non-transferable even in connection with a bankruptcy or
transaction not involving a direct assignment of such license. In addition,
licenses of Intellectual Property may, and in the case of certain licenses examined
by us under which the Parent and Delaware Subsidiaries are licensees do, contain
provisions which prohibit the granting of a security interest, invalidate a lien or
terminate the license in the event a lien purports to attach thereto.
	 
	 	F.	 	     We have assumed that the Grantors under the Term Security Agreement and
Intellectual Property Security Agreements own (beneficially and of record) all of the
Collateral pledged by them and we express no opinion as the nature or extent of any
Grantor’s rights in such Collateral. We note that in connection with Collateral that
is comprised of patents, patent applications, and trademarks and/or service mark
registrations and applications issued by or filed with (as applicable) the United
States Patent and Trademark Office, and copyrights registered with the United States
Copyright Office, any transfer upon foreclosure would require additional filings with
the United States Patent and Trademark Office or United States Copyright Office, as
applicable. We further express no opinion as to the effect of a filing of security
interest documents with the United States Patent and Trademark Office or United States
Copyright Office in theevent that the chain of title or other information recorded
with such offices is inaccurate or incomplete or in the event of an error in the
recordation of such documents in either such office.
	 
	 	G.	 	     Shares, notes, contracts, leases and other agreements, including without
limitation, licenses of Intellectual Property may, and in the case of certain licenses
examined by us under which the Parent and Delaware Subsidiaries are licensees do,
contain provisions which prohibit the granting of a security interest, invalidate a
lien or terminate the license in the event a lien purports to attach thereto.

          In addition, in rendering the foregoing opinion we express no opinion with respect to:

     i. any provisions of the Term Credit Agreement, the Guaranty, the Term Security Agreement or
the Intellectual Property Security Agreements that (A) prohibit or restrict parties thereto from
transferring their respective rights in the Collateral or from creating, attaching, perfecting or
enforcing a security interest in such Collateral except as specified therein, (B) impose a consent
requirement on such transfer or pledge, or (C) provide that such transfer or pledge giving rise to
a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy
may be unenforceable by virtue of Sections 9-401, 9-406, 9-407, 9-408 or 9-409 of the UCC;

     ii. the validity, binding effect or enforceability of any provision of the Term Credit
Agreement, the Guaranty, the Term Security Agreement or the Intellectual Property Security
Agreements that purports to (A) permit the Secured Parties or any other person to sell or otherwise
dispose of any Collateral subject thereto except in compliance with all applicable laws or (B) to
impose on the Secured Parties standards for the care of any Collateral in its possession other than
as provided in section 9-207 of the UCC;

 

 

Citicorp North America, Inc.

The Lenders party to the Term Credit Agreement

Page -7-

     iii. the ownership, validity, enforceability, registerability, scope or ability to use any
Intellectual Property;

     iv. whether the filing of the documents specified in our opinions above would be effective to
perfect a security interest in patents, patent applications, trademark and service mark
registrations and applications, and registered copyrights as against a subsequent purchaser for
value without notice;

     v. the validity, binding effect or enforceability of any contractual provisions (a) purporting
to provide indemnification of any person for any claims, damages, liabilities or expenses resulting
from violation by such person of any applicable securities laws or from the consequences of the
gross negligence or willful misconduct of such person or (b) to the effect that terms may not be
waived or modified except in writing may be limited under certain circumstances;

     vi. the validity, binding effect or enforceability of any contractual provisions as against
any person other than the Parent and the Delaware Subsidiaries, including,

     vii. without limitation, any such provisions that establish or purport to establish the
priority, seniority or subordination of claims, liens, rights or obligations of any person, whether
in or to collateral, as against the Parent or any Delaware Subsidiary or otherwise (including
references or any legends to intercreditor, subordination or other similar agreements); and

     viii. we are expressing no opinion as to (a) Federal or state laws relating to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights, (b) general principles of equity, or (c)
Federal or state securities laws, other antifraud laws, fraudulent transfer laws, antitrust laws,
laws governing the solicitation of deposits, laws that restrict transactions between United States
persons and citizens or residents of certain foreign countries, state laws relating to the payment
of dividends or the redemption or repurchase of stock, the Employee Retirement Income Security Act
of 1974 and related laws, or the Trust Indenture Act of 1939.

          The opinions expressed in this opinion letter are further limited to other federal law of the
United States of America, the laws of the State of New York, the General Corporation Law and the
Uniform Commercial Code of the State of Delaware, and, with respect to the opinions expressed in
paragraphs 1 and 2, the Limited Liability Company Act and the Revised Uniform Partnership Act of
the State of Delaware and we are expressing no opinion as to the effect of the laws of any other
jurisdiction. In connection with the opinions in paragraphs 5 and 6 to the extent the Delaware UCC
is applicable, we have reviewed and relied solely upon the official compilation of the Delaware
UCC, Title 6 of the Delaware Code, and our general familiarity with the Uniform Commercial Code in
effect in other jurisdictions, and we have not reviewed, and do not purport to be expert in
Delaware commercial law matters more generally.

          With respect to the matters involving the application of laws other than United States Federal law
and the laws of the States of New York and Delaware as specified, we understand that you have been
provided with and are relying upon the opinions of Kummer Kaempfer Bonner Renshaw & Ferrario as to
the laws of the State of Nevada, the opinion of Lane Powell as to the laws of the State of
Washington and the opinion of Husch & Eppenberger, LLC as to the laws of the States of Missouri and
Kansas, each of the above listed opinions which have

 

 

Citicorp North America, Inc.

The Lenders party to the Term Credit Agreement

Page -8-

been dated and delivered to you today, and which are subject to the same qualifications set forth
therein.

          We have also relied as to certain matters upon information obtained from public officials,
officers of the Parent and its Subsidiaries and other sources believed by us to be responsible,
including a certification from officers of the Parent regarding the calculation of the required
Consolidated Coverage Ratio under the Indenture, and we have assumed that the signatures on all
documents examined by us are genuine, that each of the Loan Documents (as defined in the Term
Credit Agreement) has been duly authorized by each party thereto other than the Parent and each
Delaware Subsidiary and has been duly executed and delivered by each such other party thereto, in
each case, with assumptions that we have not independently verified.

          This opinion is provided to you as of the date hereof under the Term Credit Agreement as of
the date hereof and may not be used or relied upon by any other persons.

Very truly yours,

 

 

EXHIBIT F

Exhibit F

Form of Guaranty

          Guaranty, dated as of _______ __, ____ (this “Guaranty”), by Collective Brands,
Inc. (“Parent”) and each of the other entities listed on the signature pages hereof or that
becomes a party hereto pursuant to Section 24 (Additional Guarantors) hereof (each, other than the
Borrower (as defined below), a “Subsidiary Guarantor” and, together with Parent, collectively, the
“Guarantors” and individually a “Guarantor”), in favor of the Administrative Agent, each
Lender and each other holder of an Obligation (each, a “Guarantied Party” and, collectively, the
“Guarantied Parties”). Capitalized terms used herein and not otherwise defined herein are used
herein as defined in the Term Loan Agreement.

W i t n e s s e t h:

          Whereas, pursuant to the Term Loan Agreement, dated as of August 17, 2007 (as the
same may be amended, restated, supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), among Collective Brands Finance, Inc. (the “Borrower”), the Lenders party
thereto, Citicorp North America, Inc., as agent for the Lenders (in such capacity, the
“Administrative Agent”) and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Joint
Bookrunners and Joint Lead Arrangers, the Lenders have severally agreed to make extensions of
credit to the Borrower upon the terms and subject to the conditions set forth therein;

          Whereas, Parent owns 100% of the equity interests of the Borrower and each Subsidiary
Guarantor is a direct or indirect Subsidiary of the Borrower;

          Whereas, each Guarantor will receive substantial direct and indirect benefits from
the making of the Loans and the granting of the other financial accommodations to the Borrower
under the Term Loan Agreement;

          Whereas, a condition precedent to the obligation of the Lenders to make their
respective extensions of credit to the Borrower under the Term Loan Agreement is that the
Guarantors shall have executed and delivered this Guaranty for the benefit of the Guarantied
Parties; and

          Now, Therefore, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

     Section 1 Guaranty

          (a) To induce the Lenders to make the Loans, each Guarantor hereby absolutely, unconditionally and
irrevocably guarantees, jointly with the other Guarantors and severally, as primary obligor and not
merely as surety, the full and punctual payment when due and in the currency due, whether at stated
maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise in accordance
herewith or any other Loan Document, of all the Obligations, whether or not from time to time
reduced or extinguished or hereafter increased or incurred, whether or not recovery may be or
hereafter may become barred by any statute of limitations, whether or not enforceable as against
the Borrower, whether now or hereafter existing, and whether due or to become due, including
principal, interest (including interest at the contract rate applicable upon default accrued or
accruing after the commencement of any proceeding under the Bankruptcy Code, or any applicable
provisions of comparable state or

 

 

GUARANTY

COLLECTIVE BRANDS FINANCE,INC.

foreign law, whether or not such interest is an allowed claim in such proceeding), fees and
costs of collection. This Guaranty constitutes a guaranty of payment and not of collection.

          (b) Each Guarantor further agrees that, if (i) any payment made by Borrower or any other
Person and applied to the Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or
repaid, or (ii) the proceeds of Collateral are required to be returned by any Guarantied Party to
the Borrower, its estate, trustee, receiver or any other party, including any Guarantor, under any
bankruptcy law, equitable cause or any other Requirement of Law, then, to the extent of such
payment or repayment, any such Guarantor’s liability hereunder (and any Lien or other Collateral
securing such liability) shall be and remain in full force and effect, as fully as if such payment
had never been made. If, prior to any of the foregoing, this Guaranty shall have been cancelled or
surrendered (and if any Lien or other Collateral securing such Guarantor’s liability hereunder
shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty
(and such Lien or other Collateral) shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the
obligations of any such Guarantor in respect of the amount of such payment (or any Lien or other
Collateral securing such obligation).

     Section 2 Limitation of Guaranty

          Any term or provision of this Guaranty or any other Loan Document to the contrary
notwithstanding, the maximum aggregate amount of the Obligations for which any Subsidiary Guarantor
shall be liable shall not exceed the maximum amount for which such Subsidiary Guarantor can be
liable without rendering this Guaranty or any other Loan Document, as it relates to such Subsidiary
Guarantor, subject to avoidance under applicable law relating to fraudulent conveyance or
fraudulent transfer (including Section 548 of the Bankruptcy Code or any applicable provisions of
comparable state law) (collectively, “Fraudulent Transfer Laws”), in each case after giving effect
(a) to all other liabilities of such Subsidiary Guarantor, contingent or otherwise, that are
relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
such Subsidiary Guarantor in respect of intercompany Indebtedness to the Borrower to the extent
that such Indebtedness would be discharged in an amount equal to the amount paid by such Subsidiary
Guarantor hereunder) and (b) to the value as assets of such Subsidiary Guarantor (as determined
under the applicable provisions of such Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights held by such Subsidiary Guarantor pursuant
to (i) applicable Requirements of Law, (ii) Section 3 (Contribution) of this Guaranty or (iii) any
other Contractual Obligations providing for an equitable allocation among such Subsidiary Guarantor
and other Subsidiaries or Affiliates of the Borrower of obligations arising under this Guaranty or
other guaranties of the Obligations by such parties.

     Section 3 Contribution

          To the extent that any Subsidiary Guarantor shall be required hereunder to pay a portion of the
Obligations exceeding the greater of (a) the amount of the economic benefit actually received by
such Subsidiary Guarantor from the Term Loans and the other financial accommodations provided to
the Borrower under the Loan Documents and (b) the amount such Subsidiary Guarantor would otherwise
have paid if such Subsidiary Guarantor had paid the aggregate amount of the Obligations (excluding
the amount thereof repaid by the Borrower and Parent) in the same proportion as such Subsidiary
Guarantor’s net worth at the date enforcement

2

 

GUARANTY

COLLECTIVE BRANDS FINANCE,INC.

is sought hereunder bears to the aggregate net worth of all the Subsidiary Guarantors at the
date enforcement is sought hereunder, then such Guarantor shall be reimbursed by such other
Subsidiary Guarantors for the amount of such excess, pro rata, based on the respective net worths
of such other Subsidiary Guarantors at the date enforcement hereunder is sought.

     Section 4 Authorization; Other Agreements

          The Guarantied Parties are hereby authorized, without notice to, or demand upon, any
Guarantor, which notice and demand requirements each are expressly waived hereby, and without
discharging or otherwise affecting the obligations of such Guarantor hereunder (which obligations
shall remain absolute and unconditional notwithstanding any such action or omission to act), from
time to time, to do each of the following:

          (a) supplement, renew, extend, accelerate or otherwise change the time for payment of, or
other terms relating to, the Obligations, or any part of them, or otherwise modify, amend or change
the terms of any promissory note or other agreement, document or instrument (including the other
Loan Documents) now or hereafter executed by the Borrower and delivered to the Guarantied Parties
or any of them, including any increase or decrease of principal or the rate of interest thereon;

          (b) waive or otherwise consent to noncompliance with any provision of any instrument
evidencing the Obligations, or any part thereof, or any other instrument or agreement in respect of
the Obligations (including the other Loan Documents) now or hereafter executed by the Borrower and
delivered to the Guarantied Parties or any of them;

          (c) accept partial payments on the Obligations;

          (d) receive, take and hold additional security or collateral for the payment of the
Obligations or any part of them and exchange, enforce, waive, substitute, liquidate, terminate,
abandon, fail to perfect, subordinate, transfer, otherwise alter and release any such additional
security or collateral;

          (e) settle, release, compromise, collect or otherwise liquidate the Obligations or accept,
substitute, release, exchange or otherwise alter, affect or impair any security or collateral for
the Obligations or any part of them or any other guaranty therefor, in any manner;

          (f) add, release or substitute any one or more other guarantors, makers or endorsers of the
Obligations or any part of them and otherwise deal with the Borrower or any other guarantor, maker
or endorser;

          (g) apply to the Obligations any payment or recovery (x) from the Borrower, from any other
guarantor, maker or endorser of the Obligations or any part of them or (y) from any Guarantor in
such order as provided herein, in each case whether such Obligations are secured or unsecured or
guaranteed or not guaranteed by others;

          (h) apply to the Obligations any payment or recovery from any Guarantor of the Obligations or
any sum realized from security furnished by such Guarantor upon its indebtedness or obligations to
the Guarantied Parties or any of them, in each case whether or not such indebtedness or obligations
relate to the Obligations; and

3

 

GUARANTY

COLLECTIVE BRANDS FINANCE,INC.

          (i) refund at any time any payment received by any Guarantied Party in respect of any
Obligation, and payment to such Guarantied Party of the amount so refunded shall be fully
guaranteed hereby even though prior thereto this Guaranty shall have been cancelled or surrendered
(or any release or termination of any Collateral by virtue thereof), and such prior cancellation or
surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of any
Guarantor hereunder in respect of the amount so refunded (and any Collateral so released or
terminated shall be reinstated with respect to such obligations);

even if any right of reimbursement or subrogation or other right or remedy of any Guarantor is
extinguished, affected or impaired by any of the foregoing (including any election of remedies by
reason of any judicial, non-judicial or other proceeding in respect of the Obligations that impairs
any subrogation, reimbursement or other right of such Guarantor).

     Section 5 Guaranty Absolute and Unconditional

          Each Guarantor hereby waives any defense of a surety or guarantor or any other obligor on any
obligations arising in connection with or in respect of any of the following and hereby agrees that
its obligations under this Guaranty are absolute and unconditional and shall not be discharged or
otherwise affected as a result of any of the following:

          (a) the invalidity or unenforceability of any of the Borrower’s obligations under the Term
Loan Agreement or any other Loan Document or any other agreement or instrument relating thereto, or
any security for, or other guaranty of the Obligations or any part of them, or the lack of
perfection or continuing perfection or failure of priority of any security for the Obligations or
any part of them;

          (b) the absence of any attempt to collect the Obligations or any part of them from the
Borrower or other action to enforce the same;

          (c) failure by any Guarantied Party to take any steps to perfect and maintain any Lien on, or
to preserve any rights to, any Collateral;

          (d) any Guarantied Party’s election, in any proceeding instituted under chapter 11 of the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code or any applicable
provisions of comparable state or foreign law;

          (e) any borrowing or grant of a Lien by the Borrower, as debtor-in-possession, or extension of
credit, under Section 364 of the Bankruptcy Code or any applicable provisions of comparable state
or foreign law;

          (f) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of any
Guarantied Party’s claim (or claims) for repayment of the Obligations;

          (g) any use of cash collateral under Section 363 of the Bankruptcy Code;

          (h) any agreement or stipulation as to the provision of adequate protection in any bankruptcy
proceeding;

          (i) the avoidance of any Lien in favor of the Guarantied Parties or any of them for any reason

4

 

GUARANTY

COLLECTIVE BRANDS FINANCE, INC.

          (j) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against the Borrower, any Guarantor or any of
the Borrower’s other Subsidiaries, including any discharge of, or bar or stay against collecting,
any Obligation (or any part of them or interest thereon) in or as a result of any such proceeding;

          (k) failure by any Guarantied Party to file or enforce a claim against the Borrower or its
estate in any bankruptcy or insolvency case or proceeding;

          (l) any action taken by any Guarantied Party if such action is authorized hereby;

          (m) any election following the occurrence of an Event of Default by any Guarantied Party to
proceed separately against the personal property Collateral in accordance with such Guarantied
Party’s rights under the UCC or, if the Collateral consists of both personal and real property, to
proceed against such personal and real property in accordance with such Guarantied Party’s rights
with respect to such real property;

          (n) any change in the corporate existence or structure of the Borrower or any other Loan
Party;

          (o) any defense, set-off or counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by any Guarantor or any other Person against
any Guarantied Party;

          (p) any Requirement of Law affecting any term of any Guarantor’s obligations under this
Guaranty; or

          (q) any other circumstance that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor or any other obligor on any obligations, other than the payment in
full of the Obligations.

     Section 6 Waivers

          Each Guarantor hereby waives diligence, promptness, presentment, demand for payment or
performance and protest and notice of protest, notice of acceptance and any other notice in respect
of the Obligations or any part of them, and any defense arising by reason of any disability or
other defense of the Borrower. Each Guarantor shall not, until the Obligations are irrevocably
paid in full and the Term Loan Commitments have been terminated, assert any claim or counterclaim
it may have against the Borrower or set off any of its obligations to the Borrower against any
obligations of the Borrower to it. In connection with the foregoing, each Guarantor covenants that
its obligations hereunder shall not be discharged, except by complete performance.

     Section 7 Reliance

          Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition
of the Borrower and any endorser and other guarantor of all or any part of the Obligations, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations, or any part
thereof, that diligent inquiry would reveal, and each Guarantor hereby agrees that no Guarantied
Party shall have any duty to advise any Guarantor of information

5

 

GUARANTY

COLLECTIVE BRANDS FINANCE, INC.

known to it regarding such condition or any such circumstances. In the event any Guarantied
Party, in its sole discretion, undertakes at any time or from time to time to provide any such
information to any Guarantor, such Guarantied Party shall be under no obligation (a) to undertake
any investigation not a part of its regular business routine, (b) to disclose any information that
such Guarantied Party, pursuant to accepted or reasonable commercial finance or banking practices,
wishes to maintain confidential or (c) to make any other or future disclosures of such information
or any other information to any Guarantor.

     Section 8 Waiver of Subrogation and Contribution Rights

          Until the Obligations have been irrevocably paid in full and the Term Loan Commitments have
been terminated, the Guarantors shall not enforce or otherwise exercise any right of subrogation to
any of the rights of the Guarantied Parties or any part of them against the Borrower or any right
of reimbursement or contribution or similar right against the Borrower by reason of this Guaranty
or by any payment made by any Guarantor in respect of the Obligations.

	 	 	Section 9 Subordination

          Each Guarantor hereby agrees that any Indebtedness of the Borrower now or hereafter owing to any
Guarantor, whether heretofore, now or hereafter created (the “Guarantor Subordinated Debt”), is
hereby subordinated to all of the Obligations and that, except as permitted under Section 8.5
(Restricted Payments) of the Term Loan Agreement, the Guarantor Subordinated Debt shall not be paid
in whole or in part until the Obligations have been paid in full and this Guaranty is terminated
and of no further force or effect. No Guarantor shall accept any payment of or on account of any
Guarantor Subordinated Debt at any time in contravention of the foregoing. Upon the occurrence and
during the continuance of an Event of Default, the Borrower shall pay to the Administrative Agent
any payment of all or any part of the Guarantor Subordinated Debt and any amount so paid to the
Administrative Agent shall be applied to payment of the Obligations as provided in Section 2.11(f)
(Payments and Computations) of the Term Loan Agreement. Each payment on the Guarantor Subordinated
Debt received in violation of any of the provisions hereof shall be deemed to have been received by
such Guarantor as trustee for the Guarantied Parties and shall be paid over to the Administrative
Agent immediately on account of the Obligations, but without otherwise affecting in any manner such
Guarantor’s liability hereof. Each Guarantor agrees to file all claims against the Borrower in any
bankruptcy or other proceeding in which the filing of claims is required by law in respect of any
Guarantor Subordinated Debt, and the Administrative Agent shall be entitled to all of such
Guarantor’s rights thereunder. If for any reason a Guarantor fails to file such claim at least ten
Business Days prior to the last date on which such claim should be filed, such Guarantor hereby
irrevocably appoints the Administrative Agent as its true and lawful attorney-in-fact and is hereby
authorized to act as attorney-in-fact in such Guarantor’s name to file such claim or, in the
Administrative Agent’s discretion, to assign such claim to and cause proof of claim to be filed in
the name of the Administrative Agent or its nominee. In all such cases, whether in administration,
bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to the
Administrative Agent the full amount payable on the claim in the proceeding, and, to the full
extent necessary for that purpose, each Guarantor hereby assigns to the Administrative Agent all of
such Guarantor’s rights to any payments or distributions to which such Guarantor otherwise would be
entitled. If the amount so paid is greater than such Guarantor’s liability hereunder, the
Administrative Agent shall pay the excess amount to the party entitled thereto. In addition, each
Guarantor hereby irrevocably appoints the Administrative Agent as its attorney-in-fact to exercise
all of such

6

 

GUARANTY

COLLECTIVE BRANDS FINANCE, INC.

Guarantor’s voting rights in connection with any bankruptcy proceeding or any plan for the
reorganization of the Borrower.

     Section 10 Default; Remedies

          The obligations of each Guarantor hereunder are independent of and separate from the
Obligations. If any Obligation is not paid when due, or upon any Event of Default hereunder or
upon any default by the Borrower as provided in any other instrument or document evidencing all or
any part of the Obligations, the Administrative Agent may, at its sole election, proceed directly
and at once, without notice, against any Guarantor to collect and recover the full amount or any
portion of the Obligations then due, without first proceeding against the Borrower or any other
guarantor of the Obligations, or against any Collateral under the Loan Documents or joining the
Borrower or any other guarantor in any proceeding against any Guarantor. At any time after
maturity of the Obligations, the Administrative Agent may (unless the Obligations have been
irrevocably paid in full), without notice to any Guarantor and regardless of the acceptance of any
Collateral for the payment hereof, appropriate and apply toward the payment of the Obligations
(a) any indebtedness due or to become due from any Guarantied Party to such Guarantor and (b) any
moneys, credits or other property belonging to such Guarantor at any time held by or coming into
the possession of any Guarantied Party or any of its respective Affiliates.

     Section 11 Irrevocability

          This Guaranty shall be irrevocable as to the Obligations (or any part thereof) until the Term
Loan Commitments have been terminated and all monetary Obligations then outstanding have been
irrevocably repaid in cash, at which time this Guaranty shall automatically be cancelled. Upon
such cancellation and at the written request of any Guarantor or its successors or assigns, and at
the cost and expense of such Guarantor or its successors or assigns, the Administrative Agent shall
execute in a timely manner a satisfaction of this Guaranty and such instruments, documents or
agreements as are necessary or desirable to evidence the termination of this Guaranty.

     Section 12 Setoff

          Upon the occurrence and during the continuance of an Event of Default, each Guarantied Party
and each Affiliate of a Guarantied Party may, without notice to any Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and apply toward the
payment of all or any part of the Obligations (a) any indebtedness due or to become due from such
Guarantied Party or Affiliate to such Guarantor and (b) any moneys, credits or other property
belonging to such Guarantor, at any time held by, or coming into, the possession of such Guarantied
Party or Affiliate.

     Section 13 No Marshalling

          Each Guarantor consents and agrees that no Guarantied Party or Person acting for or on behalf
of any Guarantied Party shall be under any obligation to marshal any assets in favor of any
Guarantor or against or in payment of any or all of the Obligations.

7

 

GUARANTY

COLLECTIVE BRANDS FINANCE, INC.

     Section 14 Enforcement; Waivers; Amendments

          (a) No delay on the part of any Guarantied Party in the exercise of any right or remedy
arising under this Guaranty, the Term Loan Agreement, any other Loan Document or otherwise with
respect to all or any part of the Obligations, the Collateral or any other guaranty of or security
for all or any part of the Obligations shall operate as a waiver thereof, and no single or partial
exercise by any such Person of any such right or remedy shall preclude any further exercise
thereof. Failure by any Guarantied Party at any time or times hereafter to require strict
performance by the Borrower, any Guarantor, any other guarantor of all or any part of the
Obligations or any other Person of any provision, warranty, term or condition contained in any Loan
Document now or at any time hereafter executed by any such Persons and delivered to any Guarantied
Party shall not waive, affect or diminish any right of any Guarantied Party at any time or times
hereafter to demand strict performance thereof and such right shall not be deemed to have been
waived by any act (except by a written instrument pursuant to Section 14(b) or knowledge of any
Guarantied Party, or its respective agents, officers or employees. No waiver of any Event of
Default by any Guarantied Party shall operate as a waiver of any other Event of Default or the same
Event of Default on a future occasion, and no action by any Guarantied Party permitted hereunder
shall in any way affect or impair any Guarantied Party’s rights and remedies or the obligations of
any Guarantor under this Guaranty. Any determination by a court of competent jurisdiction of the
amount of any principal or interest owing by the Borrower to a Guarantied Party shall be conclusive
and binding on each Guarantor irrespective of whether such Guarantor was a party to the suit or
action in which such determination was made.

          (b) None of the terms or provisions of this Guaranty may be waived, amended, supplemented or
modified except in accordance with Section 11.1 (Amendments, Waivers, Etc.) of the Term Loan
Agreement.

     Section 15 Successors and Assigns

          This Guaranty shall be binding upon each Guarantor and upon the successors and assigns of such
Guarantors and shall inure to the benefit of the Guarantied Parties and their respective successors
and assigns; all references herein to the Borrower and to the Guarantors shall be deemed to include
their respective successors and assigns. The successors and assigns of the Guarantors and the
Borrower shall include, without limitation, their respective receivers, trustees and
debtors-in-possession. All references to the singular shall be deemed to include the plural where
the context so requires.

     Section 16 Representations and Warranties; Covenants

          Each Guarantor hereby (a) represents and warrants that the representations and warranties as
to it made by the Borrower in Article IV (Representations and Warranties) of the Term Loan
Agreement are true and correct on each date as required by Section 3.2(d)(i) (Conditions Precedent
to Incremental Term Loans) of the Term Loan Agreement and (b) agrees to take, or refrain from
taking, as the case may be, each action necessary to be taken or not taken, as the case may be, so
that no Default or Event of Default is caused by the failure to take such action or to refrain from
taking such action by such Guarantor.

8

 

GUARANTY

COLLECTIVE BRANDS FINANCE, INC.

     Section 17 Governing Law

          This Guaranty and the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.

     Section 18 Submission to Jurisdiction; Service of Process

          (a) Any legal action or proceeding with respect to this Guaranty, and any other Loan Document,
may be brought in the courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Guaranty, each Guarantor
hereby accepts for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The parties hereto 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
respective jurisdictions.

          (b) Each Guarantor hereby irrevocably consents to the service of any and all legal process,
summons, notices and documents in any suit, action or proceeding brought in the United States of
America arising out of or in connection with this Guaranty or any other Loan Document by the
mailing (by registered or certified mail, postage prepaid) or delivering of a copy of such process
to such Guarantor care of the Borrower at the Borrower’s address specified in Section 11.8
(Notices, Etc.) of the Term Loan Agreement. Each Guarantor 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.

          (c) Nothing contained in this Section 18 (Submission to Jurisdiction; Service of Process)
shall affect the right of the Administrative Agent or any other Guarantied Party to serve process
in any other manner permitted by law or commence legal proceedings or otherwise proceed against a
Guarantor in any other jurisdiction.

          (d) If for the purposes of obtaining judgment in any court it is necessary to convert a sum
due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent
they may effectively do so, that the rate of exchange used shall be that at which in accordance
with normal banking procedures the Administrative Agent could purchase Dollars with such other
currency at the spot rate of exchange quoted by the Administrative Agent at 11:00 a.m. (New York
time) on the Business Day preceding that on which final judgment is given, for the purchase of
Dollars, for delivery two Business Days thereafter.

     Section 19 Waiver of Judicial Bond

          To the fullest extent permitted by applicable law, the Guarantor waives the requirement to
post any bond that otherwise may be required of any Guarantied Party in connection with any
judicial proceeding to enforce such Guarantied Party’s rights to payment hereunder, security
interest in or other rights to the Collateral or in connection with any other legal or equitable
action or proceeding arising out of, in connection with, or related to this Guaranty and the Loan
Documents to which it is a party.

9

 

GUARANTY

COLLECTIVE BRANDS FINANCE, INC.

     Section 20 Certain Terms

          The following rules of interpretation shall apply to this Guaranty: (a) the terms “herein,”
“hereof,” “hereto” and “hereunder” and similar terms refer to this Guaranty as a whole and not to
any particular Article, Section, subsection or clause in this Guaranty, (b) unless otherwise
indicated, references herein to an Exhibit, Article, Section, subsection or clause refer to the
appropriate Exhibit to, or Article, Section, subsection or clause in this Guaranty and (c) the term
“including” means “including without limitation” except when used in the computation of time
periods.

     Section 21 Waiver of Jury Trial

          Each of the Administrative Agent, the other Guarantied Parties and each Guarantor
irrevocably waives trial by jury in any action or proceeding with respect to this Guaranty and any
other Loan Document.

     Section 22 Notices

          Any notice or other communication herein required or permitted shall be given as provided in
Section 11.8 (Notices, Etc.) of the Term Loan Agreement and, in the case of any Guarantor, to such
Guarantor in care of the Borrower.

     Section 23 Severability

          Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.

     Section 24 Additional Guarantors

          Each of the Guarantors agrees that, if, pursuant to Section 7.11(b) (Additional Collateral and
Guaranties) of the Term Loan Agreement, Parent or the Borrower shall be required to cause any
Subsidiary thereof that is not a Guarantor to become a Guarantor hereunder, or if for any reason
Parent or the Borrower desires any such Subsidiary to become a Guarantor hereunder, such Subsidiary
shall execute and deliver to the Administrative Agent a Guaranty Supplement in substantially the
form of Exhibit A (Guaranty Supplement) attached hereto and shall thereafter for all purposes be a
party hereto and have the same rights, benefits and obligations as a Guarantor party hereto on the
Closing Date.

     Section 25 Collateral

          Each Guarantor hereby acknowledges and agrees that its obligations under this Guaranty are
secured pursuant to the terms and provisions of the Collateral Documents executed by it in favor of
the Administrative Agent, for the benefit of the Secured Parties, and covenants that it shall not
grant any Lien with respect to its Property in favor, or for the benefit, of any Person other than
the Administrative Agent, for the benefit of the Secured Parties except as otherwise permitted by
Section 8.2 (Liens, etc.) of the Term Loan Agreement.

10

 

GUARANTY

COLLECTIVE BRANDS FINANCE, INC.

     Section 26 Costs and Expenses

          In accordance with the provisions of Section 11.3 (Costs and Expenses) of the Term Loan
Agreement, each Guarantor agrees to pay or reimburse the Administrative Agent and each of the other
Guarantied Parties upon demand for all out-of-pocket costs and expenses, including reasonable
attorneys’ fees (including allocated costs of internal counsel and costs of settlement), incurred
by the Administrative Agent and such other Guarantied Parties in enforcing this Guaranty against
such Guarantor or any security therefor or exercising or enforcing any other right or remedy
available in connection herewith or therewith.

     Section 27 Waiver of Consequential Damages

          Each Guarantor hereby irrevocably and unconditionally waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or
consequential damage in any legal action or proceeding in respect of this Guaranty or any other
Loan Document.

     Section 28 Entire Agreement

          This Guaranty, taken together with all of the other Loan Documents executed and delivered by
the Guarantors, represents the entire agreement and understanding of the parties hereto and
supersedes all prior understandings, written and oral, relating to the subject matter hereof.

     Section 29 Counterparts

          This Guaranty may be executed in any number of separate 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 counterparts and attached to a single counterpart so that all signature
pages are attached to the same document. Delivery of an executed counterpart by facsimile
transmission or electronic mail shall be effective as delivery of a manually executed counterpart.

[Signature Pages Follow]

11

 

          In witness whereof, this Guaranty has been duly executed by the Guarantors as of
the day and year first set forth above.

	 	 	 	 	 
	 	Collective Brands Finance, Inc.,

Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	Collective Brands, Inc.,

Parent

 	 
	 	By:  	 	 
	 	 	Name:  	Matthew E. Rubel 	 
	 	 	Title:  	Chief Executive Officer and President 	 
	 
	 	Collective International, LP,

a Delaware Limited Partnership

 	 
	 	By:  	Payless Collective GP, LLC, Managing Member
 	 
	 
	 	By:  	
 	 
	 	 	Name:  	Matthew E. Rubel 	 
	 	 	Title:  	President and CEO 	 
	 
	 	Collective Licensing International, LLC,

a Delaware Limited Liability Company

 	 
	 	By:  	 	 
	 	 	Name:  	Bruce T. Pettit 	 
	 	 	Title:  	President, CEO and Secretary 	 
	 
	 	Dyelights, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	Eastborough, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	Keds LLC,

a Delaware Limited Liability Company

 	 
	 	By:  	 	 
	 	 	Name:  	R. Shaw Neville 	 
	 	 	Title:  	President 	 
	 
	 	Payless Collective GP, LLC, 

a Delaware Limited Liability Company

 	 
	 	By:  	 	 
	 	 	Name:  	Matthew E. Rubel 	 
	 	 	Title:  	President and CEO 	 
	 
	 	Payless NYC, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	Payless Purchasing Services, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	Payless ShoeSource Distribution, Inc.

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	Payless ShoeSource Gold Value, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	Payless ShoeSource Leasing, LLC,

a Delaware Limited Liability Company

 	 
	 	By:  	Payless ShoeSource, Inc., a Missouri
 Corporation, its sole member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	Senior Vice President –
 Chief Financial
Officer and Treasurer 	 
	 
	 	Payless ShoeSource Merchandising, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	Senior Vice President and Treasurer 	 
	 
	 	Payless ShoeSource Worldwide, Inc.

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Matthew E. Rubel 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	Payless ShoeSource, Inc.,

a Missouri Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Matthew E. Rubel 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	PSS Canada, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	PSS Delaware Company 2, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	PSS Delaware Company 3, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	PSS Delaware Company 4, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	PSS Investment I, Inc.,

a Nevada Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	PSS Investment III, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	Robeez Logistics Inc., 

a Nevada Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Robeez US Holdings Inc.,

a Nevada Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Robeez U.S., Inc.,

a Washington Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Guaranty]

 

	 	 	 	 	 
	 	San Jose Acquisition Corp.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Matthew E. Rubel 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	Saucony UK, Inc.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Saucony, Inc.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	Saucony/Ecom, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	
Shoe Sourcing, Inc.,

a Kansas Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	Sperry Top-Sider, Inc.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SR Holdings Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	David Chamberlain 	 
	 	 	Title:  	President 	 
	 
	 	SR/Ecom, Inc.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	David Chamberlain 	 
	 	 	Title:  	President 	 
	 
	 	SRCG LLC,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SRCG/Ecom, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	SRL, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SRR, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	David Chamberlain 	 
	 	 	Title:  	President 	 
	 
	 	Stride Rite Children’s Group, Inc.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite International Corp., 

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite International Holdings, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	Stride Rite International LLC,

a Delaware Limited Liability Company

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite Investment Corporation,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite LLC,

a Delaware Limited Liability Company

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite Sourcing International, Inc.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	STS/Ecom, Inc.,

a Delaware Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Guaranty]

 

 

	 	 	 	 	 
	 	The Keds Corporation,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	The Stride Rite Corporation,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Tommy Hilfiger Footwear, Inc.,

a Massachusetts Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

					
	 	

Acknowledged and Agreed

as of the date first above written:

Citicorp North America, Inc.,

as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Guaranty]

 

 

Exhibit A

To

Guaranty

Form of Guaranty Supplement

          The undersigned hereby agrees to be bound as a Guarantor for purposes of the Guaranty, dated
as of                               ,            (the “Guaranty”), among Collective Brands, Inc. (“Parent”) and certain
Subsidiaries of Parent listed on the signature pages thereof and acknowledged by Citicorp North
America, Inc., as Administrative Agent, and the undersigned hereby acknowledges receipt of a copy
of the Guaranty. The undersigned hereby represents and warrants that each of the representations
and warranties contained in Section 16 (Representations and Warranties; Covenants) of the Guaranty
applicable to it is true and correct on and as the date hereof as if made on and as of such date.
Capitalized terms used herein but not defined herein are used with the meanings given them in the
Guaranty.

          In witness whereof, the undersigned has caused this Guaranty Supplement to be duly
executed and delivered as of                              ,           .

	 	 	 	 	 
	 	[Name of Subsidiary Guarantor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	Acknowledged and Agreed

as of the date first above written:

Citicorp North America, Inc.,

as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Exhibit G

To

Term Loan Agreement

Form of Pledge and Security Agreement

 

 

Exhibit G

PLEDGE AND SECURITY AGREEMENT

Dated as of August 17, 2007

among

Collective Brands Finance, Inc.

as a Grantor

and

Each Other Grantor

From Time to Time Party Hereto

and

Citicorp North America, Inc.

as Administrative Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	PAGE	 
	D.
	 	 	 	 
	 
	 	 	 	 
	E. ARTICLE I DEFINED TERMS
	 	 	1	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Certain Other Terms
	 	 	6	 
	 
	 	 	 	 
	F. ARTICLE
II GRANT OF SECURITY INTEREST
	 	 	7	 
	Section 2.1 Collateral
	 	 	7	 
	Section 2.2 Grant of Security Interest in Collateral
	 	 	8	 
	Section 2.3 Cash Management Accounts
	 	 	8	 
	 
	 	 	 	 
	G. ARTICLE III REPRESENTATIONS AND WARRANTIES
	 	 	8	 
	Section 3.1 Title; No Other Liens
	 	 	8	 
	Section 3.2 Perfection and Priority
	 	 	8	 
	Section 3.3 Jurisdiction of Organization; Chief Executive Office
	 	 	9	 
	Section 3.4 Inventory and Equipment
	 	 	9	 
	Section 3.5 Pledged Collateral
	 	 	9	 
	Section 3.6 Accounts
	 	 	10	 
	Section 3.7 Intellectual Property
	 	 	10	 
	Section 3.8 Deposit Accounts; Securities Accounts
	 	 	11	 
	Section 3.9 Commercial Tort Claims
	 	 	11	 
	 
	 	 	 	 
	H. ARTICLE
IV COVENANTS
	 	 	11	 
	Section 4.1 Generally
	 	 	11	 
	Section 4.2 Maintenance of Perfected Security Interest; Further Documentation
	 	 	11	 
	Section 4.3 Maintenance of Records
	 	 	12	 
	Section 4.4 Pledged Collateral
	 	 	12	 
	Section 4.5 Accounts
	 	 	13	 
	Section 4.6 Delivery of Instruments and Chattel Paper
	 	 	14	 
	Section 4.7 Intellectual Property
	 	 	14	 
	Section 4.8 Payment of Obligations
	 	 	16	 
	Section 4.9 Notice of Commercial Tort Claims
	 	 	16	 
	 
	 	 	 	 
	I. ARTICLE V REMEDIAL PROVISIONS
	 	 	16	 
	Section 5.1 Code and Other Remedies
	 	 	16	 
	Section 5.2 Accounts and Payments in Respect of General Intangibles
	 	 	17	 
	Section 5.3 Pledged Collateral
	 	 	18	 
	Section 5.4 Proceeds to be Turned Over To Administrative Agent
	 	 	19	 

i

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	PAGE	 
	Section 5.5 Securities Laws
	 	 	19	 
	Section 5.6 Deficiency
	 	 	20	 
	Section 5.7 Remedies Subject to Intercreditor Agreement
	 	 	20	 
	 
	 	 	 	 
	J. ARTICLE VI THE ADMINISTRATIVE AGENT
	 	 	20	 
	Section 6.1 Administrative Agent’s Appointment as Attorney-in-Fact
	 	 	20	 
	Section 6.2 Duty of Administrative Agent
	 	 	22	 
	Section 6.3 Authorization of Financing Statements
	 	 	22	 
	Section 6.4 Authority of Administrative Agent
	 	 	22	 
	 
	 	 	 	 
	K. ARTICLE VII MISCELLANEOUS
	 	 	23	 
	Section 7.1 Amendments in Writing
	 	 	23	 
	Section 7.2 Notices
	 	 	23	 
	Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies
	 	 	23	 
	Section 7.4 Successors and Assigns
	 	 	23	 
	Section 7.5 Counterparts
	 	 	24	 
	Section 7.6 Severability
	 	 	24	 
	Section 7.7 Section Headings
	 	 	24	 
	Section 7.8 Entire Agreement
	 	 	24	 
	Section 7.9 Governing Law
	 	 	24	 
	Section 7.10 Additional Grantors
	 	 	24	 
	Section 7.11 Release of Collateral
	 	 	25	 
	Section 7.12 Reinstatement
	 	 	25	 
	Section 7.13 Intercreditor Agreement Governs
	 	 	26	 
	Section 7.14 Delivery of Collateral
	 	 	26	 

ii

 

TABLE OF CONTENTS

(continued)

Annexes and Schedules

	 	 	 
	Annex 1

	 	Form of Deposit Account Control Agreement
	Annex 2

	 	Form of Control Account Agreement
	Annex 3

	 	Form of Pledge Amendment
	Annex 4

	 	Form of Joinder Agreement
	Annex 5

	 	Form of Short Form Intellectual Property Security Agreement
	 
	Schedule 1

	 	State of Organization; Principal Executive Office
	Schedule 2

	 	Pledged Collateral
	Schedule 3

	 	Filings
	Schedule 3.7(d)

	 	Certain Actions
	Schedule 4

	 	Location of Inventory and Equipment
	Schedule 5

	 	Intellectual Property
	Schedule 6

	 	Bank Accounts; Control Accounts
	Schedule 7

	 	Commercial Tort Claims

iii

 

     Pledge and Security Agreement, dated as of August 17, 2007, by Collective
Brands Finance, Inc., a Nevada corporation (formerly known as Payless ShoeSource Finance,
Inc.) (the “Borrower”), and each of the other entities listed on the signature pages hereof or that
becomes a party hereto pursuant to 0 (Section 7.10 Additional Grantors) (each a “Grantor” and,
collectively, the “Grantors”), in favor of Citicorp North America, Inc. (“Citi”), as agent
(in such capacity, the “Administrative Agent”) for the Secured Parties (as defined below).

W i t n e s s e t h:

          Whereas, pursuant to the Term Loan Agreement, dated as of August 17, 2007 (as the
same may be amended, restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”), among the Borrower, Collective Brands, Inc., the Lenders party thereto and Citi, as
agent for the Lenders, the Lenders have severally agreed to make extensions of credit to the
Borrower upon the terms and subject to the conditions set forth therein;

          Whereas, the Grantors other than the Borrower are Guarantors under the Guaranty,
whereby they have guaranteed the Obligations of the Borrower; and

          Whereas, it is a condition precedent to the obligation of the Lenders to make their
respective extensions of credit to the Borrower under the Loan Agreement that the Grantors shall
have executed and delivered this Agreement to the Administrative Agent;

          Now, therefore, in consideration of the premises and to induce the Lenders and the
Administrative Agent to enter into the Loan Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the
Administrative Agent as follows:

     ARTICLE I Defined Terms

          Section 1.1 Definitions

          (a) Unless otherwise defined herein, terms defined in the Loan Agreement and used herein
have the meanings given to them in the Loan Agreement.

          (b) Terms used herein without definition that are defined in the UCC have the meanings
given to them in the UCC, including the following terms (which are capitalized herein):

          “Account Debtor”

          “Account”

          “Certificated Security”

          “Chattel Paper”

          “Commercial Tort Claim”

          “Commodity Account”

          “Control Account”

          “Deposit Account”

          “Documents”

          “Entitlement Holder”

          “Entitlement Order”

          “Equipment”

1

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          “Financial Asset”

          “General Intangible”

          “Goods”

          “Instruments”

          “Inventory”

          “Investment Property”

          “Letter-of-Credit Right”

          “Proceeds”

          “Securities Account”

          “Securities Intermediary”

          “Security”

          “Security Entitlement”

          (c) The following terms shall have the following meanings:

          “ABL Agent” means Wells Fargo Retail Finance, Inc., in its capacity as administrative agent
under the ABL Loan Agreement.

          “ABL Facility Secured Parties” shall mean the “Lenders” (as defined in the ABL Loan Agreement)
and the ABL Agent.

          “ABL Loan Agreement” means that certain Amended and Restated Loan and Guaranty Agreement,
dated as of August 17, 2007 by and among the Borrower, the other guarantors party thereto, the
lenders party thereto and the ABL Agent.

          “ABL Loan Security Agreement” means that certain Pledge and Security Agreement, dated as of
August 17, 2007 by and among the Borrower, each other Grantor party thereto from time to time and
the ABL Agent.

          “Additional Pledged Collateral” means any Pledged Collateral acquired by any Grantor after the
date hereof and in which a security interest is granted pursuant to Section 2.2 (Grant of Security
Interest in Collateral), including, to the extent a security interest is granted therein pursuant
to Section 2.2 (Grant of Security Interest in Collateral), (i) all Stock and Stock Equivalents of
any Person that are acquired by any Grantor after the date hereof, together with all certificates,
instruments or other documents representing any of the foregoing and all Security Entitlements of
any Grantor in respect of any of the foregoing, (ii) all additional Indebtedness from time to time
owed to any Grantor by any obligor on the Pledged Debt Instruments and the Instruments evidencing
such Indebtedness and (iii) all interest, cash, Instruments and other property or Proceeds from
time to time received, receivable or otherwise distributed in respect of or in exchange for any of
the foregoing. “Additional Pledged Collateral” may be General Intangibles, Instruments or
Investment Property.

          “Agreement” means this Pledge and Security Agreement.

          “Approved Securities Intermediary” means a “securities intermediary” or “commodity
intermediary” (as such terms are defined in the UCC) selected or approved by the Administrative
Agent.

2

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          “Collateral” has the meaning specified in Section 2.1 (Collateral).

          “Collateral Agents” means the Administrative Agent, in its capacity as collateral agent for
the Secured Parties, and the ABL Agent, in its capacity as collateral agent to the ABL Facility
Secured Parties.

          “Copyright Licenses” means any written agreement naming any Grantor as licensor or licensee
granting any right under any Copyright, including the grant of any right to copy, publicly perform,
create derivative works, manufacture, distribute, exploit or sell materials derived from any
Copyright.

          “Copyrights” means (a) all copyrights arising under the laws of the United States, any other
country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof and all applications in
connection therewith, including all registrations, recordings and applications in the United States
Copyright Office or in any foreign counterparts thereof, and (b) the right to obtain all renewals
thereof.

          “Deposit Account Control Agreement” means a letter agreement, substantially in the form of
Annex 1 (Form of Deposit Account Control Agreement) (with such changes as may be agreed to by the
Administrative Agent), executed by the Grantor, the Administrative Agent and the relevant financial
institution.

          “Domestic Person” means any “United States person” under and as defined in Section 7701(a)(30)
of the IRC.

          “Excluded Equity” means any Voting Stock in excess of 66% of the total outstanding Voting
Stock of any direct Subsidiary of any Grantor that is a Non-U.S. Person. For the purposes of this
definition, “Voting Stock” means, as to any issuer, the issued and outstanding shares of each class
of capital stock or other ownership interests of such issuer entitled to vote (within the meaning
of Treasury Regulations § 1.956-2(c)(2)).

          “Excluded Property” means, collectively, (i) Excluded Equity, (ii) any lease, license,
contract, property right or agreement to which any Grantor is a party or any of its rights or
interests thereunder if and to the extent that a security interest is prohibited by or in violation
of (a) any Requirement of Law applicable to such Grantor, or (b) a term, provision or condition of
or under, any such lease, license, contract, property right or agreement (unless in either clause
(a) or (b) above such law, rule or regulation or such term, provision or condition would be
rendered unenforceable against the Loans pursuant to Sections 9-406, 9-407, or 9-408 of the
applicable UCC), (iii) any “intent to use” Trademark applications for which a statement of use has
not been filed (but only until such statement is filed), (iv) Equipment owned by any Grantor that
is subject to a purchase money Lien or a Capital Lease if the contract or other agreement in which
such Lien is granted (or in the documentation providing for such Capital Lease) prohibits or
requires the consent of any Person other than the Borrower and its Affiliates as a condition to the
creation of any other Lien on such Equipment, (v) any assets of any Unrestricted Subsidiary or any
assets of or equity interests in any of an Unrestricted Subsidiary’s direct or indirect
subsidiaries, and (vi) any assets of any Immaterial Subsidiary that is not a Loan Party; provided,
however, “Excluded Property” shall not include any Proceeds, substitutions or replacements of
Excluded Property (unless such Proceeds, substitutions or replacements would constitute Excluded
Property).

3

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          “Intellectual Property” means, collectively, all rights, priorities and privileges of any
Grantor relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks, Trademark Licenses, trade secrets and Internet domain names, and all rights to sue at
law or in equity for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

          “Intercompany Note” means any promissory note evidencing loans made by any Grantor or any of
its Subsidiaries to any of its Subsidiaries or another Grantor.

          “Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the date
hereof among the Administrative Agent, the ABL Agent, the Borrower and the other Loan Parties, and
any amendments thereto.

          “LLC” means each limited liability company in which a Grantor has an interest, including those
set forth on Schedule 2 (Pledged Collateral).

          “LLC Agreement” means each operating agreement with respect to a LLC, as each agreement has
heretofore been, and may hereafter be, amended, restated, supplemented or otherwise modified from
time to time.

          “Material Intellectual Property” means trademark rights in the Trademarks “Payless
ShoeSource”, “Airwalk”, “Stride Rite”, “Keds”, “Sperry” and “Saucony”, in each case as they relate
to footwear or retail shoe store services in the United States and Canada and such other
Intellectual Property owned by or licensed to a Grantor the loss or impairment of which would
reasonably be expected to have a Material Adverse Effect.

          “Non-U.S. Person” means any Person that is not a Domestic Person.

          “Partnership” means each partnership in which a Grantor has an interest, including those set
forth on Schedule 2 (Pledged Collateral).

          “Partnership Agreement” means each partnership agreement governing a Partnership, as each such
agreement has heretofore been, and may hereafter be, amended, restated, supplemented or otherwise
modified.

          “Patents” means (a) all letters patent of the United States, any other country or any
political subdivision thereof and all reissues and extensions thereof, (b) all applications for
letters patent of the United States or any other country and all divisionals, continuations and
continuations-in-part thereof and (c) all rights to obtain any reissues, continuations or
continuations-in-part of the foregoing.

          “Patent License” means all agreements, whether written or oral, providing for the grant by or
to any Grantor of any right to manufacture, have manufactured, use, import, sell or offer for sale
any invention covered in whole or in part by a Patent.

          “Pledged Certificated Stock” means all Certificated Securities and any other Stock and Stock
Equivalent of a Person (other than Excluded Equity) evidenced by a certificate,

4

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

Instrument or other equivalent document, in each case owned by any Grantor, including all
Stock listed on Schedule 2 (Pledged Collateral).

          “Pledged Collateral” means, collectively, the Pledged Stock, Pledged Debt Instruments, any
other Investment Property of any Grantor, all chattel paper, certificates or other Instruments
representing any of the foregoing and all Security Entitlements of any Grantor in respect of any of
the foregoing. Pledged Collateral may be General Intangibles, Instruments or Investment Property.
For the purposes of this Agreement the term “Pledged Collateral” shall not include any Excluded
Property.

          “Pledged Debt Instruments” means all right, title and interest of any Grantor in Instruments
evidencing any Indebtedness owed to such Grantor (other than Excluded Property), including all
Indebtedness described on Schedule 2 (Pledged Collateral), issued by the obligors named therein.

          “Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock.
For purposes of this Agreement, the term “Pledged Stock” shall not include any Excluded Equity.

          “Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person that is not a
Pledged Certificated Stock or that is not Excluded Equity, including all right, title and interest
of any Grantor as a limited or general partner in any Partnership or as a member of any LLC and all
right, title and interest of any Grantor in, to and under any Partnership Agreement or LLC
Agreement to which it is a party.

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

          “Securities Account Control Agreement” means a letter agreement, substantially in the form of
Annex 2 (Form of Securities Account Control Agreement) (with such changes as may be agreed to by
the Administrative Agent), executed by the relevant Grantor, the Administrative Agent and the
relevant Approved Securities Intermediary.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Senior Collateral Transition Date” has the meaning set forth in the Intercreditor Agreement.

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

          “Trademark License” means any agreement, whether written or oral, providing for the grant by
or to any Grantor of any right to use any Trademark.

          “Trademarks” means (a) all 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, whether now existing or
hereafter adopted or acquired, all registrations and recordings thereof and all applications in
connection therewith, in each case whether in the United States Patent and

5

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

Trademark Office or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all common-law rights
related thereto, and (b) the right to obtain all renewals thereof.

          “UCC” means the Uniform Commercial Code as from time to time in effect in the State of New
York; provided, however, that, in the event that, by reason of mandatory provisions of law, any of
the attachment, perfection or priority of the Administrative Agent’s and the Secured Parties’
security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to such provisions.

          “Vehicles” means all vehicles covered by a certificate of title law of any state.

          Section 1.2 Certain Other Terms

          (a) In this Agreement, in the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including” and the words “to” and “until”
each mean “to but excluding” and the word “through” means “to and including.”

          (b) The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms refer to this
Agreement as a whole and not to any particular Article, Section, subsection or clause in this
Agreement.

          (c) References herein to an Annex, Schedule, Article, Section, subsection or clause refer
to the appropriate Annex or Schedule to, or Article, Section, subsection or clause in this
Agreement.

          (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

          (e) Where the context requires, provisions relating to any Collateral, when used in
relation to a Grantor, shall refer to such Grantor’s Collateral or any relevant part thereof.

          (f) Any reference in this Agreement to a Loan Document shall include all appendices,
exhibits and schedules thereto, and, unless specifically stated otherwise all amendments,
restatements, supplements or other modifications thereto, and as the same may be in effect at
any time such reference becomes operative.

          (g) The term “including” means “including without limitation” except when used in the
computation of time periods.

          (h) The terms “Lender,” “Administrative Agent” and “Secured Party” include their respective
successors.

          (i) References in this Agreement to any statute shall be to such statute as amended or modified and
in effect from time to time.

6

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

     ARTICLE II Grant of Security Interest

          Section 2.1 Collateral

          For the purposes of this Agreement, all of the following property now owned or at any time
hereafter acquired by a Grantor or in which a Grantor now has or at any time in the future may
acquire any right, title or interests is collectively referred to as the “Collateral”:

          (a) all Accounts;

          (b) all Chattel Paper;

          (c) all Deposit Accounts;

          (d) all Documents;

          (e) all Equipment;

          (f) all General Intangibles;

          (g) all Instruments;

          (h) all Intellectual Property;

          (i) all Inventory;

          (j) all Investment Property;

          (k) all Letter-of-Credit Rights;

          (l) all Vehicles;

          (m) the Commercial Tort Claims described on Sechedule 7 (Commercial Tort Claims) and on any
supplement thereto received by the Administrative Agent pursuant to 0 (Section 4.9 Notice of
Commercial Tort Claims);

          (n) all books and records pertaining to the other property described in this Section 2.1;

          (o) all property of any Grantor held by the Administrative Agent or any other Secured
Party, including all property of every description, in the possession or custody of or in
transit to the Administrative Agent or such Secured Party for any purpose, including
safekeeping, collection or pledge, for the account of such Grantor;

          (p) all other Goods and personal property of such Grantor, whether tangible or intangible
and wherever located; and

          (q) to the extent not otherwise included, all Proceeds;

7

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

provided, however, that “Collateral” shall not include any Excluded Property; and provided,
further, that if and when any property shall cease to be Excluded Property, such property shall be
deemed at all times from and after the date hereof to constitute Collateral.

          Section 2.2 Grant of Security Interest in Collateral

          Each Grantor, as collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of
such Grantor, hereby mortgages, pledges and hypothecates to the Administrative Agent for the
benefit of the Secured Parties, and grants to the Administrative Agent for the benefit of the
Secured Parties a lien on and security interest in, all of its right, title and interest in, to and
under the Collateral of such Grantor; provided, however, that, if and when any property that at any
time constituted Excluded Property becomes Collateral, the Administrative Agent shall have, and at
all times from and after the date hereof be deemed to have had, a security interest in such
property.

          Section 2.3 Cash Management Accounts

          Each Grantor has established a Cash Management Account with an appropriate Cash Management
Bank in accordance with Section 2.7 of the ABL Loan Agreement. Each Cash Management Account will
serve as a cash collateral account securing payment of the Secured Obligations, and in which each
Grantor hereby grants a Lien to the Administrative Agent.

     ARTICLE III Representations and Warranties

          To induce the Lenders and the Administrative Agent to enter into the Loan Agreement, each
Grantor hereby represents and warrants each of the following to the Administrative Agent, the
Lenders and the other Secured Parties:

          Section 3.1 Title; No Other Liens

          Except for the Lien granted to the Administrative Agent pursuant to this Agreement, the Lien
granted to the ABL Agent pursuant to the ABL Loan Security Agreement and the other Liens permitted
to exist on the Collateral under the Loan Agreement, such Grantor (a) is the record and beneficial
owner of that portion of the Pledged Collateral pledged by it hereunder constituting Instruments or
Certificated Securities, (b) is the Entitlement Holder of all such Pledged Collateral constituting
Investment Property held in a Securities Account and (c) has rights in or the power to transfer
each other item of Collateral in which a Lien is granted by it hereunder, free and clear of any
other Lien.

          Section 3.2 Perfection and Priority

          The security interest granted pursuant to this Agreement shall constitute a valid and continuing
perfected security interest in favor of the Administrative Agent in the Collateral for which
perfection is governed by the UCC or filing with the United States Copyright Office upon (i) in the
case of all Collateral in which a security interest may be perfected by filing a financing
statement under the UCC, the completion of the filings and other actions specified on Schedule 3
(Filings) (which, in the case of all filings and other documents referred to on such

8

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

schedule, have been delivered to the Administrative Agent in completed and duly executed form),
(ii) the delivery to the Administrative Agent of Collateral consisting of Instruments and
Certificated Securities, in each case properly endorsed for transfer to the Administrative Agent or
in blank, (iii) the execution of Securities Account Control Agreements with respect to Investment
Property not in certificated form and held in a securities account covered by such agreement, (iv)
the execution of Deposit Account Control Agreements with respect to certain Deposit Accounts of a
Grantor and (v) appropriate filings having been made with the United States Copyright Office. Such
perfected security interests shall be prior to all other Liens on the Collateral except for
Permitted Liens having priority over the Administrative Agent’s Lien as permitted under the Loan
Agreement, Liens in favor of the ABL Facility Secured Parties subject to the provisions of the
Intercreditor Agreement.

          Section 3.3 Jurisdiction of Organization; Chief Executive Office

          Such Grantor’s jurisdiction of organization, legal name, organizational identification number,
if any, and the location of such Grantor’s chief executive office or sole place of business, in
each case as of the date hereof, is specified on Sechedule 2 (Pledged Collateral).

          Section 3.4 Inventory and Equipment

          On the date hereof, such Grantor’s Inventory and Equipment (other than mobile goods and
Inventory or Equipment in transit) are kept at the locations listed on Schedule 4 (Location of
Inventory and Equipment).

          Section 3.5 Pledged Collateral

          (a) The Pledged Stock pledged hereunder by such Grantor is listed on Schedule 2 (Pledged
Collateral) and constitutes that percentage of the issued and outstanding equity of all classes
of each issuer thereof as set forth on Schedule 2 (Pledged Collateral).

          (b) All of the Pledged Stock (other than Pledged Stock in limited liability companies and
partnerships) has been duly authorized, validly issued and is fully paid and nonassessable.

          (c) Each of the Pledged Debt Instruments constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with its terms,
subject to the effects of applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors’ rights
generally, and general equitable principles (whether considered in a proceeding in equity or at
law).

          (d) All Pledged Collateral and, if applicable, any Additional Pledged Collateral,
consisting of Certificated Securities or Instruments has been delivered to the Administrative
Agent as agent for the Secured Parties and, pursuant to the Intercreditor Agreement, as bailee
for the ABL Facility Secured Parties.

          (e) All Pledged Collateral held by a Securities Intermediary in a Securities Account on the
date hereof is subject to a Securities Account Control Account.

9

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          (f) Other than Pledged Stock constituting General Intangibles, there is no Pledged
Collateral on the date hereof other than that represented by Certificated Securities or
Instruments in the possession of the Administrative Agent as agent for the Secured Parties and,
pursuant to the Intercreditor Agreement, as bailee for the ABL Facility Secured Parties, or that
consist of Financial Assets held in a Securities Account that is subject to a Securities Account
Control Agreement.

          (g) The Governing Documents of any Person governing any Pledged Stock provide that, upon
the occurrence and during the continuance of an Event of Default, the Administrative Agent as
agent for the Secured Parties and, pursuant to the Intercreditor Agreement, as bailee for the
ABL Facility Secured Parties, shall be entitled to exercise all of the rights of the Grantor
granting the security interest therein, and that a transferee or assignee of Stock of such
Person shall become a member, partner or, as the case may be, other holder of such Pledged Stock
to the same extent as the Grantor in such Person entitled to participate in the management of
such Person and, upon the transfer of the entire interest of such Grantor, such Grantor ceases
to be a member, partner or, as the case may be, other holder of such Pledged Stock.

          Section 3.6 Accounts

          No amount in excess of $500,000 payable to such Grantor under or in connection with any
Account is evidenced by any Instrument or Chattel Paper that has not been delivered within 10 days
after the receipt thereof to the Administrative Agent as agent for the ABL Facility Secured Parties
and, pursuant to the Intercreditor Agreement, as bailee for the ABL Facility Secured Parties,
properly endorsed for transfer, to the extent delivery is required by (Section 4.4 Pledged
Collateral).

          Section 3.7 Intellectual Property

          (a) Schedule 5 (Intellectual Property) lists all Material Intellectual Property of such
Grantor on the Closing Date separately identifying that owned by such Grantor and that licensed
to such Grantor.

          (b) As of the Closing Date, all Material Intellectual Property owned by such Grantor in the
United States and Canada (i) is valid, subsisting, unexpired and not unenforceable, has not been
adjudged invalid and has not been abandoned and (ii) the use thereof in the business of such
Grantor does not infringe, misappropriate, dilute or violate the intellectual property rights of
any other Person except as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

          (c) As of the Closing Date, no holding, decision or judgment has been rendered by any
Governmental Authority in the United States or Canada that would limit or cancel the validity of
such Grantor’s rights in any Material Intellectual Property.

          (d) Except as disclosed in any public filing or on Schedule
3.7(d) (Certain Actions), no action or proceeding seeking to limit or cancel
the validity of any Material Intellectual Property owned by such Grantor or
such Grantor’s ownership interest therein, in each case in the United States
or Canada, is pending or, to the knowledge of such Grantor, threatened.

10

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          Section 3.8 Deposit Accounts; Securities Accounts

          The only Deposit Accounts or Securities Accounts maintained by any Grantor on the date hereof
are those listed on Schedule 6 (Bank Accounts; Control Accounts), which sets forth such information
separately for each Grantor.

          Section 3.9 Commercial Tort Claims

          The only Commercial Tort Claims of any Grantor existing on the date hereof (regardless of
whether the amount, defendant or other material facts can be determined and regardless of whether
such Commercial Tort Claim has been asserted, threatened or has otherwise been made known to the
obligee thereof or whether litigation has been commenced for such claims) are those listed on
Schedule 7 (Commercial Tort Claims), which sets forth such information separately for each Grantor.

     ARTICLE IV Covenants

          Each Grantor agrees with the Administrative Agent to the following, as long as any Obligation
or Commitment remains outstanding and, in each case, unless the Required Lenders otherwise consent
in writing, or unless otherwise provided in the Loan Agreement:

          Section 4.1 Generally

          Such Grantor shall not use or permit any Collateral to be used unlawfully or in violation of
any provision of this Agreement, any other Loan Document, any Related Document, any Requirement of
Law or any policy of insurance covering the Collateral.

          Section 4.2 Maintenance of Perfected Security Interest; Further Documentation

          (a) Such Grantor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in Section 3.2 (Perfection
and Priority) and Section 2.2 (Grant of Security Interests in Collateral) and shall defend such
security interest and such priority against the claims and demands of all Persons subject to the
Intercreditor Agreement.

          (b) Such Grantor shall furnish to the Administrative Agent from time to time statements and
schedules further identifying and describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail
and in form and substance reasonably satisfactory to the Administrative Agent.

          (c) At any time and from time to time, upon the written request of the Administrative Agent, and at
the sole expense of such Grantor, such Grantor shall promptly and duly execute and deliver, and
have recorded, such further instruments and documents and take such further action as the
Administrative Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted, including the filing of any
financing or continuation statement under the UCC (or other similar laws) in effect in any
jurisdiction with respect to the security interest created

11

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

hereby and the execution and delivery of Deposit Account Control Agreements and Securities Account
Control Agreements.Maintenance of Records.

          Section 4.3 Maintenance of Records.

          Such Grantor shall keep and maintain at its own cost and expense satisfactory and complete
records of the Collateral, including a record of all payments received and all credits granted with
respect to the Collateral and all other dealings with the Collateral. If requested by the
Administrative Agent, the security interest of the Administrative Agent shall be noted on the
certificate of title of each Vehicle.

          Section 4.4 Pledged Collateral

          (a) Such Grantor shall (i) deliver not later than 10 days following the receipt thereof to
the Administrative Agent as agent for the Secured Parties and, pursuant to the Intercreditor
Agreement, as bailee for the ABL Facility Secured Parties, all certificates and Instruments
representing or evidencing any Pledged Collateral (including Additional Pledged Collateral)
which, in the case of Pledged Debt Instruments is in the face amount of at least $1,000,000,
whether now existing or hereafter acquired, in suitable form for transfer by delivery or, as
applicable, accompanied by such Grantor’s endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance satisfactory to the
Collateral Agents, together, in respect of any Additional Pledged Collateral, with a Pledge
Amendment, duly executed by the Grantor, in substantially the form of Annex 3 (Form of Pledge
Amendment), an acknowledgment and agreement to a Joinder Agreement duly executed by the Grantor,
in substantially the form in the form of Annex 4 (Form of Joinder Agreement), or such other
documentation acceptable to the Collateral Agents, provided, that any Pledged Debt Instruments
existing on the Closing Date that represent indebtedness payable by one Grantor to another
Grantor shall be delivered to the Administrative Agent within 30 days after the Closing Date,
and (ii) maintain all other Pledged Collateral constituting Investment Property in a Control
Account. Such Grantor authorizes the Administrative Agent to attach each Pledge Amendment to
this Agreement. The Administrative Agent as agent for the Secured Parties and, pursuant to the
Intercreditor Agreement, as bailee for the ABL Facility Secured Parties, shall have the right,
at any time in its discretion and without notice to the Grantor, to transfer to or to register
in its name or in the name of its nominees any Pledged Collateral during the continuance of an
Event of Default. The Administrative Agent as agent for the Secured Parties and, pursuant to
the Intercreditor Agreement, as bailee for the ABL Facility Secured Parties, shall have the
right at any time to exchange any certificate or instrument representing or evidencing any
Pledged Collateral for certificates or instruments of smaller or larger denominations during the
continuance of an Event of Default.

          (b) Except as provided in Article V (Remedial Provisions), each Grantor shall be entitled
hereunder to receive all cash dividends paid in respect of the Pledged Collateral (other than
liquidating or distributing dividends) with respect to the Pledged Collateral. Any sums paid
upon or in respect of any Pledged Collateral upon the liquidation or dissolution of any issuer
of any Pledged Collateral, any distribution of capital made on or in respect of any Pledged
Collateral or any property distributed upon or with respect to any Pledged Collateral pursuant
to the recapitalization or reclassification of the capital of any issuer of Pledged Collateral
or pursuant to the reorganization thereof shall, unless otherwise subject to a perfected
security interest in favor of the Collateral Agents, be delivered to the

12

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

Administrative Agent as agent for the Secured Parties and, pursuant to the Intercreditor
Agreement, as bailee for the ABL Facility Secured Parties, to be held by it hereunder as
additional collateral security for the Secured Obligations. If any sum of money or property so
paid or distributed in respect of any Pledged Collateral shall be received by such Grantor as
bailee, such Grantor shall, until such money or property is paid or delivered to the
Administrative Agent as agent for the Secured Parties and, pursuant to the Intercreditor
Agreement, as bailee for the ABL Facility Secured Parties, hold such money or property in trust
for the Collateral Agents, segregated from other funds of such Grantor, as additional security
for the Secured Obligations.

          (c) Except as provided in Article V (Remedial Provisions), each Grantor shall be entitled
to exercise all voting, consent and corporate, partnership, limited liability company and
similar rights with respect to the Pledged Collateral; provided, however, that no vote shall be
cast, consent given or right exercised or other action taken by such Grantor that would
materially impair the Collateral or violate the Loan Agreement.

          (d) Such Grantor shall not grant “control” (within the meaning of such term under Article
9-106 of the UCC) over any Investment Property to any Person other than, the Administrative
Agent as agent for the Secured Parties and, pursuant to the Intercreditor Agreement, as bailee
for the ABL Facility Secured Parties and statutory control granted to the Securities
Intermediary solely due to the Securities Intermediary’s possession of such Investment Property
in a Securities Account.

          (e) In the case of each Grantor that is an issuer of Pledged Collateral, such Grantor
agrees to be bound by the terms of this Agreement relating to the Pledged Collateral issued by
it and shall comply with such terms insofar as such terms are applicable to it. In the case of
any Grantor that is a holder of any Stock or Stock Equivalent in any Person that is an issuer of
Pledged Collateral during the continuance of an Event of Default, such Grantor consents to (i)
the exercise of the rights granted to the Collateral Agents hereunder (including those described
in Section 5.3 (Pledged Collateral)), and (ii) the pledge by each other Grantor, pursuant to the
terms hereof, of the Pledged Stock in such Person and to the transfer of such Pledged Stock to
the Administrative Agent as agent for the Secured Parties and, pursuant to the Intercreditor
Agreement, as bailee for the ABL Facility Secured Parties, or its nominee and to the
substitution of the Administrative Agent as agent for the Secured Parties and, pursuant to the
Intercreditor Agreement, as bailee for the ABL Facility Secured Parties, or its nominee as a
holder of such Pledged Stock with all the rights, powers and duties of other holders of Pledged
Stock of the same class and, if the Grantor having pledged such Pledged Stock hereunder had any
right, power or duty at the time of such pledge or at the time of such substitution beyond that
of such other holders, with all such additional rights, powers and duties. Such Grantor agrees
to execute and deliver to the Administrative Agent as agent for the Secured Parties and,
pursuant to the Intercreditor Agreement, as bailee for the ABL Facility Secured Parties, such
certificates, agreements and other documents as may be necessary to evidence, formalize or
otherwise give effect to the consents given in this clause (e).

          Section 4.5 Accounts

          (a) Such Grantor shall not, other than in the ordinary course of business consistent with its past
practice, (i) grant any extension of the time of payment of any Account, (ii) compromise or settle
any Account for less than the full amount thereof, (iii) release, wholly or

13

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

partially, any Person liable for the payment of any Account, (iv) allow any credit or discount on
any Account or (v) amend, supplement or modify any Account in any manner that could adversely
affect the value thereof.

          (b) The Administrative Agent shall have the right to make test verifications of the Accounts
in any manner and through any medium that it reasonably considers advisable, and such Grantor shall
furnish all such assistance and information as the Administrative Agent may reasonably require in
connection therewith. At any time and from time to time, upon the Administrative Agent’s request
and at the expense of the relevant Grantor, such Grantor shall cause independent public accountants
or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial balances for, the Accounts;
provided, however, that in the case of any appraisal or audit, such appraisal or audit may only be
undertaken if Revolver Usage at the time of such appraisal or audit is undertaken is in excess of
$100,000,000 and provided further, that unless a Default or an Event of Default is continuing or a
Triggering Period has occurred and is continuing, the Administrative Agent shall request no more
than two such reports during any calendar year.

          Section 4.6 Delivery of Instruments and Chattel Paper

          Except as otherwise agreed by the Administrative Agent, if any amount in excess of $1,000,000
payable under or in connection with any Collateral owned by such Grantor shall be or become
evidenced by an Instrument or Chattel Paper, such Grantor shall deliver within 10 days following
the receipt thereof such Instrument or Chattel Paper to the Administrative Agent as agent for the
Secured Parties and, pursuant to the Intercreditor Agreement, as bailee for the ABL Facility
Secured Parties, duly indorsed in a manner satisfactory to the Collateral Agents, or, if consented
to by the Collateral Agents, shall mark all such Instruments and Chattel Paper with the following
legend: “This writing and the obligations evidenced or secured hereby are subject to the security
interest of Wells Fargo Retail Finance, LLC, as Administrative Agent under that certain Amended and
Restated Loan and Guaranty Agreement, and Citicorp North America, Inc., as Administrative Agent
under that certain Term Loan Agreement”.

          Section 4.7 Intellectual Property

          (a) Such Grantor (either itself or through licensees) shall (i) continue to use each
Trademark that is Material Intellectual Property in order to maintain such Trademark with
respect to footwear and retail shoe store services (if so used as of the date hereof), free from
any claim of abandonment for non-use, (ii) except as it may otherwise determine in the ordinary
course of its business, maintain as in the past the quality of products and services offered
under such Trademark, (iii) generally use such Trademark with commercially reasonable notices of
registration and regular notices and legends required by applicable Requirements of Law and (iv)
not (and not permit any licensee or sublicensee thereof to) knowingly do any act or knowingly
omit to do any act whereby such Trademark (or any goodwill associated therewith) may become
destroyed or invalidated in any way.

          (b) Such Grantor (either itself or through licensees) shall not do any act, or omit to do
any act, whereby any Patent that is Material Intellectual Property becomes forfeited, abandoned
or dedicated to the public.

          (c) Such Grantor shall notify the Administrative Agent promptly if it knows that any
registration owned by such Grantor for any Material Intellectual Property is

14

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

likely to become forfeited, abandoned or dedicated to the public or any action or proceeding is
commenced seeking to limit in any material respect or cancel such Grantor’s ownership of, right
to use, interest in, or the validity of, any Material Intellectual Property or such Grantor’s
right to register the same or to own and maintain the same.

          (d) Whenever such Grantor, either by itself or through any agent, licensee or designee,
shall file an application for the registration of any Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office or any similar office or
agency within the United States or register any Internet domain name, such Grantor shall report
such filing to the Administrative Agent within 60 days after the last day of the fiscal quarter
in which such filing occurs. Upon request of the Administrative Agent, such Grantor shall
execute and deliver, and have recorded in the United States, all agreements, instruments,
documents and papers as the Administrative Agent may request to evidence the Administrative
Agent’s security interest in any Copyright, Patent, Trademark or Internet domain name and the
goodwill and general intangibles of such Grantor relating thereto or represented thereby. The
failure to provide or any omissions from such report shall not constitute an Event of Default
unless any Material Intellectual Property is omitted therefrom. At the written request of the
Administrative Agent, each Grantor shall provide a true and complete list of all Material
Intellectual Property and United States copyright registrations included in the Collateral.

          (e) Such Grantor shall take all reasonable actions necessary or requested by the
Administrative Agent, including in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency and any Internet
domain name registrar, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of any Copyright, Trademark, Patent or Internet
domain name that is Material Intellectual Property, and that is in such Grantor’s reasonable
judgment appropriate, including filing of applications for renewal, affidavits of use,
affidavits of incontestability.

          (f) In the event that any Material Intellectual Property is or has been infringed upon or
misappropriated or diluted by a third party, such Grantor shall notify the Administrative Agent
promptly after such Grantor learns thereof. Such Grantor shall take appropriate action in
response to such infringement, misappropriation of dilution, including when bringing suit for
infringement, misappropriation or dilution and to recover all damages for such infringement,
misappropriation of dilution, and shall taking such other actions, in each case as appropriate
in such Grantor’s reasonable judgment under the circumstances to protect such Material
Intellectual Property.

          (g) Unless otherwise agreed to by the Administrative Agent, such Grantor shall execute and deliver
to the Administrative Agent for filing (i) in the United States Copyright Office a short-form
copyright security agreement in the form attached hereto as Annex 5 (Form of Short Form
Intellectual Property Security Agreement), (ii) in the United States Patent and Trademark Office
and with the Secretary of State of all appropriate States of the United States a short-form patent
security agreement in the form attached hereto as Annex 5 (Form of Short Form Intellectual Property
Security Agreement) and (iii) in the United States Patent and Trademark Office a short-form
trademark security agreement in form attached hereto as Annex 5 (Form of Short Form Intellectual
Property Security Agreement).

15

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          Sectoin 4.8 Payment of Obligations

          Such Grantor shall pay and discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of
any kind (including claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if (i) the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor, or (ii) such proceedings
could not reasonably be expected to result in a Material Adverse Effect.

          Section 4.9 Notice of Commercial Tort Claims

          Such Grantor agrees that (i) within 60 days after the end of each fiscal quarter, such Grantor
shall provide to the Administrative Agent a report setting forth all Commercial Tort Claims for
which such Grantor has filed a complaint in a court of competent jurisdiction with respect to which
the pleadings seek damages in excess of $1,000,000, if any, and (ii) the provisions of Section 2.1
(Collateral) shall apply with respect to any such Commercial Tort Claims. Any report delivered
pursuant to this 0 (Section 4.9 Notice of Commercial Tort Claims) shall, after the receipt thereof
by the Administrative Agent, become part of Schedule 7 (Commercial Tort Claims) for all purposes
hereunder other than in respect of representations and warranties made prior to the date of such
receipt.

     ARTICLE V Remedial Provisions

          Section 5.1 Code and Other Remedies

          During the continuance of an Event of Default, the Administrative Agent may exercise, in addition
to all other rights and remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the UCC or any other applicable law. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law referred to below)
to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements
and notices are hereby waived to the extent permitted by law), may in such circumstances forthwith
collect, receive, appropriate and realize upon any Collateral, and may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver any Collateral (or
contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of the Administrative Agent or any Lender or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any credit risk. The Administrative
Agent shall have the right upon any such public sale or sales, and, to the extent permitted by the
UCC and other applicable law, upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of redemption of any Grantor, which
right or equity is hereby waived and released to the fullest extent permitted by law. Each Grantor
further agrees, at the Administrative Agent’s request during the continuance of an Event of
Default, to assemble the Collateral and make it available to the Administrative Agent at places
that the Administrative Agent shall reasonably select, whether at such Grantor’s premises or
elsewhere. The Administrative Agent

16

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

shall apply the net proceeds of any action taken by it pursuant to this Section 5.1, after
deducting all reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and any other Secured Party hereunder, including reasonable
attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations,
in such order as the Loan Agreement shall prescribe, and only after such application and after the
payment by the Administrative Agent of any other amount required by any provision of law, need the
Administrative Agent account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any other Secured Party arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10 Business Days before
such sale or other disposition.

          Section 5.2 Accounts and Payments in Respect of General Intangibles

          (a) In addition to, and not in substitution for, any similar requirement in the Loan
Agreement, if required by the Administrative Agent at any time during the continuance of an
Event of Default, any payment of Accounts or payment in respect of General Intangibles, when
collected by any Grantor, shall be forthwith deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent, in a Cash Management
Account, subject to withdrawal by the Administrative Agent as provided in Section 5.4 (Proceeds
to be Turned Over To Administrative Agent). Until so turned over, such payment shall be held by
such Grantor in trust for the Administrative Agent, segregated from other funds of such Grantor.

          (b) At the Administrative Agent’s request, during the continuance of an Event of Default,
each Grantor shall deliver to the Administrative Agent or, at the Administrative Agent’s option,
permit the Administrative Agent access to obtain copies or original and other documents
evidencing, and relating to, the agreements and transactions that gave rise to the Accounts or
payments in respect of General Intangibles, including all original orders, invoices and shipping
receipts.

          (c) The Administrative Agent may, without notice to the Grantors, at any time during the
continuance of an Event of Default, limit or terminate the authority of a Grantor to collect its
Accounts or amounts due under General Intangibles or any thereof.

          (d) The Administrative Agent in its own name or in the name of others may at any time
during the continuance of an Event of Default communicate with Account Debtors to verify with
them to the Administrative Agent’s satisfaction the existence, amount and terms of any Account
or amounts due under any General Intangible.

          (e) Upon the request of the Administrative Agent at any time during the continuance of an
Event of Default, each Grantor shall notify Account Debtors that the Accounts or General
Intangibles have been collaterally assigned to the Administrative Agent and that payments in
respect thereof shall be made directly to the Administrative Agent. In addition, the
Administrative Agent may at any time during the continuance of an Event of Default enforce such
Grantor’s rights against such Account Debtors and obligors of General Intangibles.

17

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          (f) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Accounts and payments in respect of General Intangibles to observe and perform all
the conditions and obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto. Neither the Administrative Agent nor any
other Secured Party shall have any obligation or liability under any agreement giving rise to an
Account or a payment in respect of a General Intangible by reason of or arising out of this
Agreement or the receipt by the Administrative Agent or any other Secured Party of any payment
relating thereto, nor shall the Administrative Agent nor any other Secured Party be obligated in
any manner to perform any obligation of any Grantor under or pursuant to any agreement giving
rise to an Account or a payment in respect of a General Intangible, to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any claim, to take
any action to enforce any performance or to collect the payment of any amounts that may have
been assigned to it or to which it may be entitled at any time or times.

          Section 5.3 Pledged Collateral

          (a) During the continuance of an Event of Default, at the request of, and upon notice from
the Administrative Agent to the relevant Grantor or Grantors, (i) the Administrative Agent shall
have the right to receive any Proceeds of the Pledged Collateral and make application thereof to
the Obligations in the order set forth in the Loan Agreement and (ii) the Administrative Agent
as agent for the Secured Parties and, pursuant to the Intercreditor Agreement, as bailee for the
ABL Facility Secured Parties, or its nominee may exercise (A) any voting, consent, corporate and
other right pertaining to the Pledged Collateral at any meeting of shareholders, partners or
members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or
otherwise and (B) any right of conversion, exchange and subscription and any other right,
privilege or option pertaining to the Pledged Collateral as if it were the absolute owner
thereof (including the right to exchange at its discretion any of the Pledged Collateral upon
the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental
change in the corporate or equivalent structure of any issuer of Pledged Stock, the right to
deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the Collateral Agents may
determine), all without liability except to account for property actually received by it;
provided, however, that the Administrative Agent shall have no duty to any Grantor to exercise
any such right, privilege or option and shall not be responsible for any failure to do so or
delay in so doing.

          (b) During the continuance of an Event of Default, in order to permit the Administrative Agent
as agent for the Secured Parties and, pursuant to the Intercreditor Agreement, as bailee for the
ABL Facility Secured Parties, to exercise the voting and other consensual rights that it may be
entitled to exercise pursuant hereto and to receive all dividends and other distributions that
it may be entitled to receive hereunder, (i) each Grantor shall promptly execute and deliver (or
cause to be executed and delivered) to the Administrative Agent as agent for the Secured Parties
and, pursuant to the Intercreditor Agreement, as bailee for the ABL Facility Secured Parties,
all such proxies, dividend payment orders and other instruments as the Collateral Agents may
from time to time reasonably request and (ii) without limiting the effect of clause (i) above,
such Grantor hereby grants to the Administrative Agent as agent for the Secured Parties and,
pursuant to the Intercreditor

18

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

Agreement, as bailee for the ABL Facility Secured Parties, an irrevocable proxy to vote all or
any part of the Pledged Collateral and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Collateral would be entitled (including giving or
withholding written consents of shareholders, partners or members, as the case may be, calling
special meetings of shareholders, partners or members, as the case may be, and voting at such
meetings), which proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Collateral on the record books of the issuer thereof) by
any other person (including the issuer of such Pledged Collateral or any officer or agent
thereof) during the continuance of an Event of Default and which proxy shall only terminate upon
the payment in full of the Secured Obligations.

          (c) Each Grantor hereby expressly authorizes and instructs each issuer of any Pledged
Collateral pledged hereunder by such Grantor to (i) comply with any instruction received by it
from any Collateral Agent in writing that (A) states that an Event of Default has occurred and
is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from such Grantor, and each Grantor agrees that such issuer shall
be fully protected in so complying and (ii) unless otherwise expressly permitted hereby, pay any
dividend or other payment with respect to the Pledged Collateral directly to the Administrative
Agent as agent for the Secured Parties and, pursuant to the Intercreditor Agreement, as bailee
for the ABL Facility Secured Parties.

          Section 5.4 Proceeds to be Turned Over To Administrative Agent

          Unless otherwise expressly provided in the Loan Agreement, all Proceeds received by the
Administrative Agent hereunder in cash or Cash Equivalents shall be held by the Administrative
Agent in a Cash Management Account. All Proceeds while held by the Administrative Agent in a Cash
Management Account (or by such Grantor in trust for the Administrative Agent) shall continue to be
held as collateral security for the Secured Obligations and shall not constitute payment thereof
until applied as provided in the Loan Agreement or in the Intercreditor Agreement.

          Section 5.5 Securities Laws

               (a) Each Grantor recognizes that the Administrative Agent as agent for the Secured Parties
and, pursuant to the Intercreditor Agreement, as bailee for the ABL Facility Secured Parties, may
be unable to effect a public sale of any Pledged Collateral by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or otherwise or may determine
that a public sale is impracticable or not commercially reasonable and, accordingly, may resort to
one or more private sales thereof to a restricted group of purchasers that shall be obliged to
agree, among other things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative Agent acting in
the above-referenced capacities shall be under no obligation to delay a sale of any Pledged
Collateral for the period of time necessary to permit the issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state securities laws,
even if such issuer would agree to do so.

19

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

     (b) During the continuance of an Event of Default, each Grantor agrees to use commercially
reasonable efforts to do or cause to be done all such other acts as may be reasonably requested of
it to make such sale or sales of all or any portion of the Pledged Collateral pursuant to this
Section 5.5 valid and binding and in compliance with all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any covenant contained in this Section 5.5 will cause
irreparable injury to the Collateral Agents, the Secured Parties and the ABL Facility Secured
Parties, that the Collateral Agents, the Secured Parties and the ABL Facility Secured Parties have
no adequate remedy at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 5.5 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defense against an action for specific
performance of such covenants except for a defense that no Event of Default has occurred under the
Loan Agreement or the Term Loan Agreement.

          Section 5.6 Deficiency

          Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations and the reasonable
out-of-pocket fees and disbursements of counsel employed by the Administrative Agent to collect
such deficiency.

          Section 5.7 Remedies Subject to Intercreditor Agreement

          Notwithstanding the foregoing provisions, any rights and remedies and all representations and
covenants contained in this Article V (Remedial Provisions) are qualified by and shall be subject
to the terms of the Intercreditor Agreement.

     ARTICLE VI The Administrative Agent

          Section 6.1 Administrative Agent’s Appointment as Attorney-in-Fact

               (a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and
any officer or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of such
Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the
terms of this Agreement, to take any appropriate action and to execute any document or
instrument that may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the Administrative
Agent the power and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any of the following:

     (i) in the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any check, draft, note, acceptance or other instrument for the payment
of moneys due under any Account or General Intangible or with respect to any other
Collateral and file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Administrative Agent for the purpose of
collecting any such moneys due under any Account or General Intangible or with respect to
any other Collateral whenever payable;

     (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any
agreement, instrument, document or paper as the Administrative Agent

20

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

may deem appropriate to evidence the Administrative Agent’s security interest in such
Intellectual Property and the goodwill and General Intangibles of such Grantor relating
thereto or represented thereby;

     (iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repair or pay any insurance called for by the terms of this
Agreement (including all or any part of the premiums therefor and the costs thereof);

     (iv) execute, in connection with any sale provided for in Section 5.1 (Code and Other
Remedies) or Section 5.5 (Securities Laws), any endorsement, assignment or other instrument
of conveyance or transfer with respect to the Collateral; and

     (v) (A) direct any party liable for any payment under any Collateral to make payment
of any moneys due or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct, (B) ask or demand for, collect, and receive payment
of and receipt for, any moneys, claims and other amounts due or to become due at any time
in respect of or arising out of any Collateral, (C) sign and indorse any invoice, freight
or express bill, bill of lading, storage or warehouse receipt, draft against debtors,
assignment, verification, notice and other document in connection with any Collateral, (D)
commence and prosecute any suit, action or proceeding at law or in equity in any court of
competent jurisdiction to collect any Collateral and to enforce any other right in respect
of any Collateral, (E) defend any suit, action or proceeding brought against such Grantor
with respect to any Collateral, (F) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate, (G) assign any Copyright, Patent or Trademark
(along with the goodwill of the business to which any such Trademark pertains) throughout
the world for such term or terms, on such conditions, and in such manner as the
Administrative Agent shall in its sole discretion determine, including the execution and
filing of any document necessary to effectuate or record such assignment and (H) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal with any
Collateral as fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and do, at the Administrative Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things that the
Administrative Agent deems necessary to protect, preserve or realize upon the Collateral
and the Administrative Agent’s and the other Secured Parties’ security interests therein
and to effect the intent of this Agreement, all as fully and effectively as such Grantor
might do.

Anything in this clause (a) to the contrary notwithstanding, the Administrative Agent agrees that
it shall not exercise any right under the power of attorney provided for in this clause (a) unless
an Event of Default shall be continuing.

          (b) If any Grantor fails to perform or comply with any of its agreements contained herein,
the Administrative Agent, at its option during the continuance of a Default or an Event of
Default, but without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.

          (c) The reasonable out-of-pocket expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 6.1, together with interest thereon at a
rate per annum equal to the rate per annum at which interest would then be

21

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

payable on past due Loans that are Base Rate Loans under the Loan Agreement, from the date of
payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be
payable by such Grantor to the Administrative Agent on demand.

          (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.

          Section 6.2 Duty of Administrative Agent

          The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. None of the Administrative
Agent, any other Secured Party nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action whatsoever with regard to
any Collateral. The powers conferred on the Administrative Agent hereunder are solely to protect
the Administrative Agent’s interest in the Collateral and shall not impose any duty upon the
Administrative Agent or any other Secured Party to exercise any such powers. The Administrative
Agent and the other Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of their respective
officers, directors, employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.

          Section 6.3 Authorization of Financing Statements

          Each Grantor authorizes the Administrative Agent and its Affiliates, counsel and other
representatives, at any time and from time to time, to file or record financing statements,
amendments to financing statements, and other filing or recording documents or instruments with
respect to the Collateral in such form and in such offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the Administrative Agent under this
Agreement, and such financing statements and amendments may describe the Collateral covered thereby
as “all assets of the debtor”, “all personal property of the debtor” or words of similar effect.
Each Grantor hereby also authorizes the Administrative Agent and its Affiliates, counsel and other
representatives, at any time and from time to time, to file continuation statements with respect to
previously filed financing statements. A photographic or other reproduction of this Agreement
shall be sufficient as a financing statement or other filing or recording document or instrument
for filing or recording in any jurisdiction.

          Section 6.4 Authority of Administrative Agent

          Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under
this Agreement with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this Agreement shall, as between
the Administrative Agent and the other Secured Parties, be governed by the Loan Agreement and by
such other agreements with respect thereto as may

22

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

exist from time to time among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for the Administrative
Agent and the other Secured Parties with full and valid authority so to act or refrain from acting,
and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such
authority.

     ARTICLE VII Miscellaneous

          Section 7.1 Amendments in Writing

          None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 15.1 (Amendments and Waivers) of the Loan
Agreement; provided, however, that annexes to this Agreement may be supplemented (but no existing
provisions may be modified and no Collateral may be released) through Pledge Amendments and Joinder
Agreements, in substantially the form of Annexorm of Pedge Amendment) and Annex 4 (Form of Joinder
Agreement) respectively, in each case duly executed by the Administrative Agent and each Grantor
directly affected thereby.

          Section 7.2 Notices

          All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder
shall be effected in the manner provided for in Section 12 (Notices) of the Loan Agreement;
provided, however, that any such notice, request or demand to or upon any Grantor shall be
addressed to the Borrower’s notice address set forth in such Section 12 (Notices) of the Loan
Agreement.

          Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies

          Neither the Administrative Agent nor any other Secured Party shall by any act (except by a
written instrument pursuant to Section 7.15 (Amendments in Writing)), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of
the Administrative Agent or any other Secured Party, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Administrative Agent or any other Secured Party of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that
the Administrative Agent or such other Secured Party would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and
are not exclusive of any other rights or remedies provided by law.

          Section 7.4 Successors and Assigns

          This Agreement shall be binding upon the successors and assigns of each Grantor and shall
inure to the benefit of the Administrative Agent and each other Secured Party and their successors
and assigns; provided, however, that no Grantor may assign, transfer or delegate any of its rights
or obligations under this Agreement without the prior written consent of the Administrative
Agent.

23

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

          Section 7.5 Counterparts

          This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts (including by telecopy), 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 counterparts and attached to a single counterpart so
that all signature pages are attached to the same document. Delivery of an executed counterpart by
telecopy shall be effective as delivery of a manually executed counterpart.

          Section 7.6 Severability

          Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.

          Section 7.7 Section Headings

          The Article and Section titles contained in this Agreement are, and shall be, without
substantive meaning or content of any kind whatsoever and are not part of the agreement of the
parties hereto.

          Section 7.8 Entire Agreement

          This Agreement together with the other Loan Documents represents the entire agreement of the
parties and supersedes all prior agreements and understandings relating to the subject matter
hereof.

          Section 7.9 Governing Law

          This Agreement and the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.

          Section 7.10 Additional Grantors

          If, pursuant to Section 6.14 (Formation of Subsidiaries) of the Loan Agreement, the Borrower
shall be required to cause any Subsidiary that is not a Grantor to become a Grantor hereunder, such
Subsidiary shall execute and deliver to the Administrative Agent a Joinder Agreement substantially
in the form of Annex 4 (Form of Joinder Agreement) and shall thereafter for all purposes be a party
hereto and have the same rights, benefits and obligations as a Grantor party hereto on the Closing
Date.

          Section 7.11 Release of Collateral

          (a) At the time provided in Section 16.12(a)(i) (Collateral Matters) of the Loan Agreement, the
Collateral shall be released from the Lien created hereby and this Agreement and all obligations
(other than those expressly stated to survive such termination) of

24

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the Collateral shall revert to
the Grantors. At the request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral of such Grantor held by the
Administrative Agent hereunder and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.

          (b) If the Administrative Agent shall be directed or permitted pursuant to Section
16.12(a)(ii), (iii) or (iv) (Collateral Matters) of the Loan Agreement to release any Lien
created hereby upon any Collateral (including any Collateral sold or disposed of by any Grantor
in a transaction permitted by the Loan Agreement), such Collateral shall be released from the
Lien created hereby to the extent provided under, and subject to the terms and conditions set
forth in, Section 16.12(a)(ii), (iii) or (iv) (Collateral Matters) of the Loan Agreement. In
connection therewith, the Administrative Agent, at the request and sole expense of the Borrower,
shall execute and deliver to the Borrower all releases or other documents, including, without
limitation, UCC termination statements, reasonably necessary or desirable for the release of the
Lien created hereby on such Collateral. At the request and sole expense of the Borrower, a
Grantor shall be released from its obligations hereunder in the event that all the capital stock
of such Grantor shall be so sold or disposed; provided, however, that the Borrower shall have
delivered to the Administrative Agent, at least five Business Days prior to the date of the
proposed release (or such later date as may be acceptable to the Administrative Agent), a
written request for release identifying the relevant Grantor and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower in form and substance satisfactory to
the Administrative Agent stating that such transaction is in compliance with the Loan Agreement
and the other Loan Documents.

          Section 7.12 Reinstatement

          Each Grantor further agrees that, if any payment made by any Loan Party or other Person and
applied to the Secured Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or
repaid, or the proceeds of Collateral are required to be returned by any Secured Party to such Loan
Party, its estate, trustee, receiver or any other party, including any Grantor, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, any Lien or other Collateral securing such liability shall be and remain in
full force and effect, as fully as if such payment had never been made or, if prior thereto the
Lien granted hereby or other Collateral securing such liability hereunder shall have been released
or terminated by virtue of such cancellation or surrender), such Lien or other Collateral shall be
reinstated in full force and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect any Lien or other Collateral securing the
obligations of any Grantor in respect of the amount of such payment.

          Section 7.13 Intercreditor Agreement Governs

          Notwithstanding anything herein to the contrary, the Liens and security interests granted to the
Administrative Agent, for the benefit of the Secured Parties, pursuant to this Pledge and Security
Agreement and the exercise of any right or remedy by the Administrative Agent and the other Secured
Parties hereunder are subject to the provisions of the Intercreditor Agreement. In the event of
any conflict or inconsistency between the provisions of the Intercreditor

25

 

PLEDGE AND SECURITY AGREEMENT

COLLECTIVE BRANDS FINANCE, INC.

Agreement and this Pledge and Security Agreement, the provisions of the Intercreditor Agreement
shall control.

          Section 7.14 Delivery of Collateral

          Prior to the Senior Collateral Transition Date, to the extent any Grantor is required
hereunder to deliver Collateral to the Administrative Agent for purposes of possession and control
and is unable to do so as a result of having previously delivered such Collateral to the ABL Agent
in accordance with the terms of the ABL Loan Security Agreement, such Grantor’s obligations
hereunder with respect to such delivery shall be deemed satisfied by the delivery to the ABL Agent,
acting as gratuitous bailee to the Administrative Agent.

[Signature Pages Follow]

26

 

     In witness whereof, each of the undersigned has caused this Pledge and Security
Agreement to be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	Collective Brands Finance, Inc. (f/k/a

     “Payless ShoeSource Finance, Inc.”),

     
as Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Collective Brands, Inc., (f/k/a

     “Payless ShoeSource, Inc.”), as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Collective International, LP,

     as Grantor

 	 
	 	By:  	Payless Collective GP, LLC, Managing Member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Collective Licensing International, LLC,

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Dyelights, Inc.,

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	 	Eastborough, Inc.,

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Keds LLC,

     as Grantor

 	 
	 	By:  	The Keds Corporation, its sole member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless Collective GP, LLC, 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless NYC, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless Purchasing Services, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless ShoeSource Distribution, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless ShoeSource Gold Value, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	 	Payless ShoeSource Leasing, LLC, 

     as Grantor

 	 
	 	By:  	Payless ShoeSource, Inc., a Missouri Corporation, its sole member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless ShoeSource Merchandising, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless ShoeSource Worldwide, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Payless ShoeSource, Inc., 

a Missouri corporation

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PSS Canada, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	 	PSS Delaware Company 2, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PSS Delaware Company 3, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PSS Delaware Company 4, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PSS Investment I, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PSS Investment III, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Robeez Logisitics Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Robeez US Holdings Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	 	Robeez U.S., Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	San Jose Acquisition Corp., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Saucony UK, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Saucony, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Saucony/Ecom, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Shoe Sourcing, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	Ullrich E. Porzig 	 
	 	 	Title:  	President 	 
	 
	 	Sperry Top-Sider, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	 	S R Holdings Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite International Corp., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SR/ECOM Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SRCG LLC, 

     as Grantor

 	 
	 	By:  	Stride Rite Children’s Group, Inc., its sole member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SRCG/ECOM, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SRL, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	 	SRR, Inc., 

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite Children’s Group, Inc.,

as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite International Holdings, Inc.,

as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite International LLC,

as Grantor

 	 
	 	By:  	Stride Rite International Holdings, Inc., its sole member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite Investment Corporation,

as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Stride Rite LLC,

as Grantor

 	 
	 	By:  	Stride Rite Children’s Group, Inc., its sole member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	 	Stride Rite Sourcing International, Inc.,

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	STS/ECOM, Inc.,

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	The Keds Corporation,

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Tommy Hilfiger Footwear, Inc.,

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

	 	 	 	 	 
	Accepted and Agreed

as of the date first above written:

Citicorp North America, Inc.,

as Administrative Agent

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]

 

 

ANNEX I

TO

PLEDGE AND SECURITY AGREEMENT

FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT

[see attached]

A1-1

 

ANNEX 2

TO

PLEDGE AND SECURITY AGREEMENT

FORM OF SECURTIES ACCOUNT CONTROL AGREEMENT

[see attached]

A2-1

 

ANNEX 3

TO

PLEDGE AND SECURITY AGREEMENT

          This Pledge Amendment, dated as of __________ __, 20__, is delivered pursuant to
Error! Reference source not found. (Error! Reference source not found.)
 Section 4.2(a) (Section 4.4 Pledged Collateral) of the Pledge and Security
Agreement, dated as of Error! Reference source not found. August 17, 200707, by Collective Brands Finance,
Inc. (the “Borrower”), the [undersigned Grantor and the other] Subsidiaries of the Borrower
from time to time party thereto as Grantors in favor of Citicorp North America, Inc., as agent for
the Secured Parties referred to therein (the “Pledge and Security Agreement”) and the undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge and Security Agreement and
that the Pledged Collateral listed on this Pledge Amendment shall be and become part of the
Collateral referred to in the Pledge and Security Agreement and shall secure all Secured
Obligations of the undersigned. Capitalized terms used herein but not defined herein are used
herein with the meaning given them in the Pledge and Security Agreement.

	 	 	 	 	 
	 	[Grantor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Pledged Stock

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Number of
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Shares, Units or
	Issuer	 	Class 	 	Certificate No(s).	 	Par Value	 	Interests

Pledged Debt Instruments

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Principal
	Issuer	 	Description of Debt	 	Certificate No(s).	 	Final Maturity	 	Amount

A3-1

 

Acknowledged and Agreed

as of the date first above written:

Citicorp North America, Inc.,

as Administrative Agent

	 	 	 	 	 
	 	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

A3-2

 

ANNEX 4

TO

PLEDGE AND SECURITY AGREEMENT

          This Joinder Agreement, dated as of _________ __, 20__, is delivered pursuant to
0 Error! Reference source not found. (Error! Reference source not found.) (Section 7.10 Additional Grantors) of the Pledge and Security
Agreement, dated as of Error! Reference source not found.  August 17, 200707, by Collective Brands Finance,
Inc. (the “Borrower”) and the Subsidiaries of the Borrower listed on the signature pages
thereof in favor of Citicorp North America, Inc., as agent for the Secured Parties referred to
therein (the “Pledge and Security Agreement”). Capitalized terms used herein but not defined
herein are used with the meanings given them in the Pledge and Security Agreement.

          By executing and delivering this Joinder Agreement, the undersigned, as provided in
Error! Reference source not found. (Error! Reference source not found.)
0 (Section 7.10 Additional Grantors) of the Pledge and Security
Agreement, hereby becomes a party to the Pledge and Security Agreement as a Grantor thereunder with
the same force and effect as if originally named as a Grantor therein and, without limiting the
generality of the foregoing, hereby grants to the Administrative Agent, as collateral security for
the full, prompt and complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations of the undersigned, a Lien on and security
interest in, all of its right, title and interest in, to and under the Collateral of the
undersigned and expressly assumes all obligations and liabilities of a Grantor thereunder.

          The information set forth in Annex 1-A is hereby added to the information set forth in
Schedules 1 through 7 to the Pledge and Security Agreement. By acknowledging and agreeing to this
Joinder Agreement, the undersigned hereby agrees that this Joinder Agreement may be attached to the
Pledge and Security Agreement and that the Pledged Collateral listed on Annex 1-A to this Pledge
Amendment shall be and become part of the Collateral referred to in the Pledge and Security
Agreement and shall secure all Secured Obligations of the undersigned.

          The undersigned hereby represents and warrants that each of the representations and warranties
contained in Error! Reference source not found. (Error! Reference source not found.)
 Article III (Representations and Warranties)  of the Pledge
and Security Agreement applicable to it is true and correct on and as the date hereof as if made on
and as of such date.

          In witness whereof, the undersigned has caused this Joinder Agreement to be duly
executed and delivered as of the date first above written.

	 	 	 	 	 
	 	[Additional Grantor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

A4-1

 

Acknowledged and Agreed

as of the date first above written:

[Each Grantor Pledging 

Additional Collateral]

	 	 	 	 	 
	 	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	Citicorp North America, Inc.,

as Administrative Agent

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

A4-2

 

ANNEX 5

TO

PLEDGE AND SECURITY AGREEMENT

FORM OF SHORT FORM INTELLECTUAL PROPERTY SECURITY AGREEMENT

           [Copyright] [Patent] [Trademark] Security Agreement, dated as of _________ __, 20__,
by each of the entities listed on the signature pages hereof [or that becomes a party hereto
pursuant to 0 (Section 7.10 Additional Grantors)  Error!
Reference source not found. (Error! Reference source not found.) of the Security
Agreement referred to below] (each a “Grantor” and, collectively, the “Grantors”), in favor of
Citicorp North America, Inc. (“Citi”), as agent for the Secured Parties (as defined in the
Security Agreement referred to below) (in such capacity, the “Administrative Agent”).

W i t n e s s e t h:

          Whereas, pursuant to the Term Loan Agreement, dated as of
Error! Reference source not found. August 17, 200707 (as the same may be amended, restated, supplemented or otherwise modified from time to
time, the “Loan Agreement”), among Collective Brands Finance, Inc. (the “Borrower”),
Collective Brands, Inc., the Lenders party thereto and Citi, as agent for the
Lenders, the Lenders have severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;

          Whereas, the Grantors other than the Borrower are Guarantors under the Guaranty,
whereby they have guaranteed the Obligations of the Borrower; and 

          Whereas, all the Grantors are party to a Pledge and Security Agreement of even date
herewith in favor of the Administrative Agent (the “Security Agreement”) pursuant to which
the Grantors are required to execute and deliver this [Copyright] [Patent] [Trademark] Security
Agreement;

          Now, Therefore, in consideration of the premises and to induce the Lenders and the
Administrative Agent to enter into the Loan Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the
Administrative Agent as follows:

          Section 30 Defined Terms

          Unless otherwise defined herein, terms defined in the Loan Agreement or in the Security
Agreement and used herein have the meaning given to them in the Loan Agreement or the Security
Agreement.

          Section 31 Grant of Security Interest in [Copyright] [Trademark] [Patent] Collateral

          Each Grantor, as collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of
such Grantor, hereby mortgages, pledges and hypothecates to the
Administrative Agent for the benefit of the Secured Parties, and grants to the Administrative
Agent for the benefit of the Secured Parties a lien on and security interest in, all of its right,
title and interest in, to and under the following Collateral of such Grantor (the “[Copyright]
[Patent] [Trademark] Collateral”):

          [(a) all of its Copyrights and Copyright Licenses to which it is a party, including, without
limitation, those referred to on Schedule I hereto;

A5-1

 

          (b) all extensions of the foregoing; and

          (c) all Proceeds of the foregoing, including, without limitation, any claim by Grantor against
third parties for past, present or future infringement of any Copyright or Copyright licensed under
any Copyright License.]

or

          [(a) all of its Patents and Patent Licenses to which it is a party, including, without
limitation, those referred to on Schedule I hereto;

          (b) all reissues, continuations or continuations-in-part of the foregoing; and

          (c) all Proceeds of the foregoing, including, without limitation, any claim by Grantor against
third parties for past, present or future infringement of any Patent or any Patent licensed under
any Patent License.]

or

          [(a) all of its Trademarks and Trademark Licenses to which it is a party, including, without
limitation, those referred to on Schedule I hereto;

          (b) all goodwill of the business connected with the use of, and symbolized by, each Trademark;
and

          (c) all Proceeds of the foregoing, including, without limitation, any claim by Grantor against
third parties for past, present, future (i) infringement or dilution of any Trademark or Trademark
licensed under any Trademark License or (ii) injury to the goodwill associated with any Trademark
or any Trademark licensed under any Trademark License.]

          Section 32 Security Agreement

          The security interest granted pursuant to this [Copyright] [Patent] [Trademark] Security
Agreement is granted in conjunction with the security interest granted to the Administrative Agent
pursuant to the Security Agreement and each Grantor hereby acknowledges and affirms that the rights
and remedies of the Administrative Agent with respect to the security interest in the [Copyright]
[Patent] [Trademark] Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference herein as if fully set
forth herein.

[Signature Pages Follow]

A5-2

 

          In witness whereof, each Grantor has caused this [Copyright] [Patent]
[Trademark] Security Agreement to be executed and delivered by its duly authorized offer as of the
date first set forth above.

	 	 	 	 	 
	 	[Grantor],

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Accepted and Agreed

as of the date first above written:

Citicorp North America, Inc.,

as Administrative Agent

	 	 	 	 	 
	 	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

[Acknowledgement of Grantor for [Copyright] [Patent] [Trademark] Security Agreement]

A5-3

 

Schedule I

to

[Copyright] [Patent] [Trademark] Security Agreement

[Copyright] [Patent] [Trademark] Registrations

INCLUDE ONLY U.S. REGISTERED INTELLECTUAL PROPERTY

	[A. 	 	 REGISTERED COPYRIGHTS

[Include Copyright Registration Number and Date]
	 
	B.	 	COPYRIGHT APPLICATIONS
	 
	C.	 	COPYRIGHT LICENSES]
	 
	[A. 	 	 REGISTERED PATENTS
	 
	B.	 	PATENT APPLICATIONS
	 
	C.	 	PATENT LICENSES]
	 
	[A. 	 	 REGISTERED TRADEMARKS
	 
	B.	 	TRADEMARK APPLICATIONS
	 
	C.	 	TRADEMARK LICENSES]

[Include complete legal description of agreement (name of agreement, parties and date)]

A -

 

Exhibit h

to

Term Loan Agreement

Form of intercreditor agreement

 

EXHIBIT H

Intercreditor Agreement

          This Intercreditor Agreement, dated as of August 17, 2007, is entered into among
Wells Fargo Retail Finance, LLC (“Wells Fargo”), as administrative agent and
collateral agent for the ABL Secured Parties (in such capacity, the “ABL Administrative Agent”),
Citicorp North America, Inc. (“Citi”), as administrative agent and collateral agent for
the Term Facility Secured Parties (in such capacity, the “Term Administrative Agent”),
Collective Brands Finance, Inc., a Nevada corporation, as borrower (the “Company”),
Collective Brands, Inc., a Delaware corporation, as a Guarantor (“Holdings”), and certain
other Subsidiaries of Holdings party hereto as Guarantors (together with the Company and Holdings,
the “Loan Parties”).

W i t n e s s e t h :

          Whereas, the Company, ABL Administrative Agent, certain other parties in other
capacities, and the Lenders and Issuing Lenders party thereto from time to time have entered into
that certain Amended and Restated Loan and Guaranty Agreement of even date herewith (as such
agreement may be amended, restated, supplemented, renewed or otherwise modified from time to time,
together with any other agreements pursuant to which any of the Indebtedness, commitments,
obligations, costs, expenses, fees, reimbursements, indemnities or other obligations payable or
owing thereunder may be refinanced, restructured, renewed, extended, increased, refunded or
replaced, the “ABL Credit Agreement”);

          Whereas, the Company, Term Administrative Agent, certain other parties in other
capacities, and the Lenders party thereto from time to time have entered into that certain Term
Loan Agreement of even date herewith (as such agreement may be amended, restated, supplemented,
renewed or otherwise modified from time to time, together with any other agreements pursuant to
which any of the Indebtedness, commitments, obligations, costs, expenses, fees, reimbursements,
indemnities or other obligations payable or owing thereunder may be refinanced, restructured,
renewed, extended, increased, refunded or replaced, the “Term Loan Agreement”); and

          Whereas, it is a condition to the amendment and restatement of the ABL Credit
Agreement and to the initial extensions of credit under the Term Loan Agreement that the parties
hereto execute and deliver this Agreement;

          Now, Therefore, in consideration of the premises and the covenants and agreements
contained herein, the parties hereto hereby agree as follows:

          ARTICLE VIII Definitions

          Section 8.1 Definitions

               (a) As used in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the terms defined);
provided, that terms defined in the UCC which are not otherwise defined in this Agreement are
used herein as defined in the UCC:

          “ABL Administrative Agent” shall include, in addition to the ABL Administrative Agent referred
to in the recitals hereto, any successors and assigns thereto or any acting ABL Administrative
Agent, in each case, as permitted under the ABL Credit Agreement.

 

 

          “ABL Collateral Documents” shall mean each “Collateral Document” (as such term is defined in
the ABL Credit Agreement).

          “ABL Credit Agreement” shall have the meaning set forth in the recitals to this Agreement.

          “ABL Facility Claims” shall mean (a) all ABL Facility Obligations; provided that the aggregate
principal amount of all such obligations shall not exceed the Maximum ABL Facility Amount, (b) all
extensions of credit under any Post-Petition Financing by the ABL Lenders and (c) all interest
accrued or accruing (or which would, absent the commencement of an Insolvency or Liquidation
Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding whether or
not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding.
To the extent any payment with respect to the ABL Facility Claims (whether by or on behalf of any
Loan Party, as proceeds of security, enforcement of any right of setoff or otherwise) is declared
to be fraudulent or preferential in any respect, set aside or required to be paid to a debtor in
possession, trustee, receiver or similar Person, then the obligation or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had
not occurred.

          “ABL Facility Obligations” shall mean all “Secured Obligations” (as such term is defined in
the ABL Security Agreement).

          “ABL Facility Primary Collateral” shall mean, collectively, that portion of the Collateral,
now existing or hereafter acquired by any Loan Party or in which any Loan Party now has or at any
time in the future may acquire any right, title or interest, consisting of substantially all of the
assets of each Loan Party (including, but not limited to, (i) all Accounts, (ii) all Inventory,
(iii) to the extent evidencing, governing, securing or otherwise related to the items referred to
in the preceding clauses (i) and (ii), all (a) General Intangibles (other than Intellectual
Property), (b) Chattel Paper, (c) Instruments and (d) Documents, (iv) all Payment Intangibles
(including corporate tax refunds), other than any Payment Intangibles in respect of or otherwise
related to Term Facility Primary Collateral, (v) all payments received from the Loan Parties’
credit card clearinghouses and processors or otherwise in respect of all credit card charges for
sales of Inventory by the Loan Parties, (vi) all Deposit Accounts, Securities Accounts and
Commodity Accounts and any cash or other assets in any such accounts (other than any Asset Sales
Proceeds Account and any cash or other asset in any such Asset Sales Proceeds Account), (vii) all
books and records related to any of the foregoing, and (viii) all Products and Proceeds of any and
all of the foregoing in whatever form received, including proceeds of insurance policies related to
Inventory of any Loan Party and business interruption insurance, in each case, that may at any time
be or become subject to a security interest or Lien in favor of the ABL Administrative Agent for
the benefit of the ABL Secured Parties to secure the ABL Facility Obligations.

          “ABL Lenders” shall mean “Lenders” (as such term is defined in the ABL Credit Agreement).

          “ABL Loan Documents” shall mean each “Loan Document” (as such term is defined in the ABL
Credit Agreement).

2

 

          “ABL Security Agreement” shall mean the “Pledge and Security Agreement” (as such term is
defined in the ABL Credit Agreement).

          “ABL Permitted Access Right” shall have the meaning assigned to such term in Section
3.6 of this Agreement.

          “ABL Secured Parties” shall mean, collectively, the “Lenders”, “Agent” and “Issuing Lenders”
(as each such term is defined in the ABL Credit Agreement).

          “Asset Sales Proceeds Account” means one or more Deposit Accounts or Securities Accounts, over
which the Term Administrative Agent has control and holding only the Proceeds of any sale or
disposition of any Term Facility Primary Collateral and any Proceeds thereof.

          “Agent” shall mean each of the Senior Agent and the Junior Agent.

          “Agreement” shall mean this Intercreditor Agreement, as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof.

          “Bankruptcy Code” shall mean title 11 of the United States Code.

          “Bankruptcy Law” shall mean the Bankruptcy Code, or any similar federal, state or foreign law
for the relief of debtors or any arrangement, reorganization, insolvency, moratorium, assignment
for the benefit of creditors, any other marshalling of the assets and liabilities of the Company or
any other Loan Party or any similar law relating to or affecting the enforcement of creditors’
rights generally.

          “Capital Lease” means, with respect to any Person, any lease of, or other arrangement
conveying the right to use, property by such Person as lessee that would be accounted for as a
capital lease on a balance sheet of such Person prepared in conformity with GAAP.

          “Collateral” shall mean, collectively, the ABL Facility Primary Collateral and the Term
Facility Primary Collateral.

          “Collateral Documents” shall mean this Agreement, the Senior Documents, the Junior Documents
and all other security agreements, pledge agreements, mortgages, guaranties and other documents
executed and/or delivered by the Loan Parties and accepted by either Agent.

          “Collateral Enforcement Action” means, with respect to any Secured Party, for such Secured Party,
whether or not in consultation with any other Secured Party, to exercise, seek to exercise, join
any Person in exercising or institute or maintain or participate in any action or proceeding with
respect to, any rights or remedies with respect to any Collateral, including (a) instituting or
maintaining, or joining any Person in instituting or maintaining, any enforcement, contest,
protest, attachment, collection, execution, levy or foreclosure action or proceeding with respect
to any Collateral, whether under any Loan Document or otherwise, (b) exercising any right of
set-off with respect to any Loan Party, (c) exercising any right or remedy under any deposit
account control agreement, securities account control agreement, landlord waiver, bailee’s letter
or similar agreement or arrangement or (d) causing (or, after the occurrence and

3

 

during the continuance of any Event of Default, consenting to or requesting) any sale or other
disposition of any Collateral.

          “Commitments” shall mean, collectively, the “Revolver Commitments” (as such term is defined in
the ABL Credit Agreement) and the “Term Loan Commitments” (as such term is defined in the Term Loan
Agreement).

          “Credit Agreements” shall mean the ABL Credit Agreement and the Term Loan Agreement.

          “Events of Default” means events that constitute “Events of Default” within the meaning of the
Term Loan Agreement or the ABL Credit Agreement, as applicable.

          “Governmental Authority” shall mean any nation, sovereign or government, any state or other
political subdivision thereof and any entity or authority exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government, including any
central bank or stock exchange.

          “Indebtedness” means and includes all “Indebtedness” within the meaning of the Term Loan
Agreement or the ABL Credit Agreement, as applicable.

          “Insolvency or Liquidation Proceeding” shall mean, collectively, (a) any voluntary or
involuntary case or proceeding under the Bankruptcy Law with respect to the Company or any other
Loan Party, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding
with respect to the Company or any other Loan Party or with respect to any of their respective
assets, (c) any liquidation, dissolution, reorganization or winding up of the Company or any Loan
Party, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy
(except as permitted by each of Section 8.7 in the Term Loan Agreement and Section 7.3 of the ABL
Credit Agreement), and (d) any assignment for the benefit of creditors or any other marshaling of
assets and liabilities of the Company or any other Loan Party.

          “Intellectual Property” means all “Intellectual Property” as defined in the ABL Security
Agreement and the Term Loan Security Agreement.

          “Junior Agent” shall mean (a) with respect to any ABL Facility Claim or any ABL Facility
Primary Collateral, the Term Administrative Agent and (b) with respect to any Term Loan Claim or
any Term Facility Primary Collateral, the ABL Administrative Agent.

          “Junior Claims” shall mean (a) with respect to any ABL Facility Primary Collateral, all Term
Loan Claims and (b) with respect to any Term Facility Primary Collateral, all ABL Facility Claims.

          “Junior Collateral” shall mean (a) with respect to any Junior Secured Party, any Collateral on
which it has a Senior Lien and (b) with respect to any Senior Secured Party, any Collateral on
which it has a Junior Lien.

4

 

          “Junior Documents” shall mean, collectively, with respect to any Junior Claim, any provision
pertaining to such Junior Claim in any Loan Document or any other document, instrument or
certificate evidencing or delivered in connection with such Junior Claim.

          “Junior Liens” shall mean (a) with respect to any ABL Facility Primary Collateral, all Liens
securing the Term Loan Claims and (b) with respect to any Term Facility Primary Collateral, all
Liens securing the ABL Facility Claims.

          “Junior Secured Parties” shall mean (a) with respect to the ABL Facility Primary Collateral,
all Term Facility Secured Parties and (b) with respect to the Term Facility Primary Collateral, all
ABL Secured Parties.

          “Lenders” shall mean, collectively, the ABL Lenders and the Term Lenders.

          “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, lien (statutory or other), security interest or preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
intended to assure payment of any Indebtedness or the performance of any other obligation,
including any conditional sale or other title retention agreement, the interest of a lessor under a
Capital Lease and any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC or comparable law of any
jurisdiction naming the owner of the asset to which such Lien relates as debtor.

          “Loan Documents” shall mean, collectively, the ABL Loan Documents and the Term Loan Documents.

          “Maximum ABL Facility Amount” shall mean the principal amount of $400,000,000 minus the
principal amount of any mandatory repayment of the ABL Facility Claims made after the date hereof
which is accompanied by a permanent reduction (other than a voluntary reduction) in the commitments
thereunder equal to the amount of such repayment (specifically excluding, however, any such
repayments and commitment reductions occurring in connection with any Refinancing permitted by the
terms hereof).

          “Maximum Term Loan Facility Amount” shall mean the principal amount of $925,000,000 minus the
amount of any scheduled, mandatory or voluntary repayments made after the date hereof (specifically
excluding, however, any such repayments occurring in connection with any Refinancing permitted by
the terms hereof).

          “Net Cash Proceeds” means and includes all proceeds that constitute “Net Cash Proceeds” within
the meaning of the Term Loan Agreement or the ABL Credit Agreement, as applicable.

          “Notice of Actionable Default” shall mean a written certification identified as a “Notice of
Actionable Default,” substantially in the form attached hereto as Exhibit A or such other form
reasonably satisfactory to the Agents, from an Agent addressed to the other Agent certifying that
an Event of Default has occurred and is continuing under the applicable Credit Agreement and that
any required notice thereof has been given and any grace periods provided for therein have
expired.

5

 

          “pay in full,” “paid in full” or “payment in full” shall mean with respect to any Secured
Claims, the payment in full in cash of the principal of, accrued (but unpaid) interest, fees and
premium, if any, on all such Secured Claims and, with respect to letters of credit outstanding
thereunder, delivery of cash collateral or backstop letters of credit in respect thereof in
compliance with the relevant Collateral Documents, in each case, after or concurrently with
termination of all Commitments thereunder and payment in full in cash of any other such Secured
Claims (other than unripened or contingent indemnity obligations under the relevant ABL Loan
Documents for which no demand has been made) that are due and payable at or prior to the time such
principal and interest are paid.

          “Person” shall mean an individual, partnership, corporation (including a business trust),
joint stock company, estate, trust, limited liability company, unincorporated association, joint
venture or other entity or a Governmental Authority.

          “Post-Petition Financing” shall mean any financing obtained by any Loan Party during any
Insolvency or Liquidation Proceeding or otherwise pursuant to any Bankruptcy Law on terms and
conditions acceptable to the Senior Agent, including any such financing obtained by any Loan Party
under Section 364 of the Bankruptcy Code or consisting of any arrangement for use of cash
collateral held in respect of any ABL Facility Obligation or Term Loan Obligation under Section 363
of the Bankruptcy Code, in each case or any similar provision of any Bankruptcy Law, including,
without limitation any such financing that Refinances all or any portion of the ABL Facility
Obligations or the Term loan Obligations, as the case may be; provided that the aggregate principal
amount of all obligations in respect of Post-Petition Financing provided by (i) the Senior Agent or
the Senior Secured Parties or (ii) a third party consented to by the Senior Agent or the Senior
Secured Parties, in either case pursuant to Section 5.3, shall not exceed the sum of (A)
$50,000,000 and (B) the Maximum ABL Facility Amount, if the Senior Agent is the ABL Administrative
Agent, or the Maximum Term Facility Amount, if the Senior Agent is the Term Administrative Agent.

          “Refinance” shall mean, in respect of any indebtedness, to refinance, extend, renew, defease,
amend, amend and restate, modify, supplement, restructure, replace, refund or repay, or to issue
other indebtedness, in exchange or replacement for, such indebtedness in whole or in part; provided
that the Refinancing indebtedness is secured by Liens in respect of the same assets and properties
that secured the Refinanced indebtedness prior to such Refinancing. “Refinanced” and “Refinancing”
shall have correlative meanings.

          “Required Lenders” shall mean, collectively, the Required ABL Lenders and the Required Term
Lenders.

          “Required ABL Lenders” shall mean “Required Lenders” (as such term is defined in the ABL
Credit Agreement).

          “Required Term Lenders” shall mean “Requisite Lenders” (as such term is defined in the Term
Loan Agreement).

          “Revolving Loans” shall have the meaning given to such term in the ABL Credit Agreement.

          “Secured Claims” shall mean, collectively, the ABL Facility Claims and the Term Loan
Claims.

6

 

          “Secured Parties” shall mean, collectively, the Senior Secured Parties and the Junior Secured
Parties.

          “Senior Agent” shall mean (a) with respect to any ABL Facility Primary Collateral, the ABL
Administrative Agent and (b) with respect to any Term Facility Primary Collateral, the Term
Administrative Agent.

          “Senior Claims” shall mean (a) with respect to any ABL Facility Primary Collateral, all ABL
Facility Claims and (b) with respect to any Term Facility Primary Collateral, all Term Loan Claims.
“Senior Claims” shall include all interest accrued or accruing (or which would, absent the
commencement of an Insolvency or Liquidation Proceeding, accrue) after the commencement of an
Insolvency or Liquidation Proceeding in accordance with and at the rate specified in the Senior
Documents whether or not the claim for such interest is allowed as a claim in such Insolvency or
Liquidation Proceeding. To the extent any payment with respect to the Senior Claims (whether by or
on behalf of any Loan Party, as proceeds of security, enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential in any respect, set aside or required to be
paid to a debtor in possession, trustee, receiver or similar Person, then the obligation or part
thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.

          “Senior Collateral” shall mean (a) with respect to any Junior Secured Party, any Collateral on
which it has a Junior Lien and (b) with respect to any Senior Secured Party, any Collateral on
which it has a Senior Lien.

          “Senior Collateral Transition Date” shall mean the earlier of (a) the date on which all the
Senior Claims shall have been paid in full and (b) the date on which all Collateral shall have been
released from the Liens created under the Senior Documents.

          “Senior Documents” shall mean, collectively, with respect to any Senior Claim, any provision
pertaining to such Senior Claim in any Loan Document or any other document, instrument or
certificate evidencing or delivered in connection with such Senior Claim.

          “Senior Liens” shall mean (a) with respect to the ABL Facility Primary Collateral, all Liens
securing the ABL Facility Claims and (b) with respect to the Term Facility Primary Collateral, all
Liens securing the Term Loan Claims.

          “Senior Secured Parties” shall mean (a) with respect to the ABL Facility Primary Collateral,
all ABL Secured Parties and (b) with respect to the Term Facility Primary Collateral, all Term
Facility Secured Parties.

          “Subsidiary” shall mean, with respect to any Person, any corporation, partnership, limited
liability company or other business entity of which an aggregate of 50% or more of the outstanding
Voting Stock is, at the time, directly or indirectly, owned or controlled by such Person or one or
more Subsidiaries of such Person.

          “Term Administrative Agent” shall include, in addition to the Term Administrative Agent
referred to in the recitals hereto, any successors and assigns thereto or any acting Term
Administrative Agent, in each case, as permitted under the Term Loan Agreement.

7

 

          “Term Facility Primary Collateral” shall mean, collectively, that portion of the Collateral,
now existing or hereafter acquired by any Loan Party or in which any Loan Party now has or at any
time in the future may acquire any right, title or interest, consisting of (i) all Pledged
Collateral (as defined in the Term Loan Security Agreement), (ii) other than the ABL Facility
Primary Collateral and any Excluded Assets (as defined in the Term Loan Agreement), all other
assets of any Loan Party (subject to the ABL Administrative Agent’s rights to use any Intellectual
Property in connection with the liquidation of any Inventory for the benefit of the ABL Secured
Parties) and (iii) all Proceeds and products of any of the items or types of assets described in
clauses (i) through (iii) above, in each case, that may at any time be or become subject to a
security interest or Lien in favor of the Term Administrative Agent for the benefit of the Term
Facility Secured Parties to secure the Term Loan Obligations.

          “Term Facility Secured Parties” shall mean the “Term Lenders” and “Agents” (as each such term
is defined in the Term Loan Agreement).

          “Term Lenders” shall have the meaning given to such term in the Term Loan Agreement).

          “Term Loan Claims” shall mean (a) all Term Loan Obligations; provided that the aggregate
principal amount of all such obligations shall not exceed the Maximum Term Facility Amount and (b)
all extensions of credit under any Post-Petition Financing by the Term Lenders and (c) all interest
accrued or accruing (or which would, absent the commencement of an Insolvency or Liquidation
Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding whether or
not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding.
To the extent any payment with respect to the Term Loan Claims (whether by or on behalf of any
Loan Party, as proceeds of security, enforcement of any right of setoff or otherwise) is declared
to be fraudulent or preferential in any respect, set aside or required to be paid to a debtor in
possession, trustee, receiver or similar Person, then the obligation or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had
not occurred.

          “Term Loan Agreement” shall have the meaning set forth in the recitals to this Agreement.

          “Term Loan Collateral Documents” shall mean “Collateral Documents” (as such term is defined in
the Term Loan Agreement).

          “Term Loan Documents” shall mean each “Loan Document” (as such term is defined in the Term
Loan Agreement).

          “Term Loan Obligations” shall mean “Obligations” (as such term is defined in the Term Loan
Security Agreement).

          “Term Loan Security Agreement” shall have the meaning given to such term in the Term Loan
Agreement.

          “Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code of the applicable
jurisdiction, as amended.

8

 

          “Voting Stock” shall mean 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 happening of any contingency).

          1.2 Certain Other Terms

          (a) The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms refer to this
Agreement as a whole and not to any particular Article, Section, subsection or clause in this
Agreement.

          (b) References herein to an Annex, Schedule, Article, Section, subsection or clause, unless
specifically stated otherwise, refer to the appropriate Annex or Schedule to, or Article,
Section, subsection or clause in this Agreement.

          (c) Where the context requires, provisions relating to any Collateral, when used in
relation to any Loan Party, shall refer to such Loan Party’s Collateral or any relevant part
thereof.

          (d) Any reference in this Agreement to a Loan Document shall include all appendices,
exhibits and schedules thereto, and, unless specifically stated otherwise, all amendments,
restatements, supplements or other modifications thereto, and as the same may be in effect at
any time such reference becomes operative.

          (e) The term “including” means “including, without limitation” except when used in the
computation of time periods.

          (f) References in this Agreement to any statute shall be to such statute as amended or
modified and in effect from time to time.

     Section 2.  Priority of Liens

     2.1 Lien Subordination. Notwithstanding the date, manner or order of grant, attachment or
perfection of any Junior Lien in respect of any Collateral or of any Senior Lien in respect of
any Collateral and notwithstanding any provision of the UCC, any applicable law, any Collateral
Document, any alleged or actual defect or deficiency in any of the foregoing or any other
circumstance whatsoever, the Junior Agent, on behalf of each Junior Secured Party, in respect of
such Collateral hereby agrees that:

          (a) any Senior Lien in respect of such Collateral, regardless of how acquired, whether by
grant, statute, operation of law, subrogation or otherwise, shall be and shall remain senior and
prior to any Junior Lien in respect of such Collateral (whether or not such Senior Lien is
subordinated to any Lien securing any other obligation);

          (b) any Junior Lien in respect of such Collateral, regardless of how acquired, whether by
grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in
all respects to any Senior Lien in respect of such Collateral until all Senior Claims are paid
in full;

9

 

          (c) the aggregate amount of the Senior Claims may, subject to the limitations set forth in
this Agreement, the Term Loan Agreement and the ABL Credit Agreement, be increased;

          (d) a portion of the Senior Claims consists or may consist of indebtedness that is
revolving in nature, and the amount thereof that may be outstanding at any time or from time to
time may be increased or reduced and subsequently reborrowed; and

          (e) the Senior Claims may be increased, extended, renewed, or otherwise amended or modified
from time to time up to the Maximum ABL Facility Amount or the Maximum Term Loan Facility
Amount, as applicable, all without affecting the subordination of the Junior Liens hereunder or
the provisions of this Agreement defining the relative rights of the ABL Secured Parties and the
Term Facility Secured Parties.

     2.2 Prohibition on Contesting Liens. In respect of any Collateral, the Junior Agent, on
behalf of each Junior Secured Party, in respect of such Collateral agrees that it shall not, and
hereby waives any right to:

     (a) contest, or support any other Person in contesting, in any proceeding (including any
Insolvency or Liquidation Proceeding), the priority, validity or enforceability of any Senior Lien
on such Collateral; or

     (b) demand, request, plead or otherwise assert or claim the benefit of any marshalling,
appraisal, valuation or similar right which it may have in respect of such Collateral or the Senior
Liens on such Collateral, except to the extent that such rights are expressly granted in this
Agreement.

Notwithstanding the foregoing, the Junior Agent may, subject to Sections 8.1 and 8.2, take all such
actions as it shall deem necessary to perfect or continue the perfection of its Junior Liens

     2.3 No Additional Liens.

     (a) No Loan Party shall grant, or permit any of its Subsidiaries to grant, any new
Lien to any Agent on behalf of any of the Secured Parties on any of its property unless such Loan
Party or, as the case may be, such Subsidiary has granted, through documentation in form and
substance satisfactory to the other Agent, a Lien on such property in favor of each Agent for the
benefit of the other Secured Parties as security for those Secured Parties’ Secured Claims,
respectively, with the priorities set forth herein.

     (b) To the extent any Collateral shall be subject to any Lien securing any Secured
Claim and such Collateral is not subject to a Lien securing all of the other Secured Claims to the
same extent (after giving effect to transactions scheduled to occur concurrently with the grant of
such Lien), then the Agent for such Secured Claims, shall, upon demand by and at the option of any
other Agent, either (i) release such Lien, (ii) ensure that the Loan Parties grant a Lien on such
Collateral in favor of the other Agent, for the benefit of the other Secured Parties, or (iii)
assign such Lien in such Collateral to the other Agent for the benefit of the other Secured
Parties. Prior to such assignment or release, the Agent to whom such Lien was granted shall act as
sub-agent of the other Agent for the sole purpose of perfecting the Lien on such Collateral and
each Agent shall thereby be deemed to have a Lien on such Collateral for all purposes, with the
priorities set forth herein.

10

 

          2.4 Separate Liens. Each of the parties hereto acknowledges and agrees that (i) the grants of
Liens pursuant to the Collateral Documents constitute separate and distinct grants of Liens and
(ii) because of, among other things, their differing rights in the Collateral, the Junior Claims in
respect of any Collateral are fundamentally different from the Senior Claims in respect of such
Collateral, and the Junior Claims and Senior Claims in respect of any Collateral must be separately
classified in any Insolvency or Liquidity Proceeding. To further effectuate the intent of the
parties as provided in the immediately preceding sentence, if it is held that, in respect of any
Collateral, the Junior Claims and the Senior Claims in respect of such Collateral constitute only
one secured claim (rather than separate classes of senior and junior secured claims), then the
Junior Secured Parties hereby acknowledge and agree that all distributions shall be made as if
there were separate classes of senior and junior secured claims against the Loan Parties as set
forth above (with the effect that, to the extent that the aggregate value of the Senior Collateral
is sufficient (for this purpose ignoring all claims held by the Junior Secured Parties), the Senior
Secured Parties shall be entitled to receive, in addition to amounts distributed to them in respect
of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition
interest before any distribution is made in respect of the claims held by the Junior Secured
Parties with respect to the Senior Collateral, with the Junior Secured Parties hereby acknowledging
and agreeing to turn over to the Senior Secured Parties amounts otherwise received or receivable by
them to the extent necessary to effectuate the intent of this sentence, even if such turnover has
the effect of reducing the claim or recovery of the Junior Secured Parties).

          2.5 Delivery of Collateral. Notwithstanding the foregoing, each Agent on behalf of the
applicable Secured Parties agrees that, after the Senior Collateral Transition Date, the Senior
Agent shall deliver to the Junior Agent any Senior Collateral and proceeds of such Collateral held
by it in the same form as received, with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct, to be applied by the Junior Agent in such order as specified in
the Junior Documents. The Senior Agent shall provide the Junior Agent and the Company with notice
of a pending Senior Collateral Transition Date within 5 Business Days of the Senior Agent becoming
aware of the pendency of such date in order that the Junior Agent may make the necessary
preparations for the transfer of the Collateral.

          2.6 Refinancing. The ABL Facility Obligations and the Term Loan Obligations may be Refinanced,
in whole or in part, in each case, without notice to, or the consent (except to the extent a
consent is required to permit the Refinancing transaction under any ABL Loan Document or Term
Loan Document) of the ABL Administrative Agent, the ABL Secured Parties, the Term
Administrative Agent or the Term Facility Secured Parties, as the case may be, all without
affecting the Lien priorities provided for herein or the other provisions hereof, provided,
however, that the holders of such Refinancing indebtedness (or an authorized agent or trustee
on their behalf) bind themselves in writing to the terms of this Agreement pursuant to such
documents or agreements (including amendments or supplements to this Agreement) as the ABL
Administrative Agent or the Term Administrative Agent, as the case may be, shall reasonably
request and in form and substance reasonably acceptable to the ABL Administrative Agent or the
Term Administrative Agent, as the case may be, and any such Refinancing transaction shall be in
accordance with the provisions of both the ABL Loan Documents and the Term Loan Documents.

11

 

          Section 3.  Exercise of Remedies

          3.1 Remedies.

          (a) Prior to the payment in full of the Senior Claims in respect of any Collateral, whether or
not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, with
respect to such Collateral:

          (i) no Junior Secured Party shall (or shall direct the Junior Agent to) (A) take any
Collateral Enforcement Action, (B) object to any Collateral Enforcement Action brought by
the Senior Agent or any Senior Secured Party or any other exercise of any rights and
remedies relating to such Collateral under the Senior Documents or otherwise, or (C) object
to the forbearance by the Senior Secured Parties from bringing or pursuing any Collateral
Enforcement Action; and

          (ii) the Senior Agent, on behalf of the Senior Secured Parties, shall have the
exclusive right to take any Collateral Enforcement Action without any consultation with, or
the consent of, any Junior Secured Party.

     (b) In exercising rights and remedies with respect to any Senior Collateral, the
Senior Agent, on behalf of the Senior Secured Parties, in respect of such Collateral may
enforce the provisions of the Senior Documents and exercise remedies thereunder, all in
such order and in such manner as they may determine in the exercise of their sole
discretion. Such exercise and enforcement shall include, without limitation, the rights of
an agent appointed by them to sell or otherwise dispose of such Collateral upon
foreclosure, to incur expenses in connection with such sale or disposition, and to exercise
all the rights and remedies of a secured lender under the UCC of any applicable
jurisdiction and of a secured creditor under any Bankruptcy Law.

     (c) The Junior Agent, on behalf of each Junior Secured Party, in respect of any Senior
Collateral agrees that, prior to the payment in full of the Senior Claims in respect of
such Collateral, it will not take or receive any such Collateral or any proceeds of such
Collateral in connection with the exercise of any Collateral Enforcement Action or in
connection with any distribution made in respect of such Collateral in any Insolvency or
Liquidation Proceeding. Without limiting the generality of the foregoing, prior to the
payment in full of the Senior Claims in respect of any Collateral, the sole right following
a Collateral Enforcement Action of the Junior Agent and the Junior Secured Parties with
respect to such Collateral shall be the right to receive a share of the proceeds of such
Collateral Enforcement Action pursuant to Section 4.2.

     (d) The Junior Agent, on behalf of each Junior Secured Party, in respect of any Senior
Collateral (i) agrees that neither it nor any Junior Secured Party will take any action that would
hinder any exercise of remedies undertaken by any Senior Secured Party in respect of such
Collateral under the Collateral Documents, including any sale, lease, exchange, transfer or other
disposition of such Collateral pursuant to a Collateral Enforcement Action and (ii) hereby waives
any and all rights it or any Junior Secured Party may have as a junior creditor to object to the
manner in which any Senior Secured Party may seek to enforce or collect the Senior Claims or the
Liens granted in any of such Collateral.

12

 

          3.2 Exercise of Remedies as Unsecured Creditors. Notwithstanding anything to the contrary in
this Agreement, each Junior Secured Party may exercise its rights and remedies as an unsecured
creditor against the Loan Parties in accordance with the terms of the Junior Documents and
applicable law. In the event any Junior Secured Party in respect of any Collateral becomes a
judgment lien creditor in respect of such Collateral as a result of its enforcement of its rights
as an unsecured creditor, such judgment lien shall be subordinated to any Lien on such Collateral
securing any Senior Claim in respect of such Collateral on the same basis and to the same extent as
the other Liens on such Collateral securing the Junior Claims are subordinated to those securing
the Senior Claims under this Agreement. Nothing in this Agreement modifies any rights or remedies
which any Senior Secured Party may have with respect to any Collateral.

          3.3 Default Notices. Each Agent shall deliver a Notice of Actionable Default to the other
Agent promptly, but in any event no later than 3 Business Days, after the occurrence thereof. From
and after the issuance or receipt by any Agent of any Notice of Actionable Default and prior to the
withdrawal of all pending Notices of Actionable Default, each Agent shall give to the other Agent,
concurrently with any such notice given to any Loan Party, a copy of any written notice by such
Agent (a) demanding any payment or (b) stating such Agent’s intention to exercise any of its
enforcement rights or remedies, including written notice pertaining to any Collateral Enforcement
Action (subject to the provisions of this Agreement) or other judicial or non-judicial remedy in
respect thereof to the extent permitted hereunder, and any legal process served or filed in
connection therewith; provided, however, that the failure of any Agent to give notice as required
hereby shall not affect the rights of any Agent or any Secured Party, or the relative priorities of
the Liens set forth in this Agreement or the validity or effectiveness of any such notice as
against any Loan Party.

          3.4 Actions in Foreclosure. At any time, including during an Insolvency or Liquidation
Proceeding of any Loan Party, Section 3.1 shall not be construed to in any way limit or impair the
right of: (a) any Secured Party to bid for or purchase Collateral at any private or judicial
foreclosure upon such Collateral initiated by any Senior Secured Party, (b) any Junior Secured
Party to join (but not control) any foreclosure or other judicial lien enforcement proceeding with
respect to the Collateral initiated by the Senior Agent, so long as it does not delay or interfere
with the exercise by the Senior Agent of its rights as provided in this Agreement and (c) any
Junior Secured Party’s right to receive any remaining proceeds of Collateral pursuant to Section
4.1 after satisfaction and payment in full of all Senior Claims and the irrevocable termination of
the Senior Documents.

          3.5 Sharing of Information and Access. In the event that any of the ABL Administrative Agent or
any ABL Secured Party shall, in the exercise of its rights under the ABL Collateral Documents or
otherwise, receive possession or control of any books and records of any Loan Party which contain
information identifying or pertaining to the Term Facility Primary Collateral, such party shall,
upon request from the Term Administrative Agent and as promptly as practicable thereafter, either
make available to the Term Administrative Agent such books and records for inspection and
duplication or provide to the Term Administrative Agent copies thereof. In the event that any of
the Term Administrative Agent or any Term Facility Secured Party shall, in the exercise of its
rights under the Term Loan Collateral Documents or otherwise, receive possession or control of any
books and records of any Loan Party which contain information identifying or pertaining to any of
the ABL Facility Primary Collateral, such party shall, upon request from the ABL Administrative
Agent and as promptly as practicable thereafter,

13

 

either make available to the ABL Administrative Agent such books and records for inspection
and duplication or provide the ABL Administrative Agent copies thereof.

          3.6 Inspection Rights and Insurance.

          (a) Without limiting any rights the ABL Administrative Agent or any other ABL Secured Party
may otherwise have under applicable law or by agreement, the ABL Administrative Agent, the ABL
Secured Parties and any representatives designated by or acting with the consent of any such party
may, at any time and whether or not the Term Administrative Agent or any other Term Facility
Secured Party has commenced and is continuing to exercise any of its rights or remedies under the
Term Loan Collateral Documents or otherwise (the “ABL Permitted Access Right”), (i) during normal
business hours on any Business Day, access and dispose of ABL Facility Primary Collateral that (A)
is stored or located in or on, (B) has become an accession with respect to (within the meaning of
Section 9-335 of the UCC), or (C) has been commingled with (within the meaning of Section 9-336 of
the UCC), Term Facility Primary Collateral and (ii) in the event of any liquidation or other
disposition of the ABL Facility Primary Collateral (or any other exercise of rights or remedies,
under the ABL Collateral Documents or otherwise, by the ABL Administrative Agent or any ABL Secured
Party or any representatives designated by or acting with the consent of any such party) or in
connection with any disposition during any Insolvency or Liquidation Proceeding, use the Term
Facility Primary Collateral (including without limitation, Intellectual Property, Equipment, owned
and leased Real Property and any general intangibles relating to such Equipment or Real Property)
(A) in the case of Term Facility Primary Collateral other than Intellectual Property, until the
date that is 180 days after the commencement of such liquidation of the ABL Facility Primary
Collateral or any exercise of rights or remedies as described above, as the case may be, and (B) in
the case of Term Facility Primary Collateral that is Intellectual Property, until the liquidation
of such ABL Facility Primary Collateral is completed, non-exclusively, royalty free and without
other costs, expenses or charges, in the case of each of (i) and (ii), (x) for the limited purposes
of assembling, inspecting, copying or downloading information stored on, taking actions to perfect
its Lien on, completing a production run of inventory involving, taking possession of, moving,
preparing and advertising for sale, selling, liquidating (by public auction, private sale or a
“store closing”, “going out of business” or similar sale, whether in bulk, in lots or to customers
in the ordinary course of business, which sale may include augmented inventory of the same type
sold in the Loan Parties’ business), storing or otherwise dealing with, or to exercise any rights
or remedies with respect to (including to protect such rights and remedies), the ABL Facility
Primary Collateral and (y) without notice to, the involvement of or interference by any Term Loan
Secured Party or liability to any Term Loan Secured Party. In the event that the ABL
Administrative Agent or any ABL Secured Party has commenced and is continuing to exercise any of
its rights or remedies with respect to any ABL Facility Primary Collateral, the Term Administrative
Agent may not sell, assign or otherwise transfer the related Term Facility Primary Collateral prior
to the expiration of the 180-day period commencing on the date such party begins to exercise its
rights or remedies as described herein, unless the purchaser, assignee or transferee thereof agrees
in writing to be bound by the provisions of this Section 3.6.

          (b) If any stay or other order that prohibits the ABL Administrative Agent and other ABL Secured
Parties from commencing and continuing to exercise any of their rights or remedies with respect to
ABL Facility Primary Collateral has been entered by a court of competent jurisdiction, such 180-day
period shall be tolled during the pendency of any such stay or other order. The ABL Administrative
Agent and the ABL Secured Parties shall not be obligated to pay any amounts to the Term
Administrative Agent or the Term Facility Secured

14

 

Parties (or any Person claiming by, through or under the Term Facility Secured Parties, including
any purchaser of the Term Facility Primary Collateral) or to the Loan Parties, for or in respect of
the use by the ABL Administrative Agent or the ABL Secured Parties of the Term Facility Primary
Collateral in accordance with this Section 3.6 and none of the ABL Administrative Agent or any ABL
Secured Party shall be obligated to secure, protect, insure or repair any such Term Facility
Primary Collateral (other than for damages caused solely by the ABL Administrative Agent, the ABL
Secured Parties or their respective employees, agents and representatives).

          (c) The Term Administrative Agent and the other Term Facility Secured Parties shall use
commercially reasonable efforts to not hinder or obstruct the ABL Administrative Agent and the
other ABL Secured Parties from exercising the ABL Permitted Access Right.

          (d) Subject to the terms hereof, the Term Administrative Agent may advertise and conduct
public auctions or private sales of the Term Facility Primary Collateral without notice (except as
required herein or by applicable law) to, the involvement of or interference by any ABL Secured
Party or liability to any ABL Secured Party as long as, in the case of an actual sale, the
respective purchaser assumes and agrees to the obligations of the Term Administrative Agent and the
Term Facility Secured Parties under this Section 3.6.

     Section 4. Application of Payments; Subrogation

     4.1 Optional and Scheduled Payments. Except as set forth in Section 4.2 and Section 4.4,
prior to payment in full of all Senior Claims, (i) the Senior Secured Parties may receive and
retain all payments in respect of any Senior Claim (including from Junior Collateral) and (ii) the
Junior Secured Parties may receive and retain all payments in respect of any Junior Claim
(including from Senior Collateral) unless such payments are from Senior Collateral or proceeds of
Senior Collateral received as a result of any Collateral Enforcement Action, a distribution of
proceeds of Senior Collateral in an Insolvency or Liquidation Proceeding or any other action taken
in contravention of this Agreement.

     4.2 Insurance and other Net Cash Proceeds. Notwithstanding the foregoing Section 4.1 but
subject to Section 4.3, all proceeds of any insurance policy covering the Senior Collateral (but
only to the extent of such coverage), awards granted in any condemnation or similar proceeding
affecting the Senior Collateral and all other Net Cash Proceeds of Senior Collateral received by
any Secured Party at any time shall be applied first to the extent provided in the Senior Documents
(taking into account any reinvestment provision therein) and then, if applicable, to the extent
provided in the Junior Documents.

     4.3 Application of Proceeds. Prior to the payment in full of the Senior Claims, any Senior
Collateral or proceeds of Senior Collateral received by the Senior Agent or any Senior Secured
Party in connection with any Collateral Enforcement Action, any distribution of proceeds of Senior
Collateral in an Insolvency or Liquidation Proceeding or any other payment required to be applied
as set forth in this section pursuant to Section 4.4 shall be applied first, to repay the Senior
Claims in the order set forth in the Senior Documents until such obligations are paid in full, and
then to repay the Junior Claims in the order set forth in the Junior Documents until such
obligations are paid in full.

15

 

     4.4 Payment Over. To the extent received by any Junior Secured Party prior to the payment in
full of all Senior Claims, all Senior Collateral or proceeds of Senior Collateral (including
proceeds of any insurance policy covering Senior Collateral) received in connection with any
Collateral Enforcement Action, as a distribution of proceeds of Senior Collateral in any Insolvency
or Liquidation Proceeding or in violation of any provision of this Agreement, including Section
4.1(ii) and 3.2, shall be segregated and held in trust and forthwith paid over to the Senior Agent
to be held for the benefit of the Senior Secured Parties or for application to the Senior Claims as
set forth in Section 4.3, in each case in the same form as received and with any necessary
endorsement or as a court of competent jurisdiction may otherwise direct.

     4.5 Subrogation. To the extent any Junior Secured Party makes a payment to any Senior Secured
Party, such Junior Secured Party shall be subrogated to the rights of such Senior Secured Party;
provided, however, that no Junior Secured Party shall assert, enforce or exercise (whether directly
or through the Junior Agent) against any Person prior to payment in full of the Senior Claims any
right of subrogation it may have obtained from any Senior Secured Party or the Senior Agent or
otherwise as a result of any payment hereunder, whether or not such payment is required or
permitted under this Agreement.

     4.6 Reinstatement. If any Senior Lender is required, in any Insolvency Proceeding or
otherwise, to turn over or otherwise pay to the estate of any Loan Party any amount (a “Recovery”),
then the Senior Claims shall be reinstated to the extent of such Recovery and the Senior Lenders
shall be entitled to the payment in full of the Senior Claims with respect to all such recovered
amounts. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall
be reinstated in full force and effect, and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the parties hereto from such date of
reinstatement.

     4.7 Insurance. Until the Senior Collateral Transition Date, as between the Senior Agent, on
the one hand, and the Junior Agent, on the other hand, only the Senior Agent will have the right to
adjust or settle any insurance policy or claim covering or constituting Senior Collateral in the
event of any loss thereunder and to approve any award granted in any condemnation or similar
proceeding affecting the ABL Senior Collateral. To the extent that, prior to the Senior Collateral
Transition Date, an insured loss covers or applies to assets or property, some of which constitutes
Senior Collateral and some of which constitutes Junior Collateral, then the Senior Agent and the
Junior Agent will work jointly and in good faith to collect, adjust or settle under the relevant
insurance policy.

     Section 5. Insolvency or Liquidation Proceedings

     5.1 Waivers. In the event an Insolvency or Liquidation Proceeding shall be commenced by or
against any Loan Party, each of the Junior Secured Parties hereby agrees that such Person shall
not, and shall not direct the Junior Agent to, until the payment in full of the Senior Claims:

          (a) seek any relief from, or modification of, the automatic stay as provided in §362 of the
Bankruptcy Code or seek any form of adequate protection under either or both of §362 and §363 of
the Bankruptcy Code with respect to the Collateral, except (i) replacement Liens and super-priority
administrative expense claims for diminution of value (the “Priority Claims”), (A) which Liens at
all times shall also secure the Senior Claims and (B) which Liens and Priority Claims shall be
subordinated to the Senior Liens and any similar Priority Claims

16

 

granted to the Senior Secured Parties in accordance with, and subject to, the terms of this
Agreement, and (ii) the accrual and payment of interest and out-of-pocket expenses, including fees
and disbursements of counsel and other professional advisors, incurred by the Junior Agent (which
the Junior Secured Parties agree will constitute adequate protection of their claims and
interests);

          (b) oppose or object to any adequate protection (including without limitation any form of
adequate protection under §362 or §363 of the Bankruptcy Code and the payment of amounts equal to
interest and expenses allowed under §506(b) and (c) of the Bankruptcy Code) sought by or granted to
any Senior Secured Parties (or any Senior Secured Party in each case acting on behalf of, or with
the express consent of, the Senior Agent), with respect to the Senior Collateral;

          (c) oppose or object to the use of any Senior Collateral constituting cash collateral by any
Loan Party, unless the Senior Secured Parties (or any Senior Secured Party in each case acting on
behalf of, or with the express consent of, the Senior Agent) shall have opposed or objected to such
use of such cash collateral; provided, that the Junior Secured Parties may seek adequate protection
as set forth above in connection with such use;

          (d) object to (i) the amount of the Senior Claims allowed or permitted to be asserted under
any Bankruptcy Law or (ii) the extent to which the Senior Claims are deemed secured claims,
including under §506(a) of the Bankruptcy Code; or

          (e) object to any proposed sale of the Senior Collateral pursuant to § 363 of the Bankruptcy
Code or any similar provision of any applicable Bankruptcy Law; provided, however, that (A) the
cash proceeds of the sale of such Collateral are applied in accordance with Section 4, (B) the
interests of the Secured Parties in such Collateral attach to the non-cash proceeds of such sale
and (C) nothing in this clause (i) or in any order entered in connection with such proposed sale
shall prohibit or restrict such Junior Secured Party from bidding on, including by credit bid, such
Collateral; provided, further, that any such bid (including any credit bid) shall provide for
payment in full in cash of all Senior Claims.

          (f) Notwithstanding the foregoing provisions of this Section 5.1, in any Insolvency or
Liquidation Proceeding:

     (i) if the Senior Secured Parties (of any subset thereof) are granted
adequate protection with respect to the Senior Collateral in the form of
additional collateral (but only if such additional collateral is not of a type
that would otherwise have constituted Junior Collateral), then the Senior Agent,
on behalf of itself and the Senior Secured Parties, agrees that the Junior Agent,
on behalf of itself or any of the Junior Secured Parties, may seek or request
(and the Senior Secured Parties will not oppose such a request) adequate
protection with respect to its interests in such Senior Collateral in the form of
a Lien on the same additional collateral, which Lien will be subordinated to the
Senior Liens on the same basis as the other Liens of the Junior Agent with
respect to Senior Collateral;

     (ii) except as otherwise expressly set forth in this Section 5.1 or in connection
with the exercise of remedies with respect to (A) the ABL Facility Primary
Collateral, nothing herein shall limit the rights of the Term

17

 

Administrative Agent or the Term Facility Secured Parties from seeking adequate
protection with respect to their rights in the Term Facility Primary Collateral
in any Insolvency or Liquidation Proceeding (including adequate protection in the
form of a cash payment, periodic cash payments or otherwise) or (B) the Term
Facility Primary Collateral, nothing herein shall limit the rights of the ABL
Administrative Agent or the ABL Secured Parties from seeking adequate protection
with respect to their rights in the ABL Facility Primary Collateral in any
Insolvency or Liquidation Proceeding (including adequate protection in the form
of a cash payment, periodic cash payments or otherwise).

               5.2 No Waiver by Senior Secured Parties. Nothing contained herein shall prohibit or
in any way limit any Senior Secured Party (or any Senior Secured Party in each case acting
on behalf of, or with the express consent of, the Senior Agent) from, with respect to the
Senior Collateral, objecting in any Insolvency or Liquidation Proceeding (or otherwise) to
any action taken by any Junior Secured Party, including the seeking by such Junior Secured
Party of adequate protection with respect to such Collateral (other than as permitted under
Section 5.1(a)(i)) or the asserting by such Junior Secured Party of any of its rights and
remedies under the Junior Documents (or otherwise) with respect to such Collateral.

               5.3 Other Agreements During any Insolvency or Liquidation Proceeding.

          (a) If at any time prior to the Senior Collateral Transition Date the Senior Agent or the Senior
Secured Parties shall seek to provide any Loan Party with, or consent to a third party providing,
any Post-Petition Financing, with such Post-Petition Financing to be secured by all or any portion
of the Senior Collateral (including assets that, but for the application of Section 552 of the
Bankruptcy Code (or any similar provision under any Bankruptcy Law) would be Senior Collateral) (it
being understood that the Senior Agent and Senior Secured Parties shall not propose any
Post-Petition Financing with respect to any Junior Collateral in competition with the Junior Agent
and Junior Secured Parties without the consent of the Junior Agent), then the Junior Agent, on
behalf of itself and the Junior Secured Parties, agrees that it will raise no objection and will
not support any objection to such Post-Petition Financing or use of cash collateral or to the Liens
securing the same on the grounds of a failure to provide “adequate protection” for the Liens of the
Junior Agent securing the Junior Claims or on any other grounds (and will not request any adequate
protection solely as a result of such Post-Petition Financing or use of cash collateral that is
Senior Collateral except as permitted by Section 5.1(f)(i)), so long as (i) the Junior Agent
retains its Lien on the Collateral to secure the Junior Claims (in each case including Proceeds
thereof arising after the commencement of the case under any Bankruptcy Laws) and, as to the Junior
Collateral only, such Lien has the same priority as existed prior to the commencement of the case
under the subject Bankruptcy Laws and any Lien on the Junior Collateral securing such Post-Petition
Financing furnished by the Senior Agent or Senior Secured Parties is junior and subordinate to the
Lien of the Junior Agent on the Junior Collateral, (ii) all Liens on Senior Collateral securing any
such Post-Petition Financing furnished by the Senior Agent or Senior Secured Parties shall be
senior to or on a parity with the Liens of the Senior Agent and the Senior Secured Parties securing
the Senior Claims on Senior Collateral and (iii) if the Senior Agent receives an adequate
protection Lien on post-petition assets of the debtor to secure the Senior Claims, the Junior Agent
also may seek to obtain an adequate protection Lien on such post-petition assets of the debtor to
secure the Junior Claims, provided that (x) such Liens

18

 

in favor of the Senior Agent and the Junior Agent shall be subject to Section 5.1(f) hereof and (y)
the foregoing provisions of this Section 5.3(a) shall not prevent the Junior Agent and the Junior
Secured Parties from objecting to any provision in any Post-Petition Financing relating to any
provision or content of a plan of reorganization or other plan of similar effect under any
Bankruptcy Laws.

          (b) all Liens granted to the ABL Administrative Agent or Term Administrative Agent in any
Insolvency or Liquidation Proceeding, whether as adequate protection or otherwise, are intended by
the parties to be and shall be deemed to be subject to the Lien priority and the other terms and
conditions of this Agreement.

     Section 6. Representations and Warranties

          Each party hereto represents and warrants as follows:

          (a) Such party is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to enter into and
perform its obligations under this Agreement.

          (b) This Agreement has been duly executed and delivered by such party and constitutes a legal,
valid and binding obligation of such party, enforceable in accordance with its terms; except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting
the rights of creditors generally and by general principles of equity.

          (c) The execution, delivery and performance by such party of this Agreement (i) do not require
any consent or approval of, registration or filing with or any other action by any governmental
authority and (ii) will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of such party or any order of any governmental authority or any
indenture, agreement or other instrument binding upon such party.

     Section 7. Senior Agent as Agent and Bailee for Perfection 

     7.1 The Senior Agent agrees to (i) hold the Collateral that is in its possession or
control (or in the possession or control of its agents or bailees) as agent or as bailee, as
the case may be, for the Junior Agent and (ii) be the agent of the Junior Agent with respect to
any deposit accounts or securities accounts included in the Collateral that are controlled or
held by it or any bailee agreements entered into by it, in each case, solely for the purpose of
perfecting the security interest granted in such Collateral pursuant to the Junior Documents,
subject to the terms and conditions of this Section 7. Subject to Section 4.6, at such time as
the Senior Claims shall have been paid in full, the Senior Agent shall take all such actions in
its power as shall reasonably be requested by the Junior Agent to transfer possession or
control of the Collateral in its possession or control to the Junior Agent.

     7.2 The Loan Parties, in accordance with the ABL Credit Agreement, shall maintain (i) blocked
account agreements relating to Deposit Accounts (the “ABL Depositary Accounts”) with certain
depositary banks (the “Depositary Banks”) in which collections from Inventory and Accounts are
deposited and (ii) securities account agreements relating to security accounts (the “ABL
Securities Accounts”) in which Proceeds of ABL Priority Collateral are deposited with certain
securities intermediaries (the “Securities Intermediaries”). The ABL Administrative Agent will
act as gratuitous bailee for the Term Administrative Agent for the purpose of perfecting the
Liens of the Term Facility Secured

19

 

Parties in all such ABL Depositary Accounts and ABL Securities Accounts and the cash and other
assets therein as provided in Section 7.1 (but will have no duty, responsibility or obligation
to the Term Facility Secured Parties except as set forth in the last sentence of this Section
7.2). After the occurrence of the Senior Collateral Transition Date with respect to the ABL
Facility Claims, the ABL Administrative Agent shall (a) at the request of the Term
Administrative Agent, transfer all cash and other assets in such ABL Depositary Accounts and
ABL Securities Accounts maintained with it to the Term Administrative Agent and (b) at the
request of the Term Administrative Agent, cooperate with the Company and the Term
Administrative Agent (at the expense of the Company) in permitting control of any other ABL
Depositary Accounts and/or ABL Securities Accounts to be transferred to the Term Administrative
Agent (or for other arrangements with respect to each such ABL Depositary Account and/or ABL
Securities Account satisfactory to the Term Administrative Agent to be made).

          7.3 Prior to the payment in full of the Senior Claims, (i) the Senior Agent shall be
entitled to deal with the Collateral in its possession or under its control in accordance with
the terms of the Senior Documents as if the Lien of the Junior Agent under the Junior Documents
did not exist, and (ii) the rights of the Junior Agent shall at all times be subject to the
terms of this Agreement and to the Senior Agent’s rights under the Senior Documents.

          7.4 The Senior Agent shall have no obligation whatsoever to the Junior Agent or any Junior
Secured Party to ensure that the Collateral in its possession or under its control is genuine
or owned by a Loan Party or to preserve the rights or benefits of any Person except as
expressly set forth in this Section 7. The duties or responsibilities of the Senior Agent
under this Section 7 shall be limited solely to holding the Collateral as agent or as bailee,
as the case may be, and controlling deposit accounts and securities accounts as agent, in each
case for the Junior Agent for purposes of perfecting the Lien thereon held by the Junior Agent.
The Senior Agent shall not have by reason of this Agreement or any other document a fiduciary
relationship in respect of the Junior Agent or any Junior Secured Party.

     Section 8. Release of Collateral

          8.1 The ABL Administrative Agent shall, and each of the ABL Secured Parties hereby
authorizes and directs the ABL Administrative Agent to, and the Term Administrative Agent
shall, and each of the Term Facility Secured Parties hereby authorizes and directs the Term
Administrative Agent to (in each case, without any further notice or consent to or of any other
Secured Party), promptly release (or, in the case of clause (c) below, release or subordinate
as required by the holders of any Lien specified thereunder) any Lien held by such Agent for
the benefit of the applicable Secured Parties against any of the following Collateral, but in
each case not the proceeds of such Collateral:

               (a) any Collateral in connection with any Collateral Enforcement Action permitted under
this Agreement and the Loan Documents;

               (b) any part of the Collateral sold or disposed of by a Loan Party if such sale or disposition
is permitted by the Credit Agreements (or pursuant to a valid waiver or consent to a transaction
otherwise prohibited by such Credit Agreements) and the proceeds thereof are applied in accordance
with the terms of the Credit Agreements; and

               (c) any part of the Collateral that is subject to a Lien permitted by each of Section 8.2 of
the Term Loan Agreement and Section 7.2 of the ABL Credit Agreement.

20

 

     8.2 The ABL Administrative Agent shall, and each of the ABL Secured Parties hereby authorizes
and directs the ABL Administrative Agent to, and the Term Administrative Agent shall, and each of
the Term Facility Secured Parties hereby authorizes and directs the Term Administrative Agent to,
execute and deliver or file such termination and partial release statements and take such other
actions as are reasonably necessary to release (or subordinate) Liens pursuant to this Section 8
promptly upon the effectiveness of any such release (or subordination).

     Section 9.
Amendments

     9.1 Amendments to Loan Documents.

          (a) Amendments to ABL Credit Agreement. Without the prior written consent of the Term
Administrative Agent, none of the ABL Credit Agreement and ABL Loan Documents may be amended,
supplemented or otherwise modified (and no replacement ABL Credit Agreement or ABL Loan Document
may be entered into in connection with a refinancing), in each case if the effect of such
amendment, supplement, modification or replacement is to do any of the following:

          (i) increase the ABL Facility Claims to an amount exceeding the Maximum ABL Facility
Amount; or

          (ii) contravene any provision of this Agreement.

          (b) Amendments to Term Loan Agreement. Without the prior written consent of the ABL
Administrative Agent, none of the Term Loan Agreement and Term Loan Documents may be amended,
supplemented or otherwise modified (and no replacement Term Loan Agreement or Term Loan Document
may be entered into in connection with a refinancing), in each case if the effect of such
amendment, supplement, modification or replacement is to do any of the following:

          (i) increase the Term Loan Claims to an amount exceeding the Maximum Term Loan
Facility Amount; or

          (ii) contravene any provision of this Agreement.

     Section 10. Acknowledgements and Consents

     10.1 Reliance by Senior Secured Parties. The consent by the Senior Secured Parties to the
execution and delivery of the Junior Documents and the grant of a Junior Lien on the Senior
Collateral and all loans and other extensions of credit made or deemed made on and after the date
hereof by the Senior Secured Parties to the Company shall be deemed to have been given and made in
reliance upon this Agreement.

     10.2 Independent Analysis. The Junior Agent, on behalf of each Junior Secured Party,
acknowledges that it and each Junior Secured Party has, independently and without reliance on the
Senior Agent or any Senior Secured Party, and based on documents and information deemed by it
appropriate, made its own credit analysis and decision to enter into this Agreement, the Junior
Documents, and the transactions contemplated hereby and thereby and agrees that it will continue to
make its own credit decision in taking or not taking any action under the Junior Documents or this
Agreement.

21

 

     10.3 No Warranties or Liability. The Junior Agent, on behalf of each Junior Secured Party,
acknowledges and agrees that:

          (a) none of the Senior Secured Parties has made any express or implied representation or
warranty, including with respect to the execution, validity, legality, completeness, collectibility
or enforceability of any Senior Document;

          (b) the Senior Secured Parties will be entitled to manage and supervise their respective loans
and extensions of credit to the Company as they may, in their sole discretion, deem appropriate and
without regard to any rights or interests that any Junior Secured Party may have in the Senior
Collateral or otherwise, except as otherwise provided in this Agreement or under applicable law;
and

          (c) none of the Senior Secured Parties shall have any duty to any Junior Secured Party to act
or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an
event of default or default under any agreements with any Loan Party (including the Junior
Documents), regardless of any knowledge thereof that any Senior Secured Party may have or be
charged with.

     10.4 No Waiver of Lien Priorities.

          (a) No right of any Senior Secured Party to enforce any provision of this Agreement shall at
any time in any way be prejudiced or impaired by any act or failure to act on the part of any Loan
Party or by any act or failure to act by any Senior Secured Party, or by any noncompliance by any
Person with the terms, provisions and covenants of this Agreement, any of the Senior Documents or
any of the Junior Documents, regardless of any knowledge thereof which any Senior Secured Party may
have or be otherwise charged with.

          (b) Subject to Section 9.1 and without in any way limiting the generality of the foregoing
clause (a) (except as set forth in any Senior Document), each Senior Secured Party, may, at any
time and from time to time, without the consent of, or notice to, any Junior Secured Party, without
incurring any liability to any Junior Secured Party and without impairing or releasing the lien
priorities and other benefits provided in this Agreement (even if any right of ubrogation or other
right or remedy of any Junior Secured Party is affected, impaired or extinguished thereby) do any
one or more of the following:

          (i) change the manner, place or terms of payment or change or extend the time of payment of,
or renew, exchange, amend, increase or alter, the terms of any Senior Claim, any Lien in respect of
any Senior Collateral, any guaranty of any Senior Claim, or any liability of any Loan Party
incurred directly or indirectly in respect of any of the foregoing (including any increase in or
extension of the Senior Claims, without any restriction as to the amount, tenor or terms of any
such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in
any manner the Senior Claims, any Liens held by the Senior Agent, the Senior Secured Parties, or
any of the Senior Documents;

          (ii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any
manner and in any order any part of the Senior Collateral or any liability of any Loan Party to the
Senior Agent or any Senior Secured Party, or any liability incurred directly or indirectly in
respect thereof;

          (iii) settle or compromise any Senior Claim or any other liability of any Loan Party or any
security therefor or any liability incurred directly or indirectly in respect thereof and

22

 

apply any sums by whomsoever paid and however realized to any liability (including the Senior
Claims) in any manner or order; and

          (iv) exercise or delay in or refrain from exercising any right or remedy against any security
or any Loan Party or any other Person, elect any remedy and otherwise deal freely with the Loan
Parties, the Senior Collateral and any security, any guarantor or any liability of any Loan Party
to any Senior Secured Party, or any liability incurred directly or indirectly, in respect of the
foregoing.

     (c ) The Junior Agent, on behalf of each Junior Secured Party, also agrees that no Senior
Secured Party shall have any duty or liability to any Junior Secured Party, and the Junior Agent,
on behalf of each Junior Secured Party, hereby waives all claims against each Senior Secured Party
arising out of any and all actions which any Senior Secured Party may take or permit or omit to
take with respect to: (i) the Senior Documents, (ii) the collection of the Senior Claims, (iii) the
foreclosure upon, or sale, liquidation or other disposition of, the Senior Collateral, (iv) the
release of any Lien in respect of any Senior Collateral, or (v) the maintenance or preservation of
the Senior Collateral, the Senior Claims or otherwise.

     10.5 Obligations Unconditional. All rights, interests, agreements and obligations hereunder
of the Senior Agent and the Senior Secured Parties in respect of any Collateral and the Junior
Agent and the Junior Secured Parties in respect of such Collateral shall remain in full force and
effect regardless of:

          (a) any lack of validity or enforceability of any Senior Document or any Junior Document and
regardless of whether the Liens of the Senior Agent and Senior Secured Parties are not perfected or
are voidable for any reason;

          (b) any change in the time, manner or place of payment of, or in any other terms of, all or
any of the Senior Claims or Junior Claims, or any amendment or waiver or other modification,
including any increase in the amount thereof, whether by course of conduct or otherwise, of the
terms of any Senior Document or any Junior Document;

          (c) any exchange, release or lack of perfection of any Lien on any Collateral or any other
asset, or any amendment, waiver or other modification, whether in writing or by course of conduct
or otherwise, of all or any of the Senior Claims or Junior Claims or any guarantee thereof;

          (d) the commencement of any Insolvency or Liquidation Proceeding in respect of any Loan Party;
or

          (e) any other circumstances which otherwise might constitute a defense available to, or a
discharge of, any Loan Party in respect of any Secured Claim or of any Junior Secured Party in
respect of this Agreement.

     10.6 Attorney-in-Fact. The Junior Agent, on behalf of each Junior Secured Party, in respect of any
Collateral hereby irrevocably constitutes and appoints the Senior Agent in respect of such
Collateral and any officer or agent of such Senior Agent, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead
of the Junior Agent or such holder or in such Senior Agent’s own name, from time to time in such
Senior Agent’s discretion, for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, including any

23

 

financing statements, endorsements or other instruments or transfer or release. Notwithstanding
the grant of the foregoing power of attorney, nothing in this Section 10.6 is intended to in any
way relieve any Loan Party of its obligations to comply with requirements of law or applicable
obligations with respect to the release of Collateral under any Collateral Document.

     10.7 Consent of Loan Parties. Each Loan Party hereby consents to the provisions of this
Agreement and the intercreditor arrangements provided for herein and agrees that the obligations of
the Loan Parties under any Senior Document, Junior Document, Loan Document or other Collateral
Document shall not in any way be diminished or otherwise affected by such provisions or
arrangements. All references to any Loan Party shall include reference to such Loan Party as a
debtor and debtor in possession and any receiver or trustee for such Loan Party in any Insolvency
or Liquidation Proceeding. Each Loan Party hereby agrees that, if, pursuant to the provisions of
either Credit Agreement, the Company shall be required to cause any Subsidiary that is not a Loan
Party to become a Loan Party, or if for any reason the Company desires any such Subsidiary to
become a Loan Party, such Subsidiary shall execute and deliver to the Agents an Intercreditor
Supplement in substantially the form of Exhibit B (Intercreditor Supplement) attached hereto and
shall thereafter for all purposes be a party hereto and have the same rights, benefits and
obligations as a Loan Party hereto on the Closing Date.

     Section 11.  Miscellaneous

     11.1 Conflicts. Except as expressly provided herein, in the event of any conflict between
the provisions of this Agreement and the provisions of the Collateral Documents, the provisions
of this Agreement shall govern.

     11.2 Continuing Nature. This Agreement shall continue to be effective until the payment
in full of all Secured Claims. This is a continuing agreement of lien subordination and the
Senior Secured Parties may continue, at any time and without notice to any Junior Secured
Party, to extend credit and other financial accommodations and lend monies constituting Senior
Claims on the faith hereof. The terms of this Agreement shall survive, and shall continue in
full force and effect, in any Insolvency or Liquidation Proceeding.

     11.3 Amendments; Waivers. No amendment, modification or waiver of any provision of this
Agreement shall be deemed to be made unless the same (i) shall be in writing signed by each
Agent and (ii) shall have been approved by the Required Lenders (other than any amendments or
modifications requested by any such Agent not adversely affecting the Secured Parties) under
each of the Credit Agreements; provided that such Required Lender approval shall not be
required for any amendment or modification that cures any typographical or clerical error or
inconsistency hereunder. Notwithstanding anything to the contrary, the consent of any Loan
Party shall not be required for amendments, modifications or waivers of the provisions of this
Agreement, except that the Company’s consent shall be required for those that (i) affect any
obligation or right of any Loan Party hereunder or that would impose any additional obligations
on any Loan Party (including such changes under this Section 11.3), (ii) change the ability of
any Junior Agent to release Collateral pursuant to Section 7 or (iii) change the rights of the
Loan Parties to make payments in respect of any Secured Claims (except with respect to proceeds
of Collateral as part of any Collateral Enforcement Action). In the case of a waiver of any
provision of this Agreement, such waiver shall be effective only with respect to the specific
instance involved and shall in no way impair the rights of the parties making such waiver or
the obligations of the other parties in any other respect or at any other time. The Agents
shall notify the

24

 

Company of any amendment, modification or waiver effected hereunder; provided, however, that
the failure of any Agent to deliver such notice shall not render any such amendment,
modification or waiver ineffective.

     11.4 Consent to Jurisdiction; Waiver of Trial by Jury.

          (a) Any legal action or proceeding with respect to this Agreement or any other Collateral
Document may be brought in the courts of the State of New York located in the City of New York or
of the United States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, each party hereto hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties
hereto hereby irrevocably waive, to the fullest extent permitted by law, 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 respective
jurisdictions.

          (b) Each party hereto hereby irrevocably consents, to the fullest extent permitted by law, to
the service of any and all legal process, summons, notices and documents in any suit, action or
proceeding brought in the United States of America arising out of or in connection with this
Agreement or any other Loan Document by the mailing (by registered or certified mail, postage
prepaid) or delivering of a copy of such process to such party at its address specified in Section
11.5. Each party hereto agrees, to the fullest extent permitted by law, 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.

          (c) Nothing contained in this Section 11.4 shall affect the right of any Agent or any Secured
Party to serve process in any other manner permitted by law or commence legal proceedings or
otherwise proceed against the Company or any other Loan Party in any other jurisdiction.

          (d) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

     11.5 Notices. Any notice or other communication herein shall be made in accordance with each
of Section 11.8 of the Term Loan Agreement and Section 15.2 of the ABL Credit Agreement or such
other address as shall be notified in writing to the Agents.

     11.6 Governing Law. This Agreement has been delivered and accepted at and shall be deemed to
have been made at New York, New York and shall be interpreted, and the rights and liabilities of
the parties bound hereby determined, in accordance with the laws of the State of New York.

     11.7 Specific Performance. Each of the Agents and the Secured Parties may demand specific
performance of this Agreement. The Senior Agent, on behalf of each Senior Secured Party, and the
Junior Agent, on behalf of each Junior Secured Party, hereby irrevocably waive any defense based on
the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of
specific performance in any action which may be brought by any Agent or Secured Party.

25

 

     11.8 Section Titles. The section titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of this Agreement.

     11.9 Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be an original and all of which shall together constitute one and the same document.
Signature pages may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are attached to the same document.

     11.10 No Third Party Beneficiaries. This Agreement shall be binding upon, and the rights and
benefits hereof shall inure to the benefit of, the Secured Parties and each of their respective
permitted successors and assigns, and no other Person shall have or be entitled to assert rights or
benefits hereunder. To the extent applicable, this Agreement shall be binding upon the Loan
Parties and their respective permitted successors and assigns, and each Loan Party shall cause each
of its Subsidiaries, to the extent such Subsidiary becomes or is required to become a Loan Party,
to comply with the terms of this Agreement.

     11.11 Termination. To the extent that all of the Term Loan Claims or ABL Facility Claims, as
the case may be, are repaid in full, or the underlying agreements with respect to such Term Loan
Claims or ABL Facility Claims, as the case may be, are terminated, the respective rights of the
Term Facility Secured Parties and ABL Secured Parties, as the case may be under this Agreement,
shall be terminated (other than those expressly stated to survive such termination of this
Agreement)

     11.12 Further Assurances. Each of the Loan Parties and the Junior Agent, on behalf of each
Junior Secured Party, agrees that each such Person shall at the Loan Parties’ expense, take such
further action and execute and deliver to the Agents and the Senior Agent, on behalf of each Senior
Secured Party, such additional documents and instruments (in recordable form, if requested), as the
Senior Agent may reasonably request to effectuate the terms of this Agreement.

[Signature Pages Follow]

26

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	Wells Fargo Retail Finance, LLC,

     as ABL Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Citicorp North America, Inc.,

     as Term Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page To Intercreditor Agreement]

 

 

ACCEPTED this 17th day of

     August, 2007

	 	 	 	 	 
	 	Borrower:

Collective Brands Finance, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Guarantors:

Collective Brands, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[______________________]

 	 
	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page To Intercreditor Agreement]

 

 

Exhibit A

Form of 

Notice of Actionable Default

_______ __, 20__

[Wells Fargo Retail Finance, LLC] [Citicorp North America, Inc.],

as [ABL][Term] Administrative Agent

[address]

          Pursuant to the provisions of the Intercreditor Agreement, dated as of August 17,
2007 (as the same may be further amended, restated, supplemented or otherwise modified from time to
time, the “Intercreditor Agreement”; capitalized terms used herein and not otherwise defined herein
are used herein as defined in the Intercreditor Agreement), among Wells Fargo Retail Finance,
LLC (“Wells Fargo”), as administrative agent and collateral agent for the ABL Secured
Parties (in such capacity, the “ABL Administrative Agent”), Citicorp North America, Inc.
(“Citi”) as administrative agent and collateral agent for the Term Facility Secured
Parties (in such capacity, the “Term Administrative Agent”), Collective Brands Finance, Inc.,
a Nevada corporation, as borrower (the “Company”), Collective Brands, Inc., a
Delaware corporation, as a Guarantor (“Holdings”), and each of the other Loan Parties that becomes
a party thereto, the undersigned, a Responsible Officer of the [ABL] [Term] Administrative Agent,
hereby certifies that [an Event of Default has occurred and is continuing under the [ABL Credit
Agreement] [Term Loan Agreement] and that] [(a) the [ABL Facility] [Term Loan] Obligations have
been accelerated as set forth in such Credit Agreement and (b), if such Agent is the Junior Agent,
the Junior Secured Parties intend to take a Collateral Enforcement Action].

	 	 	 	 	 
	 	Citicorp North America, Inc.,

as [ABL] [Term] Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Accepted and Agreed

as of the date first above written:

[Wells Fargo Retail Finance, LLC] [Citicorp North America, Inc.],

as [ABL] [Term] Administrative Agent

	 	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

 

 

Exhibit B

Form of

Intercreditor Supplement

          The undersigned hereby agrees to be bound as a Loan Party for purposes of the
Intercreditor Agreement, dated as of August 17, 2007 (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”;
capitalized terms used herein and not otherwise defined herein are used herein as defined in the
Intercreditor Agreement), among Wells Fargo Retail Finance, LLC (“Wells Fargo”),
as administrative agent and collateral agent for the ABL Secured Parties (in such capacity, the
“ABL Administrative Agent”), Citcorp North America, Inc. (“Citi”), as administrative agent
and collateral agent for the Term Facility Secured Parties (in such capacity, the “Term
Administrative Agent”), Collective Brands Finance, Inc., a Nevada corporation, as borrower
(the “Company”), Collective Brands, Inc., a Delaware corporation, as a Guarantor
(“Holdings”), and each of the other Loan Parties that becomes a party thereto, and the undersigned
hereby acknowledges receipt of a copy of the Intercreditor Agreement. The undersigned hereby
represents and warrants that each of the representations and warranties contained in Section 6 of
the Intercreditor Agreement applicable to it is true and correct on and as the date hereof as if
made on and as of such date.

          In witness whereof, the undersigned has caused this Intercreditor Supplement to be
duly executed and delivered as of ___________, ___.

	 	 	 	 	 
	 	[Name of Subsidiary Guarantor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

Accepted and Agreed

as of the date first above written:

Wells Fargo Retail Finance, LLC,

as ABL Administrative Agent

	 	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

Citicorp North America, Inc.,

as Term Administrative Agent

	 	 	 	 	 
	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]