Document:

Exhibit
      10.8(a)

     

    EXECUTION
      VERSION

     

    
      
        

      

    

     

    FOURTH
      AMENDED AND RESTATED CREDIT AGREEMENT

     

    Dated
      as
      of November 9, 2007

     

    among

     

    FINLAY
      FINE JEWELRY CORPORATION,

    CARLYLE
      & CO. JEWELERS LLC,

    L.
      CONGRESS, INC.

    

    as
      Borrowers,

     

    FINLAY
      ENTERPRISES, INC. 

    AND
      THE
      OTHER CREDIT PARTIES SIGNATORY HERETO,

     

    as
      Credit
      Parties,

     

    THE
      LENDERS SIGNATORY HERETO

    FROM
      TIME
      TO TIME,

     

    as
      Lenders,

     

    GENERAL
      ELECTRIC CAPITAL CORPORATION,

     

    as
      Agent,
      L/C Issuer and Lender

     

    GE
      CAPITAL MARKETS, INC.,

     

    as
      Sole
      Bookrunner and Joint Lead Arranger,

     

    JPMORGAN
      SECURITIES INC.,

     

    as
      Joint
      Lead Arranger

     

    and

     

    WACHOVIA
      BANK, NA,

     

    Documentation
      Agent

     

    
      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF
      CONTENTS

     

    
      	 	 	
              Page

            
	 	 	 
	
              1.

            	
              AMOUNT
                AND TERMS OF CREDIT

            	
              2

            
	 	 	 
	 	
              1.1.

            	 	
              Credit
                Facilities.

            	
              2

            
	 	
              1.2.

            	 	
              Letters
                of Credit

            	
              7

            
	 	
              1.3.

            	 	
              Prepayments.

            	
              7

            
	 	
              1.4.

            	 	
              Use
                of Proceeds

            	
              10

            
	 	
              1.5.

            	 	
              Interest
                and Applicable Margins.

            	
              10

            
	 	
              1.6.

            	 	
              Eligible
                Accounts

            	
              13

            
	 	
              1.7.

            	 	
              Eligible
                Inventory

            	
              15

            
	 	
              1.8.

            	 	
              Cash
                Management Systems

            	
              16

            
	 	
              1.9.

            	 	
              Fees.

            	
              17

            
	 	
              1.10.

            	 	
              Receipt
                of Payments

            	
              18

            
	 	
              1.11.

            	 	
              Application
                and Allocation of Payments.

            	
              18

            
	 	
              1.12.

            	 	
              Loan
                Account and Accounting

            	
              19

            
	 	
              1.13.

            	 	
              Indemnity.

            	
              19

            
	 	
              1.14.

            	 	
              Access

            	
              20

            
	 	
              1.15.

            	 	
              Taxes.

            	
              21

            
	 	
              1.16.

            	 	
              Capital
                Adequacy; Increased Costs; Illegality.

            	
              23

            
	 	
              1.17.

            	 	
              Single
                Loan

            	
              25

            
	 	 	 	 	 
	
              2.

            	
              CONDITIONS
                PRECEDENT

            	
              25

            
	 	 	 
	 	
              2.1.

            	 	
              Conditions
                to the Initial Loans

            	
              25

            
	 	
              2.2.

            	 	
              Further
                Conditions to Each Loan

            	
              26

            
	 	 	 	 	 
	
              3.

            	
              REPRESENTATIONS
                AND WARRANTIES

            	
              27

            
	 	 	 
	 	
              3.1.

            	 	
              Corporate
                Existence; Compliance with Law

            	
              27

            
	 	
              3.2.

            	 	
              Executive
                Offices, Collateral Locations, FEIN

            	
              28

            
	 	
              3.3.

            	 	
              Corporate
                Power, Authorization, Enforceable Obligations

            	
              28

            
	 	
              3.4.

            	 	
              Financial
                Statements and Projections

            	
              28

            
	 	
              3.5.

            	 	
              Material
                Adverse Effect

            	
              29

            
	 	
              3.6.

            	 	
              Ownership
                of Property; Liens

            	
              29

            
	 	
              3.7.

            	 	
              Labor
                Matters

            	
              30

            
	 	
              3.8.

            	 	
              Ventures,
                Subsidiaries and Affiliates; Outstanding Stock and
                Indebtedness

            	
              30

            
	 	
              3.9.

            	 	
              Government
                Regulation

            	
              30

            
	 	
              3.10.

            	 	
              Margin
                Regulations

            	
              31

            
	 	
              3.11.

            	 	
              Taxes

            	
              31

            
	 	
              3.12.

            	 	
              ERISA.

            	
              32

            
	 	
              3.13.

            	 	
              No
                Litigation

            	
              32

            
	 	
              3.14.

            	 	
              Brokers

            	
              32

            
	 	
              3.15.

            	 	
              Intellectual
                Property

            	
              33

            
	 	
              3.16.

            	 	
              Full
                Disclosure

            	
              33

            
	 	
              3.17.

            	 	
              Environmental
                Matters.

            	
              33

            
	 	
              3.18.

            	 	
              Insurance

            	
              34

            
	 	
              3.19.

            	 	
              Deposit
                and Disbursement Accounts

            	
              34

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    

      TABLE
        OF CONTENTS

      (continued)

    

     

    
      	 	 	 	 	
              Page

            
	 	 	 	 	 
	 	
              3.20.

            	 	
              Government
                Contracts

            	
              34

            
	 	
              3.21.

            	 	
              Customer
                and Trade Relations

            	
              34

            
	 	
              3.22.

            	 	
              [Intentionally
                Omitted].

            	
              35

            
	 	
              3.23.

            	 	
              Solvency

            	
              35

            
	 	
              3.24.

            	 	
              Acquisition
                Agreement

            	
              35

            
	 	
              3.25.

            	 	
              License
                Agreements

            	
              35

            
	 	
              3.26.

            	 	
              Material
                Contracts

            	
              35

            
	 	
              3.27.

            	 	
              Unwritten
                Agreements

            	
              35

            
	 	
              3.28.

            	 	
              UCC
                Financing Statements

            	
              36

            
	 	 	 	 	 
	
              4.

            	
              FINANCIAL
                STATEMENTS AND INFORMATION

            	
              36

            
	 	 	 
	 	
              4.1.

            	 	
              Reports
                and Notices.

            	
              36

            
	 	
              4.2.

            	 	
              Communication
                with Accountants

            	
              36

            
	 	 	 	 	 
	
              5.

            	
              AFFIRMATIVE
                COVENANTS

            	
              36

            
	 	 	 
	 	
              5.1.

            	 	
              Maintenance
                of Existence and Conduct of Business

            	
              36

            
	 	
              5.2.

            	 	
              Payment
                of Charges.

            	
              37

            
	 	
              5.3.

            	 	
              Books
                and Records; Reserves.

            	
              37

            
	 	
              5.4.

            	 	
              Insurance;
                Damage to or Destruction of Collateral.

            	
              38

            
	 	
              5.5.

            	 	
              Compliance
                with Laws

            	
              39

            
	 	
              5.6.

            	 	
              Supplemental
                Disclosure

            	
              39

            
	 	
              5.7.

            	 	
              Intellectual
                Property

            	
              40

            
	 	
              5.8.

            	 	
              Environmental
                Matters

            	
              40

            
	 	
              5.9.

            	 	
              Landlords’
                Agreements, Mortgagee Agreements, Bailee Letters and Real Estate
                Purchases

            	
              41

            
	 	
              5.10.

            	 	
              Further
                Assurances

            	
              41

            
	 	
              5.11.

            	 	
              Consignment
                Agreements.

            	
              42

            
	 	
              5.12.

            	 	
              License
                Agreements.

            	
              42

            
	 	 	 	 	 
	
              6.

            	
              NEGATIVE
                COVENANTS

            	
              43

            
	 	 	 
	 	
              6.1.

            	 	
              Mergers,
                Subsidiaries, Etc

            	
              43

            
	 	
              6.2.

            	 	
              Investments;
                Loans and Advances

            	
              46

            
	 	
              6.3.

            	 	
              Indebtedness.

            	
              48

            
	 	
              6.4.

            	 	
              Employee
                Loans and Affiliate Transactions.

            	
              51

            
	 	
              6.5.

            	 	
              Capital
                Structure and Business

            	
              52

            
	 	
              6.6.

            	 	
              Guaranteed
                Indebtedness

            	
              52

            
	 	
              6.7.

            	 	
              Liens

            	
              53

            
	 	
              6.8.

            	 	
              Sale
                of Stock and Assets

            	
              54

            
	 	
              6.9.

            	 	
              ERISA

            	
              55

            
	 	
              6.10.

            	 	
              Financial
                Covenants

            	
              55

            
	 	
              6.11.

            	 	
              Hazardous
                Materials

            	
              55

            
	 	
              6.12.

            	 	
              Sale-Leasebacks

            	
              56

            
	 	
              6.13.

            	 	
              Restricted
                Payments

            	
              56

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    

      TABLE
        OF CONTENTS

      (continued)

    

     

    
      	 	 	 	 	
              Page

            
	 	 	 	 	 
	 	
              6.14.

            	 	
              Change
                of Corporate Name, State of Incorporation or Location; Change of
                Fiscal
                Year

            	
              57

            
	 	
              6.15.

            	 	
              No
                Impairment of Intercompany Transfers

            	
              58

            
	 	
              6.16.

            	 	
              Changes
                Relating to Material Contracts.

            	
              58

            
	 	
              6.17.

            	 	
              Compromise
                of Accounts

            	
              58

            
	 	
              6.18.

            	 	
              Rental
                Obligations

            	
              58

            
	 	
              6.19.

            	 	
              Parent

            	
              59

            
	 	
              6.20.

            	 	
              No
                Negative Pledges

            	
              59

            
	 	 	 	 	 
	
              7.

            	
              TERM

            	
              59

            
	 	 	 
	 	
              7.1.

            	 	
              Termination

            	
              59

            
	 	
              7.2.

            	 	
              Survival
                of Obligations Upon Termination of Financing Arrangements

            	
              59

            
	 	 	 	 	 
	
              8.

            	EVENTS
              OF DEFAULT; RIGHTS AND REMEDIES	
              60

            
	 	 	 	 	 
	 	
              8.1.

            	 	
              Events
                of Default

            	
              60

            
	 	
              8.2.

            	 	
              Remedies.

            	
              63

            
	 	
              8.3.

            	 	
              Waivers
                by Credit Parties

            	
              63

            
	 	 	 	 	 
	
              9.

            	
              ASSIGNMENT
                AND PARTICIPATIONS; APPOINTMENT OF AGENT

            	
              64

            
	 	 	 
	 	
              9.1.

            	 	
              Assignment
                and Participations.

            	
              64

            
	 	
              9.2.

            	 	
              Appointment
                of Agent

            	
              66

            
	 	
              9.3.

            	 	
              Agent’s
                Reliance, Etc

            	
              67

            
	 	
              9.4.

            	 	
              GE
                Capital and Affiliates

            	
              67

            
	 	
              9.5.

            	 	
              Lender
                Credit Decision

            	
              68

            
	 	
              9.6.

            	 	
              Indemnification

            	
              68

            
	 	
              9.7.

            	 	
              Successor
                Agent

            	
              68

            
	 	
              9.8.

            	 	
              Setoff
                and Sharing of Payments

            	
              69

            
	 	
              9.9.

            	 	
              Advances;
                Payments; Non-Funding Lenders; Information; Actions in
                Concert.

            	
              70

            
	 	 	 	 	 
	
              10.

            	
              SUCCESSORS
                AND ASSIGNS

            	
              72

            
	 	 	 
	 	
              10.1.

            	 	
              Successors
                and Assigns

            	
              72

            
	 	 	 	 	 
	
              11.

            	
              MISCELLANEOUS

            	
              72

            
	 	 	 
	 	
              11.1.

            	 	
              Complete
                Agreement; Modification of Agreement

            	
              72

            
	 	
              11.2.

            	 	
              Amendments
                and Waivers.

            	
              73

            
	 	
              11.3.

            	 	
              Fees
                and Expenses

            	
              75

            
	 	
              11.4.

            	 	
              No
                Waiver

            	
              76

            
	 	
              11.5.

            	 	
              Remedies

            	
              76

            
	 	
              11.6.

            	 	
              Severability

            	
              76

            
	 	
              11.7.

            	 	
              Conflict
                of Terms

            	
              76

            
	 	
              11.8.

            	 	
              Confidentiality

            	
              76

            
	 	
              11.9.

            	 	
              GOVERNING
                LAW

            	
              77

            
	 	
              11.10.

            	 	
              Notices.

            	
              78

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    

      TABLE
        OF CONTENTS

      (continued)

    

     

    
      	 	 	 	 	
              Page

            
	 	 	 	 	 
	 	
              11.11.

            	 	
              Section
                Titles

            	
              78

            
	 	
              11.12.

            	 	
              Counterparts

            	
              78

            
	 	
              11.13.

            	 	
              WAIVER
                OF JURY TRIAL

            	
              79

            
	 	
              11.14.

            	 	
              Press
                Releases and Related Matters

            	
              79

            
	 	
              11.15.

            	 	
              Reinstatement

            	
              79

            
	 	
              11.16.

            	 	
              Advice
                of Counsel

            	
              79

            
	 	
              11.17.

            	 	
              No
                Strict Construction

            	
              80

            
	 	
              11.18.

            	 	
              USA
                PATRIOT Act Notice

            	
              80

            
	 	
              11.19.

            	 	
              Amendment
                and Restatement

            	
              80

            
	 	 	 	 	 
	
              12.

            	
              CROSS-GUARANTY

            	
              80

            
	 	 	 
	 	
              12.1.

            	 	
              Cross-Guaranty

            	
              80

            
	 	
              12.2.

            	 	
              Waivers
                by Borrowers

            	
              81

            
	 	
              12.3.

            	 	
              Benefit
                of Guaranty

            	
              81

            
	 	
              12.4.

            	 	
              Waiver
                of Subrogation, Etc

            	
              81

            
	 	
              12.5.

            	 	
              Election
                of Remedies

            	
              81

            
	 	
              12.6.

            	 	
              Limitation

            	
              82

            
	 	
              12.7.

            	 	
              Contribution
                with Respect to Guaranty Obligations.

            	
              82

            
	 	
              12.8.

            	 	
              Liability
                Cumulative

            	
              83

            

    

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

    INDEX
      OF APPENDICES

     

    
      	
              Annex
                A (Recitals)

            	
              -

            	
              Definitions

            
	
              Annex
                B (Section
                1.2)

            	
              -

            	
              Letters
                of Credit

            
	
              Annex
                C (Section
                1.8)

            	
              -

            	
              Cash
                Management System

            
	
              Annex
                D (Section
                2.1(a))

            	
              -

            	
              Closing
                Checklist

            
	
              Annex
                E (Section
                4.1(a))

            	
              -

            	
              Financial
                Statements and Projections - Reporting

            
	
              Annex
                F (Section
                4.1(b))

            	
              -

            	
              Collateral
                Reports

            
	
              Annex
                G (Section
                6.10)

            	
              -

            	
              Financial
                Covenants

            
	
              Annex
                H (Section
                9.9(a))

            	
              -

            	
              Lenders’
                Wire Transfer Information

            
	
              Annex
                I (Section
                11.10)

            	
              -

            	
              Notice
                Addresses

            
	
              Annex
                J (from Annex A -Commitments definition)

            	
              -

            	
              Commitments
                as of Closing Date

            
	
              Exhibit
                1.1(a)(i)

            	
              -

            	
              Form
                of Notice of Tranche A Revolving Credit Advance

            
	
              Exhibit
                1.1(a)(ii)

            	
              -

            	
              Form
                of Tranche A Revolving Note

            
	
              Exhibit
                1.1(a)(iii)

            	
              -

            	
              Form
                of Notice of Tranche B Revolving Credit Advance

            
	
              Exhibit
                1.1(a)(iv)

            	
              -

            	
              Form
                of Tranche B Revolving Note

            
	
              Exhibit
                1.1(b)(ii)

            	
              -

            	
              Form
                of Swing Line Note

            
	
              Exhibit
                1.5(e)

            	
              -

            	
              Form
                of Notice of Conversion/Continuation

            
	
              Exhibit
                4.1(b)

            	
              -

            	
              Form
                of Borrowing Base Certificate

            
	
              Exhibit
                5.19

            	
               

            	
              Form
                of Consignor Letter

            
	
              Exhibit
                9.1(a)

            	
              -

            	
              Form
                of Assignment Agreement

            
	
              Exhibit
                A-1

            	
              -

            	
              Form
                of Indemnification Agreement

            
	
              Exhibit
                B-1

            	
              -

            	
              Application
                for Standby Letter of Credit

            
	
              Exhibit
                B-2

            	
              -

            	
              Application
                for Documentary Letter of Credit

            
	
              Schedule
                1.1

            	
              -

            	
              Agent’s
                Representatives

            
	
              Disclosure
                Schedule 1.4

            	
              -

            	
              Sources
                and Uses; Funds Flow Memorandum

            
	
              Disclosure
                Schedule 3.1

            	
              -

            	
              Type
                of Entity; State of Organization

            
	
              Disclosure
                Schedule 3.2

            	
              -

            	
              Executive
                Offices, Collateral Locations, FEIN

            
	
              Disclosure
                Schedule 3.4(A)

            	
              -

            	
              Financial
                Statements

            
	
              Disclosure
                Schedule 3.4(B)

            	
              -

            	
              Projections

            
	
              Disclosure
                Schedule 3.6

            	
              -

            	
              Real
                Estate and Leases

            
	
              Disclosure
                Schedule 3.7

            	
              -

            	
              Labor
                Matters

            
	
              Disclosure
                Schedule 3.8

            	
              -

            	
              Ventures,
                Subsidiaries and Affiliates; Outstanding Stock

            
	
              Disclosure
                Schedule 3.11

            	
              -

            	
              Tax
                Matters

            
	
              Disclosure
                Schedule 3.12

            	
              -

            	
              ERISA
                Plans

            
	
              Disclosure
                Schedule 3.13

            	
              -

            	
              Litigation

            
	
              Disclosure
                Schedule 3.14

            	
              -

            	
              Brokers

            
	
              Disclosure
                Schedule 3.15

            	
              -

            	
              Intellectual
                Property

            
	
              Disclosure
                Schedule 3.17

            	
              -

            	
              Hazardous
                Materials

            
	
              Disclosure
                Schedule 3.18

            	
              -

            	
              Insurance

            
	
              Disclosure
                Schedule 3.19

            	
              -

            	
              Deposit
                and Disbursement Accounts

            
	
              Disclosure
                Schedule 3.20

            	
              -

            	
              Government
                Contracts

            
	
              Disclosure
                Schedule 3.22

            	
              -

            	
              Consignor
                Letters

            
	
              Disclosure
                Schedule 3.25

            	
              -

            	
              License
                Agreements

            
	
              Disclosure
                Schedule 3.26

            	
              -

            	
              Material
                Contracts

            
	
              Disclosure
                Schedule 5.1

            	
              -

            	
              Trade
                Names

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Disclosure
                Schedule 6.2

            	
              -

            	
              Existing
                Investments

            
	
              Disclosure
                Schedule 6.3

            	
              -

            	
              Indebtedness

            
	
              Disclosure
                Schedule 6.4(a)

            	
              -

            	
              Transactions
                with Affiliates

            
	
              Disclosure
                Schedule 6.7

            	
              -

            	
              Existing
                Liens

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”),
      dated
      as of November 9, 2007 among FINLAY FINE JEWELRY CORPORATION, a Delaware
      corporation (“Finlay”),
      CARLYLE & CO. JEWELERS LLC, a Delaware limited liability company
      (“Carlyle”),
      L.
      CONGRESS, INC., a Florida corporation (“Congress”)
      (Finlay, Carlyle and Congress are sometimes collectively referred to herein
      as
      the “Borrowers” and individually as a “Borrower”); the other Credit Parties
      signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
      (in its individual capacity, “GE
      Capital”),
      for
      itself, as Lender, and as Agent for Lenders, and the other Lenders signatory
      hereto from time to time.

     

    RECITALS

     

    WHEREAS,
      Borrowers, GE Capital, for itself, as Lender and as Agent, and the lenders
      party
      thereto are party to that certain Third Amended and Restated Credit Agreement
      dated as of May 19, 2005, as amended by the Amendment dated as of April 7,
      2006,
      the Amendment dated as of April 24, 2006, Amendment No. 3 dated as of November
      30, 2006 and Amendment No. 4 dated as of December 27, 2006 and Amendment No.
      5,
      dated as of June 20, 2007 (as so amended, restated, supplemented or otherwise
      modified from time to time, the “Existing
      Credit Agreement”);
      and

     

    WHEREAS,
      Borrowers have requested that the Existing Credit Agreement be amended and
      restated in its entirety to read as set forth herein; and

     

    WHEREAS,
      Borrowers have requested that Lenders extend revolving facilities to Borrowers
      of up to Five Hundred Fifty Million Dollars ($550,000,000) in the aggregate
      for
      the purpose of funding the Acquisition and to provide (a) working capital
      financing for Borrowers and their respective Subsidiaries, (b) funds for other
      general corporate purposes of Borrowers and (c) funds for other purposes
      permitted hereunder; and for these purposes, Lenders are willing to make certain
      loans and other extensions of credit to Borrowers of up to such amount upon
      the
      terms and conditions set forth herein; and

     

    WHEREAS,
      the Lenders are willing to amend and restate the Existing Credit Agreement
      as
      set forth herein; and

     

    WHEREAS,
      Borrowers have agreed to continue to secure all of the Obligations by
      reaffirming its grant to Agent, for the benefit of Agent and Lenders, of a
      security interest in and lien upon all of its existing and after-acquired
      personal and real property; and

     

    WHEREAS,
      Finlay Enterprises, Inc., a Delaware corporation (“Parent”),
      is
      willing to guarantee all of the obligations of Borrowers to Agent and Lenders
      under the Loan Documents and to pledge to Agent, for the benefit of Agent and
      Lenders, all of the Stock of each of its Subsidiaries to secure such guaranty;
      and

     

    WHEREAS,
      capitalized terms used in this Agreement shall have the meanings ascribed to
      them in Annex
      A
      and, for
      purposes of this Agreement and the other Loan Documents, the rules of
      construction set forth in Annex A
      shall
      govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
      (collectively, “Appendices”)
      hereto, or expressly identified to this Agreement,
      are incorporated herein by reference, and taken together with this Agreement,
      shall constitute but a single agreement. These Recitals shall be construed
      as
      part of the Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual covenants
      hereinafter contained, and for other good and valuable consideration, the
      parties hereto agree as follows:

     

    
      	 	
              1.

            	
              AMOUNT
                AND TERMS OF CREDIT

            

    

     

    1.1. Credit
      Facilities. 

     

    (a) Revolving
      Credit Facility.

     

    (i) Subject
      to the terms and conditions hereof, each Tranche A Revolving Lender agrees
      to
      make available to Borrowers from time to time until the Commitment Termination
      Date its Pro Rata Share of advances (each, a “Tranche
      A Revolving Credit Advance”);
      provided, that no Tranche A Revolving Credit Advance shall be made at any time
      when the outstanding Tranche B Revolving Loan is less than the Tranche B Maximum
      Amount. The Pro Rata Share of the Tranche A Revolving Loan of any Tranche A
      Revolving Lender shall not at any time exceed its separate Tranche A Revolving
      Loan Commitment. The obligations of each Tranche A Revolving Lender hereunder
      shall be several and not joint. Until the Commitment Termination Date, Borrowers
      may borrow, repay and reborrow Tranche A Revolving Credit Advances under this
      Section
      1.1(a));
      provided that the amount of any Tranche A Revolving Credit Advance to be made
      at
      any time shall not exceed Borrowing Availability at such time. Borrowing
      Availability may be reduced by Reserves imposed by Agent in its reasonable
      credit judgment upon prior notice to Borrower Representative. Moreover, (x)
      the
      sum of the Tranche A Revolving Loan and Swing Line Loan outstanding shall not
      exceed at any time the Tranche A Borrowing Base, and (y) the sum of the Tranche
      A Revolving Loan, the Tranche B Revolving Loan and Swing Line Loan outstanding
      shall not exceed at any time the Aggregate Borrowing Base. Each Tranche A
      Revolving Credit Advance shall be made on notice by Borrower Representative
      on
      behalf of the applicable Borrower to one of the representatives of Agent
      identified in Schedule
      1.1
      at the
      address specified therein. Any such notice must be given no later than (1)
      12:00
      noon (New York time) on the Business Day of the proposed Tranche A Revolving
      Credit Advance, in the case of an Index Rate Loan, or (2) 12:00 noon (New York
      time) on the date which is three (3) Business Days prior to the proposed Tranche
      A Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice
      (a “Notice
      of Tranche A Revolving Credit Advance”)
      must
      be given in writing (by telecopy or overnight courier) substantially in the
      form
      of Exhibit
      1.1(a)(i),
      and
      shall include the information required in such Exhibit and such other
      information as may be reasonably required by Agent. If any Borrower desires
      to
      have the Tranche A Revolving Credit Advances bear interest by reference to
      a
      LIBOR Rate, Borrower Representative must comply with Section
      1.5(e).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (ii) Except
      as
      provided in Section
      1.11,
      each
      Borrower shall execute and deliver to each Tranche A Revolving Lender, if
      requested by such Lender, a note to evidence the Tranche A Revolving Loan
      Commitment of that Tranche A Revolving Lender. Each note shall be in the
      principal amount of the Tranche A Revolving Loan Commitment of the applicable
      Tranche A Revolving Lender, dated the Closing Date and substantially in the
      form
      of Exhibit
      1.1(a)(ii)
      (each a
“Tranche
      A Revolving Note”
and,
      collectively, the “Tranche
      A Revolving Notes”).
      Each
      Tranche A Revolving Note shall represent the obligation of the applicable
      Borrower to pay the amount of the applicable Tranche A Revolving Lender’s
      Tranche A Revolving Loan Commitment or, if less, such Tranche A Revolving
      Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Tranche
      A Revolving Credit Advances to such Borrower together with interest thereon
      as
      prescribed in Section
      1.4.
      The
      entire unpaid balance of the aggregate Tranche A Revolving Loan and all other
      non-contingent Obligations shall be immediately due and payable in full in
      immediately available funds on the Commitment Termination Date.

     

    (iii) Subject
      to the terms and conditions hereof, each Tranche B Revolving Lender agrees
      to
      make available to Borrowers from time to time until the Commitment Termination
      Date its Pro Rata Share of advances (each, a “Tranche
      B Revolving Credit Advance”).
      The
      Pro Rata Share of the Tranche B Revolving Loan of any Tranche B Revolving Lender
      shall not at any time exceed its separate Tranche B Revolving Loan Commitment.
      The obligations of each Tranche B Revolving Lender hereunder shall be several
      and not joint. Until the Commitment Termination Date, Borrowers may borrow,
      repay and reborrow Tranche B Revolving Credit Advances under this Section
      1.1(a));
      provided, that (A) the amount of any Tranche B Revolving Credit Advance to
      be
      made at any time shall not exceed Borrowing Availability at such time, (B)
      prior
      to repaying any Tranche B Revolving Credit Advances, all Tranche A Revolving
      Credit Advances shall have been repaid in full and all Letter of Credit
      Obligations shall have been cash collateralized in accordance with the
      provisions of Annex
      B,
      (C) on
      the Closing Date, Tranche B Revolving Credit Advances shall be made up to the
      full amount of the Tranche B Revolving Loan Commitment prior to the making
      of
      any Tranche A Revolving Credit Advances, (D) repayments of the Tranche B
      Revolving Credit Advances shall be in minimum amounts of $5,000,000, and (E)
      following any such repayment, the Tranche B Revolving Credit Advances may be
      reborrowed in minimum amounts of $5,000,000. Each Tranche B Revolving Credit
      Advance shall be made on notice by Borrower Representative on behalf of the
      applicable Borrower to one of the representatives of Agent identified in
Schedule
      1.1
      at the
      address specified therein. Any such notice must be given no later than (1)
      12:00
      noon (New York time) on the Business Day of the proposed Tranche B Revolving
      Credit Advance, in the case of an Index Rate Loan, or (2) 12:00 noon (New York
      time) on the date which is three (3) Business Days prior to the proposed Tranche
      B Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice
      (a “Notice
      of Tranche B Revolving Credit Advance”)
      must
      be given in writing (by telecopy or overnight courier) substantially in the
      form
      of Exhibit
      1.1(a)(iii),
      and
      shall include the information
      required in such Exhibit and such other information as may be reasonably
      required by Agent. If any Borrower desires to have the Tranche B Revolving
      Credit Advances bear interest by reference to a LIBOR Rate, Borrower
      Representative must comply with Section
      1.5(e).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (iv) Except
      as
      provided in Section
      1.11,
      each
      Borrower shall execute and deliver to each Tranche B Revolving Lender, if
      requested by such Lender, a note to evidence the Tranche B Revolving Loan
      Commitment of that Tranche B Revolving Lender. Each note shall be in the
      principal amount of the Tranche B Revolving Loan Commitment of the applicable
      Tranche B Revolving Lender, dated the Closing Date and substantially in the
      form
      of Exhibit
      1.1(a)(iv)
      (each a
“Tranche
      B Revolving Note”
and,
      collectively, the “Tranche
      B Revolving Notes”).
      Each
      Tranche B Revolving Note shall represent the obligation of the applicable
      Borrower to pay the amount of the applicable Tranche B Revolving Lender’s
      Tranche B Revolving Loan Commitment or, if less, such Tranche B Revolving
      Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Tranche
      B Revolving Credit Advances to such Borrower together with interest thereon
      as
      prescribed in Section
      1.4.
      The
      entire unpaid balance of the aggregate Tranche B Revolving Loan and all other
      non-contingent Obligations shall be immediately due and payable in full in
      immediately available funds on the Commitment Termination Date.

     

    (b) Swing
      Line Facility.

     

    (i) Agent
      shall notify the Swing Line Lender upon Agent’s receipt of any Notice of Tranche
      A Revolving Credit Advance. Subject to the terms and conditions hereof, the
      Swing Line Lender may make available from time to time until the Commitment
      Termination Date advances (each, a “Swing
      Line Advance”)
      in
      accordance with any such notice. The provisions of this Section
      1.1(b)
      shall
      not relieve Tranche A Revolving Lenders of their obligations to make Tranche
      A
      Revolving Credit Advances under Section
      1.1(a);
      provided
      that if
      the Swing Line Lender makes a Swing Line Advance pursuant to any such notice,
      such Swing Line Advance shall be in lieu of any Tranche A Revolving Credit
      Advance that otherwise may be made by Tranche A Revolving Credit Lenders
      pursuant to such notice. The aggregate amount of Swing Line Advances outstanding
      shall not exceed at any time the lesser of (A) the Swing Line Commitment and
      (B)
      the lesser of the Tranche A Maximum Amount and the Tranche A Borrowing Base,
      in
      each case, less the outstanding balance of the Tranche A Revolving Loan at
      such
      time (“Swing
      Line Availability”).
      Until
      the Commitment Termination Date, Borrowers may from time to time borrow, repay
      and reborrow under this Section
      1.1(b).
      Each
      Swing Line Advance shall be made pursuant to a Notice of Tranche A Revolving
      Credit Advance delivered to Agent by Borrower Representative on behalf of the
      applicable Borrower in accordance with Section
      1.1(a).
      Any
      such notice must be given no later than 12:00 noon (New York time) on the
      Business Day of the proposed Swing Line Advance. Unless the Swing Line Lender
      has received at least one Business Day’s prior written notice from Requisite
      Lenders instructing it not to make a Swing Line Advance,
      the Swing Line Lender shall, notwithstanding the failure of any condition
      precedent set forth in Sections
      2.2,
      be
      entitled to fund that Swing Line Advance, and to have each Tranche A Revolving
      Lender make Tranche A Revolving Credit Advances in accordance with Section
      1.1(b)(iii)
      or
      purchase participating interests in accordance with Section
      1.1(b)(iv).
      Notwithstanding any other provision of this Agreement or the other Loan
      Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrowers
      shall repay the aggregate outstanding principal amount of the Swing Line Loan
      upon demand therefor by Agent.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (ii) Each
      Borrower shall execute and deliver to the Swing Line Lender, at the request
      of
      the Swing Line Lender, a promissory note to evidence the Swing Line Commitment.
      Each note shall be in the principal amount of the Swing Line Commitment of
      the
      Swing Line Lender, dated the Closing Date and substantially in the form of
      Exhibit
      1.1(b)(ii)
      (each a
“Swing
      Line Note”
and,
      collectively, the “Swing
      Line Notes”).
      Each
      Swing Line Note shall represent the obligation of each Borrower to pay the
      amount of the Swing Line Commitment or, if less, the aggregate unpaid principal
      amount of all Swing Line Advances made to such Borrower together with interest
      thereon as prescribed in Section
      1.5.
      The
      entire unpaid balance of the Swing Line Loan and all other noncontingent
      Obligations shall be immediately due and payable in full in immediately
      available funds on the Commitment Termination Date if not sooner paid in
      full.

     

    (iii) The
      Swing
      Line Lender, at any time and from time to time no less frequently than once
      weekly shall on behalf of any Borrower (and each Borrower hereby irrevocably
      authorizes the Swing Line Lender to so act on its behalf) request each Tranche
      A
      Revolving Lender (including the Swing Line Lender) to make a Tranche A Revolving
      Credit Advance to each Borrower (which shall be an Index Rate Loan) in an amount
      equal to that Tranche A Revolving Lender’s Pro Rata Share of the principal
      amount of the applicable Borrower’s Swing Line Loan (the “Refunded
      Swing Line Loan”)
      outstanding on the date such notice is given. Unless any of the events described
      in Sections
      8.1(h) or 8.1(i)
      has
      occurred (in which event the procedures of Section
      1.1(b)(iv)
      shall
      apply) and regardless of whether the conditions precedent set forth in this
      Agreement to the making of a Tranche A Revolving Credit Advance are then
      satisfied, each Tranche A Revolving Lender shall disburse directly to Agent,
      its
      Pro Rata Share of a Tranche A Revolving Credit Advance on behalf of the Swing
      Line Lender prior to 3:00 p.m. (New York time) in immediately available funds
      on
      the date that notice is given; provided, that such notice shall have been given
      prior to 1:00 p.m. (New York time) on such date. The proceeds of those Tranche
      A
      Revolving Credit Advances shall be immediately paid to the Swing Line Lender
      and
      applied to repay the Refunded Swing Line Loan of the applicable
      Borrower.

     

    (iv) If,
      prior
      to refunding a Swing Line Loan with a Tranche A Revolving Credit Advance
      pursuant to Section
      1.1(b)(iii),
      one of
      the events described in Sections
      8.1(h) or 8.1(i)
      has
      occurred, then, subject to the provisions of Section
      1.1(b)(v)
      below,
      each Tranche A Revolving Lender shall, on the date such
      Tranche A Revolving Credit Advance was to have been made for the benefit of
      the
      applicable Borrower, purchase from the Swing Line Lender an undivided
      participation interest in the Swing Line Loan to such Borrower in an amount
      equal to its Pro Rata Share of such Swing Line Loan. Upon request, each Tranche
      A Revolving Lender shall promptly transfer to the Swing Line Lender, in
      immediately available funds, the amount of its participation
      interest.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (v) Each
      Tranche A Revolving Lender’s obligation to make Tranche A Revolving Credit
      Advances in accordance with Section
      1.1(b)(iii)
      and to
      purchase participation interests in accordance with Section
      1.1(b)(iv)
      shall be
      absolute and unconditional and shall not be affected by any circumstance,
      including (A) any setoff, counterclaim, recoupment, defense or other right
      that
      such Tranche A Revolving Lender may have against the Swing Line Lender, any
      Borrower or any other Person for any reason whatsoever; (B) the occurrence
      or
      continuance of any Default or Event of Default; (C) any inability of any
      Borrower to satisfy the conditions precedent to borrowing set forth in this
      Agreement at any time or (D) any other circumstance, happening or event
      whatsoever, whether or not similar to any of the foregoing. If any Tranche
      A
      Revolving Lender does not make available to Agent or the Swing Line Lender,
      as
      applicable, the amount required pursuant to Sections
      1.1(b)(iii)
      or
1.1(b)(iv),
      as the
      case may be, the Swing Line Lender shall be entitled to recover such amount
      on
      demand from such Tranche A Revolving Lender, together with interest thereon
      for
      each day from the date of non-payment until such amount is paid in full at
      the
      Federal Funds Rate for the first two Business Days and at the Index Rate
      thereafter.

     

    (c) Reliance
      on Notices; Appointment of Borrower Representative.
      Agent
      shall be entitled to rely upon, and shall be fully protected in relying upon,
      any Notice of Tranche A Revolving Credit Advance, Notice of Tranche B Revolving
      Credit Advance, Notice of Conversion/Continuation or similar notice received
      from any Borrower or the Borrower Representative believed by Agent to be
      genuine. Agent may assume that each Person executing and delivering any notice
      in accordance herewith was duly authorized, unless the responsible individual
      acting thereon for Agent has actual knowledge to the contrary. Each Borrower
      hereby designates Finlay as its representative and agent on its behalf for
      the
      purposes of issuing Notices of Revolving Credit Advances and Notices of
      Conversion/Continuation, giving instructions with respect to the disbursement
      of
      the proceeds of the Loans, selecting interest rate options, requesting Letters
      of Credit, giving and receiving all other notices and consents hereunder or
      under any of the other Loan Documents and taking all other actions (including
      in
      respect of compliance with covenants) on behalf of any Borrower or Borrowers
      under the Loan Documents. Borrower Representative hereby accepts such
      appointment. Agent and each Lender may regard any notice or other communication
      pursuant to any Loan Document from Borrower Representative as a notice or
      communication from all Borrowers, and may give any notice or communication
      required or permitted to be given to any Borrower or Borrowers hereunder to
      Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower
      agrees that each notice, election, representation and warranty, covenant,
      agreement and undertaking made on its behalf by Borrower Representative shall
      be
      deemed for all purposes to have been made by such Borrower and shall be
binding
      upon and enforceable against such Borrower to the same extent as if the same
      had
      been made directly by such Borrower.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    1.2. Letters
      of Credit.
      Subject
      to and in accordance with the terms and conditions contained herein and in
      Annex
      B,
      Borrower Representative, on behalf of the applicable Borrower, shall have the
      right to request, and Tranche A Revolving Lenders agree to incur, or purchase
      participations in, Letter of Credit Obligations in respect of each
      Borrower.

     

    1.3. Prepayments. 

     

    (a) Voluntary
      Prepayments; Reductions in Commitments.
      

     

    (i) Borrowers
      may at any time on at least three (3) Business Days’ prior written notice by
      Borrower Representative to Agent permanently reduce (but not terminate) the
      Tranche A Revolving Loan Commitment; provided
      that (A)
      any such reductions shall be in a minimum amount of $25,000,000 and integral
      multiples of $5,000,000 in excess of such amount or following the first such
      reduction, an amount equal to $50,000,000 minus the amount of such first
      reduction, (B) the Tranche A Revolving Loan Commitment shall not be reduced
      (except in connection with a termination) by more than $50,000,000 in the
      aggregate during the term of this Agreement or,
      in
      any event, to an amount less than the amount of the Tranche A Revolving Loan
      then outstanding, and (C) after giving effect to such reductions, Borrowers
      shall comply with Section
      1.3(b)(i).
      In
      addition, Borrowers may at any time on at least five (5) Business Days’ prior
      written notice by Borrower Representative to Agent terminate the Tranche A
      Revolving Loan Commitment; provided
      that
      upon such termination, all Loans and other Obligations shall be immediately
      due
      and payable in full and all Letter of Credit Obligations shall be cash
      collateralized or otherwise satisfied in accordance with Annex
      B
      hereto.
      Any voluntary prepayment and any reduction or termination of the Tranche A
      Revolving Loan Commitment must be accompanied by the payment of any LIBOR
      funding breakage costs in accordance with Section
      1.13(b).
      Upon
      any such reduction or termination of the Tranche A Revolving Loan Commitment,
      each Borrower’s right to request Tranche A Revolving Credit Advances, or request
      that Letter of Credit Obligations be incurred on its behalf, or request Swing
      Line Advances, shall simultaneously be permanently reduced or terminated, as
      the
      case may be; provided
      that a
      permanent reduction of the Tranche A Revolving Loan Commitment shall not require
      a corresponding pro rata reduction in the L/C Sublimit.

     

    (ii) Borrowers
      may at any time on at least three (3) Business Days’ prior written notice by
      Borrower Representative to Agent permanently reduce (but not terminate) the
      Tranche B Revolving Loan Commitment; provided
      that (A)
      any such reductions shall be in a minimum amount of $5,000,000 and integral
      multiples of $5,000,000 in excess of such amount and (B) prior to any such
      permanent reduction, all Tranche A Revolving Credit Advances shall have been
      repaid in full and all Letter of Credit Obligations shall have been cash
      collateralized in accordance with the provisions of Annex
      B.
      In
      addition, Borrowers
      (x) may, at any time on at least five (5) Business Days’ prior written notice by
      Borrower Representative to Agent, and (y) shall, upon any termination of the
      Tranche A Revolving Loan Commitment, terminate the Tranche B Revolving Loan
      Commitment; provided,
      that
      upon any such termination, all Tranche B Revolving Loans shall be immediately
      due and payable in full. Any voluntary prepayment and any reduction or
      termination of the Tranche B Revolving Loan Commitment must be accompanied
      by
      the payment of any LIBOR funding breakage costs in accordance with Section
      1.13(b)
      and any
      fee payable in accordance with Section
      1.9(e).
      Upon
      any such reduction or termination of the Tranche B Revolving Loan Commitment,
      each Borrower’s right to request Tranche B Revolving Credit Advances shall
      simultaneously be permanently reduced or terminated.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b) Mandatory
      Prepayments.

     

    (i) If
      at any
      time the aggregate outstanding balances of the Tranche A Revolving Loan and
      the
      Swing Line Loan exceed the lesser of (A) the Tranche A Maximum Amount and (B)
      the Tranche A Borrowing Base, Borrowers shall immediately repay the aggregate
      outstanding Tranche A Revolving Credit Advances to the extent required to
      eliminate such excess. If any such excess remains after repayment in full of
      the
      aggregate outstanding Tranche A Revolving Credit Advances, Borrowers shall
      provide cash collateral for the Letter of Credit Obligations in the manner
      set
      forth in Annex
      B
      to the
      extent required to eliminate such excess.

     

    (ii) Immediately
      upon receipt by any Credit Party on or after the Closing Date of any working
      capital, earnings, balance sheet or similar adjustment payment under the
      Acquisition Agreement or cash proceeds of any asset disposition, Borrowers
      shall, jointly and severally, prepay the Loans in an amount equal to all such
      adjustment payments or proceeds, net of (A) commissions and other reasonable
      and
      customary transaction costs, fees and expenses properly attributable to such
      transaction and payable by Borrowers in connection therewith (in each case,
      paid
      to non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior
      Liens on such asset (to the extent such Liens constitute Permitted Encumbrances
      hereunder), if any, and (D) an appropriate reserve for income taxes and
      contingent liabilities, in each case, in accordance with GAAP in connection
      therewith. Any such prepayment shall be applied in accordance with Section
      1.3(c).
      The
      following shall not be subject to mandatory prepayment under this clause
      (ii):
      (1)
      proceeds of sales of Inventory in the ordinary course of business; (2) asset
      disposition proceeds of less than $500,000 in the aggregate in any Fiscal Year
      and (3) asset disposition proceeds that are reinvested in Equipment, Fixtures
      or
      Real Estate within one hundred and eighty (180) days following receipt thereof;
      provided that Borrower notifies Agent of its intent to reinvest at the time
      such
      proceeds are received and when such reinvestment occurs.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (iii) If
      Parent
      or any Borrower issues Stock or debt securities or incurs any indebtedness
      for
      borrowed money on or after the Closing Date, no later than the Business Day
      following the date of receipt of the proceeds thereof, all Borrowers (in the
      case of an issuance by Parent) or the issuing Borrower shall prepay the Loans
      (and cash collateralize Letter of Credit Obligations) in an amount equal to
      all
      such proceeds, net of underwriting discounts and commissions and other costs
      paid to non-Affiliates in connection therewith. Any such prepayment shall be
      applied in accordance with Section
      1.3(c).
      The
      following shall not be subject to prepayment under this clause
      (iii):
      (A)
      proceeds of Stock issuances to employees, officers and directors of Parent
      and
      its Subsidiaries, (B) any intercompany Stock issuances between Finlay and one
      or
      more of its Subsidiaries or (C) consideration received in connection with a
      Permitted Acquisition. 

     

    (c) Application
      of Certain Mandatory Prepayments.
      Any
      prepayments made by any Borrower pursuant to Section
      1.3(b)(ii) or (iii)
      above
      shall be applied as follows: first,
      to Fees
      and reimbursable expenses of Agent then due and payable pursuant to any of
      the
      Loan Documents; second,
      to
      interest then due and payable on that Borrower’s Swing Line Loan; third,
      to the
      principal balance of the Swing Line Loan outstanding to that Borrower until
      the
      same has been repaid in full; fourth,
      to
      interest then due and payable on Tranche A Revolving Credit Advances made to
      that Borrower; fifth,
      to the
      principal balance of Tranche A Revolving Credit Advances outstanding to that
      Borrower until the same has been paid in full; sixth,
      to any
      Letter of Credit Obligations of such Borrower to provide cash collateral
      therefore in the manner set forth in Annex B,
      until
      all such Letter of Credit Obligations have been fully cash collateralized in
      the
      manner set forth in Annex
      B;
      seventh,
      to
      interest then due and payable on the Swing Line Loan of each other Borrower,
      pro
      rata; eighth,
      to the
      principal balances of the Swing Line Loan outstanding to each other Borrower,
      pro rata, until the same have been repaid in full; ninth,
      to
      interest then due and payable on the Tranche A Revolving Credit Advances
      outstanding to each other Borrower, pro rata; tenth,
      to the
      principal balance of the Tranche A Revolving Credit Advances made to each other
      Borrower, pro rata, until the same has been paid in full; eleventh,
      to any
      Letter of Credit Obligations of each other Borrower, pro rata, to provide cash
      collateral therefore in the manner set forth in Annex
      B,
      until
      all such Letter of Credit Obligations have been fully cash collateralized;
      twelfth,
      to
      interest then due and payable on Tranche B Revolving Credit Advances made to
      that Borrower; thirteenth,
      to the
      principal balance of Tranche B Revolving Credit Advances outstanding to that
      Borrower until the same has been paid in full, with a corresponding permanent
      reduction in the Tranche B Revolving Loan Commitments; fourteenth,
      to
      interest then due and payable on the Tranche B Revolving Credit Advances
      outstanding to each other Borrower, pro rata; and last,
      to the
      principal balance of the Tranche B Revolving Credit Advances made to each other
      Borrower, pro rata, until the same has been paid in full, with a corresponding
      permanent reduction in the Tranche B Revolving Loan Commitments. Neither the
      Tranche A Revolving Loan Commitment nor the Swing Line Commitment shall be
      permanently reduced by the amount of any such prepayments.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (d) No
      Implied Consent.
      Nothing
      in this Section
      1.3
      shall be
      construed to constitute Agent’s or any Lender’s consent to any transaction that
      is not permitted by other provisions of this Agreement or the other Loan
      Documents.

     

    1.4. Use
      of
      Proceeds.
      Borrowers shall utilize the proceeds of the Loans solely in connection with
      the
      Related Transactions, and for the financing of Borrowers’ ordinary working
      capital and general corporate needs (including, any Permitted Acquisition).
      Disclosure
      Schedule (1.4)
      contains
      a description of Borrowers’ sources and uses of funds as of the Closing Date,
      including Loans and Letter of Credit Obligations to be made or incurred on
      that
      date, and a funds flow memorandum detailing how funds from each source are
      to be
      transferred to particular uses.

     

    1.5. Interest
      and Applicable Margins. 

     

    (a) Borrowers
      shall pay interest to Agent, for the ratable benefit of Lenders in accordance
      with the various Loans being made by each Lender, in arrears on each applicable
      Interest Payment Date, at the following rates: (i) with respect to the Tranche
      A
      Revolving Credit Advances, the Index Rate plus the Applicable Tranche A Revolver
      Index Margin per annum or, at the election of Borrower Representative, the
      applicable LIBOR Rate plus the Applicable Tranche A Revolver LIBOR Margin per
      annum; (ii) with respect to the Swing Line Loan, the Index Rate plus the
      Applicable Tranche A Revolver Index Margin per annum; and (iii) with respect
      to
      the Tranche B Revolving Credit Advances, the Index Rate plus the Applicable
      Tranche B Revolver Index Margin per annum or, at the election of Borrower
      Representative, the applicable LIBOR Rate plus the Applicable Tranche B Revolver
      LIBOR Margin per annum.

     

    As
      of the
      Closing Date, the Applicable Margins are as follows:

     

    
      	
              Applicable
                Tranche A Revolver Index Margin

               

            	
              0.25%

               

            
	
              Applicable
                Tranche A Revolver LIBOR Margin

               

            	
              2.00%

               

            
	
              Applicable
                Tranche B Revolver Index Margin

               

            	
              2.75%

               

            
	
              Applicable
                Tranche B Revolver LIBOR Margin

            	
              4.50%

            

    

    

    Commencing
      with the calendar quarter beginning January 1, 2009, the Applicable Tranche
      A
      Revolver Index Margin and Applicable Tranche A Revolver LIBOR Margin shall
      be
      determined by reference to the following grids:

     

    
      
        	
                If
                  Average Adjusted Excess

                 Availability
                  is:

              	 	
                Level
                  of

                Applicable
                  Margins:

              	 
	
                <
                  $75,000,000

              	 	 	
                Level
                  I

              	 
	
                <$100,000,000,
                  but >
                  $75,000,000

              	 	 	
                Level
                  II

              	 
	
                <$150,000,000,
                  but >
                  $100,000,000

              	 	 	
                Level
                  III

              	 
	
                <$200,000,000,
                  but >
                  $150,000,000

              	 	 	
                Level
                  IV

              	 
	
                >$200,000,000

              	 	 	
                Level
                  V

              	 

      

    

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      
        	 	 	
                Applicable
                  Margins

              	 
	 	 	
                Level
                  I

              	 	
                Level
                  II

              	 	
                Level
                  III

              	 	
                Level
                  IV

              	 	
                Level
                  V

              	 
	
                Applicable
                  Tranche A Revolver

                Index
                  Margin

              	 	 	
                0.50

              	
                %

              	 	
                0.25

              	
                %

              	 	
                0.00

              	
                %

              	 	
                0.00

              	
                %

              	 	
                0.00

              	
                %

              
	
                Applicable
                  Tranche A Revolver LIBOR Margin

              	 	 	
                2.25

              	
                %

              	 	
                2.00

              	
                %

              	 	
                1.75

              	
                %

              	 	
                1.50

              	
                %

              	 	
                1.25

              	
                %

              

      

    

    

    Adjustments
      in the Applicable Margins shall be implemented on a prospective basis for each
      calendar quarter following delivery to Agent of a certificate from the Credit
      Parties, which certificate shall be delivered within five (5) Business Days
      after the end of each calendar quarter) stating the Average Adjusted Excess
      Availability for the most recently ended calendar quarter and evidencing the
      need for an adjustment. Failure to timely deliver such certificate shall result
      in an increase in the Applicable Margins to the highest level set forth in
      the
      foregoing grid, until the first day of the calendar month following the delivery
      of such certificate demonstrating that such an increase is not required. If
      an
      Event of Default has occurred and is continuing at the time any reduction in
      the
      Applicable Margins is to be implemented, that reduction shall be deferred until
      the first day of the first calendar month following the date on which such
      Event
      of Default is waived or cured.

     

    (b) If
      any
      payment on any Loan becomes due and payable on a day other than a Business
      Day,
      the maturity thereof will be extended to the next succeeding Business Day
      (except as set forth in the definition of LIBOR Period) and, with respect to
      payments of principal, interest thereon shall be payable at the then applicable
      rate during such extension.

     

    (c) 
      All
      computations of Fees shall be calculated on a per annum basis and interest
      shall
      be calculated by Agent on the basis of a 360-day year, in each case for the
      actual number of days occurring in the period for which such interest and Fees
      are payable. The Index Rate is a floating rate determined for each day. Each
      determination by Agent of an interest rate and Fees hereunder shall be
      presumptive evidence of the correctness of such rates and Fees.

     

    (d) So
      long
      as an Event of Default has occurred and is continuing under Section
      8.1(a), (h) or (i)
      or so
      long as any other Event of Default has occurred and is continuing and at the
      election of Agent (or upon the written request of Requisite Lenders) confirmed
      by written notice from Agent to Borrower Representative, the interest rates
      applicable to the Loans and the Letter of Credit Fees shall be increased by
      two
      percentage points (2%) per annum above the rates of interest or the rate of
      such
      Fees otherwise applicable hereunder unless Agent or Requisite Lenders elect
      to
      impose a smaller increase (the “Default
      Rate”),
      and
      all outstanding Obligations shall bear interest at the Default Rate applicable
      to such Obligations. Interest and Letter of Credit Fees at the Default Rate
      shall accrue from the initial date of such Event of Default until that Event
      of
      Default is cured or waived and shall be payable upon demand.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (e) Subject
      to the conditions precedent set forth in Section
      2.2,
      Borrower Representative shall have the option to (i) request that any Tranche
      A
      Revolving Credit Advance
      or Tranche B Revolving Credit Advance be made as a LIBOR Loan, (ii) convert
      at
      any time all or any part of outstanding Loans (other than the Swing Line Loan)
      from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index
      Rate Loan and subject to payment of LIBOR breakage costs in accordance with
      Section
      1.13(b)
      if such
      conversion is made prior to the expiration of the LIBOR Period applicable
      thereto, or (iv) continue all or any portion of any Loan (other than the Swing
      Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
      and the succeeding LIBOR Period of that continued Loan shall commence on the
      first day after the last day of the LIBOR Period of the Loan to be continued.
      Any Loan or group of Loans having the same proposed LIBOR Period to be made
      or
      continued as, or converted into, a LIBOR Loan must be in a minimum amount of
      $1,000,000 and integral multiples of $1,000,000 in excess of such amount. Any
      such election must be made no later than 12:00 noon (New York time) on
      the
      third Business Day prior to (1) the date of any proposed Advance which is
      to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
      respect to any LIBOR Loans to be continued as such, or (3) the date on
      which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR
      Loan for a LIBOR Period designated by Borrower Representative in such election,
      as applicable. If no election is received with respect to a LIBOR Loan by 12:00
      noon (New York time) on the third Business Day prior to the end of the LIBOR
      Period with respect thereto (or if a Default or an Event of Default has occurred
      and is continuing or if the additional conditions precedent set forth in
Section
      2.2
      shall
      not have been satisfied), that LIBOR Loan shall be converted to an Index Rate
      Loan at the end of its LIBOR Period. Borrower Representative must make such
      election by notice to Agent in writing, by telecopy or overnight courier. In
      the
      case of any conversion or continuation, such election must be made pursuant
      to a
      written notice (a “Notice
      of Conversion/Continuation”)
      in the
      form of Exhibit
      1.5(e).
      No Loan
      may be made as or converted into a LIBOR Loan until the earlier of (i)
      forty-five (45) days after the Closing Date or (ii) completion of primary
      syndication as determined by Agent.

     

    (f) Notwithstanding
      anything to the contrary set forth in this Section 1.5,
      if a
      court of competent jurisdiction determines in a final order that the rate of
      interest payable hereunder exceeds the highest rate of interest permissible
      under law (the “Maximum Lawful Rate”), then so long as the Maximum Lawful Rate
      would be so exceeded, the rate of interest payable hereunder shall be equal
      to
      the Maximum Lawful Rate; provided,
      however, that if at any time thereafter the rate of interest payable hereunder
      is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest
      hereunder at the Maximum Lawful Rate until such time as the total interest
      received by Agent, on behalf of Lenders, is equal to the total interest that
      would have been received had the interest rate payable hereunder been (but
      for
      the operation of this paragraph) the interest rate payable since the Closing
      Date as otherwise provided in this Agreement. In no event shall the total
      interest received by any Lender pursuant to the terms hereof exceed the amount
      that such Lender could lawfully have received had the interest due hereunder
      been calculated for the full term hereof at the Maximum Lawful
      Rate.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    1.6. Eligible
      Accounts.
      The Net
      Amount of Finlay Receivables owned by any Finlay Credit Party and reflected
      in
      the most recent Borrowing Base Certificate delivered to Agent shall be
“Eligible
      Accounts”
for
      purposes of this Agreement, except to the extent that Agent, in its reasonable
      credit judgment, has determined such amount is not an Eligible Account. Agent
      shall have the right to establish, modify or eliminate Reserves against Eligible
      Accounts from time to time in its reasonable credit judgment upon prior notice
      to Borrower Representative. In addition, Agent reserves the right, at any time
      and from time to time after the Closing Date, to adjust any of the criteria
      set
      forth below and to establish new criteria, in its reasonable credit judgment,
      subject to the approval of each Lender in the case of adjustments or new
      criteria which have the effect of making more credit available.  Without in
      any
      way limiting the discretion of Agent to deem or not deem any Account as an
      Eligible Account, Eligible Accounts shall not include any Account of any Finlay
      Credit Party:

     

    (a) that
      does
      not arise from the sale of goods or the performance of services by such Finlay
      Credit Party in the ordinary course of its business;

     

    (b) (i)
      upon
      which such Finlay Credit Party’s right to receive payment is not absolute or is
      contingent upon the fulfillment of any condition whatsoever or (ii) as to which
      such Finlay Credit Party is not able to bring suit or otherwise enforce its
      remedies against the Account Debtor through judicial process or (iii) if the
      Account represents a progress billing consisting of an invoice for goods sold
      or
      used or services rendered pursuant to a contract under which the Account
      Debtor’s obligation to pay that invoice is subject to such Finlay Credit Party’s
      completion of further performance under such contract or is subject to the
      equitable lien of a surety bond issuer;

     

    (c) to
      the
      extent that any defense, counterclaim, setoff or dispute is asserted as to
      such
      Account, but only to the extent of any such asserted defense, counterclaim,
      set
      off, or dispute;

     

    (d) that
      is
      not a true and correct statement of bona fide indebtedness incurred in the
      amount of the Account for merchandise sold to or services rendered and accepted
      by the applicable Account Debtor;

     

    (e) with
      respect to which an invoice, reasonably acceptable to Agent in form and
      substance, has not been sent to the applicable Account Debtor;

     

    (f) that
      (i)
      is not owned by such Finlay Credit Party or (ii) is subject to any Lien of
      any
      other Person, other than Liens in favor of Agent, on behalf of itself and
      Lenders;

     

    (g) that
      arises from a sale to any director, officer, other employee or Affiliate of
      any
      Credit Party, or to any entity that has any common officer or director with
      any
      Credit Party;

     

    (h) that
      is
      the obligation of an Account Debtor that is the United States government or
      a
      political subdivision thereof, or any state, county or municipality or
      department, agency or instrumentality thereof unless Agent, in its sole
      discretion, has agreed to the contrary in writing and such Finlay Credit Party,
      if necessary or desirable, has complied with respect to such obligation with
      the
      Federal Assignment of Claims Act of 1940, or any applicable state, county or
      municipal law restricting assignment thereof;

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (i) that
      is
      the obligation of an Account Debtor located in a foreign country other than
      Canada unless payment thereof is assured by a letter of credit assigned and
      delivered to Agent, reasonably satisfactory to Agent as to form, amount and
      issuer;

     

    (j) to
      the
      extent such Finlay Credit Party or any Subsidiary thereof is liable for goods
      sold or services rendered by the applicable Account Debtor to such Finlay Credit
      Party or any Subsidiary thereof but only to the extent of the potential
      offset;

     

    (k) that
      arises with respect to goods that are delivered on a bill-and-hold,
      cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
      by reason of which the payment by the Account Debtor is or may be
      conditional;

     

    (l) that
      is
      in default; provided,
      that,
      without limiting the generality of the foregoing, an Account shall be deemed
      in
      default upon the occurrence of any of the following:

     

    (i) the
      Account is not paid within the earlier of: sixty (60) days following its due
      date or ninety (90) days following its original invoice date;

     

    (ii) the
      Account Debtor obligated upon such Account suspends business, makes a general
      assignment for the benefit of creditors or fails to pay its debts generally
      as
      they come due; or

     

    (iii) a
      petition is filed by or against any Account Debtor obligated upon such Account
      under any bankruptcy law or any other federal, state or foreign (including
      any
      provincial) receivership, insolvency relief or other law or laws for the relief
      of debtors;

     

    (m) that
      is
      the obligation of an Account Debtor if fifty percent (50%) or more of the Dollar
      amount of all Accounts owing by that Account Debtor are ineligible under the
      other criteria set forth in this Section
      1.6;

     

    (n) as
      to
      which Agent’s Lien thereon, on behalf of itself and Lenders, is not a first
      priority perfected Lien;

     

    (o) as
      to
      which any of the representations or warranties in the Loan Documents are
      untrue;

     

    (p) to
      the
      extent such Account is evidenced by a judgment, Instrument or Chattel
      Paper;

     

    (q) that
      is
      payable in any currency other than Dollars;

    
       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

    

    (r) with
      respect to Accounts arising under a License Agreement, if such License Agreement
      has been terminated (or notice of termination given) or is otherwise not in
      full
      force and effect (or, if not in effect because such License Agreement has been
      approved as a reasonably acceptable arrangement by Agent, if Agent’s approval
      has not been rescinded), the applicable Finlay Credit Party or licensor
      thereunder is in material default
      under such License Agreement, the licensor under such License Agreement is
      entitled to withhold amounts which may be withheld only upon default by the
      applicable Finlay Credit Party thereunder, or the Account Debtor under such
      License Agreement has no place of business in the United States;

     

    (s) with
      respect to Accounts arising under a License Agreement, to the extent that any
      sale thereunder was made other than in accordance with the terms of the License
      Agreement; 

     

    (t) that
      is
      assigned to the credit insurance company pursuant to the Factor Guaranties;
      and

     

    (u) that
      arises from an Unapproved License Agreement.

     

    1.7. Eligible
      Inventory.
      All of
      the Inventory owned by the Borrowers and reflected in the most recent Borrowing
      Base Certificate delivered by each Borrower to Agent shall be “Eligible
      Inventory”
for
      purposes of this Agreement, except Inventory that Agent, in its reasonable
      credit judgment and upon prior notice to Borrower Representative, has determined
      is not Eligible Inventory. Agent shall have the right to establish, modify
      or
      eliminate Reserves against Eligible Inventory from time to time in its
      reasonable credit judgment, in each case, upon prior notice to Borrower
      Representative. In addition, Agent reserves the right, at any time and from
      time
      to time after the Closing Date, to adjust any of the criteria set forth below
      and to establish new criteria, in its reasonable credit judgment and upon prior
      notice to Borrower Representative, subject to the approval of each Lender in
      the
      case of adjustments or new criteria which have the effect of making more credit
      available. Without in
      any
      way limiting the discretion of Agent to deem or not deem any Inventory as
      Eligible Inventory, Eligible Inventory shall not include any Inventory of any
      Borrower that:

     

    (a) is
      not
      owned by such Borrower free and clear of all Liens and rights of any other
      Person (including the rights of a purchaser that has made progress payments
      and
      the rights of a surety that has issued a bond to assure such Borrower’s
      performance with respect to that Inventory), except the Liens in favor of Agent,
      on behalf of itself and Lenders, and Permitted Encumbrances in favor of
      landlords and bailees to the extent permitted in Section
      5.9
      hereof
      (subject to Reserves established by Agent in accordance with Section
      5.9
      hereof);
provided,
      that,
      Inventory subject to the Rolex Security Agreement shall not be deemed to be
      ineligible solely because of the provisions of this clause (a); provided,
      further,
      that,
      the Congress Rolex Inventory shall not be deemed to be ineligible solely because
      of the provisions in this clause (a) so long as the Congress Rolex Intercreditor
      is in full force and effect;

     

    (b) (i)
      is
      not located on premises owned, leased or rented by such Borrower and set forth
      in Disclosure
      Schedule (3.2)
      (as the
      same may be updated from time to time), or (ii) is stored at a leased location,
      unless Agent has given its prior consent thereto and unless either (x) a
      reasonably satisfactory landlord waiver has been delivered to Agent, or (y)
      Reserves reasonably satisfactory to Agent have been established with respect
      thereto or (iii) is stored with a bailee or warehouseman unless a reasonably
      satisfactory, acknowledged bailee letter has been received by Agent and Reserves
      reasonably
      satisfactory to Agent have been established with respect thereto, or (iv) is
      located at an owned location subject to a mortgage in favor of a lender other
      than Agent unless a reasonably satisfactory mortgagee waiver has been delivered
      to Agent;

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (c) is
      placed
      on consignment or is in transit, except for Inventory in transit between
      domestic locations of Credit Parties;

     

    (d) is
      covered by a negotiable document of title, unless such document has been
      delivered to Agent with all necessary endorsements, free and clear of all Liens
      except those in favor of Agent and Lenders;

     

    (e) is
      obsolete, slow moving, unsalable, shopworn, seconds, damaged or unfit for
      sale;

     

    (f) consists
      of display items or packing or shipping materials, manufacturing supplies,
      work-in-process Inventory or replacement parts;

     

    (g) is
      not of
      a type held for sale in the ordinary course of such Borrower’s
      business;

     

    (h) is
      not
      subject to a first priority lien in favor of Agent on behalf of itself and
      Lenders, subject to Permitted Encumbrances as set forth in clause
      (e)
      of the
      definition thereof (subject to reserves satisfactory to Agent);

     

    (i) breaches
      any of the representations or warranties pertaining to Inventory set forth
      in
      the Loan Documents;

     

    (j) consists
      of any costs associated with “freight-in” charges;

     

    (k) consists
      of Hazardous Materials or goods that can be transported or sold only with
      licenses that are not readily available;

     

    (l) is
      not
      covered by casualty insurance reasonably acceptable to Agent; or

     

    (m) is
      subject to any patent or trademark license requiring the payment of royalties
      or
      fees or requiring the consent of the licensor for a sale thereof by Agent;
      provided,
      however,
      that,
      there shall be included as Eligible Inventory (i) all Rolex Inventory and (ii)
      certain Inventory subject to the DAR License Agreement with an aggregate cost
      value of $500,000.

     

    1.8. Cash
      Management Systems.
      Borrowers will establish and will maintain until the Termination Date, the
      cash
      management systems described in Annex
      C
      (the
“Cash
      Management Systems”).

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    1.9. Fees. 

     

    (a) Borrowers
      shall pay to GE Capital, individually, the Fees specified in the GE Capital
      Fee
      Letter.

     

    (b) As
      additional compensation for the Tranche A Revolving Lenders, Borrowers shall
      pay
      to Agent, for the ratable benefit of such Lenders, in arrears, on the first
      Business Day of each month prior to the Commitment Termination Date and on
      the
      Commitment Termination Date, a Fee for Borrowers’ non-use of available funds in
      an amount equal to one quarter of one percent (0.25%) per annum (calculated
      on
      the basis of a 360 day year for actual days elapsed) multiplied by the
      difference between (x) the Tranche A Maximum Amount (as it may be reduced from
      time to time) and (y) the average for the period of the daily closing balances
      of the aggregate Tranche A Revolving Loan and the Swing Line Loan outstanding
      during the period for which such Fee is due. 

     

    (c) As
      additional compensation for the Tranche B Revolving Lenders, Borrowers shall
      pay
      to Agent, for the ratable benefit of such Lenders, in arrears, on the first
      Business Day of each month prior to the Commitment Termination Date and on
      the
      Commitment Termination Date, a Fee for Borrowers’ non-use of available funds in
      an amount equal to four and one half percent (4.50%) per annum (calculated
      on
      the basis of a 360 day year for actual days elapsed) multiplied by the
      difference between (x) the Tranche B Maximum Amount (as it may be reduced from
      time to time) and (y) the average for the period of the daily closing balances
      of the aggregate Tranche B Revolving Loan outstanding during the period for
      which such Fee is due.

     

    (d) Borrowers
      shall pay to Agent, for the ratable benefit of Tranche A Revolving Lenders,
      the
      Letter of Credit Fee as provided in Annex
      B.

     

    (e) If
      Borrowers permanently reduce or terminate the Tranche B Revolving Loan
      Commitment, whether voluntarily or involuntarily and whether before or after
      acceleration of the Obligations, Borrowers shall pay to Agent, for the benefit
      of Tranche B Revolving Lenders as liquidated damages and compensation for the
      costs of being prepared to make funds available hereunder an amount equal to
      the
      Applicable Percentage (as defined below) multiplied by the amount of the
      reduction of the Tranche B Revolving Loan Commitment. As used in this
Section
      1.9(e),
      the
      term “Applicable Percentage” shall mean (x) two percent (2%), in the case of a
      reduction or termination on or prior to the first anniversary of the Closing
      Date, (y) one percent (1%), in the case of a reduction or termination after
      the
      first anniversary of the Closing Date but on or prior to the second anniversary
      thereof, and (z) zero percent (0%) in the case of a reduction or termination
      after the second anniversary of the Closing Date. The Credit Parties agree
      that
      the Applicable Percentages are a reasonable calculation of Tranche B Revolving
      Lenders’ lost profits in view of the difficulties and impracticality of
      determining actual damages resulting from an early termination of the Tranche
      B
      Revolving Loan Commitments. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    1.10. Receipt
      of Payments.
      Borrowers shall make each payment under this Agreement not later than 12:00
      noon
      (New York time) on the day when due in immediately available funds in Dollars
      to
      the Collection Account. For purposes of computing interest and Fees and
      determining Borrowing Availability as of any date, all payments shall be deemed
      received on the Business Day on which immediately available funds therefor
      are
      received in the Collection Account prior to 12:00 noon (New York time). Payments
      received after 12:00 noon (New York time)
      on
      any Business Day or on a day that is not a Business Day shall be deemed to
      have
      been received on the following Business Day.

     

    1.11. Application
      and Allocation of Payments. 

     

    (a) So
      long
      as no Event of Default has occurred and is continuing, (i) payments consisting
      of proceeds of Accounts received in the ordinary course of business shall be
      applied, first, to the Swing Line Loan, second, to the Tranche A Revolving
      Credit Advances, third, to provide cash collateral for Letter of Credit
      Obligations in the manner set forth in Annex
      B,
      and
      fourth, to the Tranche B Revolving Credit Advances subject to the provisions
      of
Section
      1.1(a)(iii);
      (ii)
      voluntary prepayments shall be applied in accordance with the provisions of
      Section
      1.3(a);
      and
      (iii) mandatory prepayments shall be applied as set forth in Section
      1.3(c).
      All
      payments and prepayments applied to a particular Loan shall be applied ratably
      to the portion thereof held by each Lender as determined by its Pro Rata
      Share. As to any other payment, and as to all payments made when an Event of
      Default has occurred and is continuing or following the Commitment Termination
      Date, each Borrower hereby irrevocably waives the right to direct the
      application of any and all payments received from or on behalf of such Borrower,
      and each Borrower hereby irrevocably agrees that Agent shall have the continuing
      exclusive right to apply any and all such payments against the Obligations
      of
      Borrowers as Agent may deem advisable notwithstanding any previous entry by
      Agent in the Loan Account or any other books and records for so long as an
      Event
      of Default has occurred and is continuing. In all circumstances, after
      acceleration or maturity of the Obligations, all payments and proceeds of
      Collateral shall be applied to amounts then due and payable in the following
      order: (1) to Fees and Agent’s expenses reimbursable hereunder; (2) to interest
      on the Swing Line Loan; (3) to principal payments on the Swing Line Loan; (4)
      to
      interest on the Tranche A Revolving Loan; (5) to principal payments on the
      Tranche A Revolving Loan and to provide cash collateral for contingent Letter
      of
      Credit Obligations in the manner described in Annex
      B,
      ratably
      to the aggregate, combined principal balance of the Tranche A Revolving Loan
      and
      outstanding Letter of Credit Obligations; (6) to interest on the Tranche B
      Revolving Loan; (7) to principal payments on the Tranche B Revolving Loan;
      and
      (8) to all other Obligations, including expenses of Lenders to the extent
      reimbursable under Section
      11.3
      and any
      Obligations under any Secured Rate Contract, ratably to all such Obligations.
      

     

    (b) Agent
      is
      authorized to, and at its sole election may, charge to the Tranche A Revolving
      Loan balance on behalf of each Borrower and cause to be paid all Fees, expenses,
      Charges, costs (including insurance premiums in accordance with Section
      5.4(a))
      and
      interest and principal, other than principal of the Tranche A Revolving Loan,
      owing by Borrowers under this Agreement or any of the other Loan Documents
      if
      and to the extent Borrowers fail to pay promptly any such amounts as and when
      due, even if the amount of such charges would exceed Borrowing Availability
      at
      such time after giving effect to such charges. At Agent’s option and to the
      extent permitted by law, any charges so made shall constitute part of the
      Tranche A Revolving Loan hereunder.

     

    
      
        
        

      

      
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    1.12. Loan
      Account and Accounting.
      Agent
      shall maintain a loan account (the “Loan
      Account”)
      on its
      books to record: all Advances, all payments made by Borrowers, and all other
      debits
      and credits as provided in this Agreement with respect to the Loans or any
      other
      Obligations. All entries in the Loan Account shall be made in accordance with
      Agent’s customary accounting practices as in effect from time to time. The
      balance in the Loan Account, as recorded on Agent’s most recent printout or
      other written statement, shall, absent manifest error, be presumptive evidence
      of the amounts due and owing to Agent and Lenders by each Borrower; provided
      that any
      failure to so record or any error in so recording shall not limit or otherwise
      affect any Borrower’s duty to pay the Obligations. Agent shall render to
      Borrower Representative a monthly accounting of transactions with respect to
      the
      Loans setting forth the balance of the Loan Account as to each Borrower for
      the
      immediately preceding month. Unless Borrower Representative notifies Agent
      in
      writing of any objection to any such accounting (specifically describing the
      basis for such objection), within thirty (30) days after the date thereof,
      each
      and every such accounting shall be presumptive evidence of all matters reflected
      therein. Only those items expressly objected to in such notice shall be deemed
      to be disputed by Borrowers. Notwithstanding any provision herein contained
      to
      the contrary, any Lender may elect (which election may be revoked) to dispense
      with the issuance of Notes to that Lender and may rely on the Loan Account
      as
      evidence of the amount of Obligations from time to time owing to
      it.

     

    1.13. Indemnity. 

     

    (a) Each
      Credit Party that is a signatory hereto shall jointly and severally indemnify
      and hold harmless each of Agent, Lenders and their respective Affiliates, and
      each such Person’s respective officers, directors, employees, attorneys, agents,
      advisors and representatives (each, an “Indemnified
      Person”),
      from
      and against any and all suits, actions, proceedings, claims, damages, losses,
      liabilities and expenses (including reasonable attorneys’ fees and disbursements
      and other costs of investigation or defense, including those incurred upon
      any
      appeal) that may be instituted or asserted against or incurred by any such
      Indemnified Person as the result of credit having been extended, suspended
      or
      terminated under this Agreement and the other Loan Documents and the
      administration of such credit, and in connection with or arising out of the
      transactions contemplated hereunder and thereunder and any actions or failures
      to act in connection therewith, including any and all Environmental Liabilities
      and reasonable legal costs and expenses arising out of or incurred in connection
      with disputes between or among any parties to any of the Loan Documents
      (collectively, “Indemnified
      Liabilities”);
      provided,
      that no
      such Credit Party shall be liable for any indemnification to an Indemnified
      Person to the extent that any such suit, action, proceeding, claim, damage,
      loss, liability or expense results from that Indemnified Person’s gross
      negligence, willful misconduct or bad faith. NO INDEMNIFIED PERSON SHALL BE
      RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
      ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING
      CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
      CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
      EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF
      ANY
      OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

     

    
      
        
        

      

      
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    (b) To
      induce
      Lenders to provide the LIBOR Rate option on the terms provided herein, if (i)
      any LIBOR Loans are repaid in whole or in part prior to the last day of any
      applicable LIBOR Period (whether that repayment is made pursuant to any
      provision of this Agreement or any other Loan Document or occurs as a result
      of
      acceleration, by operation of law or otherwise); (ii) any Borrower shall default
      in payment when due of the principal amount of or interest on any LIBOR Loan;
      (iii) any Borrower shall refuse to accept any borrowing of, or shall request
      a
      termination of, any borrowing of, conversion into or continuation of, LIBOR
      Loans after Borrower Representative has given notice requesting the same in
      accordance herewith; or (iv) any Borrower shall fail to make any prepayment
      of a
      LIBOR Loan after Borrower Representative has given a notice thereof in
      accordance herewith, then Borrowers shall jointly and severally indemnify and
      hold harmless each Lender from and against all losses, costs and expenses
      resulting from or arising from any of the foregoing. Such indemnification shall
      include any loss (including loss of margin) or expense arising from the
      reemployment of funds obtained by it or from fees payable to terminate deposits
      from which such funds were obtained. For the purpose of calculating amounts
      payable to a Lender under this subsection, each Lender shall be deemed to have
      actually funded its relevant LIBOR Loan through the purchase of a deposit
      bearing interest at the LIBOR Rate in an amount equal to the amount of that
      LIBOR Loan and having a maturity comparable to the relevant LIBOR Period;
provided,
      that
      each Lender may fund each of its LIBOR Loans in any manner it sees fit, and
      the
      foregoing assumption shall be utilized only for the calculation of amounts
      payable under this subsection. This covenant shall survive the termination
      of
      this Agreement and the payment of the Notes and all other amounts payable
      hereunder. As promptly as practicable under the circumstances, each Lender
      shall
      provide Borrower Representative with its written calculation of all amounts
      payable pursuant to this Section
      1.13(b),
      and
      such calculation shall be binding on the parties hereto unless Borrower
      Representative shall object in writing within ten (10) Business Days of receipt
      thereof, specifying the basis for such objection in detail.

     

    1.14. Access.
      Each
      Credit Party that is a party hereto shall, during normal business hours, from
      time to time upon two (2) Business Days’ prior notice as frequently as Agent
      reasonably determines to be appropriate: (a) provide Agent and any of its
      officers, employees and agents access to its properties, facilities, advisors,
      officers and employees of each Credit Party and to the Collateral; provided,
      however, that, if no Event of Default shall have occurred and be continuing
      and
      the circumstances set forth in Section 5.8 permitting Agent to request
      environmental audits and testing shall not apply, access for the purposes of
      conducting an environmental assessment or investigation of the Real Estate
      shall
      be limited to the performance of a Phase I environmental assessment retained
      by
      Agent, at the expense of Agent and Lenders, and acceptable to the Credit
      Parties, in accordance with the protocol established by the American Society
      for
      Testing and Materials, Standard Practice for Environmental Site Assessments;
      Phase I Environmental Site Assessment Process, E 1527 05; (b) permit Agent,
      and
      any of its officers, employees and agents, to inspect, audit and make extracts
      from any Credit Party’s books and records, subject to Section 11.8 hereof and
      (c) permit Agent, and its officers, employees and agents, to inspect, review,
      evaluate and make test verifications and counts of the Accounts, Inventory
      and
      other Collateral of any Credit Party. Notwithstanding anything herein to the
      contrary, to the extent any access, inspection or audit constitutes a field
      examination, the provisions of paragraph (e) of Annex F shall control. If an
      Event of Default has occurred and is continuing,
      each such Credit Party shall provide such access to Agent and to each Lender
      at
      all times and without advance notice. Furthermore, so long as any Event of
      Default has occurred and is continuing, Borrowers shall provide Agent and each
      Lender with access to their suppliers and customers. Each Credit Party shall
      make available to Agent and its counsel reasonably promptly originals or copies
      of all books and records that Agent may reasonably request. Each Credit Party
      shall deliver any document or instrument necessary for Agent, as it may from
      time to time reasonably request, to obtain records from any service bureau
      or
      other Person that maintains records for such Credit Party, and shall maintain
      duplicate records or supporting documentation on media, including computer
      tapes
      and discs owned by such Credit Party. Agent will give Lenders at least five
      (5)
      Business Days’ prior written notice of regularly scheduled audits.
      Representatives of other Lenders may accompany Agent’s representatives on
      regularly scheduled audits at no charge to Borrowers.

     

    
      
        
        

      

      
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    1.15. Taxes. 

     

    (a) Any
      and
      all payments by each Borrower or any other Credit Party hereunder (including
      any
      payments made pursuant to Section
      12)
      or
      under the Notes or any other Loan Document shall be made, in accordance with
      this Section
      1.15,
      free
      and clear of and without deduction for any and all present or future Taxes.
      If
      any Borrower or any other Credit Party shall be required by law to deduct any
      Taxes from or in respect of any sum payable hereunder (including any sum payable
      pursuant to Section
      12)
      or
      under the Notes or any other Loan Document, (i) the sum payable shall be
      increased as much as shall be necessary so that after making all required
      deductions (including deductions applicable to additional sums payable under
      this Section
      1.15)
      Agent,
      Lenders or L/C Issuer, as applicable, receive an amount equal to the sum they
      would have received had no such deductions been made, (ii) such Borrower or
      other Credit Party shall make such deductions, and (iii) such Borrower or other
      Credit Party shall pay the full amount deducted to the relevant taxing or other
      authority in accordance with applicable law. Within thirty (30) days after
      the
      date of any payment of Taxes, Borrower Representative shall furnish to Agent
      the
      original or a certified copy of a receipt evidencing payment thereof. In
      addition, Borrowers shall pay any Other Taxes to the relevant taxing or other
      authority in accordance with applicable law. Within thirty (30) days after
      the
      date of any payment of Other Taxes, Borrowers shall furnish to Agent the
      original or certified copy of a receipt evidencing payment thereof.

     

    (b) Each
      of
      Borrowers and Parent that is a signatory hereto shall jointly and severally
      indemnify and, within ten (10) days of demand therefor, pay Agent, each Lender
      and each L/C Issuer 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
      1.15)
      paid by
      Agent or such Lender or such L/C Issuer, as appropriate, and any liability
      (including penalties, interest and expenses) arising therefrom or with respect
      thereto, whether or not such Taxes or Other Taxes were correctly or legally
      asserted.

     

    
      
        
        

      

      
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    (c) Each
      Lender, L/C Issuer and Agent organized under the laws of a jurisdiction outside
      the United States (a “Foreign
      Lender”)
      as to
      which payments to be made under this Agreement or under the Notes are exempt
      from United States withholding tax under an applicable statute or tax treaty
      shall provide to Borrower Representative
      and Agent at the time prescribed by law, a properly completed and executed
      IRS
      Form W-8ECI or Form W-8BEN or other applicable form, certificate or document
      prescribed by the IRS or the United States certifying as to such Foreign
      Lender’s entitlement to such exemption (a “Certificate
      of Exemption”).
      Any
      foreign Person that seeks to become a Lender or an L/C Issuer as applicable,
      under this Agreement shall provide a Certificate of Exemption to Borrower
      Representative and Agent prior to becoming a Lender or an L/C Issuer, as
      applicable, hereunder. No foreign Person may become a Lender or an L/C Issuer,
      as applicable, hereunder if such Person fails to deliver a Certificate of
      Exemption in advance of becoming a Lender or an L/C Issuer, as applicable.
      Each
      Foreign Lender, from time to time after submitting the forms referred to above,
      shall submit to Borrower Representative and the Agent such additional duly
      completed and signed copies of one or the other such forms (or such successor
      forms or other documents as shall be adopted from time to time by the relevant
      United States taxing authorities) as may be (1) reasonably requested in writing
      by Borrower Representative or the Agent and (2) appropriate under then current
      United States law or regulations to avoid United States withholding taxes on
      payments in respect of any amounts to be received by such Foreign Lender
      pursuant to this Agreement and/or the Notes. If any Foreign Lender determines
      that it is unable to submit to Borrower Representative or the Agent any form
      or
      certificate that such Foreign Lender is requested to submit pursuant to the
      preceding paragraph, or that it is required to withdraw or cancel any such
      form
      or certificate, or that any such form or certificate previously submitted has
      otherwise become ineffective or inaccurate, such Foreign Lender shall promptly
      notify Borrower Representative and the Agent of such fact. 

     

    (d) No
      Credit
      Party shall be required to pay any additional amount in respect of Taxes to
      any
      Lender if and only to the extent that (A) such Lender becomes subject to Taxes
      subsequent to the date this Agreement (or, if applicable, an Assignment
      Agreement) is executed by such Lender above (or in the case of a Foreign Lender,
      the first date on which it delivers the appropriate form or certificate to
      Borrower Representative and the Agent as referred to in Section 1.15(c)) as
      a
      result of any change in the circumstances of such Lender, other than a change
      in
      applicable law (including without limitation an increase in any applicable
      tax
      rate), including without limitation a change in the residence, place of
      incorporation or principal place of business of the Lender, a change in the
      branch or lending office of the Lender participating in the transactions set
      forth herein or as a result of the sale by the Lender of participating interests
      in such Lender’s creditor position(s) hereunder; provided, however, that the
      Credit Parties will be required to pay any additional amount in respect of
      Taxes
      to any Lender to the extent that after a change in the circumstances (as
      described above) of such Lender a subsequent change in any applicable law
      results in an additional amount that such Lender is subject to with respect
      to
      Taxes; or (B) such Taxes would not have been incurred but for the failure of
      such Lender to file with the appropriate tax authorities and/or provide to
      Borrower Representative or the Agent any form or certificate that it was
      required so to do pursuant to Section 1.15(c) and entitled so to do under
      applicable law.

     

    
      
        
        

      

      
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    (e) Within
      thirty (30) days after the written reasonable request of the Borrowers, each
      Lender shall execute and deliver to such Borrower such certificates, forms
      or
      other documents which can be furnished consistent with the facts and which
      are
reasonably
      necessary to assist such Borrower in applying for refunds of Taxes paid by
      such
      Borrower hereunder or making payment of Taxes hereunder; provided, however,
      that
      no Lender shall be required to furnish to the Borrowers any financial
      information with respect to itself or other information which it, in its
      reasonable discretion, considers confidential. Upon the written request of
      the
      Borrowers made to the Lender, and at the Borrowers’ expense, such Lender shall
      apply for a refund with respect to any Tax for which such Lender has been
      indemnified by, or has received payment from, the Borrowers pursuant to this
      Section 1.15, and for which such Lender believes, in its reasonable discretion,
      that it is entitled to receive. If the Lender receives such refund and in its
      reasonable discretion determines that such refund is of Taxes or Other Taxes
      for
      which it has been indemnified by, or has received payment from, the Borrowers
      or
      another Credit Party pursuant to this Section 1.15, such Lender shall remit,
      within a reasonable period of time, such refund to the Borrowers without
      interest (other than interest, if any, included in such refund), net of all
      costs and expenses of such Lender and any taxes payable with respect to the
      receipt of such refund and interest, provided that the Borrower, upon the
      request of the Lender or Agent, agrees to repay the amount paid over to the
      Borrower (plus any penalties, interest or other charges imposed by the relevant
      Governmental Authority) to the Lender or Agent in the event the Lender or Agent
      is required to repay such refund to such Governmental Authority. 

     

    1.16. Capital
      Adequacy; Increased Costs; Illegality. 

     

    (a) If
      any
      law, treaty, governmental (or quasi-governmental) rule, regulation, guideline
      or
      order regarding capital adequacy, reserve requirements or similar requirements
      or compliance by any Lender with any request or directive regarding capital
      adequacy, reserve requirements or similar requirements (whether or not having
      the force of law), in each case, adopted after the Closing Date, from any
      central bank or other Governmental Authority increases or would have the effect
      of increasing the amount of capital, reserves or other funds required to be
      maintained by such Lender and thereby reducing the rate of return on such
      Lender’s capital as a consequence of its obligations hereunder, then Borrowers
      shall from time to time upon demand by such Lender (with a copy of such demand
      to Agent) pay to Agent, for the account of such Lender, additional amounts
      sufficient to compensate such Lender for such reduction. A certificate as to
      the
      amount of that reduction and showing the basis of the computation thereof
      submitted by such Lender to Borrower Representative and to Agent shall be
      presumptive evidence of the matters set forth therein. Notwithstanding anything
      herein to the contrary, Borrowers shall only be required to compensate any
      so
      affected Lender in respect of any such reduction in the amount received or
      receivable by such Lender as to which the Lender has given Borrowers written
      notice within ninety (90) days after the Lender has received actual notice
      of
      the occurrence of the relevant circumstance giving rise to such reduction in
      the
      amount received or receivable by such Lender, as the case may be.

     

    
      
        
        

      

      
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    (b) If,
      due
      to either (i) the introduction of or any change in any law or regulation
      (or any change in the interpretation thereof) or (ii) the compliance with
      any guideline or request from any central bank or other Governmental Authority
      (whether or not having the force of law), in each case adopted after the Closing
      Date, there shall be any increase in the cost to any Lender of agreeing to
      make
      or making, funding or maintaining
      any Loan, then Borrowers shall from time to time, upon demand by such Lender
      (with a copy of such demand to Agent), pay to 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 Borrower Representative and to Agent by such Lender, shall be presumptive
      evidence of the matters set forth therein. Each Lender agrees that, as promptly
      as practicable after it becomes aware of any circumstances referred to above
      which would result in any such increased cost, the affected Lender shall, to
      the
      extent not inconsistent with such Lender’s internal policies of general
      application, use reasonable commercial efforts to minimize costs and expenses
      incurred by it and payable to it by Borrowers pursuant to this Section
      1.16(b).
      Notwithstanding anything herein to the contrary, Borrowers shall only be
      required to compensate any so affected Lender in respect of any such increase
      in
      the amount received or receivable by such Lender as to which the Lender has
      given Borrowers written notice within ninety (90) days after the Lender has
      received actual notice of the occurrence of the relevant circumstance giving
      rise to such increase in the amount received or receivable by such Lender,
      as
      the case may be.

     

    (c) Notwithstanding
      anything to the contrary contained herein, if the introduction of or any change
      in any law or regulation (or any change in the interpretation thereof), in
      each
      case adopted after the Closing Date, shall make it unlawful, or any central
      bank
      or other Governmental Authority shall assert that it is unlawful, for any Lender
      to agree to make or to make or to continue to fund or maintain any LIBOR Loan,
      then, unless that Lender is able to make or to continue to fund or to maintain
      such LIBOR Loan at another branch or office of that Lender without, in that
      Lender’s reasonable opinion, materially adversely affecting it or its Loans or
      the income obtained therefrom, on notice thereof and demand therefor by such
      Lender to Borrower Representative through Agent, (i) the obligation of such
      Lender to agree to make or to make or to continue to fund or maintain LIBOR
      Loans shall terminate and (ii) each Borrower shall forthwith prepay in full
      all outstanding LIBOR Loans owing by such Borrower to such Lender, together
      with
      interest accrued thereon, unless Borrower Representative on behalf of such
      Borrower, within five (5) Business Days after the delivery of such notice and
      demand, converts all LIBOR Loans into Index Rate Loans.

    
       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

    

    (d) Within
      thirty (30) days after receipt by Borrower Representative of written notice
      and
      demand from any Lender (an “Affected
      Lender”)
      for
      payment of additional amounts or increased costs as provided in Sections
      1.15(a), 1.16(a) or 1.16(b),
      Borrower Representative may, at its option, notify Agent and such Affected
      Lender of its intention to replace the Affected Lender. So long as no Default
      or
      Event of Default has occurred and is continuing, Borrower Representative, with
      the consent of Agent, may obtain, at Borrowers’ expense, a replacement Lender
      (“Replacement
      Lender”)
      for
      the Affected Lender, which Replacement Lender must be reasonably satisfactory
      to
      Agent. If Borrowers obtain a Replacement Lender within ninety (90) days
      following notice of their intention to do so, the Affected Lender must sell
      and
      assign its Loans and Commitments to such Replacement Lender for an amount equal
      to the principal balance of all Loans held by the Affected Lender and all
      accrued interest and Fees with respect thereto through the date of such sale
      and
      such assignment shall not require the payment of an assignment fee to Agent;
      provided,
      that
      Borrowers shall have reimbursed such Affected Lender
      for the additional amounts or increased costs that it is entitled to receive
      under this Agreement through the date of such sale and assignment.
      Notwithstanding the foregoing, Borrowers shall not have the right to obtain
      a
      Replacement Lender if the Affected Lender rescinds its demand for increased
      costs or additional amounts within 15 days following its receipt of Borrowers’
notice of intention to replace such Affected Lender. Furthermore, if Borrowers
      give a notice of intention to replace and do not so replace such Affected Lender
      within ninety (90) days thereafter, Borrowers’ rights under this Section
      1.16(d)
      with
      respect to the specific instance that gave rise to such notice shall terminate
      with respect to such Affected Lender and Borrowers shall promptly pay all
      increased costs or additional amounts demanded by such Affected Lender pursuant
      to Sections
      1.15(a), 1.16(a) and 1.16(b).

     

    1.17. Single
      Loan.
      All
      Loans to each Borrower and all of the other Obligations of each Borrower arising
      under this Agreement and the other Loan Documents shall constitute one general
      obligation of that Borrower secured, until the Termination Date, by all of
      the
      Collateral.

     

    1.18. Agreement
      to Amend and Restate.
      On the
      Closing Date, subject to the terms and conditions specified herein, the
      Borrowers, the Lenders and the Agent agree (i) to amend and restate the Existing
      Credit Agreement as provided herein and (ii) that the obligations existing
      thereunder shall be Obligations hereunder.

     

    
      	 	
              2.

            	
              CONDITIONS
                PRECEDENT

            

    

     

    2.1. Conditions
      to the Initial Loans.
      No
      Lender shall be obligated to make any Loan or incur any Letter of Credit
      Obligations on the Closing Date, or to take, fulfill, or perform any other
      action hereunder, until the following conditions have been satisfied or provided
      for in a manner reasonably satisfactory to Agent, or waived in writing by
      Agent:

     

    (a) Credit
      Agreement; Loan Documents.
      This
      Agreement or counterparts hereof shall have been duly executed by, and delivered
      to, Borrowers, each other Credit Party, Agent and Lenders; and Agent shall
      have
      received such documents, instruments, agreements and legal opinions as Agent
      shall reasonably request in connection with the transactions contemplated by
      this Agreement and the other Loan Documents, including all those listed in
      the
      Closing Checklist attached hereto as Annex
      D,
      each in
      form and substance reasonably satisfactory to Agent.

     

    (b) Approvals.
      Agent
      shall have received (i) satisfactory evidence that the Credit Parties have
      obtained all required consents and approvals of all Persons including all
      requisite Governmental Authorities, to the execution, delivery and performance
      of this Agreement and the other Loan Documents and the consummation of the
      Related Transactions or (ii) an officer’s certificate in form and substance
      reasonably satisfactory to Agent affirming that no such consents or approvals
      are required.

     

    
      
        
        

      

      
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    (c) Opening
      Adjusted Excess Availability.
      The
      Eligible Accounts and Eligible Inventory supporting the initial Tranche A
      Revolving Credit Advance, the Tranche B Revolving Credit Advance and the initial
      Letter of Credit Obligations incurred and the amount of the Reserves to be
      established on the Closing Date shall be sufficient in
      value,
      as reasonably determined by Agent, to provide Borrowers, collectively, with
      Adjusted Excess Availability, after giving effect to the initial Tranche A
      Revolving Credit Advance and Tranche B Revolving Credit Advance made to each
      Borrower, the incurrence of any initial Letter of Credit Obligations and the
      consummation of the Related Transactions (on a pro forma basis, with trade
      payables being paid currently, and expenses and liabilities being paid in the
      ordinary course of business and without acceleration of sales and without
      deterioration of working capital) of at least $50,000,000.

     

    (d) Payment
      of Fees.
      Borrowers shall have paid the Fees required to be paid on the Closing Date
      in
      the respective amounts specified in Section
      1.9
      (including the Fees specified in the GE Capital Fee Letter), and shall have
      reimbursed Agent and Lead Arranger for all fees, costs and expenses of closing
      presented as of the Closing Date.

     

    (e) Consummation
      of Related Transactions.
      Agent
      shall have received fully executed copies of the Acquisition Agreement and
      final
      and complete copies of each of the other Related Transactions Documents, each
      of
      which shall be in full force and effect. The Acquisition and the other Related
      Transactions shall have been consummated in all material respects in accordance
      with the terms of the Acquisition Agreement and the other Related Transactions
      Documents but for the payment of the cash purchase price payable on the Closing
      Date pursuant to the Acquisition Agreement.

     

    2.2. Further
      Conditions to Each Loan.
      Except
      as otherwise expressly provided herein, no Lender shall be obligated to fund
      any
      Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of
      Credit Obligation, if, as of the date thereof:

     

    (a) (i)
      any
      representation or warranty by any Credit Party contained herein or in any other
      Loan Document is untrue or incorrect in any material respect as of such date
      as
      determined by Agent or Requisite Lenders, except to the extent that such
      representation or warranty expressly relates to an earlier date and except
      for
      changes therein expressly permitted or expressly contemplated by this Agreement
      and (ii) Agent or Requisite Lenders have determined not to make such Advance,
      convert or continue any Loan as LIBOR Loan or incur such Letter of Credit
      Obligation as a result of the fact that such warranty or representation is
      untrue or incorrect; provided, however, that, with respect to the Loans and
      Letter of Credit Obligations incurred on the Closing Date, each reference to
      a
“Material Adverse Effect” in any representation or warranty shall be deemed to
      refer to a “Closing Material Adverse Effect”;

     

    
      
        
        

      

      
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    (b) (i)
      any
      Default or Event of Default has occurred and is continuing or would result
      after
      giving effect to any Advance (or the incurrence of any Letter of Credit
      Obligation), and (ii) Agent or Requisite Lenders shall have determined not
      to
      make any Advance, convert or continue any Loan as a LIBOR Loan or incur any
      Letter of Credit Obligation as a result of that Default or Event of Default;
      or

     

    (c) after
      giving effect to any Advance (or the incurrence of any Letter of Credit
      Obligations), the outstanding principal amount of the aggregate Tranche A
      Revolving Loan and Tranche B Revolving Loan would exceed the lesser of (i)
      the
Aggregate
      Borrowing Base and (ii) the sum of the Tranche A Maximum Amount and the Tranche
      B Maximum Amount, in each case, less the then outstanding principal amount
      of
      the Swing Line Loan.

     

    The
      request and acceptance by any Borrower of the proceeds of any Advance, the
      incurrence of any Letter of Credit Obligations or the conversion or continuation
      of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of
      the
      date thereof, (i) a representation and warranty by Borrowers that the conditions
      in this Section
      2.2
      have
      been satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty
      provisions set forth in Section
      12
      and of
      the granting and continuance of Agent’s Liens, on behalf of itself and Lenders,
      pursuant to the Collateral Documents.

     

    
      	 	
              3.

            	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

    To
      induce
      Lenders to make the Loans and to incur Letter of Credit Obligations, the Credit
      Parties executing this Agreement, jointly and severally, make the following
      representations and warranties to Agent and each Lender with respect to all
      Credit Parties, each and all of which shall survive the execution and delivery
      of this Agreement. In the case of Borrowers, the representations shall be deemed
      to apply to Borrowers and, to the knowledge of the Borrowers, the Acquired
      Business.

     

    3.1. Corporate
      Existence; Compliance with Law.
      Each
      Credit Party (a) is a corporation, limited liability company or limited
      partnership duly organized, validly existing and in good standing under the
      laws
      of its respective jurisdiction of incorporation or organization set forth in
      Disclosure
      Schedule (3.1);
      (b) is
      duly qualified to conduct business and is in good standing in each other
      jurisdiction where its ownership or lease of property or the conduct of its
      business requires such qualification, except where the failure to be so
      qualified would not result in exposure to losses or liabilities which could
      reasonably be expected to have a Material Adverse Effect; (c) has the requisite
      power and authority and the legal right to own, pledge, mortgage or otherwise
      encumber and operate its properties, to lease the property it operates under
      lease and to conduct its business as now conducted or proposed to be conducted;
      (d) subject to specific representations regarding Environmental Laws, has all
      licenses, permits, consents or approvals from or by, and has made all filings
      with, and has given all notices to, all Governmental Authorities having
      jurisdiction, to the extent required for such ownership, operation and conduct,
      except where the failure to have obtained any such license, permit, consent
      or
      approval or give any such notice individually or in the aggregate, could not
      reasonably be expected to cause a Material Adverse Effect; (e) is in compliance
      with its charter and bylaws or partnership or operating agreement, as
      applicable; and (f) subject to specific representations set forth herein
      regarding ERISA, Environmental Laws, tax and other laws (it being understood
      that no representation or warranty is intended to be given herein with respect
      to laws covered by such specific representations), is in compliance with all
      applicable provisions of law, except where the failure to comply, individually
      or in the aggregate, could not reasonably be expected to have a Material Adverse
      Effect.

     

    
      
        
        

      

      
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    3.2. Executive
      Offices, Collateral Locations, FEIN.
      As of
      the Closing Date, each Credit Party’s name as it appears in official filings in
      its state of incorporation or organization, state of incorporation or
      organization, organization type, organization number, if any, issued by
its
      state
      incorporation or organization, and the current location of each Credit Party’s
      chief executive office and the warehouses and premises at which any Collateral
      is located are set forth in Disclosure
      Schedule (3.2),
      none of
      such locations has changed within the four (4) months preceding the Closing
      Date
      (other than as a result of the purchase of the Acquired Business) and each
      Credit Party has only one state of incorporation or organization. In addition,
      Disclosure
      Schedule (3.2)
      lists
      the federal employer identification number of each Credit Party.

     

    3.3. Corporate
      Power, Authorization, Enforceable Obligations.
      The
      execution, delivery and performance by each Credit Party of the Loan Documents
      to which it is a party and the creation of all Liens provided for therein:
      (a)
      are within such Credit Party’s power; (b) have been duly authorized by all
      necessary corporate, limited liability company or limited partnership action;
      (c) do not contravene any provision of such Credit Party’s charter, bylaws or
      partnership or operating agreement as applicable; (d) do not violate any law
      or
      regulation, or any order or decree of any court or Governmental Authority;
      (e)
      do not conflict with or result in the breach or termination of, constitute
      a
      default under or accelerate or permit the acceleration of any performance
      required by, any indenture, mortgage, deed of trust, lease, agreement or other
      instrument to which such Credit Party is a party or by which such Credit Party
      or any of its property is bound; (f) do not result in the creation or imposition
      of any Lien upon any of the property of such Credit Party other than those
      in
      favor of Agent, on behalf of itself and Lenders, pursuant to the Loan Documents;
      and (g) do not require the consent or approval of any Governmental Authority
      or
      any other Person, except those referred to in Section
      2.1(c),
      all of
      which will have been duly obtained, made or complied with prior to the Closing
      Date. Each of the Loan Documents shall be duly executed and delivered by each
      Credit Party that is a party thereto and each such Loan Document shall
      constitute a legal, valid and binding obligation of such Credit Party
      enforceable against it in accordance with its terms.

     

    3.4. Financial
      Statements and Projections.
      Except
      for the Projections, all Financial Statements concerning Parent and its
      Subsidiaries that are referred to below have been prepared in accordance with
      GAAP consistently applied throughout the periods covered (except as disclosed
      therein and except, with respect to unaudited Financial Statements, for the
      absence of footnotes and normal year-end audit adjustments) and present fairly
      in all material respects the financial position of the Persons covered thereby
      as at the dates thereof and the results of their operations and cash flows
      for
      the periods then ended.

     

    (a) Financial
      Statements.
      The
      following Financial Statements attached hereto as Disclosure
      Schedule (3.4(a))
      have
      been delivered on the date hereof:

     

    
      
        
        

      

      
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    (i) The
      audited consolidated and unaudited consolidating balance sheets at February
      3,
      2007 and January 28, 2006 and the related statements of operations, statements
      of stockholders’ equity and cash flows of Parent and Borrowers for the Fiscal
      Years then ended, certified by Deloitte & Touche LLP (other than with
      respect to any consolidating financial statements).

     

    (ii) The
      unaudited consolidated balance sheet(s) at August 4, 2007 and the related
      statement(s) of operations and cash flows of Borrowers for the two Fiscal
      Quarters then ended.

     

    (b) Projections.
      The
      Projections delivered on September 26, 2007 and attached hereto as Disclosure
      Schedule (3.4(b))
      have
      been prepared by Borrowers in light of the past operations of their businesses,
      and reflect projections for the five year period beginning November 3, 2007
      on a
      month-by-month basis for the first year and on a year-by-year basis thereafter.
      The Projections are based upon the same accounting principles as those used
      in
      the preparation of the financial statements described above and the estimates
      and assumptions stated therein, all of which Borrowers believe to be reasonable
      and fair in light of current conditions and current facts known to Borrowers
      and, as of the Closing Date, reflect Borrowers’ good faith and reasonable
      estimates of the future financial performance of Borrowers for the period set
      forth therein. The Projections are not a guaranty of future performance, and
      actual results may differ from the Projections.

     

    3.5. Material
      Adverse Effect.
      Between
      February 3, 2007 and the Closing Date: (a) no Credit Party has incurred any
      obligations, contingent or noncontingent liabilities, liabilities for Charges,
      long-term leases or unusual forward or long-term commitments that, alone or
      in
      the aggregate, could reasonably be expected to have a Material Adverse Effect,
      (b) no contract, lease or other agreement or instrument has been entered into
      by
      any Credit Party or has become binding upon any Credit Party’s assets and no law
      or regulation applicable to any Credit Party has been adopted that has had
      or
      could reasonably be expected to have a Material Adverse Effect, and (c) no
      Credit Party is in default and to the best of Borrowers’ knowledge no third
      party is in default under any material contract, lease or other agreement or
      instrument, that alone or in the aggregate could reasonably be expected to
      have
      a Material Adverse Effect. Since February 3, 2007 no event has occurred, that
      alone or together with other events, could reasonably be expected to have a
      Material Adverse Effect.

     

    3.6. Ownership
      of Property; Liens.
      As of
      the Closing Date, the real estate (“Real
      Estate”)
      listed
      in Disclosure
      Schedule (3.6)
      constitutes all of the real property owned, leased, subleased, or used by any
      Credit Party. Each Credit Party owns good and marketable fee simple title to
      all
      of its owned Real Estate, and valid and marketable leasehold interests in all
      of
      its leased Real Estate, all as described on Disclosure
      Schedule (3.6),
      and
      copies of all such leases or a summary of terms thereof reasonably satisfactory
      to Agent have been delivered or made available to Agent. Disclosure
      Schedule (3.6)
      further
      describes any Real Estate with respect to which any Credit Party is a lessor,
      sublessor or assignor as of the Closing Date. Each Credit Party also has good
      title to, or valid leasehold interests in, all of its personal property and
      assets. As of the Closing Date, none of the properties and assets of any Credit
      Party are subject to any Liens other than Permitted Encumbrances and Liens
      in
      favor of the Agent or the Lenders, and there are no facts, circumstances or
      conditions known to any Credit Party that may result in any Liens (including
      Liens arising under Environmental Laws) other than Permitted Encumbrances.
      Each
      Credit Party has received all material deeds, assignments, waivers, consents,
      bills of sale and other documents, and has duly effected all recordings, filings
      and other actions necessary to establish, protect and perfect such Credit
      Party’s right, title and interest in and to all such Real Estate and other
      properties and assets. Disclosure
      Schedule (3.6)
      also
      describes any purchase options, rights of first refusal to purchase or other
      similar contractual rights pertaining to any Real Estate. As of the Closing
      Date, no portion of any Credit Party’s Real Estate has suffered any material
      damage by fire or other casualty loss that has not heretofore been repaired
      and
restored
      in all material respects to its original condition or otherwise remedied. As
      of
      the Closing Date, all material permits required to have been issued or
      appropriate to enable the Real Estate to be lawfully occupied and used for
      all
      of the purposes for which it is currently occupied and used have been lawfully
      issued and are in full force and effect.

     

    
      
        
        

      

      
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    3.7. Labor
      Matters.
      Except
      as set forth on Disclosure
      Schedule 3.7,
      as of
      the Closing Date except as could not reasonably be expected to have a Material
      Adverse Effect (a) no strikes or other material labor disputes against any
      Credit Party are pending or, to any Credit Party’s knowledge, threatened; (b)
      hours worked by and payment made to employees of each Credit Party comply with
      the Fair Labor Standards Act and each other federal, state, local or foreign
      law
      applicable to such matters; (c) all payments due from any Credit Party for
      employee health and welfare insurance have been paid or accrued as a liability
      on the books of such Credit Party; (d) no Credit Party is a party to or bound
      by
      any collective bargaining agreement, (and true and complete copies of any
      agreements described on Disclosure
      Schedule (3.7)
      have
      been delivered to Agent); (e) there is no organizing activity involving any
      Credit Party pending or, to any Credit Party’s knowledge, threatened by any
      labor union or group of employees; (f) there are no representation proceedings
      pending or, to any Credit Party’s knowledge, threatened with the National Labor
      Relations Board, and no labor organization or group of employees of any Credit
      Party has made a pending demand for recognition; and (g) there are no complaints
      or charges against any Credit Party pending or, to the knowledge of any Credit
      Party, threatened to be filed with any Governmental Authority or arbitrator
      based on, arising out of, in connection with, or otherwise relating to the
      employment or termination of employment by any Credit Party of any
      individual.

     

    3.8. Ventures,
      Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.
      Except
      as set forth in Disclosure
      Schedule (3.8),
      as of
      the Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
      venture or partnership with any other Person, or is an Affiliate of any other
      Person. All of the issued and outstanding Stock of each Credit Party is owned
      by
      each of the Stockholders and in the amounts set forth in Disclosure
      Schedule (3.8).
      Except
      as set forth in Disclosure
      Schedule (3.8),
      as of
      the Closing Date, there are no outstanding rights to purchase, options, warrants
      or similar rights or agreements pursuant to which any Credit Party may be
      required to issue, sell, repurchase or redeem any of its Stock or other equity
      securities or any Stock or other equity securities of its Subsidiaries. All
      outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as
      of
      the Closing Date (except for the Obligations) is described in Section
      6.3
      (including Disclosure
      Schedule (6.3)).

     

    3.9. Government
      Regulation.
      No
      Credit Party 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. No Credit Party is
      subject to regulation under any federal or state statute that restricts or
      limits its ability to incur Indebtedness or to perform its obligations
      hereunder. The making of the Loans by Lenders to Borrowers, the incurrence
      of
      the Letter of Credit Obligations on behalf of Borrowers, the application of
      the
      proceeds thereof and repayment thereof and the consummation of the Related
      Transactions will not violate any provision of any such statute or any rule,
      regulation or order issued by the Securities and Exchange
      Commission.

     

    
      
        
        

      

      
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    3.10. Margin
      Regulations.
      No
      Credit Party is engaged, nor will it engage, principally or as one of its
      important activities, in the business of extending credit for the purpose of
      “purchasing” or “carrying” any “margin stock” as such terms are defined in
      Regulation U of the Federal Reserve Board as now and from time to time hereafter
      in effect (such securities being referred to herein as “Margin
      Stock”).
      No
      Credit Party owns any Margin Stock, and none of the proceeds of the Loans or
      other extensions of credit under this Agreement will be used, directly or
      indirectly, for the purpose of purchasing or carrying any Margin Stock, for
      the
      purpose of reducing or retiring any Indebtedness that was originally incurred
      to
      purchase or carry any Margin Stock or for any other purpose that might cause
      any
      of the Loans or other extensions of credit under this Agreement to be considered
      a “purpose credit” within the meaning of Regulations T, U or X of the Federal
      Reserve Board. No Credit Party will take or permit to be taken any action that
      might cause any Loan Document to violate any regulation of the Federal Reserve
      Board.

     

    3.11. Taxes.
      All
      Federal income tax and all other material tax returns, reports and statements,
      including information returns, required by any Governmental Authority to be
      filed by any Credit Party have been filed with the appropriate Governmental
      Authority, and all Charges shown thereon to be due and payable have been paid
      prior to the date on which any fine, penalty, interest or late charge may be
      added thereto for nonpayment thereof excluding Charges or other amounts being
      contested in good faith and with respect to which reserves are maintained on
      the
      books of such Credit Party in accordance with GAAP or unless the failure to
      so
      file or pay would not reasonably be expected to result in fines, penalties
      or
      interest in excess of $1,000,000 in the aggregate. Proper and accurate amounts
      have been withheld by each Credit Party from its respective employees for all
      periods in full and complete compliance with all applicable federal, state,
      local and foreign laws and such withholdings have been timely paid to the
      respective Governmental Authorities. Disclosure
      Schedule (3.11)
      sets
      forth as of the Closing Date those taxable years for which any Credit Party’s
      tax returns are currently being audited by the IRS or any other applicable
      Governmental Authority, and any assessments or written notice of proposed
      assessment in connection with such audit, or otherwise currently outstanding.
      Except as described in Disclosure
      Schedule (3.11),
      as of
      the Closing Date, no Credit Party has 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 assessment or collection of
      any
      Charges. None of the Credit Parties are liable for any Charges: (a) under any
      tax sharing agreement other than the Tax Allocation Agreement or (b) to each
      Credit Party’s knowledge, as a transferee.

    
       

      
        
          
          

        

        
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    3.12. ERISA. 

     

    (a) Disclosure
      Schedule (3.12)
      lists,
      as of the Closing Date, (i) all ERISA Affiliates and (ii) all Plans. Copies
      of
      all such listed Plans, together with a copy of the latest form IRS/DOL
      5500-series, as applicable, for each such Plan, have been delivered or made
      available to Agent. Except with respect to Multiemployer Plans, each Qualified
      Plan has received a determination letter from the IRS to such Plan's qualified
      status under Section 401 of the IRC, the trusts created thereunder have been
      determined to be exempt from tax under the provisions of Section 501(a) of
      the
      IRC, and nothing has occurred that could reasonably be expected to cause the
      loss of such qualification or tax-exempt status. Each Plan (excluding any
      Multiemployer Plan) is in compliance in all material respects with
      the
      applicable provisions of ERISA, the IRC and its terms, including the timely
      filing of all reports required under the IRC or ERISA. Neither any Credit Party
      nor ERISA Affiliate has failed to make any material contribution or pay any
      material amount due as required by either Section 412 of the IRC or Section
      302
      of ERISA or the terms of any such Plan. No “prohibited transaction,” as defined
      in Section 406 of ERISA and Section 4975 of the IRC, has occurred with respect
      to any Plan (excluding any Multiemployer Plan), that would subject any Credit
      Party to a material tax on prohibited transactions imposed by Section 502(i)
      of
      ERISA or Section 4975 of the IRC.

     

    (b) Except
      as
      set forth in Disclosure
      Schedule (3.12):
      (i) no
      Title IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event
      has occurred or is reasonably expected to occur; (iii) there are no pending,
      or
      to the knowledge of any Credit Party, threatened material claims (other than
      claims for benefits in the normal course), sanctions, actions or lawsuits,
      asserted or instituted against any Plan or any Person as fiduciary or sponsor
      of
      any Plan (excluding any Multiemployer Plan); (iv) no Credit Party or ERISA
      Affiliate has incurred or could reasonably be expected to incur any material
      liability as a result of a complete or partial withdrawal from a Multiemployer
      Plan; and (v) within the last five years no Title IV Plan of any Credit Party
      or
      ERISA Affiliate has been terminated, whether or not in a “standard termination”
as that term is used in Section 4041 of ERISA, nor has any Title IV Plan of
      any
      Credit Party or any ERISA Affiliate (determined at any time within the last
      five
      years) with material Unfunded Pension Liabilities been transferred outside
      of
      the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of
      any Credit Party or ERISA Affiliate (determined at such time).

     

    3.13. No
      Litigation.
      As of
      the Closing Date, no action, claim, lawsuit, demand, investigation or proceeding
      is now pending or, to the knowledge of any Credit Party, threatened against
      any
      Credit Party, before any Governmental Authority or before any arbitrator or
      panel of arbitrators (collectively, “Litigation”),
      (a)
      that challenges any Credit Party’s right or power to enter into or perform any
      of its obligations under the Loan Documents to which it is a party, or the
      validity or enforceability of any Loan Document or any action taken thereunder,
      or (b) that has a reasonable risk of being determined adversely to any Credit
      Party and that, if so determined, could reasonably be expected to have a
      Material Adverse Effect. Except as set forth on Disclosure
      Schedule (3.13),
      as of
      the Closing Date there is no Litigation pending or, to any Credit Party’s
      knowledge, threatened, that seeks damages in excess of $1,000,000 or injunctive
      relief against, or alleges criminal misconduct of, any Credit
      Party.

     

    3.14. Brokers.
      Except
      as set forth on Disclosure
      Schedule 3.14,
      no
      broker or finder brought about the obtaining, making or closing of the Loans
      or
      the Related Transactions, and no Credit Party or Affiliate thereof has any
      obligation to any Person in respect of any finder’s or brokerage fees in
      connection therewith.

     

    
      
        
        

      

      
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    3.15. Intellectual
      Property.
      As of
      the Closing Date, each Credit Party owns or has rights to use all Intellectual
      Property necessary to continue to conduct its business as now conducted by
      it or
      presently proposed to be conducted by it, and each material Patent, Trademark,
      Copyright and License is listed, together with application or registration
      numbers, as applicable, in Disclosure
      Schedule (3.15).
      Each
      Credit Party conducts its business and affairs without
      infringement of or interference with any Intellectual Property of any other
      Person except as could not reasonably be expected to result in a Material
      Adverse Effect. Except as set forth in Disclosure
      Schedule (3.15),
      no
      Credit Party has knowledge of any material infringement claim by any other
      Person with respect to any Intellectual Property.

     

    3.16. Full
      Disclosure.
      No
      information contained in this Agreement, any of the other Loan Documents,
      Financial Statements or Collateral Reports or other written reports from time
      to
      time prepared by any Credit Party and delivered hereunder or any written
      statement prepared by any Credit Party and furnished by or on behalf of any
      Credit Party to Agent or any Lender pursuant to the terms of this Agreement
      or
      in connection with the transactions contemplated hereby, (other than
      Projections) the Agent’s due diligence investigation or the negotiation and
      drafting of this Agreement contains or will contain any untrue statement of
      a
      material fact or omits or will omit to state a material fact necessary to make
      the statements contained herein or therein not misleading in light of the
      circumstances under which they were made. Projections from time to time
      delivered hereunder are or will be based upon the estimates and assumptions
      stated therein, all of which Borrowers believed at the time of delivery to
      be
      reasonable and fair in light of current conditions and current facts known
      to
      Borrowers as of such delivery date, and reflect Borrowers’ good faith and
      reasonable estimates of the future financial performance of Borrowers and of
      the
      other information projected therein for the period set forth therein. Such
      Projections are not a guaranty of future performance and actual results may
      differ from those set forth in such Projections. The Liens granted to Agent,
      on
      behalf of itself and Lenders, pursuant to the Collateral Documents will at
      all
      times be fully perfected first priority Liens in and to the Collateral described
      therein, subject, as to priority, only to Permitted Encumbrances.

     

    3.17. Environmental
      Matters. 

     

    (a) Except
      as
      set forth in Disclosure
      Schedule (3.17),
      as of
      the Closing Date: (i) the Real Estate is free of contamination from any
      Hazardous Material except for such contamination that would not adversely impact
      the value or marketability of such Real Estate and that would not result in
      Environmental Liabilities that could reasonably be expected to exceed
      $1,000,000; (ii) no Credit Party has caused or suffered to occur any material
      Release of Hazardous Materials on, at, in, under, above, to, from or about
      any
      of its Real Estate, except for any such Release that would not result in
      Environmental Liabilities which could reasonably be expected to exceed
      $1,000,000; (iii) the Credit Parties are and have been in compliance with all
      Environmental Laws, except for such noncompliance that would not result in
      Environmental Liabilities which could reasonably be expected to exceed
      $1,000,000; (iv) the Credit Parties have obtained, and are in compliance with,
      all Environmental Permits required by Environmental Laws for the operations
      of
      their respective businesses as presently conducted or as proposed to be
      conducted, except where the failure to so obtain or comply with such
      Environmental Permits would not result in Environmental Liabilities that could
      reasonably be expected to exceed $1,000,000, and all such Environmental Permits
      are valid, uncontested and in good standing; (v) no Credit Party is involved
      in
      operations or knows of any facts, circumstances or conditions, including any
      Releases of Hazardous Materials, that are likely to result in any Environmental
      Liabilities of such Credit Party which could reasonably be expected to exceed
      $1,000,000; (vi) there is no Litigation arising under or related to any
      Environmental Laws, Environmental Permits or Hazardous Material that
seeks
      damages, penalties, fines, costs or expenses in excess of $1,000,000or
      injunctive relief against, or that alleges criminal misconduct by, any Credit
      Party; (vii) no notice has been received by any Credit Party identifying it
      as a
“potentially responsible party” under CERCLA or analogous state statutes, and to
      the knowledge of the Credit Parties, there are no facts, circumstances or
      conditions that may result in any Credit Party being identified as a
“potentially responsible party” under CERCLA or analogous state statutes; and
      (viii) the Credit Parties have provided to Agent copies of all existing
      environmental reports, reviews and audits and all written information pertaining
      to actual or potential Environmental Liabilities, in each case relating to
      any
      Credit Party and in the Credit Parties’ custody, possession and
      control.

     

    
      
        
        

      

      
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    (b) Each
      Credit Party hereby acknowledges and agrees that Agent (i) is not now, and
      has
      not ever been, in control of any of the Real Estate or any Credit Party’s
      affairs, and (ii) does not have the capacity through the provisions of the
      Loan
      Documents or otherwise to influence any Credit Party’s conduct with respect to
      the ownership, operation or management of any of its Real Estate or compliance
      with Environmental Laws or Environmental Permits.

     

    3.18. Insurance.
      Disclosure
      Schedule (3.18)
      lists
      all insurance policies of any nature maintained, as of the Closing Date, for
      current occurrences by each Credit Party, as well as a summary of the terms
      of
      each such policy.

     

    3.19. Deposit
      and Disbursement Accounts.
      Disclosure
      Schedule (3.19)
      lists
      all banks and other financial institutions at which any Credit Party maintains
      deposit or other accounts as of the Closing Date, including any Disbursement
      Accounts, and such Schedule correctly identifies the name, address and telephone
      number of each depository, the name in which the account is held, a description
      of the purpose of the account, and the complete account number
      therefor. 

     

    3.20. Government
      Contracts.
      Except
      as set forth in Disclosure
      Schedule (3.20),
      as of
      the Closing Date, no Credit Party is a party to any contract or agreement with
      any Governmental Authority and no Credit Party’s Accounts are subject to the
      Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any similar state
      or local law.

     

    3.21. Customer
      and Trade Relations.
      As of
      the Closing Date, there exists no actual or, to the knowledge of any Credit
      Party, threatened termination or cancellation of, or any material adverse
      modification or change in: the business relationship of any Credit Party with
      any customer or group of customers whose purchases during the preceding 12
      months caused them to be ranked among the ten largest customers of such Credit
      Party; or the business relationship of any Credit Party with any supplier
      essential to its operations.

     

    
      
        
        

      

      
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    3.22. Consignor
      Letters. Disclosure
      Schedule (3.22)
      sets
      forth all the Consignor Letters executed by consignors of “consigned” or “memo”
inventory of the Borrowers that are in effect as of the Closing
      Date.

     

    3.23. Solvency.
      Both
      before and after giving effect to (a) the Loans and Letter of Credit Obligations
      to be made or incurred on the Closing Date or such other date as Loans and
      Letter
      of
      Credit Obligations requested hereunder are made or incurred, (b) the
      disbursement of the proceeds of such Loans pursuant to the instructions of
      Borrower Representative; (c) the Acquisition and the consummation of the other
      Related Transactions; and (d) the payment and accrual of all transaction costs
      in connection with the foregoing, each Borrower is and will be
      Solvent.

     

    3.24. Acquisition
      Agreement.
      As of
      the Closing Date, Borrowers have delivered to Agent a complete and correct
      copy
      of the Acquisition Agreement (including all schedules, exhibits, amendments,
      supplements, modifications, assignments and all other documents delivered
      pursuant thereto or in connection therewith). No Credit Party and no other
      Person party thereto is in default in any material respect in the performance
      or
      compliance with any provisions thereof. The Acquisition Agreement complies
      in
      all material respects with, and the Acquisition has been consummated in
      accordance with, all applicable laws. The Acquisition Agreement is in full
      force
      and effect as of the Closing Date and has not been terminated, rescinded or
      withdrawn. All requisite approvals by Governmental Authorities having
      jurisdiction over Seller, any Credit Party and other Persons referenced therein
      with respect to the transactions contemplated by the Acquisition Agreement
      have
      been obtained, and no such approvals impose any conditions to the consummation
      of the transactions contemplated by the Acquisition Agreement or to the conduct
      by any Credit Party of its business thereafter. To the best of each Credit
      Party’s knowledge, none of the Seller’s representations or warranties in the
      Acquisition Agreement contain any untrue statement of a material fact or omit
      any fact necessary to make the statements therein not misleading. Each of the
      representations and warranties given by each applicable Credit Party in the
      Acquisition Agreement is true and correct in all material respects.

     

    3.25. License
      Agreements.
      Disclosure
      Schedule (3.25)
      sets
      forth all the License Agreements of Borrowers, and each of the License
      Agreements listed thereon is in full force and effect (or has been approved
      in
      writing (which approval has not been rescinded in writing) as an acceptable
      arrangement by the Agent), and except as disclosed by the Borrowers in writing
      to the Agent from time to time, the Borrowers are in compliance with the
      material terms thereof and there exists no default on the part of the Borrowers
      under any of the License Agreements.

     

    3.26. Material
      Contracts.
      Disclosure
      Schedule (3.26)
      sets
      forth all the contracts, agreements and documents (other than those set forth
      on
      any other Disclosure Schedule hereto or constituting an Exhibit hereto) that
      materially affect or relate to the business or operations of the Parent and
      its
      Subsidiaries.

     

    3.27. Unwritten
      Agreements.
      Neither
      the Borrowers nor any of their Subsidiaries is party to any arrangement which,
      if approved by the Agent would constitute a License Agreement or Consignment
      Agreement and which is not evidenced by a written agreement other than those
      previously disclosed to the Agent.

     

    
      
        
        

      

      
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    3.28. UCC
      Financing Statements.
      Any
      documents (including, without limitation, financing statements) required to
      be
      filed (if any) in order to create in favor of the Agent for the benefit of
      the
      Lenders, a perfected security interest in the Collateral with respect to which
      a
      security interest may be perfected by a filing under the Code have been duly
      executed (if required) and delivered by the Borrowers on or prior to the Closing
      Date and have been or will be (immediately after the Closing Date) properly
      filed in each jurisdiction required in order to create
      in
      favor of the Agent for the benefit of the Lenders a perfected Lien on the
      Collateral immediately following the Closing Date.

     

    
      	 	
              4.

            	
              FINANCIAL
                STATEMENTS AND INFORMATION

            

    

     

    4.1. Reports
      and Notices. 

     

    (a) Each
      Credit Party executing this Agreement hereby agrees that from and after the
      Closing Date and until the Termination Date, it shall deliver to Agent or to
      Agent and Lenders, as required, the Financial Statements, notices, Projections
      and other information at the times, to the Persons and in the manner set forth
      in Annex
      E.

     

    (b) Each
      Credit Party executing this Agreement hereby agrees that, from and after the
      Closing Date and until the Termination Date, it shall deliver to Agent or to
      Agent and Lenders, as required, the various Collateral Reports (including
      Borrowing Base Certificates in the form of Exhibit
      4.1(b))
      at the
      times, to the Persons and in the manner set forth in Annex
      F.

     

    4.2. Communication
      with Accountants.
      Each
      Credit Party executing this Agreement authorizes (a) Agent and (b) so long
      as an
      Event of Default has occurred and is continuing, each Lender, to communicate
      directly with its independent certified public accountants, including Eisner
      LLP, and authorizes and shall instruct those accountants and advisors to
      communicate to Agent and each Lender information relating to any Credit Party
      with respect to the business, results of operations and financial condition
      of
      any Credit Party.

     

    
      	 	
              5.

            	
              AFFIRMATIVE
                COVENANTS

            

    

     

    Each
      Credit Party executing this Credit Agreement jointly and severally agrees as
      to
      all Credit Parties that from and after the date hereof and until the Termination
      Date:

     

    5.1. Maintenance
      of Existence and Conduct of Business.
      Each
      Credit Party shall: except as otherwise expressly permitted hereunder, do or
      cause to be done all things necessary to preserve and keep in full force and
      effect its corporate existence and its material rights and franchises; do or
      cause to be done all things necessary to comply with, preserve and keep in
      full
      force and effect all material agreements, licenses, permits, consents and
      approvals necessary to the operation and conduct of its business; continue
      to
      conduct its business substantially as now conducted or as otherwise permitted
      hereunder; at all times maintain, preserve and protect all of its assets and
      properties used or useful in the conduct of its business, and keep the same
      in
      good repair, working order and condition in all material respects (taking into
      consideration ordinary wear and tear) and from time to time make, or cause
      to be
      made, all necessary or appropriate repairs, replacements and improvements
      thereto consistent with prudent business practices; and transact business only
      in such corporate and trade names as are set forth in Disclosure
      Schedule (5.1).

     

    
      
        
        

      

      
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    5.2. Payment
      of Charges. 

     

    (a) Subject
      to Section
      5.2(b),
      each
      Credit Party shall pay and discharge or cause to be paid and discharged promptly
      all Charges payable by it, including (i) Charges imposed
      upon it, its income and profits, or any of its property (real, personal or
      mixed) and all Charges with respect to tax, social security and unemployment
      withholding with respect to its employees, (ii) lawful claims for labor,
      materials, supplies and services or otherwise, and (iii) all storage or rental
      charges payable to warehousemen or bailees, in each case, before any thereof
      shall become past due, except in the case of clauses
      (ii) and (iii)
      where
      the failure to pay or discharge such Charges would not result in aggregate
      liabilities in excess of $1,000,000.

     

    (b) Each
      Credit Party may in good faith contest, by appropriate proceedings, the validity
      or amount of any Charges, Taxes or claims described in Section
      5.2(a);
      provided,
      that
      (i) adequate reserves with respect to such contest are maintained on the books
      of such Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed
      to
      secure payment of such Charges (other than payments to warehousemen and/or
      bailees) that is superior to any of the Liens securing the Obligations and
      such
      contest is maintained and prosecuted continuously and with diligence and
      operates to suspend collection or enforcement of such Charges; (iii) none of
      the
      Collateral becomes subject to forfeiture or loss as a result of such contest;
      and (iv) such Credit Party shall promptly pay or discharge such contested
      Charges, Taxes or claims and all additional charges, interest, penalties and
      expenses, if any, and shall deliver to Agent evidence reasonably acceptable
      to
      Agent of such compliance, payment or discharge, if such contest is terminated
      or
      discontinued adversely to such Credit Party or the conditions set forth in
      this
Section
      5.2(b)
      are no
      longer met.

     

    5.3. Books
      and Records; Reserves. 

     

    (a) Each
      Credit Party shall keep adequate books and records with respect to its business
      activities in which proper entries, reflecting all financial transactions,
      are
      made in accordance with GAAP and on a basis consistent with the Financial
      Statements attached as Disclosure
      Schedule (3.4(a)).

     

    (b) Each
      Credit Party shall by means of appropriate entries, reflect in its accounts
      and
      in all financial statements furnished pursuant to Sections 3.4 and 4.1 hereof
      proper liabilities and reserves for all taxes and proper provision for
      depreciation and amortization or its properties and bad debts, all in accordance
      with GAAP.

    
       

      
        
          
          

        

        
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    5.4. Insurance;
      Damage to or Destruction of Collateral. 

     

    (a) The
      Credit Parties shall, at their sole cost and expense, maintain the policies
      of
      insurance described on Disclosure
      Schedule (3.18) as
      in effect on the date hereof or otherwise in form and amounts and with insurers
      reasonably acceptable to Agent. Such policies of insurance (or the loss payable
      and additional insured endorsements delivered to Agent) shall contain provisions
      pursuant to which the insurer agrees to provide thirty (30) days prior written
      notice to Agent in the event of any non-renewal, cancellation or amendment
      of
      any such insurance policy. If any Credit Party at any time or times hereafter
      shall fail to obtain or maintain any of the policies of insurance required
      above, or to pay all premiums relating thereto, Agent may upon prior notice
      to
      Borrower Representative, at any time or times thereafter obtain and maintain
      such policies
      of insurance and pay such premiums and take any other action with respect
      thereto that Agent deems advisable. Agent shall have no obligation to obtain
      insurance for any Credit Party or pay any premiums therefor. By doing so, Agent
      shall not be deemed to have waived any Default or Event of Default arising
      from
      any Credit Party’s failure to maintain such insurance or pay any premiums
      therefor. All sums so disbursed, including reasonable attorneys’ fees, court
      costs and other charges related thereto, shall be payable on demand by Borrowers
      to Agent and shall be additional Obligations hereunder secured by the
      Collateral.

     

    (b) Agent
      reserves the right at any time upon any adverse change in any Credit Party’s
      risk profile (including any change in the product mix maintained by any Credit
      Party or any laws affecting the potential liability of such Credit Party) to
      require additional forms and limits of insurance to, in Agent’s reasonable
      credit judgment, adequately protect both Agent’s and Lenders’ interests in all
      or any portion of the Collateral and to ensure that each Credit Party is
      protected by insurance in amounts and with coverage customary for its industry.
      If reasonably requested by Agent, each Credit Party shall deliver to Agent
      from
      time to time a report of a reputable insurance broker, reasonably satisfactory
      to Agent, with respect to its insurance policies.

     

    (c) Each
      Credit
      Party and their respective Subsidiaries shall
      deliver to Agent, in form and substance reasonably satisfactory to Agent,
      endorsements to (i) all “All Risk” and business interruption insurance naming
      Agent, on behalf of itself and Lenders, as loss payee, and (ii) all general
      liability and other liability policies naming Agent, on behalf of itself and
      Lenders, as additional insured. Each Credit Party and their respective
      Subsidiaries irrevocably makes, constitutes and appoints Agent (and all
      officers, employees or agents designated by Agent), so long as any Default
      or
      Event of Default has occurred and is continuing, as such Credit Party’s or such
      Subsidiary’s true and lawful agent and attorney-in-fact for the purpose of
      making, settling and adjusting claims under such “All Risk” policies of
      insurance, endorsing the name of such Credit Party or Subsidiary on any check
      or
      other item of payment for the proceeds of such “All Risk” policies of insurance
      and for making all determinations and decisions with respect to such “All Risk”
policies of insurance. Agent shall have no duty to exercise any rights or powers
      granted to it pursuant to the foregoing power-of-attorney. Borrower
      Representative shall promptly notify Agent of any loss, damage, or destruction
      to the Collateral in the amount of $1,000,000 or more, whether or not covered
      by
      insurance. After deducting from such proceeds (i) the expenses incurred by
      Agent
      in the collection or handling thereof, and (ii) amounts required to be paid
      to
      creditors (other than Lenders) having Permitted Encumbrances, Agent may, at
      its
      option, apply such proceeds to the reduction of the Obligations in accordance
      with Section 1.3(c);
      provided
      that in
      the case of insurance proceeds pertaining to any Credit Party that is not a
      Borrower, such insurance proceeds shall be applied ratably to all of the Loans
      owing by each Borrower, or permit or require the applicable Credit Party or
      Subsidiary to use such money, or any part thereof, to replace, repair, restore
      or rebuild the Collateral in a diligent and expeditious manner with materials
      and workmanship of substantially the same quality as existed before the loss,
      damage or destruction. Notwithstanding the foregoing, if the casualty giving
      rise to such insurance proceeds could not reasonably be expected to have a
      Material Adverse Effect and such insurance proceeds do not exceed $5,000,000
      in
      the aggregate,
      Agent shall permit the applicable Credit Party or Subsidiary to replace,
      restore, repair or rebuild the property; provided
      that if
      such Credit Party or Subsidiary shall not have completed or entered into binding
      agreements to complete such replacement, restoration, repair or rebuilding
      within 180 days of such casualty, Agent may apply such insurance proceeds to
      the
      Obligations in accordance with Section
      1.3(c);
      provided,
      further, that in the case of insurance proceeds pertaining to any Credit Party
      that is not a Borrower, such insurance proceeds shall be applied ratably to
      all
      of the Loans owing by each Borrower. All insurance proceeds that are to be
      made
      available to any Borrower to replace, repair, restore or rebuild the Collateral
      shall be applied by Agent to reduce the outstanding principal balance of the
      Tranche A Revolving Loan of such Borrower (which application shall not result
      in
      a permanent reduction of the Tranche A Revolving Loan Commitment) and upon
      such
      application, Agent shall establish a Reserve against the Tranche A Borrowing
      Base in an amount equal to the amount of such proceeds so applied. All insurance
      proceeds made available to any Credit Party that is not a Borrower to replace,
      repair, restore or rebuild Collateral shall be deposited in a cash collateral
      account. Thereafter, such funds shall be made available to that Borrower or
      Credit Party to provide funds to replace, repair, restore or rebuild the
      Collateral as follows: (i) Borrower Representative shall request a Tranche
      A
      Revolving Credit Advance or a release from the cash collateral account be made
      to such Borrower or Credit Party in the amount requested to be released; (ii)
      so
      long as the conditions set forth in Section
      2.2
      have
      been met, Tranche A Revolving Lenders shall make such Tranche A Revolving Credit
      Advance or Agent shall release funds from the cash collateral account; and
      (iii)
      in the case of insurance proceeds applied against the Tranche A Revolving Loan,
      the Reserve established with respect to such insurance proceeds shall be reduced
      by the amount of such Tranche A Revolving Credit Advance. To the extent not
      used
      to replace, repair, restore or rebuild the Collateral, such insurance proceeds
      shall be applied in accordance with Section
      1.3(c);
      provided
      that in
      the case of insurance proceeds pertaining to any Credit Party that is not a
      Borrower, such insurance proceeds shall be applied ratably to all of the Loans
      owing by each Borrower.

     

    
      
        
        

      

      
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    5.5. Compliance
      with Laws.
      Each
      Credit Party shall comply with all federal, state, local and foreign laws and
      regulations applicable to it, including those relating to ERISA, labor laws,
      and
      Environmental Laws and Environmental Permits, except to the extent that the
      failure to comply, individually or in the aggregate, could not reasonably be
      expected to have a Material Adverse Effect.

     

    5.6. Supplemental
      Disclosure.
      From
      time to time as may be reasonably requested by Agent (which request will not
      be
      made more frequently than once each year absent the occurrence and continuance
      of an Event of Default) or at Credit Parties’ election, the Credit Parties shall
      supplement each Disclosure Schedule hereto, or any representation herein or
      in
      any other Loan Document, with respect to any matter hereafter arising that,
      if
      existing or occurring at the date of this Agreement, would have been required
      to
      be set forth or described in such Disclosure Schedule or as an exception to
      such
      representation or that is necessary to correct any information in such
      Disclosure Schedule or representation which has been rendered inaccurate thereby
      (and, in the case of any supplements to any Disclosure Schedule, such Disclosure
      Schedule shall be appropriately marked to show the changes made therein);
provided
      that (a)
      no such supplement to any such Disclosure Schedule or representation shall
      amend, supplement or otherwise
      modify any Disclosure Schedule or representation, or be or be deemed a waiver
      of
      any Default or Event of Default resulting from the matters disclosed therein,
      except as consented to by Agent and Requisite Lenders in writing, and (b) no
      supplement shall be required or permitted as to representations and warranties
      that relate solely to the Closing Date.

     

    
      
        
        

      

      
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    5.7. Intellectual
      Property.
      Each
      Credit Party will conduct its business and affairs without infringement of
      or
      interference with any Intellectual Property of any other Person and shall comply
      with the terms of its Licenses except to the extent that the failure to do
      so,
      individually or in the aggregate, could not reasonably be expected to have
      a
      Material Adverse Effect.

     

    5.8. Environmental
      Matters.
      Each
      Credit Party shall and shall cause each Person within its control to: (a)
      conduct its operations and keep and maintain its Real Estate in compliance
      with
      all Environmental Laws and Environmental Permits other than noncompliance that
      could not reasonably be expected to have a Material Adverse Effect; (b)
      implement any and all investigation, remediation, removal and response actions
      that are appropriate or necessary to maintain the value and marketability of
      the
      Real Estate or to otherwise comply in all material respects with Environmental
      Laws and Environmental Permits pertaining to the presence, generation,
      treatment, storage, use, disposal, transportation or Release of any Hazardous
      Material on, at, in, under, above, to, from or about any of its Real Estate;
      (c)
      notify Agent promptly after such Credit Party becomes aware of any violation
      of
      Environmental Laws or Environmental Permits or any Release on, at, in, under,
      above, to, from or about any Real Estate that is reasonably likely to result
      in
      Environmental Liabilities in excess of $500,000; and (d) promptly forward to
      Agent a copy of any order, notice, request for information or any communication
      or report received by such Credit Party in connection with any such violation
      or
      Release or any other matter relating to any Environmental Laws or Environmental
      Permits that could reasonably be expected to result in Environmental Liabilities
      in excess of $500,000, in each case whether or not the Environmental Protection
      Agency or any Governmental Authority has taken or threatened any action in
      connection with any such violation, Release or other matter. If Agent at any
      time has a reasonable basis to believe that there may be a violation of any
      Environmental Laws or Environmental Permits by any Credit Party or any
      Environmental Liability arising thereunder, or a Release of Hazardous Materials
      on, at, in, under, above, to, from or about any of its Real Estate and in each
      case that is reasonably likely to result in Environmental Liabilities in excess
      of $500,000, then the applicable Credit Party shall, upon Agent’s written
      request (i) cause the performance of such environmental audits regarding the
      matters which are the subject of such violations or Environmental Liabilities,
      including subsurface sampling of soil and groundwater, and preparation of such
      environmental reports, at Borrowers’ expense, as Agent may from time to time
      reasonably request, which shall be conducted by reputable environmental
      consulting firms reasonably acceptable to Agent and shall be in form and
      substance reasonably acceptable to Agent, and (ii) permit Agent or its
      representatives to have access to the applicable Real Estate for the purpose
      of
      conducting such environmental audits and testing described in the immediately
      preceding clause (i). Borrowers shall reimburse Agent for the costs of such
      audits and tests and the same will constitute a part of the Obligations secured
      hereunder.

     

    
      
        
        

      

      
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    5.9. Landlords’
      Agreements, Mortgagee Agreements, Bailee Letters and Real Estate
      Purchases.
      Each
      Credit Party shall use good faith efforts to obtain a landlord’s agreement,
      mortgagee agreement or bailee letter, as applicable, from the lessor of each
      leased property, mortgagee
      of owned property or bailee with respect to any warehouse, processor or
      converter facility or other location where Collateral is stored or located,
      which agreement or letter shall contain a waiver or subordination of all Liens
      or claims that the landlord, mortgagee or bailee may assert against the
      Collateral at that location, and shall otherwise be reasonably satisfactory
      in
      form and substance to Agent; provided that the Borrowers shall have ninety
      (90)
      days from the Closing Dated to deliver such executed third party agreements
      to
      the Agent with respect to any location relating to the Acquired Business. With
      respect to such locations or warehouse space leased or owned as of the Closing
      Date and thereafter, if Agent has not received a landlord or mortgagee agreement
      or bailee letter as of the Closing Date (or, if later, as of the date such
      location is acquired or leased), any Borrower’s Eligible Inventory at that
      location shall, in Agent’s discretion, be excluded from the Tranche A Borrowing
      Base and Tranche B Borrowing Base or be subject to such Reserves as may be
      established by Agent in its reasonable credit judgment; provided that if the
      Agent chooses to exclude any Borrower’s Eligible Inventory from the Tranche A
      Borrowing Base and the Tranche B Borrowing Base or subject such to Borrower’s
      Eligible Inventory to Reserves, any landlord or mortgagee agreement or bailee
      letter relating to such location or warehouse space holding that portion of
      the
      Borrower’s Eligible Inventory shall no longer be required. After the Closing
      Date, no real property or warehouse space shall be leased by any Credit Party
      and no Inventory shall be shipped to a processor or converter under arrangements
      established after the Closing Date without the prior written consent of Agent
      (which consent, in Agent’s discretion, may be conditioned upon the exclusion
      from the Tranche A Borrowing Base and Tranche B Borrowing Base of Eligible
      Inventory at that location or the establishment of Reserves acceptable to Agent)
      or, unless and until a reasonably satisfactory landlord agreement or bailee
      letter, as appropriate, shall first have been obtained with respect to such
      location. Each Credit Party shall timely and fully pay and perform its
      obligations under all leases and other agreements with respect to each leased
      location or public warehouse where any Collateral is or may be located. To
      the
      extent otherwise permitted hereunder, if any Credit Party proposes to acquire
      a
      fee ownership interest in Real Estate after the Closing Date, it shall first
      provide to Agent a mortgage or deed of trust granting Agent a first priority
      Lien on such Real Estate, together with environmental audits, mortgage title
      insurance commitment, real property survey, local counsel opinion(s), and,
      if
      required by Agent, supplemental casualty insurance and flood insurance, and
      such
      other documents, instruments or agreements reasonably requested by Agent, in
      each case, in form and substance reasonably satisfactory to Agent.

     

    5.10. Further
      Assurances.
      Each
      Credit Party executing this Agreement agrees that it shall and shall cause
      each
      other Credit Party to, at such Credit Party’s expense and upon the reasonable
      request of Agent, duly execute and deliver, or cause to be duly executed and
      delivered, to Agent such further instruments and do and cause to be done such
      further acts as may be necessary or proper in the reasonable opinion of Agent
      to
      carry out more effectively the provisions and purposes of this Agreement and
      each Loan Document.

     

    
      
        
        

      

      
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    5.11. Consignment
      Agreements. 

     

    (a) Subject
      to the terms of clause (b) below, Borrowers shall deliver to the Agent Consignor
      Letters duly executed by consignors of “consigned” or “memo” inventory (pursuant
      to any written consignment agreement or otherwise) representing at least ninety
      percent (90%) of the “memo” or “consigned” inventory (based on book value) of
      such Borrowers and at no time following the Closing Date shall any Borrowers
      suffer or permit more than ten percent (10%) of their aggregate “memo” or
“consigned” inventory (based on book value) to be on consignment from consignors
      who have not executed and delivered to the Agent Consignor Letters. Each
      Borrower further agrees to use its best efforts to deliver to the Agent
      Consignor Letters from each of its consignors of “memo” or “consigned” inventory
      and each Borrower further agrees that it shall not from and after the Closing
      Date enter into any consignment agreement or arrangement with any consignor
      who
      has not delivered to the Agent a Consignor Letter.

     

    (b) Within
      ninety (90) days following the Closing Date, Borrower Representative shall
      deliver such Consignor Letters set forth in clause (a) above to the Agent with
      respect to Consignment Inventory of the Acquired Business.

     

    5.12. License
      Agreements. 

     

    (a) If
      an
      Event of Default occurs and is continuing, Borrowers shall, upon the request
      of
      the Agent, use their best efforts to grant to the Agent for the benefit of
      the
      Agent and the Lenders pursuant to security agreements and/or collateral
      assignments each in form and substance satisfactory to the Agent, a valid,
      perfected and enforceable first priority Lien on all right, title and interest
      of the applicable Borrower in, to and under all Unapproved License Agreements
      and License Agreements as to which the Agent shall have not heretofore received
      such a valid, perfected and enforceable first priority Lien (together with
      any
      legal opinions reasonably requested by the Agent as to the validity,
      enforceability and perfection of such Liens). In connection therewith, Borrowers
      shall use their best efforts to obtain all consents of third parties (including,
      without limitation, any licensor consents) necessary to permit the effective
      granting of such Liens. In the event such security agreements or collateral
      assignments (together any legal opinions requested by the Agent and third party
      consents deemed necessary by the Agent to permit the granting of such Liens)
      are
      not delivered to the Agent within 45 days after the Agent’s request therefor and
      the Agent has not otherwise received a valid, perfected and enforceable first
      priority security interest in such Unapproved License Agreements and License
      Agreements, such failure on the part of any Credit Party shall constitute an
      Event of Default hereunder in addition to any other Default or Event of Default
      existing at such time.

     

    (b) The
      Borrowers shall (i) promptly upon entering into any Unapproved License Agreement
      or License Agreement, or any amendment to any Unapproved License Agreement
      or
      License Agreement, provide the Agent with a written description thereof or,
      if
      requested, copies of same (or, if such Unapproved License Agreement, License
      Agreement or amendment is not in writing, a written description thereof), it
      being understood that the Borrowers shall not need the approval of the Agent
      or
      any Lender to enter into, amend or terminate any Unapproved License Agreement
      or
      License Agreement, (ii) promptly upon entering into any Unapproved License
      Agreement or License Agreement after the Closing Date, provide to the Agent
      an
      internally generated projection of gross revenues for any such Unapproved
      License Agreement or License Agreement for the twelve month period following
      the
      first date of operation under such Unapproved License Agreement or License
      Agreement, (iii) provide the Agent with written notice upon receiving notice
      or
      having knowledge that a License Agreement shall not be renewed, (iv) comply
      in
      all material respects with all Unapproved License Agreements or License
      Agreements now existing or hereafter entered into by it (including, without
      limitation, those License Agreements listed on Disclosure Schedule 3.25 hereof)
      and (v) provide the Agent with written notice of any default under any
      Unapproved License Agreement or License Agreement immediately upon becoming
      aware of any default thereunder and of any termination of any Unapproved License
      Agreement or License Agreement.

    

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

    
      	 	
              6.

            	
              NEGATIVE
                COVENANTS

            

    

     

    Each
      Credit Party executing this Agreement jointly and severally agrees as to all
      Credit Parties that from and after the date hereof until the Termination
      Date:

     

    6.1. Mergers,
      Subsidiaries, Etc.
      No
      Credit Party shall directly or indirectly, by operation of law or otherwise,
      (a)
      form or acquire any Subsidiary, or (b) merge with, consolidate with, acquire
      all
      or substantially all of the assets or Stock of, or otherwise combine with or
      acquire, any Person, except that a wholly-owned direct or indirect Domestic
      Subsidiary of a Borrower may merge (i) with such Borrower so long as such
      Borrower is the sole survivor of any such merger; provided, that in the case
      of
      any merger to which Finlay is a party, Finlay shall be the sole survivor of
      any
      such merger or (ii) with another wholly-owned direct or indirect Domestic
      Subsidiary of such Borrower. Notwithstanding the foregoing, any Borrower may
      acquire all or substantially all of the assets or Stock of any Person (the
      “Target”)
      (in
      each case, a “Permitted
      Acquisition”)
      subject to the satisfaction of each of the following conditions:

     

    (i) Agent
      shall receive at least ten (10) Business Days’ prior written notice of such
      proposed Permitted Acquisition, which notice shall include such information
      with
      respect thereto as Agent may reasonably request, including (i) the proposed
      date
      and the amount of the acquisition, (ii) a list and description of the assets
      or
      Stock to be acquired, (iii) the total purchase price for the assets to be
      purchased (and the terms of the payment of such purchase price), (iv) a summary
      of the due diligence undertaken by such Borrower in connection with such
      acquisition, and (v) appropriate financial statements of Target;

     

    (ii) such
      Permitted Acquisition shall only involve assets located in the United States
      or
      Canada and comprising a business, or those assets of a business, of the type
      engaged in by Borrowers as of the Closing Date, and which business would not
      subject Agent or any Lender to regulatory or third party approvals in connection
      with the exercise of its rights and remedies under this Agreement or any other
      Loan Documents other than approvals applicable to the exercise of such rights
      and remedies with respect to Borrowers prior to such Permitted
      Acquisition;

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    (iii) such
      Permitted Acquisition shall be consensual and shall have been approved by the
      Target’s board of directors;

     

    (iv) no
      additional Indebtedness, Guaranteed Indebtedness, contingent obligations
      (excluding contingent obligations arising as a result of a purchase price
      adjustment or “earn-out” or similar provision) or other liabilities shall be
      incurred, assumed or otherwise be reflected on a consolidated balance sheet
      of
      Borrowers and Target after giving effect to such Permitted Acquisition, except
      (A) Loans made hereunder and (B) ordinary course trade payables, accrued
      expenses and unsecured Indebtedness of the Target to the extent no Default
      or
      Event of Default has occurred and is continuing or would result after giving
      effect to such Permitted Acquisition;

     

    (v) the
      sum
      of all amounts payable in connection with all Permitted Acquisitions consummated
      after the Closing Date (including all transaction costs and all Indebtedness,
      liabilities and contingent obligations incurred or assumed in connection
      therewith or otherwise reflected in a consolidated balance sheet of Borrowers
      and Target) shall not exceed $50,000,000 and the portion thereof allocable
      to
      goodwill and intangible assets for all such Permitted Acquisitions during the
      term hereof shall not exceed $25,000,000;

     

    (vi) the
      Target shall not have incurred an operating loss for the trailing twelve-month
      period preceding the date of the Permitted Acquisition, as determined based
      upon
      the Target’s financial statements for its most recently completed fiscal year
      and its most recent interim financial period completed within sixty (60) days
      prior to the date of consummation of such Permitted Acquisition;

     

    (vii) the
      business and assets acquired in such Permitted Acquisition shall be free and
      clear of all Liens (other than Permitted Encumbrances);

     

    (viii) at
      or
      prior to the closing of any Permitted Acquisition, Agent will be granted a
      first
      priority perfected Lien (subject to Permitted Encumbrances) in all assets
      acquired pursuant thereto or in the assets and Stock of the Target, and Parent
      and Borrowers and the Target shall have executed such documents and taken such
      actions as may be reasonably required by Agent in connection
      therewith;

     

    (ix) Concurrently
      with delivery of the notice referred to in clause
      (i)
      above,
      Borrowers shall have delivered to Agent, in form and substance reasonably
      satisfactory to Agent:

     

    (A) a
      pro
      forma consolidated balance sheet, income statement and cash flow statement
      of
      Parent and its Subsidiaries (the “Acquisition
      Pro Forma”),
      based
      on recent financial statements, which shall be complete and shall fairly present
      in all material respects the assets, liabilities, financial condition and
      results of operations of Parent and its Subsidiaries in accordance with GAAP
      consistently applied, but taking into account such Permitted Acquisition and
      the
      funding of all Loans (if any) in connection therewith, and such Acquisition
      Pro
      Forma shall reflect that (x) average daily Borrowing Availability of all
      Borrowers for the 90-day period preceding the consummation of such Permitted
      Acquisition would have exceeded $90,000,000 on a pro forma basis (after giving
      effect to such Permitted Acquisition and all Loans (if any) funded in connection
      therewith as if made on the first day of such period) and the Acquisition
      Projections (as hereinafter defined) shall reflect that such Borrowing
      Availability of $90,000,000 shall continue for at least ninety (90) days after
      the consummation of such Permitted Acquisition, and (y) on a pro forma basis,
      no
      Event of Default has occurred and is continuing or would result after giving
      effect to such Permitted Acquisition and Borrowers would have been in compliance
      with the financial covenants set forth in Annex
      G
      for the
      four quarter period most recently ended prior to the consummation of such
      Permitted Acquisition (after giving effect to such Permitted Acquisition and
      all
      Loans (if any) funded in connection therewith as if made on the first day of
      such period);

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    (B) updated
      versions of the most recently delivered Projections covering the 1-year period
      commencing on the date of such Permitted Acquisition and otherwise prepared
      in
      accordance with the Projections (the “Acquisition
      Projections”)
      and
      based upon historical financial data of a recent date reasonably satisfactory
      to
      Agent, taking into account such Permitted Acquisition; and

     

    (C) a
      certificate of the chief financial officer of each Borrower to the effect that:
      (w) each Borrower will be Solvent upon the consummation of the Permitted
      Acquisition; (x) the Acquisition Pro Forma fairly presents the financial
      condition of Parent and Borrowers (on a consolidated basis) as of the date
      thereof after giving effect to the Permitted Acquisition; (y) the Acquisition
      Projections are reasonable estimates of the future financial performance of
      Borrowers subsequent to the date thereof based upon the historical performance
      of Borrowers and the Target and show that Borrowers shall continue to be in
      compliance with the financial covenants set forth in Annex
      G
      for the
      3-year period thereafter; and (z) Borrowers have completed their due diligence
      investigation with respect to the Target and such Permitted Acquisition, which
      investigation was conducted in a manner similar to that which would have been
      conducted by a prudent purchaser of a comparable business and the results of
      which investigation were delivered to Agent and Lenders;

     

    (x) on
      or
      prior to the date of such Permitted Acquisition, Agent shall have received,
      in
      form and substance reasonably satisfactory to Agent, copies of the acquisition
      agreement and related agreements and instruments, and all opinions,
      certificates, lien search results and other documents reasonably requested
      by
      Agent including those specified in the last sentence of Section
      5.9;
      and

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    (xi) at
      the
      time of such Permitted Acquisition and after giving effect thereto, no Default
      or Event of Default has occurred and is continuing.

     

    Notwithstanding
      the foregoing, the Accounts and Inventory of the Target shall not be included
      in
      Eligible Accounts and Eligible Inventory without the prior written consent
      of
      Agent.

     

    6.2. Investments;
      Loans and Advances.
      Except
      as otherwise expressly permitted by this Section
      6,
      no
      Credit Party shall make or permit to exist any investment in, or make, accrue
      or
      permit to exist loans or advances of money to, any Person, through the direct
      or
      indirect lending of money, holding of securities or otherwise (each of the
      foregoing an “Investment”),
      except that: 

     

    (a) Borrowers
      may hold investments comprised of notes payable, or stock or other securities
      issued by Account Debtors to any Borrower pursuant to negotiated agreements
      with
      respect to settlement of such Account Debtor’s Accounts in the ordinary course
      of business consistent with past priorities; 

     

    (b) each
      Credit Party may maintain its existing investments in its Subsidiaries as of
      the
      Closing Date; 

     

    (c) so
      long
      as no Default or Event of Default has occurred and is continuing, Borrowers
      may
      make investments, subject to Control Letters in favor of Agent for the benefit
      of Lenders or otherwise subject to a perfected security interest in favor of
      Agent for the benefit of Lenders, in (i) marketable direct obligations issued
      or
      unconditionally guaranteed by the United States of America or any agency thereof
      maturing within one year from the date of acquisition thereof, (ii) commercial
      paper maturing no more than one year from the date of creation thereof and
      currently having the highest rating obtainable from either Standard & Poor’s
      Ratings Group or Moody’s Investors Service, Inc., (iii) certificates of deposit
      maturing no more than one year from the date of creation thereof issued by
      commercial banks incorporated under the laws of the United States of America,
      each having combined capital, surplus and undivided profits of not less than
      $300,000,000 and having a senior unsecured rating of “A” or better by a
      nationally recognized rating agency (an “A
      Rated Bank”),
      (iv)
      time deposits maturing no more than thirty (30) days from the date of creation
      thereof with A Rated Banks and (v) mutual funds that invest solely in one or
      more of the investments described in clauses
      (i) through (iv)
      above;

     

    (d) Borrowers
      may make investments representing stock or obligations issued to the Parent
      or
      any of its Subsidiaries in settlement of claims against any other Person by
      reason of a composition or readjustment of debt or a reorganization of any
      debtor of the Parent or such Subsidiary;

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    (e) Investments
      representing the Indebtedness of any Person owing as a result of the sale by
      Finlay or any of its Subsidiaries in the ordinary course of business of products
      or services (on customary trade terms); 

     

    (f) Investments
      in the Stock of any Subsidiary existing on the Closing Date or any new
      Subsidiary created with the prior written consent of the Requisite Lenders,
      but
      not any additional Investments therein other than additional Investments
      approved in writing by the Requisite Lenders and increases in Investments solely
      by reason of increases in the retained earnings of such Subsidiary; provided,
      that notwithstanding anything to the contrary contained in the foregoing,
      Carlyle may make capital contributions to Park Promenade, and Finlay may make
      capital contributions to Congress, from time to time as Borrowers shall
      determine are appropriate and desirable in the operation of the business
      conducted by the Carlyle Credit Parties or the Finlay Credit Parties, as
      applicable, including for the purposes of providing for the repayment of any
      intercompany loans and advances owing from Park Promenade to Carlyle or Congress
      to Finlay or to provide Park Promenade or Congress with access to and the
      benefit of any Tranche A Revolving Loans and Tranche B Revolving Loans made
      to
      Carlyle or Finlay, as applicable, on the basis of Inventory owned by Park
      Promenade or Congress, as applicable. 

     

    (g) the
      Guaranties; 

     

    (h) Investments
      outstanding on the date hereof and described on Disclosure
      Schedule (6.2),
      but not
      any additional Investments therein (other than additional investments required
      to be made and described on Disclosure
      Schedule (6.2)
      (including, without limitation, additional investments in connection with the
      Congress Acquisition)); 

     

    (i) Investments
      represented by the Blocked Accounts and the other bank accounts, if any,
      permitted hereunder; 

     

    (j) Investments
      by any Borrower with respect to its officers, directors or employees not to
      exceed $500,000 in the aggregate outstanding at any time, plus (i) advances
      to
      employees for travel and entertainment in the ordinary course of business,
      (ii)
      advances to employees for relocation expenses not to exceed $1,000,000 in the
      aggregate at any one time outstanding, and (iii) advances to employees in
      respect of bonuses actually earned by such employees so long as such bonuses
      were actually earned by such employees and that at the time of each such advance
      or advances no Default or Event of Default was continuing and (iv) the
“split-dollar” life insurance benefits/arrangement provided for under the
      Carlyle Executive Employment Agreements; provided, in each case, that such
      Investments do not violate the Sarbanes-Oxley Act of 2002; 

     

    (k) payments
      required pursuant to the Tax Allocation Agreement; 

     

    (l) advances
      to consignment vendors in the ordinary course of business consistent with past
      practices (net of interim sales of such vendor’s consigned inventory) not to
      exceed $25,000,000 outstanding at any one time, provided, that (i) the amount
      of
      such advances made to any one Person and its Affiliates does not exceed (x)
      $10,000,000 (net of interim sales of such vendor’s consigned inventory) at any
      time outstanding and (y) the amount outstanding at any time will not exceed
      50%
      of the book value at such time of such Person’s (or Affiliate’s) “memo” or
“consigned” inventory as shown on the Borrower’s books or computer records, (ii)
      within thirty (30) days following the end of each month, at Agent’s request, the
      Borrowers shall deliver to the Agent a detailed schedule showing all outstanding
      advances under this Section 6.2(l)
      in
      form and content satisfactory to the Agent and (iii) the Borrowers shall put
      in
      place a system reasonably satisfactory to the Agent to set appropriate credit
      limits, track its credit experience and obtain financial information from
      Persons to whom advances are made under this Section 6.2(l). 

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    (m) Investments
      constituting Initial License Expense or advance payments of rent or security
      deposits made under any real estate lease for any Independent Retail Store
      not
      exceeding $1,500,000 in the aggregate in any Fiscal Year of the Parent.

     

    (n) Investments
      as a result of any transaction pursuant to Section 6.13 hereof; 

     

    (o) Investments
      of the Borrowers as a result of any Hedge Agreement which is not speculative
      in
      nature, which is designed to hedge against fluctuations in the price of gold
      and
      which is in the ordinary course of business in keeping with the Borrowers’ past
      practices; 

     

    (p) Investments
      of the Borrowers as a result of any other Hedge Agreement which is not
      prohibited under the terms of this Agreement; 

     

    (q) guarantees
      by any Finlay Credit Party of any obligations of any other Finlay Credit Party
      and guarantees by any Carlyle Credit Party of any obligations of any other
      Carlyle Credit Party, so long as, in either such case, the obligations of the
      other Finlay Credit Party or Carlyle Credit Party, as applicable, are otherwise
      permitted hereunder; 

     

    (r) guarantees
      by Finlay and/or Parent of any of the rental obligations of any Credit Party
      under any real estate lease for any Independent Retail Store, so long as such
      rental obligations are permitted under Section 6.18 below. 

     

    (s) guaranties
      by the Carlyle Credit Parties of the Senior Notes to the extent required under
      the Senior Note Indenture; and

     

    (t) Permitted
      Acquisitions.

     

    6.3. Indebtedness. 

     

    (a) No
      Credit
      Party shall create, incur, assume or permit to exist any Indebtedness, except
      (without duplication):

     

    (i) Indebtedness
      secured by purchase money security interests and Capital Leases permitted in
      Section
      6.7(c),
      

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    (ii) the
      Loans
      and the other Obligations, 

     

    (iii) unfunded
      pension fund and other employee benefit plan obligations and liabilities to
      the
      extent they are permitted to remain unfunded under applicable law, 

     

    (iv) existing
      Indebtedness described in Disclosure
      Schedule (6.3)
      and
      refinancings thereof or amendments or modifications thereto that do not have
      the
      effect of increasing the principal amount thereof or changing the amortization
      thereof (other than to extend the same) and that are otherwise on terms and
      conditions no less favorable to any Credit Party, Agent or any Lender, as
      reasonably determined by Agent, than the terms of the Indebtedness being
      refinanced, amended or modified, 

     

    (v) Indebtedness
      specifically permitted under Section
      6.1,
      

     

    (vi) hedging
      obligations under swaps, caps and collar arrangements arranged by GE Capital
      or
      provided by any Lender or an Affiliate of a Lender entered into for the sole
      purpose of hedging against fluctuations in the price of gold and which is in
      the
      normal course of business and consistent with industry practices, 

     

    (vii) hedging
      obligations under swaps, caps and collar arrangements arranged by GE Capital
      or
      provided by any Lender or an Affiliate of a Lender entered into for the sole
      purpose of hedging against fluctuations in interest rates,

     

    (viii) Indebtedness
      consisting of intercompany loans and advances made by any Credit Party to any
      other Credit Party (other than Parent); provided,
      that:
      (A) each Credit Party shall have executed and delivered to each other Credit
      Party, on the Closing Date, a demand note (collectively, the “Intercompany
      Notes”)
      to
      evidence any such intercompany Indebtedness owing at any time by such Credit
      Party to such other Credit Parties which Intercompany Notes shall be in form
      and
      substance reasonably satisfactory to Agent and shall be pledged and delivered
      to
      Agent pursuant to the applicable Pledge Agreement or Security Agreement as
      additional collateral security for the Obligations; (B) each Credit Party shall
      record all intercompany transactions on its books and records in a manner
      reasonably satisfactory to Agent; (C) the obligations of each Credit Party
      under
      any such Intercompany Notes shall be subordinated to the Obligations of such
      Credit Party hereunder in a manner reasonably satisfactory to Agent; (D) at
      the
      time any such intercompany loan or advance is made by any Credit Party to any
      other Credit Party and after giving effect thereto, each such Credit Party
      shall
      be Solvent; and (E) no Default or Event of Default would occur and be continuing
      after giving effect to any such proposed intercompany loan,

     

    
      (ix) Indebtedness
        of Finlay evidenced by the Senior Notes, 

       

      (x) Indebtedness
        of Finlay and Parent arising under the Tax Allocation
        Agreement,

    

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

    (xi) Indebtedness
      of Finlay or any Subsidiary thereof to lessors or licensors of store locations
      with respect to Inventory purchased from such lessors or licensors not to exceed
      $2,000,000 in the aggregate outstanding at any time,

     

    (xii) Indebtedness
      of Finlay or any Subsidiary thereof to lessors or licensors of store locations
      with respect to fixtures or equipment located at a store location not to exceed
      $2,000,000 in the aggregate outstanding at any time, 

     

    (xiii) Indebtedness
      of Finlay or any Subsidiary thereof for judgments, attachments, seizures or
      levies not to exceed $1,000,000 in the aggregate outstanding at any time,

     

    (xiv) subject
      to Section 6.13 hereof, (A) indebtedness of the Parent under the Shareholders
      Agreement and Reiner Employment Agreement (or under any option agreement
      executed pursuant to the Long Term Incentive Plan) and (B) Indebtedness of
      Carlyle under the Carlyle Executive Employment Agreements, 

     

    (xv) current
      trade Indebtedness owing to Rolex Watch U.S.A., Inc. secured by liens created
      under the Rolex Security Agreement and subject to the Rolex Intercreditor
      Agreement or under the Congress Rolex Security Agreements and subject to the
      Congress Rolex Intercreditor Agreements, 

     

    (xvi) Indebtedness,
      if any, of the Carlyle Credit Parties under the Receivables Purchase Agreements,
      

     

    (xvii) Indebtedness,
      if any, of the Carlyle Credit Parties under the Credit Card Services Agreement,
      

     

    (xviii) the
      obligation of Finlay to make the Contingent Payment (as defined in the Congress
      SPA),

     

    (xix) Indebtedness,
      if any, of Congress under the Congress Credit Card Services
      Agreement.

     

    (b) No
      Credit
      Party shall, directly or indirectly, voluntarily purchase, redeem, defease
      or
      prepay any principal of, premium, if any, interest or other amount payable
      in
      respect of any Indebtedness prior to its scheduled maturity, other than (i)
      the
      Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset
      securing such Indebtedness has been sold or otherwise disposed of in accordance
      with Sections
      6.8(b) or (c);
      (iii)
      Indebtedness permitted by Section
      6.3(a)(iv)
      upon any
      refinancing thereof in accordance with Section
      6.3(a)(iv);
      (iv)
      Finlay may, from time to time, repurchase, acquire or redeem Senior Notes;
      provided
      that
      such Senior Notes are repurchased at prices deemed favorable by Finlay’s board
      of directors; provided,
      further,
      that
      the amount of such Senior Notes repurchased under this clause (iv) shall not
      exceed $25,000,000 in the aggregate; provided,
      further,
      that
      the average daily Borrowing Availability of all Borrowers for the 90-day period
      preceding the consummation of such repurchase shall have exceeded $130,000,000
      and after giving effect to such repurchase, the average daily Borrowing
      Availability of all Borrowers for the 90-day period following the consummation
      of such repurchase shall be projected to exceed $130,000,000 (based on
      projections delivered by Borrowers to Agent and reasonably acceptable to Agent);
      provided,
      further,
      that no
      Senior Notes may be repurchased under this clause (iv) prior to the date on
      which Borrowers shall deliver to Agent the annual audited financial statements
      for the Fiscal Year ending on or about January 31, 2009; (v) any of Borrowers
      may, from time to time, repay and/or prepay any intercompany Indebtedness
      outstanding and permitted under Section 6.3(a)(viii), including payments of
      principal and/or interest, as they may elect in their discretion; (vi) other
      Indebtedness not in excess of $4,000,000 and (vii) as otherwise permitted in
      Section
      6.13.

    
      
        
        

      

      
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    6.4. Employee
      Loans and Affiliate Transactions. 

     

    (a) Except
      as
      otherwise expressly permitted in this Section
      6
      with
      respect to Affiliates (including, without limitation transactions contemplated
      pursuant to the Tax Allocation Agreement, the Shareholders Agreement, the
      Registration Rights Agreement, the Stock Purchase Agreement, the Carlyle
      Executive Employment Agreements, the Trade Name License Agreements the Services
      Agreement, the Parent’s Restated Certificate of Incorporation, the
      Indemnification Agreements, the eFinlay Agreements, the Finlay Employment
      Agreements, the Carlyle Credit Party Management, Services and Allocation
      Agreements or any Carlyle Intercompany Services and Allocation Agreements,
      in
      each case as in effect on the Closing Date or as amended in accordance with
      its
      terms and the limitations set forth in Section 6.16, and any Carlyle/Finlay
      Lease that may exist from time to time), no Credit Party shall enter into or
      be
      a party to any transaction with any other Credit Party or any Affiliate thereof
      except in the ordinary course of and pursuant to the reasonable requirements
      of
      such Credit Party’s business and upon fair and reasonable terms that are no less
      favorable to such Credit Party than would be obtained in a comparable arm’s
      length transaction with a Person not an Affiliate of such Credit Party. In
      addition, if any such transaction or series of related transactions involves
      payments in excess of $4,000,000 in the aggregate, the terms of these
      transactions must be disclosed in advance to Agent. All such transactions
      existing as of the date hereof are described in Disclosure
      Schedule (6.4(a)).

     

    (b) Notwithstanding
      anything to the contrary contained in this Agreement,

     

    (i) at
      all
      times from and after the Closing Date, the Subsidiaries of Carlyle may continue
      to incur and make payments to Carlyle in respect of management and other
      services provided by Carlyle to its Subsidiaries (and Carlyle may continue
      to
      provide such services) and the Subsidiaries of Carlyle may continue to incur
      obligations and make payments to Carlyle in respect of any interest, tax,
      expense or similar allocation arrangements among Carlyle and its Subsidiaries
      pursuant to the unwritten management, services and allocation agreement and
      practices existing among Carlyle and its Subsidiaries as of the Closing Date
      consistent with the past practices of Carlyle and its Subsidiaries and/or
      pursuant to any written agreement(s) entered into by Carlyle and its
      Subsidiaries after the Closing Date to document and evidence any such unwritten
      management, services and allocation agreements and practices existing among
      Carlyle and its Subsidiaries as of the Closing Date (such agreements and
      practices, whether unwritten as of the Closing Date or subsequently reduced
      to
      written agreements, collectively, the “Carlyle
      Credit Party Management, Services and Allocation Agreements”),
      provided
      that,
      no
      material term of any such Carlyle Credit Party Management, Services and
      Allocation Agreements may be changed, amended or modified except in accordance
      with Section 6.16 below,

    
      
        
        

      

      
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    (ii) at
      any
      time after the Closing Date, Carlyle and/or its Subsidiaries may enter into
      such
      written management and other services agreements with Finlay or Finlay
      Merchandising and/or such interest tax, expense or similar allocation agreements
      with Finlay as Finlay and Carlyle shall determine in their discretion are
      appropriate in the conduct of their respective and collective business so long
      as (x) such agreements are on terms reasonably acceptable to the Agent and
      (y)
      the terms of any such management or other services agreements and/or allocation
      agreements are reasonable and, if applicable, are substantially similar to
      the
      terms of any similar agreements existing between or among Finlay, Finlay
      Merchandising and/ or eFinlay, including without limitation (if applicable)
      the
      Services Agreement, the eFinlay FFJC Services Agreement and/or the eFinlay
      FMBI
      Services Agreement (any such management or other services agreements and/or
      allocation agreements, collectively, the “Carlyle
      Intercompany Services and Allocation Agreements”);
      provided
      that,
      no
      material term of any such Carlyle Intercompany Services and Allocation
      Agreements may be changed, amended or modified after the execution thereof
      except in accordance with Section 6.16 below,

     

    (iii) at
      any
      time after the Closing Date, Carlyle and/or its Subsidiaries may enter into
      a
      lease with Finlay pursuant to which Finlay leases any space in its Connecticut
      distribution center to Carlyle and/or any of its Subsidiaries on terms that
      are
      reasonable and substantially similar to the terms of the eFinlay Lease Agreement
      (any such lease, the “Carlyle/Finlay
      Lease”);
      provided
      that,
      no
      material term of any such Carlyle/Finlay Lease may be changed, amended or
      modified after the execution thereof except in accordance with Section 6.16
      below.

     

    6.5. Capital
      Structure and Business.
      If all
      or part of a Credit Party’s Stock is pledged to Agent, that Credit Party shall
      not issue additional Stock unless such additional Stock is concurrently pledged
      to Agent. No Credit Party shall amend its charter or bylaws in a manner that
      would adversely affect Agent or Lenders or such Credit Party’s duty or ability
      to repay the Obligations. No Credit Party shall engage in any business other
      than the businesses currently engaged in by it or businesses reasonably related
      thereto.

     

    6.6. Guaranteed
      Indebtedness.
      No
      Credit Party shall create, incur, assume or permit to exist any Guaranteed
      Indebtedness except (a) by endorsement of instruments or items of payment for
      deposit to the general account of any Credit Party, and (b) for Guaranteed
      Indebtedness incurred for the benefit of any other Credit Party if the primary
      obligation is expressly permitted by this Agreement other than Indebtedness,
      if
      any, of a Target existing at the time such Target is acquired, Indebtedness
      of
      Parent not guaranteed by any of its Subsidiaries as of the Closing
      Date. 

    
      
        
        

      

      
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    6.7. Liens.
      No
      Credit Party shall create, incur, assume or permit to exist any Lien on or
      with
      respect to its Accounts or any of its other properties or assets (whether now
      owned or hereafter acquired) except for: 

     

    (a) Permitted
      Encumbrances; 

     

    (b) Liens
      in
      existence on the date hereof and summarized on Disclosure
      Schedule (6.7)
      securing
      the Indebtedness described on Disclosure
      Schedule (6.3)
      and
      permitted refinancings, extensions and renewals thereof, including extensions
      or
      renewals of any such Liens; provided
      that the
      principal amount of the Indebtedness so secured is not increased and the Lien
      does not attach to any other property; 

     

    (c) Liens
      created after the date hereof by conditional sale or other title retention
      agreements (including Capital Leases) or in connection with purchase money
      Indebtedness with respect to Equipment and Fixtures acquired by any Credit
      Party
      in the ordinary course of business or any refinancing thereof, involving the
      incurrence of an aggregate amount of purchase money Indebtedness and Capital
      Lease Obligations of not more than $6,000,000 outstanding at any one time for
      all such Liens (provided
      that
      such Liens attach only to the assets subject to such purchase money debt and
      such Indebtedness is incurred within sixty (60) days following such purchase
      and
      does not exceed 100% of the purchase price of the subject assets); 

     

    (d) Liens
      on
      Consignment Inventory in favor of any Person who retains title to such
      Consignment Inventory;

     

    (e) Liens
      granted to lessors or licensors of store locations with respect to Fixtures
      and
      Equipment at store locations leased or licensed from such lessors or licensors
      not to exceed $2,000,000 in the aggregate at any time;

     

    (f) Liens
      in
      favor of the credit insurance provider on certain account receivables pursuant
      to the Factor Guaranties;

     

    (g) Liens
      on
      funds deposited in the Credit Card Services Account in connection with the
      Credit Card Services Agreement; 

     

    (h) Liens
      in
      favor of the Receivables Purchaser upon Purchased Accounts granted pursuant
      to
      the Receivables Purchase Agreements;

     

    (i) Liens
      in
      favor of Rolex Watch U.S.A., Inc. granted pursuant to the Rolex Security
      Agreement or the Congress Rolex Security Agreements;

     

    (j) Liens
      on
      funds deposited in the Congress Credit Card Services Account in connection
      with
      the Congress Rolex Security Agreements;

    
      
        
        

      

      
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    (k) Liens
      existing on property or assets acquired pursuant to a Permitted Acquisition;
      provided, that, any such Indebtedness that is secured by such Liens is otherwise
      permitted under Section 6.3 hereof, and such Liens are not incurred in
      connection with or contemplation of, such acquisition and do not attach to
      any
      other asset of such Borrower, Guarantor or Subsidiary thereof; and

     

    (l) and
      other
      Liens securing Indebtedness not exceeding $1,000,000 in the aggregate at any
      time outstanding, so long as such Liens do not attach to any Accounts or
      Inventory.

     

    In
      addition, no Credit Party shall become a party to any agreement, note, indenture
      or instrument, or take any other action, that would prohibit the creation of
      a
      Lien on any of its properties or other assets in favor of Agent, on behalf
      of
      itself and Lenders, as additional collateral for the Obligations, except
      operating leases, Capital Leases or Licenses which prohibit Liens upon the
      assets that are subject thereto.

     

    6.8. Sale
      of Stock and Assets.
      No
      Credit Party shall sell, transfer, convey, assign or otherwise dispose of any
      of
      its properties or other assets, including the Stock of any of its Subsidiaries
      (whether in a public or a private offering or otherwise) or any of its Accounts,
      other than:

     

    (a) the
      sale
      of Inventory in the ordinary course of business;

     

    (b) sales
      in
      the ordinary course of business of assets and properties of Finlay and its
      Subsidiaries no longer necessary for the proper conduct of their respective
      businesses having a value, together with the value of all other such property
      of
      Finlay and its Subsidiaries so sold in the same Fiscal Year of the Parent,
      of
      not greater than $1,000,000 in the aggregate;

     

    (c) sales
      by
      Finlay and its Subsidiaries of worn out, obsolete or out-moded personal property
      of Finlay or such Subsidiary having a value, together with the value of all
      other such property of Finlay and its Subsidiaries so sold in the same Fiscal
      Year of the Parent, of not greater than $1,000,000 plus sales of obsolete
      jewelry, watches or other merchandise which Finlay believes cannot be
      advantageously sold in the ordinary course of business;

     

    (d) sales
      of
      Inventory, Equipment and Fixtures in connection with (i) the termination of
      License Agreements (or similar agreements or arrangements regarding the
      operation of jewelry departments or stores by the Borrowers) or (ii) the closing
      of any Independent Retail Store: as to any one or more locations, or Independent
      Retail Stores to the extent such Inventory, Equipment and Fixtures were used
      or
      retained at such locations or Independent Retail Stores in the ordinary course
      of business;

     

    (e) the
      abandonment of any assets and properties of Finlay or any of its Subsidiaries
      which are no longer useful in its business and cannot be sold;

     

    (f) the
      winding down and dissolution of Sonab Holdings and Sonab
      International;

    
      
        
        

      

      
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    (g) assignments
      under, and in accordance with, the Factor Guaranties;

     

    (h) the
      sale,
      transfer and assignment by any Carlyle Credit Party to Finlay Merchandising
      of
      any Trademarks of such Carlyle Credit Party; provided that (i) any such transfer
      shall be duly registered with the United States Patent and Trademark Office
      and
      (ii) Borrowers shall cause the Trademark, Patent and Copyright Security
      Agreement executed by Finlay Merchandising to be amended to include such
      transferred Trademarks; provided, further, that upon such transfer permitted
      under this clause (j), Finlay Merchandising and any one or more of the Carlyle
      Credit Parties may enter into an appropriate Carlyle License
      Agreement;

     

    (i) the
      sale
      of the Purchased Accounts under the Receivables Purchase Program;

     

    (j) the
      sale
      or issuance by any Credit Party of Stock to any other Credit Party, provided,
      that the such Stock shall be pledged by the holder thereof pursuant to the
      terms
      of the Pledge Agreement;

     

    (k) the
      transfer of assets (other than Stock) by any Credit Party to any other Credit
      Party;

     

    (l) the
      sublease of real or personal property by any Credit Party on commercially
      reasonably terms to the extent that such Person determines that such property
      is
      no longer necessary in the conduct of the business of the Credit
      Parties;

     

    (m) the
      sale,
      transfer or other disposition of patents, trademarks, copyrights and know-how
      by
      any Credit Party which is no longer used and is not material to the conduct
      of
      its business,

     

    (n) the
      granting of licenses of intellectual property of the Credit Parties to third
      parties in the ordinary course of business; and

     

    (o) sales
      or
      other dispositions approved by Requisite Lenders.

     

    6.9. ERISA.
      No
      Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause
      or
      permit to occur (i) an event that could result in the imposition of a Lien
      under
      Section 412 of the IRC or Section 302 or 4068 of ERISA or (ii) an ERISA Event
      to
      the extent such ERISA Event would reasonably be expected to result in taxes,
      penalties and other liabilities in an aggregate amount in excess of $250,000
      in
      the aggregate.

     

    6.10. Financial
      Covenants.
      Borrowers shall not breach or fail to comply with any of the Financial
      Covenants.

     

    6.11. Hazardous
      Materials.
      No
      Credit Party shall cause or permit a Release of any Hazardous Material on,
      at,
      in, under, above, to, from or about any of the Real Estate where such Release
      would violate in any respect, or form the basis for any Environmental
      Liabilities under, any Environmental Laws or Environmental Permits other than
      such violations or Environmental Liabilities that could not reasonably be
      expected to have a Material Adverse Effect.

    
      
        
        

      

      
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    6.12. Sale-Leasebacks.
      No
      Credit Party shall engage in any sale-leaseback, synthetic lease or similar
      transaction involving any of its assets.

     

    6.13. Restricted
      Payments.
      No
      Credit Party shall make any Restricted Payment, except:

     

    (a) intercompany
      loans and advances between Borrowers to the extent permitted by Section
      6.3,
      

     

    (b) dividends
      and distributions by Subsidiaries of any Borrower paid to such Borrower,

     

    (c) employee
      loans permitted under Section
      6.2(j),
      

     

    (d) payments
      of principal and interest of Intercompany Notes issued in accordance with
Section
      6.3,

     

    (e) so
      long
      as no Default or Event of Default shall have occurred and be continuing or
      would
      result therefrom, (A) Finlay may declare or pay dividends to the Parent on
      an
      annual basis to pay expenses of the Parent incurred in the ordinary course
      of
      business of the Parent not to exceed in the aggregate in any Fiscal Year of
      the
      Parent 0.25% of Finlay’s net sales as indicated in Finlay’s audited annual
      financial statements for the immediately preceding Fiscal Year and (B) Finlay
      and/or the Parent may purchase, repurchase, redeem, retire or acquire Stock
      from
      former employees, officers and directors pursuant to the Long Term Incentive
      Plan, Employment Agreements, the Shareholders Agreement or other written
      agreements permitted hereby and may make payments in respect of promissory
      notes
      or other Indebtedness or evidence thereof issued or incurred in connection
      with
      any such purchase, repurchase, redemption, retirement or acquisition, and Finlay
      may pay dividends to the Parent in an amount sufficient to make such purchases,
      repurchases, redemptions, retirements and acquisitions so long as the amount
      of
      such purchases, repurchases, redemptions, retirements and acquisitions
      (including, without limitation, amounts paid in respect of promissory notes
      or
      other Indebtedness or evidence thereof issued or incurred in connection with
      any
      such purchase, repurchase, redemption, retirement or acquisition) does not
      exceed in the aggregate in any Fiscal Year the sum of $1,000,000 plus the amount
      of cash received by the Parent from employees, officers and directors in respect
      of purchases of Stock during such Fiscal Year; provided, however, that the
      portion, if any, of such sum which is not applied to such purchases,
      repurchases, redemptions, retirements or acquisitions (or to the payment of
      dividends by Finlay to the Parent therefor) in any Fiscal Year may be applied
      to
      purchases, repurchases, redemptions, retirements or acquisitions of Stock from
      former employees of Finlay whose employment was terminated in such Fiscal Year
      (and for the payment of dividends by Finlay to Parent therefor) so long as
      such
      application (and payment) is made during the first three months of the
      immediately succeeding Fiscal Year, and any such portion so paid during such
      first three months as permitted by this proviso shall not be included in
      calculating the sum for such succeeding Fiscal Year,

     

    (f) Finlay
      may pay dividends to the Parent for the payment of cash dividends by the Parent
      of up to $5,000,000 plus 25% of net income (without giving effect to
      extraordinary gains or losses or gains or losses resulting from the repurchase,
      acquisition or redemption of Senior Notes), of Finlay and its subsidiaries
      after
      the fiscal year ending on or about January 31, 2008; provided,
      that
      the average daily Borrowing Availability of all Borrowers for the 90-day period
      preceding the payment of any such dividend shall have exceeded $130,000,000
      and
      after giving effect to such dividend, the average daily Borrowing Availability
      of all Borrowers for the 90-day period following the payment of such dividend
      shall be projected to exceed $130,000,000 (based on projections delivered by
      Borrowers to Agent and reasonably acceptable to Agent); provided,
      further,
      that no
      such dividend may be paid under this clause (f) prior to the date on which
      Borrowers shall deliver to Agent the annual audited financial statements for
      the
      Fiscal Year ending on or about January 31, 2009; provided,
      further
      that
      Parent shall give Agent quarterly notice, in arrears, of cash dividends made
      by
      it pursuant to this clause (f), specifying the amount of aggregate cash
      dividends and the source from which Finlay obtained the funds to be used to
      effectuate such cash dividends.

    
      
        
        

      

      
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    (g) so
      long
      as no Default or Event of Default is continuing, on any tax payment date, Finlay
      may make payments to the Parent of amounts required to be paid on such tax
      payment date under sections 4(c) and 5 of the Tax Allocation Agreement;
      provided, however, that (x) no payment on any tax payment date made by Finlay
      to
      the Parent shall exceed the amount payable by the Parent to any taxing authority
      on such tax payment date, and (y) in any taxable year (or portion thereof),
      the
      aggregate amount payable by Finlay to the Parent under this Section 6.13(g)
      in
      respect of federal, state and local income taxes shall not exceed the lesser
      of
      (i) the federal, state and local income tax liability that would have been
      payable by Finlay for such taxable year (or portion thereof) determined as
      if
      Finlay and its Subsidiaries had filed separate federal, state and local income
      tax returns for such taxable year (or portion thereof) and for all previous
      taxable years beginning after October 31, 1992, computed in accordance with
      actual elections, conventions and other determinations with respect to Finlay
      reflected in the consolidated or combined returns of the Parent and including
      any carryforwards of tax attributes from all prior taxable years (as limited
      under the Code) and (ii) the consolidated or combined federal, state and local
      income tax liability of the consolidated or combined group that includes Finlay
      and the Parent. For purposes of subsection (y) above the provisions relating
      to
      state and local income taxes shall only apply if and to the extent Finlay and
      the Parent file consolidated or combined income tax returns in such
      jurisdictions, and

     

    (h) the
      Parent may redeem, repurchase, retire or otherwise acquire any Stock of the
      Parent in exchange for, or out of net proceeds of the prior or concurrent sale
      (other than to a Subsidiary of the Parent) of, other Stock (other than
      Disqualified Stock) of the Parent.

     

    6.14. Change
      of Corporate Name, State of Incorporation or Location; Change of Fiscal
      Year.
      No
      Credit Party shall (a) change its name as it appears in official filings in
      the
      state of its incorporation or other organization (b) change its chief executive
      office, principal place of business, corporate offices or warehouses or
      locations at which Collateral is held or stored, or the location of its records
      concerning the Collateral, (c) change the type of entity that it is, (d) change
      its organization identification number, if any, issued by its state of
      incorporation or other organization, or (e) change its state of incorporation
      or
      organization or incorporate or organize in any additional jurisdictions, in
      each
      case without at least thirty (30) days prior written notice to Agent and after
      Agent’s written acknowledgment that any reasonable action requested by Agent in
      connection therewith, including to continue the perfection of any Liens in
      favor
      of Agent, on behalf of Lenders, in any Collateral, has been completed or taken,
      and provided
      that any
      such new location shall be in the continental United States. No Credit Party
      shall change its Fiscal Year.

    
      
        
        

      

      
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    6.15. No
      Impairment of Intercompany Transfers.
      No
      Credit Party shall directly or indirectly enter into or become bound by any
      agreement, instrument, indenture or other obligation (other than this Agreement
      and the other Loan Documents) that could directly or indirectly restrict,
      prohibit or require the consent of any Person with respect to the payment of
      dividends or distributions or the making or repayment of intercompany loans
      by a
      Subsidiary of any Borrower to any Borrower or between Borrowers.

     

    6.16. Changes
      Relating to Material Contracts. 

     

    (a) No
      Credit
      Party shall directly or indirectly, amend, modify, supplement, waive compliance
      with, seek a waiver under, or assent to noncompliance with, any term, provision
      or condition of the Senior Note Indenture or any Senior Note or the Tax
      Allocation Agreement, provided, that Finlay and Parent may terminate the Tax
      Allocation Agreement at any time in the exercise of their
      discretion.

     

    (b) No
      Credit
      Party shall directly or indirectly, amend, modify, supplement, waive compliance
      with, seek a waiver under, or assent to noncompliance with, any material term,
      provision or condition of (i) the Shareholders Agreement, (ii) the Registration
      Rights Agreement, (iii) the Indemnification Agreements or (iv) the Congress
      SPA,
      in each case, in a manner adverse to Agent or any Lender. 

     

    (c) No
      Credit
      Party shall directly or indirectly, amend, modify, supplement, waive compliance
      with, seek a waiver under, or assent to noncompliance with, any material term,
      provision or condition of any other agreement, instrument or document to which
      the Parent or any of its Subsidiaries is a party (including, without limitation,
      the Long Term Incentive Plan) in a manner that will have a Material Adverse
      Effect.

     

    6.17. Compromise
      of Accounts.
      No
      Credit Party shall compromise or adjust any of the Accounts (or extend the
      time
      for payment thereon or grant any discounts, allowances or credits thereon other
      than, so long as there exists no Default or Event of Default, discounts,
      adjustments, allowances and credits granted with respect to Accounts in the
      ordinary course of business provided that, nothing contained in the foregoing
      shall be deemed to prohibit the sale of any Accounts of any Carlyle Credit
      Party
      under the Receivables Purchase Agreements or any transaction contemplated by
      the
      Credit Card Services Agreement.

     

    6.18. Rental
      Obligations.
      No
      Credit Party shall incur, create, assume or permit to exist, in respect of
      leases of real or personal property (a) obligations in any amount in respect
      of
      percentage rentals, except under the License Agreements or real estate leases
      for any Independent Retail Store, or (b) rental obligations or other commitments
      thereunder (other than Capital Lease Obligations) to make any direct or indirect
      payment, whether as rent or otherwise, for fixed or minimum rentals (including
      minimum payments (and excluding all other payments) under the License
      Agreements) in excess of $15,000,000 for Parent and its Subsidiaries for any
      fiscal Year.

    
      
        
        

      

      
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    6.19. Parent.
      Parent
      shall not engage in any business other than ownership of Stock of Finlay, and
      those activities incidental to its status as a publicly traded corporation,
      and
      shall not own, acquire or lease any property, other than such Stock. 

     

    6.20. No
      Negative Pledges.
      No
      Credit Party shall enter into or become subject to, directly or indirectly,
      including, without limitation, as a non-party Subsidiary of a party to any
      agreement, any agreement other than agreements entered into on or before the
      Closing Date (including, without limitation, the Restated Certificate of
      Incorporation of the Parent) (a) prohibiting or restricting, in any manner
      (including, without limitation, by way of covenant, representation or event
      of
      default), (i) the incurrence, creation or assumption of any Indebtedness, or
      any
      Lien upon any property of any Credit Party, except restrictions in a Capital
      Lease or other purchase money financing agreement permitted hereunder relating
      to the asset financed and except restrictions in any software or other
      intellectual property license agreement pertaining to such licensed software
      or
      intellectual property thereunder, (ii) the sale, disposition or pledge of any
      asset of any Credit Party, except restrictions in a Capital Lease or other
      purchase money financing agreement permitted hereunder relating to the asset
      financed and except restrictions in any software or other intellectual property
      license agreement pertaining to such licensed software or intellectual property
      thereunder, (iii) any investments of any Credit Party, (iv) any Capital
      Expenditures by any Credit Party, (v) any acquisition, merger or consolidation
      involving any Credit Party, (vi) any change in control of any Credit Party,
      or
      (vii) any amendment or supplement to or waiver under this Agreement or any
      other
      Loan Document or other document relating to the Obligations, or (b) which
      provides that any default by any Credit Party which is not a party to such
      agreement of any obligation not arising under such agreement is a default under
      such agreement.

     

    
      	 	
              7.

            	
              TERM

            

    

     

    7.1. Termination.
      The
      financing arrangements contemplated hereby shall be in effect until the
      Commitment Termination Date, and the Loans and all other Obligations shall
      be
      automatically due and payable in full on such date.

     

    7.2. Survival
      of Obligations Upon Termination of Financing Arrangements.
      Except
      as otherwise expressly provided for in the Loan Documents, no termination or
      cancellation (regardless of cause or procedure) of any financing arrangement
      under this Agreement shall in any way affect or impair the obligations, duties
      and liabilities of the Credit Parties or the rights of Agent and Lenders
      relating to any unpaid portion of the Loans or any other Obligations, due or
      not
      due, liquidated, contingent or unliquidated, or any transaction or event
      occurring prior to such termination, or any transaction or event, the
      performance of which is required after the Commitment Termination Date. Except
      as otherwise expressly provided herein or in any other Loan Document, all
      undertakings, agreements, covenants, warranties and representations of or
      binding upon the Credit Parties, and all rights of Agent and each Lender, all
      as
      contained in the Loan Documents, shall not terminate or expire, but rather
      shall
      survive any such termination or cancellation and shall continue in full force
      and effect until the Termination Date; provided,
      that
      the provisions of Section
      11,
      the
      payment obligations under Sections
      1.15
      and
1.16,
      and the
      indemnities contained in the Loan Documents shall survive the Termination
      Date.

    
      
        
        

      

      
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              8.

            	
              EVENTS
                OF DEFAULT; RIGHTS AND
                REMEDIES

            

    

     

    8.1. Events
      of Default.
      The
      occurrence of any one or more of the following events (regardless of the reason
      therefor) shall constitute an “Event
      of Default”
      hereunder:

     

    (a) Any
      Borrower (i) fails to make any payment (A) of principal of the Loans or (B)
      in
      the due and punctual reimbursement of any Letter of Credit Obligation, or (ii)
      fails to make any payment of interest in respect of the Loans or Fees or fails
      to pay or reimburse Agent or Lenders for any expense reimbursable hereunder
      or
      under any other Loan Document, in each case, within three (3) days following
      Agent’s demand for such payment of interest of Fees or reimbursement or payment
      of expenses.

     

    (b) Any
      Credit Party fails or neglects to perform, keep or observe any of the provisions
      of Sections
      1.4, 1.8, 1.14, 5.1, 5.2, 5.4, 5.5, 5.6, 5.8, 5.10, 5.11, 5.12 or
      6,
      or any
      of the provisions set forth in Annexes
      C or G,
      respectively.

     

    (c) Any
      Borrower fails or neglects to perform, keep or observe any of the provisions
      of
Section
      4.1
      or any
      provisions set forth in Annexes
      E or F,
      respectively, and the same shall remain unremedied for three (3) Business Days
      or more.

     

    (d) Any
      Credit Party fails or neglects to perform, keep or observe any other provision
      of this Agreement or of any of the other Loan Documents (other than any
      provision embodied in or covered by any other clause of this Section
      8.1)
      and the
      same shall remain unremedied for thirty (30) days or more.

     

    (e) A
      default
      or breach occurs under any other agreement, document or instrument to which
      any
      Credit Party is a party that is not cured within any applicable grace period
      therefor, and such default or breach (i) involves the failure to make any
      payment when due in respect of any Indebtedness or Guaranteed Indebtedness
      (other than the Obligations) of any Credit Party in excess of $5,000,000 in
      the
      aggregate (including (x) undrawn committed or available amounts and (y) amounts
      owing to all creditors under any combined or syndicated credit arrangements),
      or
      (ii) causes, or permits any holder of such Indebtedness or Guaranteed
      Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness
      or a
      portion thereof in excess of $5,000,000 in the aggregate to become due prior
      to
      its stated maturity or prior to its regularly scheduled dates of payment, or
      cash collateral in respect thereof to be demanded, in each case, regardless
      of
      whether such default is waived, or such right is exercised, by such holder
      or
      trustee.

     

    (f) (i)
      Any
      information contained in any Borrowing Base Certificate is untrue or incorrect
      in any respect, or (ii) any representation or warranty herein or in any Loan
      Document or in any written statement, report, financial statement or certificate
      (other than a Borrowing Base Certificate) made or delivered to Agent or any
      Lender by any Credit Party is untrue or incorrect in any material respect as
      of
      the date when made or deemed made, except to the extent that such representation
      or warranty expressly relates to an earlier date and except for changes therein
      expressly permitted or expressly contemplated by this
      Agreement.

    
      
        
        

      

      
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    (g) Assets
      of
      any Credit Party with a fair market value of $2,000,000 or more are attached,
      seized, levied upon or subjected to a writ or distress warrant, or come within
      the possession of any receiver, trustee, custodian or assignee for the benefit
      of creditors of any Credit Party and such condition continues for thirty (30)
      days or more.

     

    (h) A
      case or
      proceeding is commenced against any Credit Party seeking a decree or order
      in
      respect of such Credit Party (i) under the Bankruptcy Code, or any other
      applicable federal, state or foreign bankruptcy or other similar law, (ii)
      appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
      (or similar official) for such Credit Party or for any substantial part of
      any
      such Credit Party’s assets, or (iii) ordering the winding-up or liquidation of
      the affairs of such Credit Party, and such case or proceeding shall remain
      undismissed or unstayed for thirty (30) days or more or a decree or order
      granting the relief sought in such case or proceeding is granted by a court
      of
      competent jurisdiction.

     

    (i) Any
      Credit Party (i) files a petition seeking relief under the Bankruptcy Code,
      or
      any other applicable federal, state or foreign bankruptcy or other similar
      law,
      (ii) consents to or fails to contest in a timely and appropriate manner the
      institution of proceedings thereunder or the filing of any such petition or
      the
      appointment of or taking possession by a custodian, receiver, liquidator,
      assignee, trustee or sequestrator (or similar official) for such Credit Party
      or
      for any substantial part of any such Credit Party’s assets, (iii) makes an
      assignment for the benefit of creditors, (iv) takes any action in furtherance
      of
      any of the foregoing; or (v) admits in writing its inability to, or is generally
      unable to, pay its debts as such debts generally become due.

     

    (j) A
      final
      judgment or judgments for the payment of money in excess of $5,000,000 in the
      aggregate at any time are outstanding against one or more of the Credit Parties,
      and the same are not, within thirty (30) days after the entry thereof,
      discharged or execution thereof stayed or bonded pending appeal, or such
      judgments are not discharged prior to the expiration of any such
      stay.

     

    (k) Any
      material provision of any Loan Document for any reason ceases to be valid,
      binding and enforceable in accordance with its terms (or any Credit Party shall
      challenge the enforceability of any Loan Document or shall assert in writing,
      or
      engage in any action or inaction based on any such assertion, that any provision
      of any of the Loan Documents has ceased to be or otherwise is not valid, binding
      and enforceable in accordance with its terms), or any Lien created under any
      Loan Document ceases to be a valid and perfected first priority Lien (except
      as
      otherwise permitted herein or therein) in any of the Collateral purported to
      be
      covered thereby.

     

    (l) Any
      Change of Control occurs.

     

    (m) There
      shall occur the loss, theft, substantial damage to, condemnation of, exercise
      of
      right of eminent domain with respect to or destruction of, any Collateral not
      fully covered by insurance (except for deductibles), which by itself or with
      other such losses, thefts, damage, condemnation or destruction of, or exercise
      of right of eminent domain with respect to, Collateral, shall constitute a
      Material Adverse Effect.

    
      
        
        

      

      
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    (n) (A)(i)
      any Unapproved License Agreement or License Agreement shall be cancelled,
      terminated (other than termination at the end of the originally scheduled or
      renewed or extended term of an Unapproved License Agreement or License
      Agreement) or no longer in full force or effect (excluding any License Agreement
      which continues to be an arrangement approved in writing by the Agent, whether
      or not such approval has been rescinded) or the licensor or licensors under
      such
      Unapproved License Agreement or License Agreement shall be debtors under any
      Chapter of the Bankruptcy Code (any of the foregoing events, a “License
      Termination Event”), (ii) as of the date three (3) months following such License
      Termination Event, the excess of (x) the amount of the gross revenues of Finlay
      arising from such Unapproved License Agreement or License Agreement plus the
      gross revenues arising from Unapproved License Agreements and License Agreements
      as to which previous License Termination Events shall have occurred during
      the
      period beginning on the Closing Date and ending on the date of determination
      (gross revenues being calculated by the Agent, in the case of any Unapproved
      License Agreement or License Agreement which had been in effect for at least
      twelve (12) calendar months as of the end of such period, for such period of
      twelve calendar months, and, in the case of any Unapproved License Agreement
      or
      License Agreement which had been in effect for less than twelve (12) calendar
      months as of the end of such period, on a seasonally adjusted twelve (12) month
      pro forma basis based upon results for the number of full calendar months during
      which such Unapproved License Agreement or License Agreement was in effect,
      over
      (y) the amount of gross revenues of Finlay arising from any Unapproved License
      Agreements and License Agreements entered into within the period beginning
      on
      the Closing Date and ending on such date of determination, and remaining in
      full
      force and effect as of such date of determination (gross revenues being
      calculated by the Agent, in the case of any Unapproved License Agreements or
      License Agreements which have been in effect for at least twelve months, on
      a
      seasonally adjusted twelve month pro forma basis based upon results for the
      number of full calendar months during which such Unapproved License Agreement
      or
      License Agreement which has been in effect for less than twelve (12) months,
      based upon Finlay’s internally generated projection of gross revenues for such
      Unapproved License Agreement or License Agreement for the twelve (12) month
      period following the first date of operation under such Unapproved License
      Agreement or License Agreement as delivered to the Agent under Section 5.12(b)
      hereof) shall equal or exceed 10% of the gross revenues of Finlay for the period
      of twelve (12) consecutive full calendar months (treating the month ending
      on
      the last Saturday of January as a full calendar month) ending on or nearest
      preceding such date of determination and (iii) such License Termination Event
      shall represent a Material Adverse Effect or (B) there shall occur a License
      Termination Event with respect to an Unapproved License Agreement or License
      Agreement that accounted for, in any fiscal period of twelve consecutive full
      calendar months (treating the month ending on the last Saturday of January
      as a
      full calendar month), more than 20% of the gross revenues of
      Finlay;

    
      
        
        

      

      
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    (o) Any
      default or breach by any Borrower occurs and is continuing under the Receivables
      Purchase Agreement and such default or breach shall continue for more than
      the
      period of grace, if any, therein specified or the Receivables Purchase Agreement
      shall be terminated for any reason.

     

    8.2. Remedies. 

     

    (a) If
      any
      Event of Default has occurred and is continuing, Agent may (and at the written
      request of the Requisite Lenders shall), without notice, suspend the Tranche
      A
      Revolving Loan and Tranche B Revolving Loan facility with respect to additional
      Advances and/or the incurrence of additional Letter of Credit Obligations,
      whereupon any additional Advances and additional Letter of Credit Obligations
      shall be made or incurred in Agent’s sole discretion (or in the sole discretion
      of the Requisite Lenders, if such suspension occurred at their direction) so
      long as such Default or Event of Default is continuing. If any Event of Default
      has occurred and is continuing, Agent may (and at the written request of
      Requisite Lenders shall), without notice except as otherwise expressly provided
      herein, increase the rate of interest applicable to the Loans and the Letter
      of
      Credit Fees to the Default Rate.

     

    (b) If
      any
      Event of Default has occurred and is continuing, Agent may (and at the written
      request of the Requisite Lenders shall), without notice: (i) terminate the
      Tranche A Revolving Loan and Tranche B Revolving Loan facility with respect
      to
      further Advances or the incurrence of further Letter of Credit Obligations;
      (ii)
      reduce the Tranche A Revolving Loan Commitment and Tranche B Revolving Loan
      Commitment from time to time; (iii) declare all or any portion of the
      Obligations, including all or any portion of any Loan to be forthwith due and
      payable, and require that the Letter of Credit Obligations be cash
      collateralized in the manner set forth in Annex
      B,
      all
      without presentment, demand, protest or further notice of any kind, all of
      which
      are expressly waived by Borrowers and each other Credit Party; or (iv) exercise
      any rights and remedies provided to Agent under the Loan Documents or at law
      or
      equity, including all remedies provided under the Code; provided,
      that
      upon the occurrence of an Event of Default specified in Sections
      8.1(j) or 8.1(k),
      the
      Commitments shall be immediately terminated and all of the Obligations,
      including the aggregate Tranche A Revolving Loan and Tranche B Revolving Loan,
      shall become immediately due and payable without declaration, notice or demand
      by any Person.

     

    8.3. Waivers
      by Credit Parties.
      Except
      as otherwise provided for in this Agreement or by applicable law, each Credit
      Party waives (including for purposes of Section
      12):
      (a)
      presentment, demand and protest and notice of presentment, dishonor, notice
      of
      intent to accelerate, notice of acceleration, protest, default, nonpayment,
      maturity, release, compromise, settlement, extension or renewal of any or all
      commercial paper, accounts, contract rights, documents, instruments, chattel
      paper and guaranties at any time held by Agent on which any Credit Party may
      in
      any way be liable, and hereby ratifies and confirms whatever Agent may do in
      this regard, (b) all rights to notice and a hearing prior to Agent’s taking
      possession or control of, or to Agent’s replevy, attachment or levy upon, the
      Collateral or any bond or security that might be required by any court prior
      to
      allowing Agent to exercise any of its remedies, and (c) the benefit of all
      valuation, appraisal, marshaling and exemption laws.

    
      
        
        

      

      
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    9.  
ASSIGNMENT
      AND PARTICIPATIONS; APPOINTMENT OF AGENT

     

    9.1. Assignment
      and Participations. 

     

    (a) Subject
      to the terms of this Section
      9.1,
      any
      Lender may make an assignment to a Qualified Assignee of, or sell participations
      in, at any time or times, the Loan Documents, Loans, Letter of Credit
      Obligations and any Commitment or any portion thereof or interest therein,
      including any Lender’s rights, title, interests, remedies, powers or duties
      thereunder. Any assignment by a Lender shall: (i) require the consent of Agent
      (which consent shall not be unreasonably withheld or delayed with respect to
      a
      Qualified Assignee) and the execution of an assignment agreement (an
“Assignment
      Agreement”)
      substantially in the form attached hereto as Exhibit
      9.1(a)
      and
      otherwise in form and substance reasonably satisfactory to, and acknowledged
      by,
      Agent; (ii) be conditioned on such assignee Lender representing to the assigning
      Lender and Agent that it is purchasing the applicable Loans to be assigned
      to it
      for its own account, for investment purposes and not with a view to the
      distribution thereof; (iii) after giving effect to any such partial assignment,
      the assignee Lender shall have Commitments in an amount at least equal to
      $5,000,000 and the assigning Lender shall have retained Commitments in an amount
      at least equal to $5,000,000; (iv) include a payment to Agent of an assignment
      fee of $3,500; provided, that such fee shall be waived in the case of an
      assignment to an Affiliate of the assigning Lender; and (v) so long as no Event
      of Default has occurred and is continuing, require the consent of Borrower
      Representative, which shall not be unreasonably withheld or delayed;
provided
      that no
      such consent shall be required for an assignment to a Qualified Assignee of
      the
      type described in clause (a) of the definition of “Qualified Assignee”;
      and provided
      further,
      that an assignment will not be effective unless it is recorded by Agent in
      the
      Loan Account. In the case of an assignment by a Lender under this Section
      9.1,
      the
      assignee shall have, to the extent of such assignment, the same rights, benefits
      and obligations as all other Lenders hereunder. The assigning Lender shall
      be
      relieved of its obligations hereunder with respect to its Commitments or
      assigned portion thereof from and after the date of such assignment. Each
      Borrower hereby acknowledges and agrees that any assignment shall give rise
      to a
      direct obligation of Borrowers to the assignee and that the assignee shall
      be
      considered to be a “Lender”. In all instances, each Lender’s liability to make
      Loans hereunder shall be several and not joint and shall be limited to such
      Lender’s Pro Rata Share of the applicable Commitment. In the event Agent or any
      Lender assigns or otherwise transfers all or any part of the Obligations, Agent
      or any such Lender shall so notify Borrowers and Borrowers shall, upon the
      request of Agent or such Lender, execute new Notes in exchange for the Notes,
      if
      any, being assigned. Notwithstanding the foregoing provisions of this
Section
      9.1(a),
      any
      Lender may at any time pledge the Obligations held by it and such Lender’s
      rights under this Agreement and the other Loan Documents to a Federal Reserve
      Bank, and any Lender that is an investment fund may assign the Obligations
      held
      by it and such Lender’s rights under this Agreement and the other Loan Documents
      to another investment fund managed by the same investment advisor; provided,
      that no
      such pledge to a Federal Reserve Bank shall release such Lender from such
      Lender’s obligations hereunder or under any other Loan
      Document.

    
      
        
        

      

      
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    (b) Any
      participation by a Lender of all or any part of its Commitments shall be made
      with the understanding that all amounts payable by Borrowers hereunder shall
      be
      determined as if that Lender had not sold such participation, and that the
      holder of any such participation shall not be entitled to require such Lender
      to
      take or omit to take any action hereunder except actions directly affecting
      (i)
      any reduction in the principal amount of, or interest rate or Fees payable
      with
      respect to, any Loan in which such holder participates, (ii) any extension
      of
      the scheduled amortization of the principal amount of any Loan in which such
      holder participates or the final maturity date thereof, and (iii) any release
      of
      all or substantially all of the Collateral (other than in accordance with the
      terms of this Agreement, the Collateral Documents or the other Loan Documents).
      Solely for purposes of Sections
      1.13, 1.15, 1.16 and 9.8,
      each
      Borrower acknowledges and agrees that a participation shall give rise to a
      direct obligation of Borrowers to the participant and the participant shall
      be
      considered to be a “Lender”. Except as set forth in the preceding sentence no
      Borrower or Credit Party shall have any obligation or duty to any participant.
      Neither Agent nor any Lender (other than the Lender selling a participation)
      shall have any duty to any participant and may continue to deal solely with
      the
      Lender selling a participation as if no such sale had occurred.

     

    (c) Except
      as
      expressly provided in this Section
      9.1,
      no
      Lender shall, as between Borrowers and that Lender, or Agent and that Lender,
      be
      relieved of any of its obligations hereunder as a result of any sale,
      assignment, transfer or negotiation of, or granting of participation in, all
      or
      any part of the Loans, the Notes or other Obligations owed to such
      Lender.

     

    (d) Each
      Credit Party executing this Agreement shall assist any Lender permitted to
      sell
      assignments or participations under this Section
      9.1
      as
      reasonably required to enable the assigning or selling Lender to effect any
      such
      assignment or participation, including the execution and delivery of any and
      all
      agreements, notes and other documents and instruments as shall be reasonably
      requested and, if requested by Agent, the preparation of informational materials
      for, and the participation of management in meetings with, potential assignees
      or participants. Each Credit Party executing this Agreement shall certify the
      correctness, completeness and accuracy in all material respects of all
      descriptions of the Credit Parties and their respective affairs contained in
      any
      selling materials provided by them and all other information provided by them
      and included in such materials, except that any Projections delivered by
      Borrowers shall only be certified by Borrowers as having been prepared by
      Borrowers in compliance with the representations contained in Section
      3.4(b).

     

    (e) Any
      Lender may furnish any information concerning Credit Parties in the possession
      of such Lender from time to time to assignees and participants (including
      prospective assignees and participants); provided
      that
      such Lender shall obtain from assignees or participants confidentiality
      covenants substantially equivalent to those contained in Section
      11.8.

     

    (f) So
      long
      as no Event of Default has occurred and is continuing, no Lender shall assign
      or
      sell participations in any portion of its Loans or Commitments to a potential
      Lender or participant, if, as of the date of the proposed assignment or sale,
      the assignee Lender or participant would be subject to capital adequacy or
      similar requirements under Section
      1.16(a),
      increased costs under Section
      1.16(b),
      an
      inability to fund LIBOR Loans under Section
      1.16(c),
      or
      withholding taxes in accordance with Section
      1.15(a).

    
      
        
        

      

      
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    (g) Notwithstanding
      anything to the contrary contained herein, any Lender (a “Granting
      Lender”),
      may
      grant to a special purpose funding vehicle (an “SPC”),
      identified as such in writing by the Granting Lender to Agent and Borrowers,
      the
      option to provide to Borrowers all or any part of any Loans that such Granting
      Lender would otherwise be obligated to make to Borrowers pursuant to this
      Agreement; provided
      that
      (i)
      nothing herein shall constitute a commitment by any SPC to make any Loan; and
      (ii) if an SPC elects not to exercise such option or otherwise fails to provide
      all or any part of such Loan, the Granting Lender shall be obligated to make
      such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
      shall utilize the Commitment of the Granting Lender to the same extent, and
      as
      if such Loan were made by such Granting Lender. No SPC shall be liable for
      any
      indemnity or similar payment obligation under this Agreement (all liability
      for
      which shall remain with the Granting Lender). Any SPC may (i) with notice to,
      but without the prior written consent of, Borrowers and Agent and without paying
      any processing fee therefor assign all or a portion of its interests in any
      Loans to the Granting Lender or to any financial institutions (consented to
      by
      Borrowers and Agent) providing liquidity and/or credit support to or for the
      account of such SPC to support the funding or maintenance of Loans and (ii)
      disclose on a confidential basis any non-public information relating to its
      Loans to any rating agency, commercial paper dealer or provider of any surety,
      guarantee or credit or liquidity enhancement to such SPC. This Section
      9.1(g)
      may not
      be amended without the prior written consent of each Granting Lender, all or
      any
      of whose Loans are being funded by an SPC at the time of such amendment. For
      the
      avoidance of doubt, the Granting Lender shall for all purposes, including
      without limitation, the approval of any amendment or waiver of any provision
      of
      any Loan Document or the obligation to pay any amount otherwise payable by
      the
      Granting Lender under the Loan Documents, continue to be the Lender of record
      hereunder.

     

    9.2. Appointment
      of Agent.
      GE
      Capital is hereby appointed to act on behalf of all Lenders as Agent under
      this
      Agreement and the other Loan Documents. The provisions of this Section
      9.2
      are
      solely for the benefit of Agent and Lenders and no Credit Party nor any other
      Person shall have any rights as a third party beneficiary of any of the
      provisions hereof. In performing its functions and duties under this Agreement
      and the other Loan Documents, Agent shall act solely as an agent of Lenders
      and
      does not assume and shall not be deemed to have assumed any obligation toward
      or
      relationship of agency or trust with or for any Credit Party or any other
      Person. Agent shall have no duties or responsibilities except for those
      expressly set forth in this Agreement and the other Loan Documents. The duties
      of Agent shall be mechanical and administrative in nature and Agent shall not
      have, or be deemed to have, by reason of this Agreement, any other Loan Document
      or otherwise a fiduciary relationship in respect of any Lender. Except as
      expressly set forth in this Agreement and the other Loan Documents, Agent shall
      not have any duty to disclose, and shall not be liable for failure to disclose,
      any information relating to any Credit Party or any of their respective
      Subsidiaries or any Account Debtor that is communicated to or obtained by GE
      Capital or any of its Affiliates in any capacity. Neither Agent nor any of
      its
      Affiliates nor any of their respective officers, directors, employees, agents
      or
      representatives shall be liable to any Lender for any action taken or omitted
      to
      be taken by it hereunder or under any other Loan Document, or in connection
      herewith or therewith, except for damages caused by its or their own gross
      negligence or willful misconduct.

    
      
        
        

      

      
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    If
      Agent
      shall request instructions from Requisite Lenders or all affected Lenders with
      respect to any act or action (including failure to act) in connection with
      this
      Agreement or any other Loan Document, then Agent shall be entitled to refrain
      from such act or taking such action unless and until Agent shall have received
      instructions from Requisite Lenders or all affected Lenders, as the case may
      be,
      and Agent shall not incur liability to any Person by reason of so refraining.
      Agent shall be fully justified in failing or refusing to take any action
      hereunder or under any other Loan Document (a) if such action would, in the
      opinion of Agent, be contrary to law or the terms of this Agreement or any
      other
      Loan Document, (b) if such action would, in the opinion of Agent, expose Agent
      to Environmental Liabilities or (c) if Agent shall not first be indemnified
      to
      its satisfaction against any and all liability and expense which may be incurred
      by it by reason of taking or continuing to take any such action. Without
      limiting the foregoing, no Lender shall have any right of action whatsoever
      against Agent as a result of Agent acting or refraining from acting hereunder
      or
      under any other Loan Document in accordance with the instructions of Requisite
      Lenders or all affected Lenders, as applicable.

     

    9.3. Agent’s
      Reliance, Etc.
      Neither
      Agent nor any of its Affiliates nor any of their respective directors, officers,
      agents or employees shall be liable for any action taken or omitted to be taken
      by it or them under or in connection with this Agreement or the other Loan
      Documents, except for damages caused by its or their own gross negligence or
      willful misconduct. Without limiting the generality of the foregoing, Agent:
      (a)
      may treat the payee of any Note as the holder thereof until Agent receives
      written notice of the assignment or transfer thereof signed by such payee and
      in
      form reasonably satisfactory to Agent; (b) may consult with legal counsel,
      independent public accountants and other experts selected by it and shall not
      be
      liable for any action taken or omitted to be taken by it in good faith 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 in or in
      connection with this Agreement or the other Loan Documents; (d) shall not have
      any duty to ascertain or to inquire as to the performance or observance of
      any
      of the terms, covenants or conditions of this Agreement or the other Loan
      Documents on the part of any Credit Party or to inspect the Collateral
      (including the books and records) of any Credit Party; (e) shall not be
      responsible to any Lender for the due execution, legality, validity,
      enforceability, genuineness, sufficiency or value of this Agreement or the
      other
      Loan Documents 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 the other Loan Documents by acting upon any notice, consent, certificate
      or
      other instrument or writing (which may be by telecopy, telegram, cable or telex)
      believed by it to be genuine and signed or sent by the proper party or
      parties.

     

    9.4. GE
      Capital and Affiliates.
      With
      respect to its Commitments hereunder, GE Capital shall have the same rights
      and powers under this Agreement and the other Loan Documents as any other Lender
      and may exercise the same as though it were not Agent; and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated, include GE Capital in its
      individual capacity. GE Capital and its Affiliates may lend money to, invest
      in,
      and generally engage in any kind of business with, any Credit Party, any of
      their Affiliates and any Person who may do business with or own securities
      of
      any Credit Party or any such Affiliate, all as if GE Capital were not Agent
      and
      without any duty to account therefor to Lenders. GE Capital and its Affiliates
      may accept fees and other consideration from any Credit Party for services
      in
      connection with this Agreement or otherwise without having to account for the
      same to Lenders.

    
      
        
        

      

      
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    9.5. Lender
      Credit Decision.
      Each
      Lender acknowledges that it has, independently and without reliance upon Agent
      or any other Lender and based on the Financial Statements referred to in
Section
      3.4(a)
      and such
      other documents and information as it has deemed appropriate, made its own
      credit and financial analysis of the Credit Parties and its own decision to
      enter into this Agreement. Each Lender also acknowledges that it will,
      independently and without reliance upon 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. Each Lender acknowledges the potential conflict of interest
      of
      each other Lender as a result of Lenders holding disproportionate interests
      in
      the Loans, and expressly consents to, and waives any claim based upon, such
      conflict of interest.

     

    9.6. Indemnification.
      Lenders
      agree to indemnify Agent (to the extent not reimbursed by Credit Parties and
      without limiting the obligations of Credit Parties hereunder), ratably according
      to their respective Pro Rata Shares, from and against any and all liabilities,
      obligations, losses, damages, penalties, actions, judgments, suits, costs,
      expenses or disbursements of any kind or nature whatsoever that may be imposed
      on, incurred by, or asserted against Agent in any way relating to or arising
      out
      of this Agreement or any other Loan Document or any action taken or omitted
      to
      be taken by Agent in connection therewith; provided,
      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 Agent’s gross negligence or willful misconduct. Without limiting
      the foregoing, each Lender agrees to reimburse Agent promptly upon demand for
      its ratable share of any out-of-pocket expenses (including reasonable counsel
      fees) incurred by Agent in connection with the preparation, execution, delivery,
      administration, modification, amendment or enforcement (whether through
      negotiations, legal proceedings or otherwise) of, or legal advice in respect
      of
      rights or responsibilities under, this Agreement and each other Loan Document,
      to the extent that Agent is not reimbursed for such expenses by Credit
      Parties.

     

    9.7. Successor
      Agent.
      Agent
      may resign at any time by giving not less than thirty (30) days’ prior written
      notice thereof to Lenders and Borrower Representative. Upon any such
      resignation, the Requisite Lenders shall have the right to appoint a successor
      Agent. If no successor Agent shall have been so appointed by the Requisite
      Lenders and shall have accepted such appointment within thirty (30) days after
      the resigning Agent’s giving notice of resignation, then the resigning Agent
      may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
      if a Lender is willing to accept such appointment, or otherwise shall be a
      commercial bank or financial institution or a subsidiary of a commercial bank
      or
      financial institution if such commercial bank or financial institution is
      organized under the laws of the United States of America or of any State thereof
      and has a combined capital and surplus of at least $300,000,000. If no successor
      Agent has been appointed pursuant to the foregoing, within thirty (30) days
      after the date such notice of resignation was given by the resigning Agent,
      such
      resignation shall become effective and the Requisite Lenders shall thereafter
      perform all the duties of Agent hereunder until such time, if any, as the
      Requisite Lenders appoint a successor Agent as provided above. Any successor
      Agent appointed by the Requisite Lenders hereunder shall be subject to the
      approval of Borrower Representative, such approval not to be unreasonably
      withheld or delayed; provided
      that
      such approval shall not be required if an Event of Default has occurred and
      is
      continuing. Upon the acceptance of any appointment as Agent hereunder by a
      successor Agent, such successor Agent shall succeed to and become vested with
      all the rights, powers, privileges and duties of the resigning Agent. Upon
      the
      earlier of the acceptance of any appointment as Agent hereunder by a successor
      Agent or the effective date of the resigning Agent’s resignation, the resigning
      Agent shall be discharged from its duties and obligations under this Agreement
      and the other Loan Documents, except that any indemnity rights or other rights
      in favor of such resigning Agent shall continue. After any resigning Agent’s
      resignation hereunder, the provisions of this Section
      9
      shall
      inure to its benefit as to any actions taken or omitted to be taken by it while
      it was acting as Agent under this Agreement and the other Loan
      Documents.

    
      
        
        

      

      
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    9.8. Setoff
      and Sharing of Payments.
      In
      addition to any rights now or hereafter granted under applicable law and not
      by
      way of limitation of any such rights, upon the occurrence and during the
      continuance of any Event of Default and subject to Section
      9.9(f),
      each
      Lender is hereby authorized at any time or from time to time, without prior
      notice to any Credit Party or to any Person other than Agent, any such notice
      being hereby expressly waived, to offset and to appropriate and to apply any
      and
      all balances held by it at any of its offices for the account of any Borrower
      or
      Guarantor (regardless of whether such balances are then due to such Borrower
      or
      Guarantor) and any other properties or assets at any time held or owing by
      that
      Lender or that holder to or for the credit or for the account of any Borrower
      or
      Guarantor against and on account of any of the Obligations that are not paid
      when due; provided that the Lender exercising such offset rights shall give
      notice thereof to the affected Credit Party promptly after exercising such
      rights. Any Lender exercising a right of setoff or otherwise receiving any
      payment on account of the Obligations in excess of its Pro Rata Share thereof
      shall purchase for cash (and the other Lenders or holders shall sell) such
      participations in each such other Lender’s or holder’s Pro Rata Share of the
      Obligations as would be necessary to cause such Lender to share the amount
      so
      offset or otherwise received with each other Lender or holder in accordance
      with
      their respective Pro Rata Shares (other than offset rights exercised by any
      Lender with respect to Sections
      1.13, 1.15 or 1.16).
      Each
      Lender’s obligation under this Section
      9.8
      shall be
      in addition to and not in limitation of its obligations to purchase a
      participation in an amount equal to its Pro Rata Share of the Swing Line Loans
      under Section
      1.1.
      Each
      Credit Party that is a Borrower or Guarantor agrees, to the fullest extent
      permitted by law, that (a) any Lender may exercise its right to offset with
      respect to amounts in excess of its Pro Rata Share of the Obligations and may
      sell participations in such amounts so offset to other Lenders and holders
      and
      (b) any Lender so purchasing a participation in the Loans made or other
      Obligations held by other Lenders or holders may exercise all rights of offset,
      bankers’ lien, counterclaim or similar rights with respect to such participation
      as fully as if such Lender or holder were a direct holder of the Loans and
      the
      other Obligations in the amount of such participation. Notwithstanding the
      foregoing, if all or any portion of the offset amount or payment otherwise
      received is thereafter recovered from the Lender that has exercised the right
      of
      offset, the purchase of participations by that Lender shall be rescinded and
      the
      purchase price restored without interest.

    
      
        
        

      

      
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    9.9. Advances;
      Payments; Non-Funding Lenders; Information; Actions in Concert.

     

    (a) Advances;
      Payments.

     

    (i) Tranche
      A
      Revolving Lenders shall refund or participate in the Swing Line Loan in
      accordance with clauses
      (iii)
      and
(iv)
      of
Section
      1.1(b).
      If the
      Swing Line Lender declines to make a Swing Line Loan or if Swing Line
      Availability is zero, Agent shall notify Tranche A Revolving Lenders, promptly
      after receipt of a Notice of Tranche A Revolving Credit Advance and in any
      event
      prior to 1:00 p.m. (New York time) on the date such Notice of Tranche A
      Revolving Credit Advance is received, by telecopy, telephone or other similar
      form of transmission. Each Tranche A Revolving Lender shall make the amount
      of
      such Lender’s Pro Rata Share of such Tranche A Revolving Credit Advance
      available to Agent in same day funds by wire transfer to Agent’s account as set
      forth in Annex
      H
      not
      later than 3:00 p.m. (New York time) on the requested funding date, in the
      case
      of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the
      requested funding date, in the case of a LIBOR Loan. After receipt of such
      wire
      transfers (or, in the Agent’s sole discretion, before receipt of such wire
      transfers), subject to the terms hereof, Agent shall make the requested Tranche
      A Revolving Credit Advance to the Borrower designated by Borrower Representative
      in the Notice of Tranche A Revolving Credit Advance. All payments by each
      Tranche A Revolving Lender shall be made without setoff, counterclaim or
      deduction of any kind.

     

    (ii) Not
      less
      than once during each calendar week or more frequently at Agent’s election,
      (each, a “Settlement
      Date”),
      Agent
      shall advise each Lender by telephone, or telecopy of the amount of such
      Lender’s Pro Rata Share of principal, interest and Fees paid for the benefit of
      Lenders with respect to each applicable Loan. Provided that each Lender has
      funded all payments or Advances required to be made by it and has purchased
      all
      participations required to be purchased by it under this Agreement and the
      other
      Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
      Lender’s Pro Rata Share of principal, interest and Fees paid by Borrowers since
      the previous Settlement Date for the benefit of such Lender on the Loans held
      by
      it. To the extent that any Lender (a “Non-Funding
      Lender”)
      has
      failed to fund all such payments and Advances or failed to fund the purchase
      of
      all such participations, Agent shall be entitled to set off the funding
      short-fall against that Non-Funding Lender’s Pro Rata Share of all payments
      received from Borrowers. Such payments shall be made by wire transfer to such
      Lender’s account (as specified by such Lender in Annex
      H
      or the
      applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on
      such Settlement Date.

     

    (b) Availability
      of Lender’s Pro Rata Share.
      Agent
      may assume that each Tranche A Revolving Lender and Tranche B Revolving Lender,
      as applicable, will make its Pro Rata Share of each Tranche A Revolving Credit
      Advance and Tranche B Revolving Credit Advance, as applicable, available to
      Agent on each funding date. If such Pro Rata Share is not, in fact, paid to
      Agent by such Lender when due, Agent will be entitled to recover such amount
      on
      demand from such Lender without setoff, counterclaim or deduction of any kind.
      If any Lender fails to pay the amount of its Pro Rata Share forthwith upon
      Agent’s demand, Agent shall promptly notify Borrower Representative and
      Borrowers shall immediately repay such amount to Agent. Nothing in this
Section
      9.9(b)
      or
      elsewhere in this Agreement or the other Loan Documents shall be deemed to
      require Agent to advance funds on behalf of any Lender or to relieve any Lender
      from its obligation to fulfill its Commitments hereunder or to prejudice any
      rights that Borrowers may have against any Lender as a result of any default
      by
      such Lender hereunder. To the extent that Agent advances funds to any Borrower
      on behalf of any Lender and is not reimbursed therefor on the same Business
      Day
      as such Advance is made, Agent shall be entitled to retain for its account
      all
      interest accrued on such Advance until reimbursed by the applicable
      Lender.

    
      
        
        

      

      
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    (c) Return
      of Payments.

     

    (i) If
      Agent
      pays an amount to a Lender under this Agreement in the belief or expectation
      that a related payment has been or will be received by Agent from Borrowers
      and
      such related payment is not received by Agent, then Agent will be entitled
      to
      recover such amount from such Lender on demand without setoff, counterclaim
      or
      deduction of any kind.

     

    (ii) If
      Agent
      determines at any time that any amount received by Agent under this Agreement
      must be returned to any Borrower or paid to any other Person pursuant to any
      insolvency law or otherwise, then, notwithstanding any other term or condition
      of this Agreement or any other Loan Document, Agent will not be required to
      distribute any portion thereof to any Lender. In addition, each Lender will
      repay to Agent on demand any portion of such amount that Agent has distributed
      to such Lender, together with interest at such rate, if any, as Agent is
      required to pay to any Borrower or such other Person, without setoff,
      counterclaim or deduction of any kind.

     

    (d) Non-Funding
      Lenders.
      The
      failure of any Non-Funding Lender to make any Tranche A Revolving Credit Advance
      or Tranche B Revolving Credit Advance or any payment required by it hereunder
      or
      to purchase any participation in any Swing Line Loan to be made or purchased
      by
      it on the date specified therefor shall not relieve any other Lender (each
      such
      other Lender, an “Other Lender”) of its obligations to make such Advance or
      purchase such participation on such date, but neither any Other Lender nor
      Agent
      shall be responsible for the failure of any Non-Funding Lender to make an
      Advance, purchase a participation or make any other payment required hereunder.
      Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
      shall not have any voting or consent rights under or with respect to any Loan
      Document or constitute a “Lender”, a “Tranche A Revolving Lender” or a "Tranche
      B Revolving Lender", as applicable (or be included in the calculation of
“Requisite Lenders” hereunder), for any voting or consent rights under or with
      respect to any Loan Document. At Borrower Representative’s request, Agent or a
      Person reasonably acceptable to Agent shall have the right with Agent’s consent
      and in Agent’s sole discretion (but shall have no obligation) to purchase from
      any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at
      Agent’s request, sell and assign to Agent or such Person, all of the Commitments
      of that Non-Funding Lender for an amount equal to the principal balance of
      all
      Loans held by such Non-Funding Lender and all accrued interest and fees with
      respect thereto through the date of sale, such purchase and sale to be
      consummated pursuant to an executed Assignment Agreement.

    
      
        
        

      

      
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    (e) Dissemination
      of Information.
      Agent
      shall use reasonable efforts to provide Lenders with any notice of Default
      or
      Event of Default received by Agent from, or delivered by Agent to, any Credit
      Party, with notice of any Event of Default of which Agent has actually become
      aware and with notice of any action taken by Agent following any Event of
      Default; provided,
      that
      Agent shall not be liable to any Lender for any failure to do so, except to
      the
      extent that such failure is attributable to Agent’s gross negligence or willful
      misconduct. Lenders acknowledge that Borrowers are required to provide Financial
      Statements and Collateral Reports to Lenders in accordance with Annexes
      E and F
      hereto
      and agree that Agent shall have no duty to provide the same to
      Lenders.

     

    (f) Actions
      in Concert.
      Anything in this Agreement to the contrary notwithstanding, each Lender hereby
      agrees with each other Lender that no Lender shall take any action to protect
      or
      enforce its rights arising out of this Agreement or the Notes (including
      exercising any rights of setoff) without first obtaining the prior written
      consent of Agent and Requisite Lenders, it being the intent of Lenders that
      any
      such action to protect or enforce rights under this Agreement and the Notes
      shall be taken in concert and at the direction or with the consent of Agent
      or
      Requisite Lenders.

     

    
      	 	
              10.

            	
              SUCCESSORS
                AND ASSIGNS

            

    

     

    10.1. Successors
      and Assigns.
      This
      Agreement and the other Loan Documents shall be binding on and shall inure
      to
      the benefit of each Credit Party, Agent, Lenders and their respective successors
      and assigns (including, in the case of any Credit Party, a debtor-in-possession
      on behalf of such Credit Party), except as otherwise provided herein or therein.
      No Credit Party may assign, transfer, hypothecate or otherwise convey its
      rights, benefits, obligations or duties hereunder or under any of the other
      Loan
      Documents without the prior express written consent of Agent and Lenders. Any
      such purported assignment, transfer, hypothecation or other conveyance by any
      Credit Party without the prior express written consent of Agent and Lenders
      shall be void. The terms and provisions of this Agreement are for the purpose
      of
      defining the relative rights and obligations of each Credit Party, Agent and
      Lenders with respect to the transactions contemplated hereby and no Person
      shall
      be a third party beneficiary of any of the terms and provisions of this
      Agreement or any of the other Loan Documents.

     

    
      	 	
              11.

            	
              MISCELLANEOUS

            

    

     

    11.1. Complete
      Agreement; Modification of Agreement.
      The
      Loan Documents constitute the complete agreement between the parties with
      respect to the subject matter thereof and may not be modified, altered or
      amended except as set forth in Section
      11.2.
      Any
      letter of interest, commitment letter, fee letter or confidentiality agreement,
      if any, between any Credit Party and Agent or any Lender or any of their
      respective Affiliates, predating this Agreement and relating to a financing
      of
      substantially similar form, purpose or effect shall be superseded by this
      Agreement. Notwithstanding the foregoing, the GE Capital Fee Letter and any
      market flex provisions contained in the final commitment letter between Agent
      and Borrower shall survive the execution and delivery of this Agreement and
      shall continue to be binding obligations of the parties.

    
      
        
        

      

      
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    11.2. Amendments
      and Waivers. 

     

    (a) Except
      for actions expressly permitted to be taken by Agent, no amendment,
      modification, termination or waiver of any provision of this Agreement or any
      other Loan Document, or any consent to any departure by any Credit Party
      therefrom, shall in any event be effective unless the same shall be in writing
      and signed by Agent and Borrowers, and by Requisite Lenders or all affected
      Lenders, as applicable. Except as set forth in clauses
      (b) and (c)
      below,
      all such amendments, modifications, terminations or waivers requiring the
      consent of any Lenders shall require the written consent of Requisite
      Lenders.

     

    (b) No
      amendment, modification, termination or waiver of or consent with respect to
      any
      provision of this Agreement that waives compliance with the conditions precedent
      set forth in Section
      2.2
      to the
      making of any Loan or the incurrence of any Letter of Credit Obligations shall
      be effective unless the same shall be in writing and signed by Agent, Requisite
      Lenders and Borrowers. Notwithstanding anything contained in this Agreement
      to
      the contrary, no waiver or consent with respect to any Default or any Event
      of
      Default shall be effective for purposes of the conditions precedent to the
      making of Loans or the incurrence of Letter of Credit Obligations set forth
      in
Section
      2.2
      unless
      the same shall be in writing and signed by Agent, Requisite Lenders and
      Borrowers.

     

    (c) No
      amendment, modification, termination or waiver shall, unless in writing and
      signed by Agent and each Lender directly affected thereby: (i) increase the
      principal amount of any Lender’s Commitment or the aggregate amount of the
      Commitments of all Lenders hereunder (which action shall be deemed to directly
      affect all Lenders); (ii) reduce the principal of, rate of interest on or Fees
      payable with respect to any Loan or Letter of Credit Obligations of any affected
      Lender; (iii) extend any scheduled payment date (other than payment dates of
      mandatory prepayments under Section
      1.3(b)(ii) or (iii))
      or
      final maturity date of the principal amount of any Loan of any affected Lender;
      (iv) waive, forgive, defer, extend or postpone any payment of interest or Fees
      as to any affected Lender; (v) except as otherwise permitted herein or in the
      other Loan Documents, release any Guaranty or, release, or permit any Credit
      Party to sell or otherwise dispose of, all or substantially all of the
      Collateral (which action shall be deemed to directly affect all Lenders);
      (vi) change the percentage of the Commitments or of the aggregate unpaid
      principal amount of the Loans that shall be required for Lenders or any of
      them
      to take any action hereunder; (vii) amend or waive this Section
      11.2
      or the
      definitions of the terms “Requisite Lenders” or insofar as such definitions
      affect the substance of this Section
      11.2;
      (viii)
      increase the percentage advance rates set forth in the definition of the Tranche
      A Borrowing Base, Tranche B Borrowing Base or Inventory Advance Rate (which
      action shall be deemed to directly affect all Lenders); (ix) decrease the amount
      of the minimum Borrowing Availability covenant in Annex G; (x) adjust any of
      the
      criteria for exclusion from Eligible Accounts and Eligible Inventory set forth
      in Sections
      1.6 and 1.7
      or
      establish new criteria if such adjustments or new criteria have the effect
      of
      making more credit available; or (xi) amend the order of application of payments
      and proceeds of Collateral after acceleration or maturity of the Obligations
      set
      forth in Section
      1.11(a).
      Furthermore, no amendment, modification, termination or waiver affecting the
      rights or duties of Agent or L/C Issuer, under this Agreement or any other
      Loan
      Document, shall be effective unless in writing and signed by Agent or L/C
      Issuer, as the case may be, in addition to Lenders required hereinabove to
      take
      such action. No amendment, modification or waiver of this Agreement or any
      Loan
      Document altering the ratable treatment of Obligations arising under Secured
      Rate Contracts resulting in such Obligations being junior in right of payment
      to
      principal on the Loans or resulting in Obligations owing to any Secured Swap
      Provider becoming unsecured (other than release of Liens in accordance with
      the
      terms hereof), in each case in a manner adverse to any Secured Swap Provider,
      shall be effective without the written consent of GE Capital. Each amendment,
      modification, termination or waiver shall be effective only in the specific
      instance and for the specific purpose for which it was given. No amendment,
      modification, termination or waiver shall be required for Agent to take
      additional Collateral pursuant to any Loan Document. No amendment, modification,
      termination or waiver of any provision of any Note shall be effective without
      the written concurrence of the holder of that Note. No notice to or demand
      on
      any Credit Party in any case shall entitle such Credit Party or any other Credit
      Party to any other or further notice or demand in similar or other
      circumstances. Any amendment, modification, termination, waiver or consent
      effected in accordance with this Section
      11.2
      shall be
      binding upon each holder of the Notes at the time outstanding and each future
      holder of the Notes.

    
      
        
        

      

      
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    (d) If,
      in
      connection with any proposed amendment, modification, waiver or termination
      (a
“Proposed
      Change”)
      requiring the consent of all affected Lenders, the consent of Requisite Lenders
      is obtained, but the consent of other Lenders whose consent is required is
      not
      obtained (any such Lender whose consent is not obtained being referred to as
      a
“Non-Consenting
      Lender”),
      then,
      so long as Agent is not a Non-Consenting Lender, at Borrower Representative’s
      request, Agent or a Person reasonably acceptable to Agent shall have the right
      with Agent’s consent and in Agent’s sole discretion (but shall have no
      obligation) to purchase from such Non-Consenting Lenders, and such
      Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and
      assign to Agent or such Person, all of the Commitments of such Non-Consenting
      Lenders for an amount equal to the principal balance of all Loans held by the
      Non-Consenting Lenders and all accrued interest and Fees with respect thereto
      through the date of sale, such purchase and sale to be consummated pursuant
      to
      an executed Assignment Agreement.

     

    (e) Upon
      payment in full in cash and performance of all of the Obligations (other than
      indemnification Obligations), termination of the Commitments and a release
      of
      all claims against Agent and Lenders, and so long as no suits, actions,
      proceedings or claims are pending or threatened against any Indemnified Person
      asserting any damages, losses or liabilities that are Indemnified Liabilities,
      Agent shall deliver to Borrowers termination statements, mortgage releases
      and
      other documents necessary or appropriate to evidence the termination of the
      Liens securing payment of the Obligations.

    
      
        
        

      

      
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    11.3. Fees
      and Expenses.
      Borrowers shall reimburse (i) Agent for all fees, costs and expenses (including
      the reasonable fees and expenses of all of its counsel, advisors, consultants
      and auditors) and (ii) Agent (and, with respect to clauses
      (c)
      and
(d)
      below,
      all Lenders) for all fees, costs and expenses, including the reasonable fees,
      costs and expenses of counsel or other advisors (including environmental and
      management consultants and appraisers), incurred in connection with the
      negotiation, preparation and filing and/or recordation of the Loan Documents
      and
      incurred in connection with:

     

    (a) any
      amendment, modification or waiver of, consent with respect to, or termination
      of, any of the Loan Documents or Related Transactions Documents or advice in
      connection with the syndication and administration of the Loans made pursuant
      hereto or its rights hereunder or thereunder;

     

    (b) any
      litigation, contest, dispute, suit, proceeding or action (whether instituted
      by
      Agent, any Lender, any Credit Party or any other Person and whether as a party,
      witness or otherwise) in any way relating to the Collateral, any of the Loan
      Documents or any other agreement to be executed or delivered in connection
      herewith or therewith, including any litigation, contest, dispute, suit, case,
      proceeding or action, and any appeal or review thereof, in connection with
      a
      case commenced by or against any or all of the Credit Parties or any other
      Person that may be obligated to Agent by virtue of the Loan Documents; including
      any such litigation, contest, dispute, suit, proceeding or action arising in
      connection with any work-out or restructuring of the Loans during the pendency
      of one or more Events of Default; provided,
      that no
      Person shall be entitled to reimbursement under this clause
      (c)
      in
      respect of any litigation, contest, dispute, suit, proceeding or action to
      the
      extent any of the foregoing results from such Person’s gross negligence or
      willful misconduct;

     

    (c) any
      attempt to enforce any remedies of Agent against any or all of the Credit
      Parties or any other Person that may be obligated to Agent or any Lender by
      virtue of any of the Loan Documents, including any such attempt to enforce
      any
      such remedies in the course of any work-out or restructuring of the Loans during
      the pendency of one or more Events of Default; provided,
      that in
      the case of reimbursement of counsel for Lenders other than Agent, such
      reimbursement shall be limited to one counsel for all such Lenders;

     

    (d) any
      workout or restructuring of the Loans during the pendency of one or more Events
      of Default, provided,
      that in
      the case of reimbursement of counsel for Lenders other than Agent, such
      reimbursement shall be limited to one counsel for all such Lenders;
      and

     

    (e) efforts
      to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observe
      or assess any of the Credit Parties or their respective affairs, and (iii)
      verify, protect, evaluate, assess, appraise, collect, sell, liquidate or
      otherwise dispose of any of the Collateral;

     

    including,
      as to each of clauses
      (a) through (e)
      above,
      all reasonable attorneys’ and other professional and service providers’ fees
      arising from such services and other advice, assistance or other representation,
      including those in connection with any appellate proceedings, and all expenses,
      costs, charges and other fees incurred by such counsel and others in connection
      with or relating to any of the events or actions described in this Section
      11.3,
      all of
      which shall be payable, on demand, by Borrowers to Agent. Without limiting
      the
      generality of the foregoing, such expenses, costs, charges and fees may include:
      fees, costs and expenses of accountants, environmental advisors, appraisers,
      investment bankers, management and other consultants and paralegals; court
      costs
      and expenses; photocopying and duplication expenses; court reporter fees, costs
      and expenses; long distance telephone charges; air express charges; telegram
      or
      telecopy charges; secretarial overtime charges; and expenses for travel, lodging
      and food paid or incurred in connection with the performance of such legal
      or
      other advisory services.

    
      
        
        

      

      
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    11.4. No
      Waiver.
      Agent’s
      or any Lender’s failure, at any time or times, to require strict performance by
      the Credit Parties of any provision of this Agreement or any other Loan Document
      shall not waive, affect or diminish any right of Agent or such Lender thereafter
      to demand strict compliance and performance herewith or therewith. Any
      suspension or waiver of an Event of Default shall not suspend, waive or affect
      any other Event of Default whether the same is prior or subsequent thereto
      and
      whether the same or of a different type. Subject to the provisions of
Section
      11.2,
      none of
      the undertakings, agreements, warranties, covenants and representations of
      any
      Credit Party contained in this Agreement or any of the other Loan Documents
      and
      no Default or Event of Default by any Credit Party shall be deemed to have
      been
      suspended or waived by Agent or any Lender, unless such waiver or suspension
      is
      by an instrument in writing signed by an officer of or other authorized employee
      of Agent and the applicable required Lenders, and directed to Borrowers
      specifying such suspension or waiver.

     

    11.5. Remedies.
      Agent’s
      and Lenders’ rights and remedies under this Agreement shall be cumulative and
      nonexclusive of any other rights and remedies that Agent or any Lender may
      have
      under any other agreement, including the other Loan Documents, by operation
      of
      law or otherwise. Recourse to the Collateral shall not be required.

     

    11.6. Severability.
      Wherever possible, each provision of this Agreement and the other Loan Documents
      shall be interpreted in such a manner as to be effective and valid under
      applicable law, but if any provision of this Agreement or any other Loan
      Document shall be prohibited by or invalid under applicable law, such provision
      shall be ineffective only to the extent of such prohibition or invalidity
      without invalidating the remainder of such provision or the remaining provisions
      of this Agreement or such other Loan Document.

     

    11.7. Conflict
      of Terms.
      Except
      as otherwise provided in this Agreement or any of the other Loan Documents
      by
      specific reference to the applicable provisions of this Agreement, if any
      provision contained in this Agreement conflicts with any provision in any of
      the
      other Loan Documents, the provision contained in this Agreement shall govern
      and
      control.

     

    11.8. Confidentiality.
      Agent
      and each Lender agree to use commercially reasonable efforts (equivalent to
      the
      efforts Agent or such Lender applies to maintaining the confidentiality of
      its
      own confidential information) to maintain as confidential all confidential
      information provided to them by the Credit Parties and designated as
      confidential for a period of two (2) years following receipt thereof, except
      that Agent and any Lender may disclose such information (a) to Persons employed
      or engaged by Agent or such Lender; (b) to any bona fide assignee or participant
      or potential assignee or participant that has agreed to comply with the covenant
      contained in this Section
      11.8
      (and any
      such bona fide assignee or participant or potential assignee or participant
      may
      disclose such information to Persons employed or engaged by them as described
      in
clause
      (a)
      above);
      (c) as required or requested by any Governmental Authority or reasonably
      believed by Agent or such Lender to be compelled by any court decree, subpoena
      or legal or administrative order or process; (d) as, on the advice of Agent’s or
      such Lender’s counsel, is required by law; (e) in connection with the exercise
      of any right or remedy under the Loan Documents or in connection with any
      Litigation to which Agent or such Lender is a party; or (f) that ceases to
      be
      confidential through no fault of Agent or any Lender.
      

    
      
        
        

      

      
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    11.9. GOVERNING
      LAW.
      EXCEPT
      AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
      INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN
      DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
      IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
      CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED
      STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE
      OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL
      HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
      THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF
      THE
      OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
      AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED,
      THAT
      AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
      COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY;
      PROVIDED FURTHER,
      THAT
      NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
      BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
      ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
      A
      JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY
      SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
      COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION
      THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
      IMPROPER VENUE OR FORUM NON CONVENIENS
      AND
      HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
      APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE
      OF
      THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
      AND
      AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE
      BY
      REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS
      SET
      FORTH IN ANNEX
      I
      OF THIS
      AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
      OF
      SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR FOUR (4) DAYS AFTER DEPOSIT IN THE
      UNITED STATES MAILS, PROPER POSTAGE PREPAID.

    
      
        
        

      

      
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    11.10. Notices. 

     

    (a) Addresses.
      All
      notices, demands, requests, directions and other communications required or
      expressly authorized to be made by this Agreement shall, whether or not
      specified to be in writing but unless otherwise expressly specified to be given
      by any other means, be given in writing and (i) addressed to (A) the
      party
      to be notified and sent to the address or facsimile number indicated in Annex
      I,
or
      (B)
      otherwise to the party to be notified at its address specified on the signature
      page of any applicable Assignment Agreement, (ii) posted to
      Intralinks®
      (to
      the
      extent such system is available and set up by or at the direction of the Agent
      prior to posting) in an appropriate location by uploading such notice, demand,
      request, direction or other communication to www.intralinks.com, faxing it
      to
      866-545-6600 with an appropriate bar-coded fax coversheet or using such other
      means of posting to Intralinks®
      as may
      be available and reasonably acceptable to the Agent prior to such posting,
      (iii)
      posted to any other E-System set up by or at the direction of Agent in an
      appropriate location or (iv) addressed to such other address as shall be
      notified in writing (A) in the case of Borrower Representative, Agent and Swing
      Line Lender, to the other parties hereto and (B) in the case of all other
      parties, to Borrower Representative and Agent. Transmission by electronic mail
      (including E-Fax, even if transmitted to the fax numbers set forth in
clause
      (i)
      above)
      shall not be sufficient or effective to transmit any such notice under this
      clause
      (a)
      unless
      such transmission is an available means to post to any E-System.

     

    (b) Effectiveness.
      All
      communications described in clause (a) above and all other notices, demands,
      requests and other communications made in connection with this Agreement shall
      be effective and be deemed to have been received (i) if delivered by hand,
      upon
      personal delivery, (ii) if delivered by overnight courier service, one Business
      Day after delivery to such courier service, (iii) if delivered by registered
      or
      certified mail, return receipt requested four (4) days following the date when
      sent, (iv) if delivered by facsimile (other than to post to an E-System pursuant
      to clause (a)(ii) or (a)(iii) above), upon sender’s receipt of confirmation of
      proper transmission, and (v) if delivered by posting to any E-System, on the
      later of the date of such posting in an appropriate location and the date access
      to such posting is given to the recipient thereof in accordance with the
      standard procedures applicable to such E-System. Failure or delay in delivering
      copies of any notice, demand, request, consent, approval, declaration or other
      communication to any Person (other than Borrower Representative or Agent)
      designated in Annex I to receive copies shall in no way adversely affect the
      effectiveness of such notice, demand, request, consent, approval, declaration
      or
      other communication. The giving of any notice required hereunder may be waived
      in writing by the party entitled to receive such notice.

     

    11.11. Section
      Titles.
      The
      Section titles and Table of Contents 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.

     

    11.12. Counterparts.
      This
      Agreement may be executed in any number of separate counterparts, each of which
      shall collectively and separately constitute one agreement.

    
      
        
        

      

      
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    11.13. WAIVER
      OF JURY TRIAL.
      BECAUSE
      DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
      QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
      PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
      RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
      SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
      OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT
      TO
      TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
      WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY
      CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
      RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY
      OF
      THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

     

    11.14. Press
      Releases and Related Matters.
      Each
      Credit Party executing this Agreement agrees that neither it nor its Affiliates
      will in the future issue any press releases or other public disclosure using
      the
      name of GE Capital or its affiliates or referring to this Agreement, the other
      Loan Documents or the Related Transactions Documents without at least two (2)
      Business Days’ prior notice to GE Capital and without the prior written consent
      of GE Capital unless (and only to the extent that) such Credit Party or
      Affiliate is required to do so under law and then, in any event, such Credit
      Party or Affiliate will consult with GE Capital before issuing such press
      release or other public disclosure; provided,
      however
      that
      with respect to any public filings required by applicable securities laws and/or
      stock exchange rules, each Credit Party agrees that it shall use its reasonable
      efforts to provide Agent with an opportunity to comment thereon prior to the
      filing thereof. Each Credit Party consents to the publication by Agent or any
      Lender of customary advertising material relating to the financing transactions
      contemplated by this Agreement using Borrowers’ name, product photographs, logo
      or trademark. Agent reserves the right to provide to industry trade
      organizations information necessary and customary for inclusion in league table
      measurements.

     

    11.15. Reinstatement.
      This
      Agreement shall remain in full force and effect and continue to be effective
      should any petition be filed by or against any Credit Party for liquidation
      or
      reorganization, should any Credit Party become insolvent or make an assignment
      for the benefit of any creditor or creditors or should a receiver or trustee
      be
      appointed for all or any significant part of any Credit Party’s assets, and
      shall continue to be effective or to be reinstated, as the case may be, if
      at
      any time payment and performance of the Obligations, or any part thereof, is,
      pursuant to applicable law, rescinded or reduced in amount, or must otherwise
      be
      restored or returned by any obligee of the Obligations, whether as a “voidable
      preference,” “fraudulent conveyance,” or otherwise, all as though such payment
      or performance had not been made. In the event that any payment, or any part
      thereof, is rescinded, reduced, restored or returned, the Obligations shall
      be
      reinstated and deemed reduced only by such amount paid and not so rescinded,
      reduced, restored or returned.

     

    11.16. Advice
      of Counsel.
      Each of
      the parties represents to each other party hereto that it has discussed this
      Agreement and, specifically, the provisions of Sections
      11.9
      and
11.13,
      with
      its counsel.

    
      
        
        

      

      
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    11.17. No
      Strict Construction.
      The
      parties hereto have participated jointly in the negotiation and drafting of
      this
      Agreement. In the event an ambiguity or question of intent or interpretation
      arises, this Agreement shall be construed as if drafted jointly by the parties
      hereto and no presumption or burden of proof shall arise favoring or disfavoring
      any party by virtue of the authorship of any provisions of this
      Agreement.

     

    11.18. USA
      PATRIOT Act Notice.
      Each
      Lender that is subject to the Patriot Act (as hereinafter defined) and Agent
      (for itself and not on behalf of any Lender) hereby notifies each Borrower
      that
      pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
      (signed into law October 26, 2001)) (the “Patriot
      Act”),
      it is
      required to obtain, verify and record information that identifies each Borrower,
      which information includes the name and address of each Borrower and other
      information that will allow such Lender or Agent, as applicable, to identify
      such Borrower in accordance with the Patriot Act.

     

    11.19. Amendment
      and Restatement.
      This
      Agreement amends and restates in its entirety the Existing Credit Agreement
      and
      upon the effectiveness of this Agreement, the terms and provisions of the
      Existing Credit Agreement shall, subject to this Section 11.19, be superseded
      hereby. All references to the “Credit Agreement” contained in the Loan Documents
      delivered in connection with the Existing Credit Agreement or this Agreement
      shall, and shall be deemed to, refer to this Agreement. Notwithstanding the
      amendment and restatement of the Existing Credit Agreement by this Agreement,
      the Obligations of the Borrowers and the other Credit Parties outstanding under
      the Existing Credit Agreement and the other Loan Documents as of the Closing
      Date shall remain outstanding and shall constitute continuing Obligations and
      shall continue as such to be secured by the Collateral. Such Obligations shall
      in all respects be continuing and this Agreement shall not be deemed to evidence
      or result in a novation or repayment and reborrowing of such Obligations. The
      Liens securing payment of the Obligations under the Existing Credit Agreement,
      as amended and restated in the form of this Agreement, shall in all respects
      be
      continuing, securing the payment of all Obligations.

     

    
      	 	
              12.

            	
              CROSS-GUARANTY

            

    

     

    12.1. Cross-Guaranty.
      Each
      Borrower hereby agrees that such Borrower is jointly and severally liable for,
      and hereby absolutely and unconditionally guarantees to Agent and Lenders and
      their respective successors and assigns, the full and prompt payment (whether
      at
      stated maturity, by acceleration or otherwise) and performance of, all
      Obligations owed or hereafter owing to Agent and Lenders by each other Borrower.
      Each Borrower agrees that its guaranty obligation hereunder is a continuing
      guaranty of payment and performance and not of collection, that its obligations
      under this Section 12
      shall
      not be discharged until payment and performance, in full, of the Obligations
      has
      occurred, and that its obligations under this Section
      12
      shall be
      absolute and unconditional, irrespective of, and unaffected by,

     

    (a) the
      genuineness, validity, regularity, enforceability or any future amendment of,
      or
      change in, this Agreement, any other Loan Document or any other agreement,
      document or instrument to which any Borrower is or may become a
      party;

    
      
        
        

      

      
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    (b) the
      absence of any action to enforce this Agreement (including this Section
      12)
      or any
      other Loan Document or the waiver or consent by Agent and Lenders with respect
      to any of the provisions thereof;

     

    (c) the
      existence, value or condition of, or failure to perfect its Lien against, any
      security for the Obligations or any action, or the absence of any action, by
      Agent and Lenders in respect thereof (including the release of any such
      security);

     

    (d) the
      insolvency of any Credit Party; or

     

    (e) any
      other
      action or circumstances that might otherwise constitute a legal or equitable
      discharge or defense of a surety or guarantor.

     

    Each
      Borrower shall be regarded, and shall be in the same position, as principal
      debtor with respect to the Obligations guaranteed hereunder.

     

    12.2. Waivers
      by Borrowers.
      Each
      Borrower expressly waives all rights it may have now or in the future under
      any
      statute, or at common law, or at law or in equity, or otherwise, to compel
      Agent
      or Lenders to marshal assets or to proceed in respect of the Obligations
      guaranteed hereunder against any other Credit Party, any other party or against
      any security for the payment and performance of the Obligations before
      proceeding against, or as a condition to proceeding against, such Borrower.
      It
      is agreed among each Borrower, Agent and Lenders that the foregoing waivers
      are
      of the essence of the transaction contemplated by this Agreement and the other
      Loan Documents and that, but for the provisions of this Section
      12
      and such
      waivers, Agent and Lenders would decline to enter into this
      Agreement.

     

    12.3. Benefit
      of Guaranty.
      Each
      Borrower agrees that the provisions of this Section
      12
      are for
      the benefit of Agent and Lenders and their respective successors, transferees,
      endorsees and assigns, and nothing herein contained shall impair, as between
      any
      other Borrower and Agent or Lenders, the obligations of such other Borrower
      under the Loan Documents.

     

    12.4. Waiver
      of Subrogation, Etc.
      Notwithstanding anything to the contrary in this Agreement or in any other
      Loan
      Document, and except as set forth in Section 12.7,
      each
      Borrower hereby expressly and irrevocably waives any and all rights at law
      or in
      equity to subrogation, reimbursement, exoneration, contribution, indemnification
      or set off and any and all defenses available to a surety, guarantor or
      accommodation co-obligor for so long as any of the Obligations shall remain
      outstanding. Each Borrower acknowledges and agrees that this waiver is intended
      to benefit Agent and Lenders and shall not limit or otherwise affect such
      Borrower’s liability hereunder or the enforceability of this Section 12,
      and
      that Agent, Lenders and their respective successors and assigns are intended
      third party beneficiaries of the waivers and agreements set forth in this
Section
      12.4.

     

    12.5. Election
      of Remedies.
      If
      Agent or any Lender may, under applicable law, proceed to realize its benefits
      under any of the Loan Documents giving Agent or such Lender a Lien upon any
      Collateral, whether owned by any Borrower or by any other Person, either by
      judicial foreclosure or by non-judicial sale or enforcement, Agent or any Lender
      may, at its sole option, determine which of its remedies or rights it may pursue
      without affecting any of its rights and remedies under this Section
      12.
      If, in
      the exercise of any of its rights and remedies, Agent or any Lender shall
      forfeit any of its rights or remedies, including its right to enter a deficiency
      judgment against any Borrower or any other Person, whether because of any
      applicable laws pertaining to “election of remedies” or the like, each Borrower
      hereby consents to such action by Agent or such Lender and waives any claim
      based upon such action, even if such action by Agent or such Lender shall result
      in a full or partial loss of any rights of subrogation that each Borrower might
      otherwise have had but for such action by Agent or such Lender. Any election
      of
      remedies that results in the denial or impairment of the right of Agent or
      any
      Lender to seek a deficiency judgment against any Borrower shall not impair
      any
      other Borrower’s obligation to pay the full amount of the Obligations. In the
      event Agent or any Lender shall bid at any foreclosure or trustee’s sale or at
      any private sale permitted by law or the Loan Documents, Agent or such Lender
      may bid all or less than the amount of the Obligations and the amount of such
      bid need not be paid by Agent or such Lender but shall be credited against
      the
      Obligations. The amount of the successful bid at any such sale, whether Agent,
      Lender or any other party is the successful bidder, shall be conclusively deemed
      to be the fair market value of the Collateral and the difference between such
      bid amount and the remaining balance of the Obligations shall be conclusively
      deemed to be the amount of the Obligations guaranteed under this Section
      12,
      notwithstanding that any present or future law or court decision or ruling
      may
      have the effect of reducing the amount of any deficiency claim to which Agent
      or
      any Lender might otherwise be entitled but for such bidding at any such
      sale.

    
      
        
        

      

      
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    12.6. Limitation.
      Notwithstanding any provision herein contained to the contrary, each Borrower’s
      liability under this Section
      12
      (which
      liability is in any event in addition to amounts for which such Borrower is
      primarily liable under Section
      1)
      shall
      be limited to an amount not to exceed as of any date of determination the
      greater of:

     

    (a) the
      net
      amount of all Loans advanced to any other Borrower under this Agreement and
      then
      re-loaned or otherwise transferred to, or for the benefit of, such Borrower;
      and

     

    (b) the
      amount that could be claimed by Agent and Lenders from such Borrower under
      this
Section
      12
      without
      rendering such claim voidable or avoidable under Section 548 of the Bankruptcy
      Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
      Fraudulent Conveyance Act or similar statute or common law after taking into
      account, among other things, such Borrower’s right of contribution and
      indemnification from each other Borrower under Section
      12.7.

     

    12.7. Contribution
      with Respect to Guaranty Obligations. 

     

    (a) To
      the
      extent that any Borrower shall make a payment under this Section 12
      of all
      or any of the Obligations (other than Loans made to that Borrower for which
      it
      is primarily liable) (a “Guarantor
      Payment”)
      that,
      taking into account all other Guarantor Payments then previously or concurrently
      made by any other Borrower, exceeds the amount that such Borrower would
      otherwise have paid if each Borrower had paid the aggregate Obligations
      satisfied by such Guarantor Payment in the same proportion that such Borrower’s
“Allocable Amount” (as defined below) (as determined immediately prior to such
      Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
      Borrowers as determined immediately prior to the making of such Guarantor
      Payment, then, following indefeasible payment in full in cash of the Obligations
      and termination of the Commitments, such Borrower shall be entitled to receive
      contribution and indemnification payments from, and be reimbursed by, each
      other
      Borrower for the amount of such excess, pro rata based upon their respective
      Allocable Amounts in effect immediately prior to such Guarantor
      Payment.

    
      
        
        

      

      
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    (b) As
      of any
      date of determination, the “Allocable
      Amount”
of
      any
      Borrower shall be equal to the maximum amount of the claim that could then
      be
      recovered from such Borrower under this Section
      12
      without
      rendering such claim voidable or avoidable under Section 548 of the Bankruptcy
      Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
      Fraudulent Conveyance Act or similar statute or common law.

     

    (c) This
      Section
      12.7
      is
      intended only to define the relative rights of Borrowers and nothing set forth
      in this Section
      12.7
      is
      intended to or shall impair the obligations of Borrowers, jointly and severally,
      to pay any amounts as and when the same shall become due and payable in
      accordance with the terms of this Agreement, including Section
      12.1.
      Nothing
      contained in this Section
      12.7
      shall
      limit the liability of any Borrower to pay the Loans made directly or indirectly
      to that Borrower and accrued interest, Fees and expenses with respect thereto
      for which such Borrower shall be primarily liable.

     

    (d) The
      parties hereto acknowledge that the rights of contribution and indemnification
      hereunder shall constitute assets of the Borrower to which such contribution
      and
      indemnification is owing.

     

    (e) The
      rights of the indemnifying Borrowers against other Credit Parties under this
      Section
      12.7
      shall be
      exercisable upon the full and indefeasible payment of the Obligations and the
      termination of the Commitments.

     

    12.8. Liability
      Cumulative.
      The
      liability of Borrowers under this Section
      12
      is in
      addition to and shall be cumulative with all liabilities of each Borrower to
      Agent and Lenders under this Agreement and the other Loan Documents to which
      such Borrower is a party or in respect of any Obligations or obligation of
      the
      other Borrowers, without any limitation as to amount, unless the instrument
      or
      agreement evidencing or creating such other liability specifically provides
      to
      the contrary.

    
      
        
        

      

      
        83

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, this Agreement has been duly executed as of the date first
      written above.

     

    
      	
              FINLAY
                FINE JEWELRY CORPORATION,

            
	
              as
                Borrower

            
	 
	
              By:

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 
	 	 
	
              CARLYLE
                & CO. JEWELERS LLC,

            
	
              as
                Borrower

            
	 	 
	
              By:
                

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 
	 	 
	
              L.
                CONGRESS, INC.,

            
	
              as
                Borrower

            
	 	 
	
              By:
                

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 

    

     

    
      [Signature
        Page to Fourth Amended and Restated Credit Agreement]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              GENERAL
                ELECTRIC CAPITAL

            
	
              CORPORATION,

            
	
              as
                Agent and Lender

            
	 
	
              By:

            	
              /s/
                Charles Chiodo

            
	
              Name:

            	
              Charles
                Chiodo

            
	
              Title:

            	
              Duly
                Authorized Signatory

            

    

     

    
      [Signature
        Page to Fourth Amended and Restated Credit Agreement]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      following Persons are signatories to this Agreement in their capacity as Credit
      Parties and not as Borrowers.

    

    
      	
              FINLAY
                ENTERPRISES, INC.,

            
	
              as
                Parent

            
	 	 
	
              By:
                

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 
	 
	
              FINLAY
                JEWELRY, INC.,

            
	
              as
                a Credit Party

            
	 	 
	
              By:
                

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 
	 	 
	
              FINLAY
                MERCHANDISING & BUYING, INC.,

            
	
              as
                a Credit Party

            
	 	 
	
              By:
                

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 
	 	 
	
              EFINLAY,
                INC.,

            
	
              as
                a Credit Party

            
	 
	
              By:
                

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 
	 	 
	 	 
	
              PARK
                PROMENADE LLC,

            
	
              as
                a Credit Party

            
	 	 
	
              By:
                

            	
              /s/
                Bruce E. Zurlnick

            
	
              Name:

            	 
	
              Title:

            	 

    

     

    [Signature
      Page to Fourth Amended and Restated Credit Agreement]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    Pursuant
      to Item 601(b)(2) of Regulation S-K, the following is a list of omitted annexes,
      exhibits and schedules to the Fourth Amended and Restated Credit Agreement.
      Finlay agrees to furnish supplementally to the Securities and Exchange
      Commission a copy of any omitted annex, exhibit or schedule upon
      request.

     

    ANNEXES

    
      	
              Annex
                C (Section 1.8)

            	
              -

            	
              Cash
                Management System

            
	
              Annex
                D (Section 2.1(a))

            	
              -

            	
              Closing
                Checklist

            
	
              Annex
                E (Section 4.1(a))

            	
              -

            	
              Financial
                Statements and Projections - Reporting

            
	
              Annex
                F (Section 4.1(b))

            	
              -

            	
              Collateral
                Reports

            
	
              Annex
                H (Section 9.9(a))

            	
              -

            	
              Lenders’
                Wire Transfer Information

            
	
              Annex
                I (Section 11.10)

            	
              -

            	
              Notice
                Addresses

            
	
              Annex
                J (from Annex A)

            	
              -

            	
              Commitments
                as of Closing Date

            
	
               

              EXHIBITS

              Exhibit
                1.1(a)(i)

            	
               

               

              -

            	
               

               

              Form
                of Notice of Tranche A Revolving Credit Advance

            
	
              Exhibit
                1.1(a)(ii)

            	
              -

            	
              Form
                of Tranche A Revolving Note

            
	
              Exhibit
                1.1(a)(iii)

            	
              -

            	
              Form
                of Notice of Tranche B Revolving Credit Advance

            
	
              Exhibit
                1.1(a)(iv) 

            	
              -

            	
              Form
                of Tranche B Revolving Note

            
	
              Exhibit
                1.1(b)(ii)

            	
              -

            	
              Form
                of Swing Line Note

            
	
              Exhibit
                1.5(e)

            	
              -

            	
              Form
                of Notice of Conversion/Continuation

            
	
              Exhibit
                4.1(b)

            	
              -

            	
              Form
                of Borrowing Base Certificate

            
	
              Exhibit
                5.19

            	 	
              Form
                of Consignor Letter

            
	
              Exhibit
                9.1(a)

            	
              -

            	
              Form
                of Assignment Agreement

            
	
              Exhibit
                A-1

            	
              -

            	
              Form
                of Indemnification Agreement

            
	
              Exhibit
                B-1

            	
              -

            	
              Application
                for Standby Letter of Credit

            
	
              Exhibit
                B-2

            	
              -

            	
              Application
                for Documentary Letter of Credit

            
	
               

              SCHEDULES

              Schedule
                1.1

            	
               

               

              -

            	
               

               

              Agent’s
                Representatives

            
	
              Disclosure
                Schedule 1.4

            	
              -

            	
              Sources
                and Uses; Funds Flow Memorandum

            
	
              Disclosure
                Schedule 3.1

            	
              -

            	
              Type
                of Entity; State of Organization

            
	
              Disclosure
                Schedule 3.2

            	
              -

            	
              Executive
                Offices, Collateral Locations, FEIN

            
	
              Disclosure
                Schedule 3.4(A)

            	
              -

            	
              Financial
                Statements

            
	
              Disclosure
                Schedule 3.4(B)

            	
              -

            	
              Projections

            
	
              Disclosure
                Schedule 3.6

            	
              -

            	
              Real
                Estate and Leases

            
	
              Disclosure
                Schedule 3.7

            	
              -

            	
              Labor
                Matters

            
	
              Disclosure
                Schedule 3.8

            	
              -

            	
              Ventures,
                Subsidiaries and Affiliates; Outstanding Stock

            
	
              Disclosure
                Schedule 3.11

            	
              -

            	
              Tax
                Matters

            
	
              Disclosure
                Schedule 3.12

            	
              -

            	
              ERISA
                Plans

            
	
              Disclosure
                Schedule 3.13

            	
              -

            	
              Litigation

            
	
              Disclosure
                Schedule 3.14

            	
              -

            	
              Brokers

            
	
              Disclosure
                Schedule 3.15

            	
              -

            	
              Intellectual
                Property

            
	
              Disclosure
                Schedule 3.17

            	
              -

            	
              Hazardous
                Materials

            
	
              Disclosure
                Schedule 3.18

            	
              -

            	
              Insurance

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Disclosure
                Schedule 3.19

            	
              -

            	
              Deposit
                and Disbursement Accounts

            
	
              Disclosure
                Schedule 3.20

            	
              -

            	
              Government
                Contracts

            
	
              Disclosure
                Schedule 3.22

            	
              -

            	
              Consignor
                Letters

            
	
              Disclosure
                Schedule 3.25

            	
              -

            	
              License
                Agreements

            
	
              Disclosure
                Schedule 3.26

            	
              -

            	
              Material
                Contracts

            
	
              Disclosure
                Schedule 5.1

            	
              -

            	
              Trade
                Names

            
	
              Disclosure
                Schedule 6.2

            	
              -

            	
              Existing
                Investments

            
	
              Disclosure
                Schedule 6.3

            	
              -

            	
              Indebtedness

            
	
              Disclosure
                Schedule 6.4(a)

            	
              -

            	
              Transactions
                with Affiliates

            
	
              Disclosure
                Schedule 6.7

            	
              -

            	
              Existing
                Liens

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      A (RECITALS)

     

    TO

     

    CREDIT
      AGREEMENT

     

    DEFINITIONS

     

    Capitalized
      terms used in the Loan Documents shall have (unless otherwise provided elsewhere
      in the Loan Documents) the following respective meanings, and all references
      to
      Sections, Exhibits, Schedules or Annexes in the following definitions shall
      refer to Sections, Exhibits, Schedules or Annexes of or to the
      Agreement:

     

    “Account
      Debtor”
means
      any Person who may become obligated to any Credit Party under, with respect
      to,
      or on account of, an Account, Chattel Paper or General Intangibles (including
      a
      payment intangible).

     

    “Accounts”
means
      all “accounts,” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party, including (a) all accounts receivable, other
      receivables, book debts and other forms of obligations (other than forms of
      obligations evidenced by Chattel Paper, or Instruments), (including any such
      obligations that may be characterized as an account or contract right under
      the
      Code), (b) all of each Credit Party’s rights in, to and under all purchase
      orders or receipts for goods or services, (c) all of each Credit Party’s rights
      to any goods represented by any of the foregoing (including unpaid sellers’
rights of rescission, replevin, reclamation and stoppage in transit and rights
      to returned, reclaimed or repossessed goods), (d) all rights to payment due
      to
      any Credit Party for property sold, leased, licensed, assigned or otherwise
      disposed of, for a policy of insurance issued or to be issued, for a secondary
      obligation incurred or to be incurred, for energy provided or to be provided,
      for the use or hire of a vessel under a charter or other contract, arising
      out
      of the use of a credit card or charge card, or for services rendered or to
      be
      rendered by such Credit Party or in connection with any other transaction
      (whether or not yet earned by performance on the part of such Credit Party),
      (e)
      all health care insurance receivables and (f) all collateral security of any
      kind, given by any Account Debtor or any other Person with respect to any of
      the
      foregoing.

     

    “Acquired
      Business”
means,
      solely with respect to periods prior to the Closing Date, the assets and
      business owned by Sellers that are operated as a division known as the Bailey
      Banks & Biddle brand.

     

    “Acquisition”
means
      the acquisition of all or substantially all of the assets of the Acquired
      Business.

     

    “Acquisition
      Agreement”
means
      that certain Asset Purchase Agreement dated September 27, 2007 by and among
      Zale
      Corporation, a Delaware corporation, Zale Delaware, Inc., a Delaware corporation
      (“Opco”),
      TXDC,
      L.P., a Texas limited partnership (“Inventory
      Company,”
and,
      together with Opco, “Sellers”),
      Finlay and, for limited purposes, Finlay Enterprises, Inc., a Delaware
      corporation.

    
      
        
        

      

      
        Annex
          A -
          1 

        
          

        

      

      
        
        

      

    

    “Adjusted
      Excess Availability”
means
      as of any date of determination, Borrowing Availability less
      $30,000,000.

     

    “Advance”
means
      any Tranche A Revolving Credit Advance, Tranche B Revolving Advance or Swing
      Line Advance, as the context may require.

     

    “Affiliate”
means,
      with respect to any Person, (a) each Person that, directly or indirectly, owns
      or controls, whether beneficially, or as a trustee, guardian or other fiduciary,
      10% or more of the Stock having ordinary voting power in the election of
      directors of such Person, (b) each Person that controls, is controlled by or
      is
      under common control with such Person, and (c) each of such Person’s officers,
      directors, joint venturers and partners. For the purposes of this definition,
      “control”
of
      a
      Person shall mean the possession, directly or indirectly, of the power to direct
      or cause the direction of its management or policies, whether through the
      ownership of voting securities, by contract or otherwise; provided,
      however,
      that
      the term “Affiliate”
shall
      specifically exclude Agent and each Lender.

     

    “Agent”
means
      GE Capital in its capacity as Agent for Lenders or its successor appointed
      pursuant to Section
      9.7.

     

    “Aggregate
      Borrowing Base”
means
      the sum of the Tranche A Borrowing Base (without reduction for any Tranche
      B
      Deficiency Amount) and the Tranche B Borrowing Base.

     

    “Agreement”
means
      the Credit Agreement by and among Borrowers, the other Credit Parties party
      thereto, GE Capital, as Agent and Lender and the other Lenders from time to
      time
      party thereto, as the same may be amended, supplemented, restated or otherwise
      modified from time to time.

     

    “Appendices”
has
      the
      meaning ascribed to it in the recitals to the Agreement.

     

    “Applicable
      Margins”
means
      collectively the Applicable Tranche A Revolver Index Margin, the Applicable
      Tranche A Revolver LIBOR Margin, the Applicable Tranche B Revolver Index Margin
      and the Applicable Tranche B Revolver LIBOR Margin.

     

    “Applicable
      Tranche A Revolver LIBOR Margin”
means
      the per annum interest rate from time to time in effect and payable in addition
      to the LIBOR Rate applicable to the Tranche A Revolving Loan, as determined
      by
      reference to Section
      1.5(a).

     

    “Applicable
      Tranche A Revolver Index Margin”
means
      the per annum interest rate margin from time to time in effect and payable
      in
      addition to the Index Rate applicable to the Tranche A Revolving Loan, as
      determined by reference to Section
      1.5(a).

     

    “Applicable
      Tranche B Revolver LIBOR Margin”
means
      the per annum interest rate from time to time in effect and payable in addition
      to the LIBOR Rate applicable to the Tranche B Revolving Loan, as determined
      by
      reference to Section
      1.5(a).

    
      
        
        

      

      
        Annex
          A -
          2 

        
          

        

      

      
        
        

      

    

    “Applicable
      Tranche B Revolver Index Margin”
means
      the per annum interest rate margin from time to time in effect and payable
      in
      addition to the Index Rate applicable to the Tranche B Revolving Loan, as
      determined by reference to Section
      1.5(a).

     

    “Assignment
      Agreement”
has
      the
      meaning ascribed to it in Section
      9.1(a).

     

    “Average
      Adjusted Excess Availability”
means,
      as of any date of determination, (a) Adjusted Excess Availability for each
      day
      during the calendar quarter most recently ended, divided by (b) the number
      of
      days occurring during such period.

     

    “Bankruptcy
      Code”
means
      the provisions of Title 11 of the United States Code, 11 U.S.C. §§101
et seq.

     

    “Blocked
      Accounts”
has
      the
      meaning ascribed to it in Annex
      C.

     

    “Borrower
      Representative”
means
      Finlay in its capacity as Borrower Representative pursuant to the provisions
      of
Section
      1.1(d).

     

    “Borrowers”
and
      “Borrower”
have
      the respective meanings ascribed thereto in the preamble to the
      Agreement.

     

    “Borrowing
      Availability”
means
      as of any date of determination as to all Borrowers, the lesser of (i) the
      sum
      of the Tranche A Maximum Amount and the Tranche B Maximum Amount and (ii) the
      Aggregate Borrowing Base (subject to any Reserves in effect on such date)
less
      the sum
      of the aggregate Tranche A Revolving Loan, Tranche B Revolving Loan and Swing
      Line Loan then outstanding.

     

    “Borrowing
      Base Certificate”
means
      a
      certificate to be executed and delivered from time to time by each Borrower
      in
      the form attached to the Agreement as Exhibit
      4.1(b).

     

    “Business
      Day”
means
      any day that is not a Saturday, a Sunday or a day on which banks are required
      or
      permitted to be closed in the State of New York and in reference to LIBOR Loans
      shall mean any such day that is also a LIBOR Business Day.

     

    “Capital
      Expenditures”
means,
      with respect to any Person, all expenditures (by the expenditure of cash or
      the
      incurrence of Indebtedness but excluding any Initial License Expense) by such
      Person during any measuring period for any fixed assets or improvements or
      for
      replacements, substitutions or additions thereto that have a useful life of
      more
      than one year and that are required to be capitalized under GAAP.

     

    “Capital
      Lease”
means,
      with respect to any Person, any lease of any property (whether real, personal
      or
      mixed) by such Person as lessee that, in accordance with GAAP, would be required
      to be classified and accounted for as a capital lease on a balance sheet of
      such
      Person.

     

    “Capital
      Lease Obligation”
means,
      with respect to any Capital Lease of any Person, the amount of the obligation
      of
      the lessee thereunder that, in accordance with GAAP, would appear on a balance
      sheet of such lessee in respect of such Capital Lease.

    
      
        
        

      

      
        Annex
          A -
          3 

        
          

        

      

      
        
        

      

    

    “Carlyle”
has
      the
      meaning ascribed to it in the preamble to the Agreement.

     

    “Carlyle
      Credit Party”
means,
      collectively, Carlyle and Park Promenade.

     

    “Carlyle
      Credit Party Management, Services and Allocation Agreements”
has
      the
      meaning ascribed to it in Section 6.4.

     

    “Carlyle
      Executive Employment Agreements”
means
      (i) the Employment Agreement dated as of May 19, 2005 among John K. Cohen and
      Carlyle and (ii) the Employment Agreement dated as of May 19, 2005 among Russell
      L. Cohen and Carlyle, each as originally in effect or as amended in accordance
      with its terms and the limitations set forth in Section 6.16
      hereof.

     

    “Carlyle/Finlay
      Lease”
has
      the
      meaning ascribed to it in Section 6.4.

     

    “Carlyle
      Intercompany Services and Allocation Agreements”
has
      the
      meaning ascribed to it in Section 6.4.

     

    “Carlyle
      License Agreement”
shall
      mean any Trade Name License Agreement entered into on or at any time after
      the
      Closing Date among Finlay Merchandising and any one or more of the Carlyle
      Credit Parties (as any such agreement may be amended, modified, or supplemented
      from time to time in accordance with its terms and the terms hereof) which
      shall
      provide for the licensing back to such Carlyle Credit Parties of any Trademarks
      previously transferred by the Carlyle Credit Parties to Finlay Merchandising
      pursuant to Section 6.8(h) on licensing terms substantially similar to those
      provided for in the Finlay License Agreement.

     

    “Cash
      Collateral Account”
has
      the
      meaning ascribed to it Annex
      B.

     

    “Cash
      Management Systems”
has
      the
      meaning ascribed to it in Section
      1.8.

     

    “Change
      of Control”
means
      any of the following: (a) any person or group of persons (within the meaning
      of
      the Securities Exchange Act of 1934,) shall have acquired beneficial ownership
      (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
      Commission under the Securities Exchange Act of 1934,) of 35% or more of the
      issued and outstanding shares of capital Stock of Parent having the right to
      vote for the election of directors of Parent under ordinary circumstances;
      (b)
      during any period of twelve consecutive calendar months, individuals who at
      the
      beginning of such period constituted the board of directors of Parent (together
      with any new directors whose election by the board of directors of Parent or
      whose nomination for election by the Stockholders of Parent was approved by
      a
      vote of at least two-thirds of the directors then still in office who either
      were directors at the beginning of such period or whose election or nomination
      for election was previously so approved) cease for any reason other than death
      or disability to constitute a majority of the directors then in office; (c)
      Parent ceases to own and control all of the economic and voting rights
      associated with all of the outstanding capital Stock of Finlay; (d) Finlay
      ceases to own and control all of the economic and voting rights associated
      with
      all of the outstanding capital Stock of any of its Subsidiaries or (e) a “Change
      of Control” as such term is defined in the Senior Note
      Indenture.

    
      
        
        

      

      
        Annex
          A -
          4 

        
          

        

      

      
        
        

      

    

    “Charges”
means
      all federal, state, county, city, municipal, local, foreign or other
      governmental taxes (including taxes owed to the PBGC at the time due and
      payable), levies, assessments, charges, liens, claims or encumbrances upon
      or
      relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll,
      income or gross receipts of any Credit Party, (d) any Credit Party’s ownership
      or use of any properties or other assets, or (e) any other aspect of any Credit
      Party’s business.

     

    “Chattel
      Paper”
means
      any “chattel paper,” as such term is defined in the Code, including electronic
      chattel paper, now owned or hereafter acquired by any Credit Party.

     

    “Closing
      Checklist”
means
      the schedule, including all appendices, exhibits or schedules thereto, listing
      certain documents and information to be delivered in connection with the
      Agreement, the other Loan Documents and the transactions contemplated
      thereunder, substantially in the form attached hereto as Annex
      D.

     

    “Closing
      Date”
means
      November 9, 2007.

     

    “Closing
      Material Adverse Effect”
means
      a
      material adverse effect upon the condition (financial or otherwise), business,
      assets or results of operations of Borrowers, the Acquired Business and their
      respective Subsidiaries, taken as a whole; provided that “Closing Material
      Adverse Effect” shall not be deemed to include an event, change, occurrence or
      effect to the extent it relates to (A) applicable economic or market conditions
      generally affecting the industry in which Borrowers and the Acquired Business
      operate that do not affect them in a materially disproportionate manner; (B)
      the
      announcement of the Related Transactions; (C) the execution of, compliance
      with
      the terms of, or the taking of any action required by the Acquisition Agreement,
      and the other transactions contemplated by the Acquisition Agreement; (D) any
      change in accounting requirements or principles or any change of laws of general
      applicability or the interpretation thereof; or (E) any change in prevailing
      interest rates.

     

    “Code”
means
      the Uniform Commercial Code as the same may, from time to time, be enacted
      and
      in effect in the State of New York; provided,
      that to
      the extent that the Code is used to define any term herein or in any Loan
      Document and such term is defined differently in different Articles or Divisions
      of the Code, the definition of such term contained in Article or Division 9
      shall govern; provided further,
      that in
      the event that, by reason of mandatory provisions of law, any or all of the
      attachment, perfection or priority of, or remedies with respect to, Agent’s or
      any Lender’s Lien on any Collateral is governed by the Uniform Commercial Code
      as enacted and in effect in a jurisdiction other than the State of New York,
      the
      term “Code”
shall
      mean the Uniform Commercial Code as enacted and in effect in such other
      jurisdiction solely for purposes of the provisions thereof relating to such
      attachment, perfection, priority or remedies and for purposes of definitions
      related to such provisions.

     

    “Collateral”
means
      the property covered by the Security Agreement, the Mortgages and the other
      Collateral Documents and any other property, real or personal, tangible or
      intangible, now existing or hereafter acquired, that may at any time be or
      become subject to a security interest or Lien in favor of Agent, on behalf
      of
      itself and Lenders, to secure the Obligations.

    
      
        
        

      

      
        Annex
          A -
          5 

        
          

        

      

      
        
        

      

    

     

    “Collateral
      Documents”
means
      the Security Agreement, the Pledge Agreement, the Guaranties, the Mortgages,
      the
      Patent Security Agreement, the Trademark Security Agreement, the Copyright
      Security Agreement and all similar agreements entered into guaranteeing payment
      of, or granting a Lien upon property as security for payment of, the
      Obligations.

     

    “Collateral
      Reports”
means
      the reports with respect to the Collateral referred to in Annex
      F.

     

    “Collection
      Account”
means
      that certain account of Agent, account number 502-795-13 in the name of Agent
      at
      DeutscheBank Trust Company Americas in New York, New York ABA No. 021 001 033,
      or such other account as may be specified in writing by Agent as the “Collection
      Account.”

     

    “Commitment
      Termination Date”
means
      the earliest of (a) November 9, 2012, (b) the date which is four (4) months
      prior to the scheduled maturity of the Senior Notes unless the Senior Notes
      shall have been paid in full through a permitted refinancing on or prior to
      such
      date, (c) the date of termination of Lenders’ obligations to make Advances and
      to incur Letter of Credit Obligations or permit existing Loans to remain
      outstanding pursuant to Section
      8.2(b),
      and (d)
      the date of indefeasible prepayment in full by Borrowers of the Loans and the
      cancellation and return (or stand-by guarantee) of all Letters of Credit or
      the
      cash collateralization of all Letter of Credit Obligations pursuant to
Annex
      B,
      and the
      permanent reduction of all Commitments to zero dollars ($0).

     

    “Commitments”
means
      (a) as to any Lender, the aggregate of such Lender’s Tranche A Revolving Loan
      Commitment (including without duplication the Swing Line Lender’s Swing Line
      Commitment as a subset of its Tranche A Revolving Loan Commitment) and Tranche
      B
      Revolving Commitment as set forth on Annex
      J
      to the
      Agreement or in the most recent Assignment Agreement executed by such Lender,
      and (b) as to all Lenders, the aggregate of all Lenders’ Tranche A Revolving
      Loan Commitments (including without duplication the Swing Line Lender’s Swing
      Line Commitment as a subset of its Tranche A Revolving Loan Commitment) and
      Tranche B Revolving Commitments, which aggregate commitment shall be Five
      Hundred Fifty Million Dollars ($550,000,000) on the Closing Date, as to each
      of
clauses
      (a) and (b),
      as such
      Commitments may be reduced, amortized or adjusted from time to time in
      accordance with the Agreement.

     

    “Concentration
      Accounts”
has
      the
      meaning ascribed to it in Annex
      C.

     

    “Congress”
means
      L. Congress, Inc., a Florida corporation.

     

    “Congress
      Acquisition”
means
      the acquisition of the Congress Shares pursuant to the Congress
      SPA.

     

    “Congress
      Credit Card Services Account”
means
      that certain deposit account established in connection with the Congress Credit
      Card Services Agreement and maintained at a bank reasonably acceptable to
      Agent.

    
      
        
        

      

      
        Annex
          A -
          6

        
          

        

      

      
        
        

      

    

    “Congress
      Credit Card Services Agreement”
means
      that certain Shoppers Charge Accounts Co. Private Label Credit Card Agreement,
      dated as of May 1, 2006, by an between Shoppers Charge Account Co., a division
      of TD Banknorth, N.A., and Congress (d/b/a Congress Jewelers), as
      amended.

     

    “Congress
      Rolex Intercreditor”
means
      that certain Intercreditor Agreement dated November 30, 2006 by and between
      Rolex Watch U.S.A. and the Agent and relating to the Congress Rolex
      Inventory. 

     

    “Congress
      Rolex Inventory”
means
      the Inventory subject to the Congress Rolex Security Agreements.

     

    “Congress
      Rolex Security Agreements”
means,
      collectively, (i) that certain Security Agreement, dated as of February 21,
      1997, between Congress and Rolex Watch U.S.A., (ii) that certain Security
      Agreement, dated as of May 25, 2000, between Congress and Rolex Watch U.S.A.,
      (iii) that certain Security Agreement, dated as of August 21, 2001, between
      Congress and Rolex Watch U.S.A., (iv) that certain Security Agreement, dated
      as
      of October 3, 2003, between Congress and Rolex Watch U.S.A., and (v) that
      certain Security Agreement, dated as of September 1, 2006, between Congress
      and
      Rolex Watch U.S.A

     

    “Congress
      Shares”
means
      the shares of common stock of Congress.

     

    “Congress
      SPA”
means
      that certain Stock Purchase Agreement (together with the schedules thereto),
      dated as of November 7, 2006, by and among Finlay, Congress and Scot Congress
      and Doug Congress, the stockholders of the company.

    

      “Consignment
        Agreement”
shall
        mean (i) each written consignment agreement existing as of the Closing Date
        or
        entered into after the Closing Date and as to which Finlay has complied with
        Section 5.11 hereof, in each case, as in effect from time to time, and (ii)
        each
        consignment arrangement, which is not evidenced by or memorialized in a writing
        signed by the consignor and as to which Finlay has complied with Section
        5.11
        hereof, in each case, under which Finlay or any Domestic Subsidiary thereof
        is
        the consignee thereunder.

    

     

    “Consignment
      Inventory”
shall
      mean, at any time, each item of merchandise which (i) at such time is in the
      possession of the Borrowers or any Domestic Subsidiary thereof as consignee
      pursuant to a Consignment Agreement which, if not in a writing signed by the
      consignor, has been approved in writing by the Agent, (ii) at such time is
      identified by item number by the Borrowers or any Domestic Subsidiary thereof
      to
      Agent as being “memo” or “consigned” inventory, (iii) as of such time has not
      been sold or deemed sold to or by the Borrowers or any Domestic Subsidiary
      thereof, (iv) to which ownership, at such time, is retained by a consignor
      under
      such Consignment Agreement or other consignment arrangement until such item
      or
      merchandise is sold or deemed sold by such consignor to the consignee, and
      (v)
      accordingly, at such time, is not an asset of the Borrowers or any Domestic
      Subsidiary thereof. Ownership of an item of merchandise described in the
      foregoing sentence is deemed to be retained by such consignor until, in
      accordance with the applicable Consignment Agreement or other consignment
      arrangement, ownership is transferred (or deemed to be transferred) to a buyer,
      the Borrowers or any Domestic Subsidiary thereof, regardless of whether any
      procedures have been performed to protect the third party’s title to such item
      of merchandise. Additionally, “Consignment Inventory” (a) includes, at any time,
      any item of merchandise (including the gold content thereof) which (i) contains
      gold which is leased or consigned or lent to the Borrowers or any Domestic
      Subsidiary thereof, and (ii) complies at such time with clauses (ii) and (iii)
      of the first sentence of this definition, and (b) excludes all cash and non-cash
      proceeds of any item of merchandise (and any gold content thereof) which
      constituted Consignment Inventory.

    
      
        
        

      

      
        Annex
          A -
          7

        
          

        

      

      
        
        

      

    

    “Consignor
      Letter”
means
      a
      letter agreement executed and delivered by a consignor of “memo” or “consigned”
inventory to the Borrowers substantially in the form of Exhibit 5.19 hereto
      (it
      being understood and agreed that a letter agreement substantially in the form
      of
      the corresponding exhibit to the Original Credit Agreement or the First, Second
      or Third Amended and Restated Credit Agreement shall be acceptable).

     

    “Contracts”
means
      all “contracts,” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party, in any event, including all contracts,
      undertakings, or agreements (other than rights evidenced by Chattel Paper,
      Documents or Instruments) in or under which any Credit Party may now or
      hereafter have any right, title or interest, including any agreement relating
      to
      the terms of payment or the terms of performance of any Account.

     

    “Control
      Letter”
means
      a
      letter agreement between Agent and (i) the issuer of uncertificated securities
      with respect to uncertificated securities in the name of any Credit Party,
      (ii)
      a securities intermediary with respect to securities, whether certificated
      or
      uncertificated, securities entitlements and other financial assets held in
      a
      securities account in the name of any Credit Party, (iii) a futures commission
      merchant or clearing house, as applicable, with respect to commodity accounts
      and commodity contracts held by any Credit Party, whereby, among other things,
      the issuer, securities intermediary or futures commission merchant limits any
      security interest in the applicable financial assets in a manner reasonably
      satisfactory to Agent, acknowledges the Lien of Agent, on behalf of itself
      and
      Lenders, on such financial assets, and agrees to follow the instructions or
      entitlement orders of Agent without further consent by the affected Credit
      Party.

     

    “Copyright
      License”
means
      any and all rights now owned or hereafter acquired by any Credit Party under
      any
      written agreement granting any right to use any Copyright or Copyright
      registration.

     

    “Copyright
      Security Agreements”
means
      the Copyright Security Agreements made in favor of Agent, on behalf of itself
      and Lenders, by each applicable Credit Party.

     

    “Copyrights”
means
      all of the following now owned or hereafter adopted or acquired by any Credit
      Party: (a) all copyrights and General Intangibles of like nature (whether
      registered or unregistered), 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 similar office
      or agency of the United States, any state or territory thereof, or any other
      country or any political subdivision thereof, and (b) all reissues, extensions
      or renewals thereof.

    
      
        
        

      

      
        Annex
          A -
          8

        
          

        

      

      
        
        

      

    

    “Credit
      Card Services Account”
means
      that certain deposit account maintained with Bank of America, N.A., account
      no.
      684073343, established in connection with the Credit Card Services
      Agreement.

     

    “Credit
      Card Services Agreement”
means
      that certain Merchant Credit Card Agreement dated as of May 9, 2002 by and
      among
      Carlyle, certain Subsidiaries of Carlyle and Paymentech Merchant Services,
      Inc.
      or any similar agreement reasonably acceptable to the Agent providing for credit
      card services and amending or replacing such agreement.

     

    “Credit
      Parties”
means
      Parent, each Borrower, and each of the Guarantors. 

     

    “Default”
means
      any event that, with the passage of time or notice or both, would, unless cured
      or waived, become an Event of Default.

     

    “Default
      Rate”
has
      the
      meaning ascribed to it in Section
      1.5(d).

     

    “Deposit
      Accounts”
means
      all “deposit accounts” as such term is defined in the Code, now or hereafter
      held in the name of any Credit Party.

     

    “Deposit
      Account Control Agreement”
means
      a
      letter agreement, in form and substance reasonably acceptable to the Agent,
      executed by the applicable Credit Party, the Agent and the relevant financial
      institution, necessary to enable the Agent to obtain “control” (as defined in
      the Code) with respect to any Deposit Account described therein.

     

    “Designated
      Officer”
means
      the chief financial officer, president, any vice president having responsibility
      for financial affairs, treasurer or controller of the Parent or the Borrowers
      as
      the case may be.

     

    “Disbursement
      Accounts”
has
      the
      meaning ascribed to it in Annex C.

     

    “Disclosure
      Schedules”
means
      the Schedules prepared by Borrowers and attached to the Agreement.

     

    “Disqualified
      Stock”
means
      (a) the Stock of any Person that by its terms (or by the terms of any equity
      into which it is convertible or for which it is exchangeable), or upon the
      occurrence of any event, matures or is mandatorily redeemable, pursuant to
      a
      sinking fund obligation or otherwise, or is exchangeable for Indebtedness of
      such Person or is redeemable at the option of the holder thereof, in whole
      or in
      part, in each case, on or prior to six months after the Commitment Termination
      Date or (b) any Stock which pays dividends (other than in the form of additional
      shares of such Stock).

     

    “Documents”
means
      all “documents,” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party, wherever located.

     

    “Dollars”
or
      “$”
means
      lawful currency of the United States of America.

     

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

    
      
        
        

      

      
        Annex
          A -
          9

        
          

        

      

      
        
        

      

    

    “E-System”
means
      any electronic system, including Intralinks®
      and any
      other Internet or extranet-based site, whether such electronic system is owned,
      operated or hosted by Agent, any of its Affiliates, or any of such Person’s
      respective officers, directors, employees, attorneys, agents and representatives
      or any other Person, providing for access to data protected by passcodes or
      other security system.

     

    “eFinlay”
shall
      mean eFinlay, Inc., a Delaware corporation and wholly-owned subsidiary of
      Finlay.

     

    “eFinlay
      Agreements”
shall
      mean,
      collectively, the eFinlay Contribution Agreement, the eFinlay FFJC Services
      Agreement, the eFinlay FMBI Services Agreement and the eFinlay Lease
      Agreement.

     

    “eFinlay
      Contribution Agreement”
shall
      mean that certain Contribution Agreement dated as of September 29, 2000 between
      Finlay and eFinlay (as originally in effect, without any waivers or
      modifications materially adverse to the Lenders not consented to by the
      Requisite Lenders) pursuant to which Finlay transferred certain assets to
      eFinlay.

     

    “eFinlay
      FFJC Services Agreement”
shall
      mean that certain Services Agreement dated as of September 29, 2000 between
      Finlay and eFinlay (as originally in effect, without any waivers or
      modifications materially adverse to the Lenders not consented to by the
      Requisite Lenders) pursuant to which Finlay provides certain managerial advice,
      direction and services to eFinlay.

     

    “eFinlay
      FMBI Services Agreement”
shall
      mean that certain Services Agreement dated as of September 29, 2000 between
      Finlay Merchandising and eFinlay (as originally in effect, without any waivers
      or modifications materially adverse to the Lenders not consented to by the
      Requisite Lenders) pursuant to which Finlay provides certain merchandising
      and
      buying services to eFinlay.

     

    “eFinlay
      Lease Agreement”
shall
      mean that certain Lease Agreement dated as of September 29, 2000 between Finlay
      and eFinlay (as originally in effect, without any waivers or modifications
      materially adverse to the Lenders not consented to by the Requisite Lenders)
      pursuant to which Finlay leases certain space in its Connecticut distribution
      center to eFinlay.

     

    “Eligible
      Accounts”
has
      the
      meaning ascribed to it in Section
      1.6.

     

    “Eligible
      Inventory”
has
      the
      meaning ascribed to it in Section
      1.7.

     

    “Environmental
      Laws”
means
      all applicable federal, state, local and foreign laws, statutes, ordinances,
      codes, rules, standards and regulations, now or hereafter in effect, and any
      applicable judicial or administrative interpretation thereof, including any
      applicable judicial or administrative order, consent decree, order or judgment,
      imposing liability or standards of conduct for or relating to the regulation
      and
      protection of human health, safety, the environment and natural resources
      (including ambient air, surface water, groundwater, wetlands, land surface
      or
      subsurface strata, wildlife, aquatic species and vegetation). Environmental
      Laws
      include the Comprehensive Environmental Response, Compensation, and Liability
      Act of 1980 (42 U.S.C. §§ 9601 et
      seq.)
      (“CERCLA”);
      the
      Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101
et
      seq.);
      the
      Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136
et
      seq.);
      the
      Solid Waste Disposal Act (42 U.S.C. §§ 6901 et
      seq.);
      the
      Toxic Substance Control Act (15 U.S.C. §§ 2601 et
      seq.);
      the
      Clean Air Act (42 U.S.C. §§ 7401 et
      seq.);
      the
      Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et
      seq.);
      the
      Occupational Safety and Health Act (29 U.S.C. §§ 651 et
      seq.);
      and
      the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et
      seq.),
      and
      any and all regulations promulgated thereunder, and all analogous state, local
      and foreign counterparts or equivalents and any transfer of ownership
      notification or approval statutes.

    
      
        
        

      

      
        Annex
          A -
          10

        
          

        

      

      
        
        

      

    

    “Environmental
      Liabilities”
means,
      with respect to any Person, all liabilities, obligations, responsibilities,
      response, remedial and removal costs, investigation and feasibility study costs,
      capital costs, operation and maintenance costs, losses, damages, punitive
      damages, property damages, natural resource damages, consequential damages,
      treble damages, costs and expenses (including all reasonable fees, disbursements
      and expenses of counsel, experts and consultants), fines, penalties, sanctions
      and interest incurred as a result of or related to any claim, suit, action,
      investigation, proceeding or demand by any Person, whether based in contract,
      tort, implied or express warranty, strict liability, criminal or civil statute
      or common law, in each case arising under or related to any Environmental Laws,
      Environmental Permits, or in connection with any Release or threatened Release
      or presence of a Hazardous Material whether on, at, in, under, from or about
      or
      in the vicinity of any real or personal property.

     

    “Environmental
      Permits”
means
      all permits, licenses, authorizations, certificates, approvals or registrations
      required by any Governmental Authority under any Environmental
      Laws.

     

    “Equipment”
means
      all “equipment,” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party, wherever located and, in any event, including
      all
      such Credit Party’s machinery and equipment, including processing equipment,
      conveyors, machine tools, data processing and computer equipment, including
      embedded software and peripheral equipment and all engineering, processing
      and
      manufacturing equipment, office machinery, furniture, materials handling
      equipment, tools, attachments, accessories, automotive equipment, trailers,
      trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
      equipment of every kind and nature, trade fixtures and fixtures not forming
      a
      part of real property, together with all additions and accessions thereto,
      replacements therefor, all parts therefor, all substitutes for any of the
      foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
      and rights with respect thereto, and all products and proceeds thereof and
      condemnation awards and insurance proceeds with respect thereto.

     

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

     

    “ERISA
      Affiliate”
means,
      with respect to any Credit Party, any trade or business (whether or not
      incorporated) that, together with such Credit Party, are treated as a single
      employer within the meaning of Sections 414(b), (c), (m) or (o) of the
      IRC.

    
      
        
        

      

      
        Annex
          A -
          11

        
          

        

      

      
        
        

      

    

    “ERISA
      Event”
means,
      with respect to any Credit Party or any ERISA Affiliate, (a) with respect to
      a
      Title IV Plan, any event described in Section 4043(c) of ERISA for which notice
      to the PBGC has not been waived; (b) the withdrawal of any Credit Party or
      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 any Credit Party or any ERISA
      Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent
      to
      terminate a Title IV Plan in a distress termination described in Section 4041(c)
      of ERISA or the treatment of a plan amendment as a termination under Section
      4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan
      or Multiemployer Plan by the PBGC; (f) with respect to a Title IV Plan, the
      existence of an “accumulated funding deficiency” (as defined in Section 412 of
      the IRC or Section 302 of ERISA) whether or not waived, or the failure to make
      any required contribution to a Multiemployer Plan; (g) the filing pursuant
      to
      Section 412(d) of the Code or Section 303(d) of ERISA of an application for
      a
      waiver of the minimum funding standard with respect to a Title IV Plan; (h)
      the
      making of any amendment to any Title IV Plan which could reasonably be expected
      to result in the imposition of a lien or the posting of a bond or other
      security; (i) with respect to a Title IV Plan an event described in Section
      4062(e) of ERISA; (j) any other event or condition that would 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 for the imposition of liability under Section 4069 or
      4212(c) of ERISA; (k) the termination of a Multiemployer Plan under Section
      4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan
      under
      Section 4241 or 4245 of ERISA; (l) the loss of a Qualified Plan’s qualification
      or tax exempt status; or (m) the termination of a Plan described in Section
      4064
      of ERISA.

     

    “Event
      of Default”
has
      the
      meaning ascribed to it in Section
      8.1.

     

    “Excluded
      Taxes”
shall
      mean (A) franchise taxes and taxes upon or determined by reference to any
      Lender’s net income, in each case, imposed by the United States of America or
      any political subdivision or taxing authority thereof or therein or by any
      jurisdiction in which any other branch of any Lender is located, is resident
      or
      in which any Lender is organized or has its principal or registered office
      (including, without limitation, branch taxes imposed by the United States or
      similar taxes imposed by any subdivision thereof), (B) any United States
      withholding taxes payable with respect to payments hereunder or the Notes or
      under the Loan Documents under laws (including any statute, treaty or
      regulation) in effect on the Closing Date (or, in the case of (i) an assignee,
      the date of the Assignment Agreement, (ii) a successor Agent, the date of the
      appointment of such Agent, and (iii) a successor L/C Issuer, the date such
      L/C
      Issuer becomes an L/C Issuer) applicable to such Lender, such L/C Issuer or
      the
      Agent, as the case may be, but not excluding any United States withholding
      tax
      payable with respect to interest arising under a Loan Document as a result
      of
      any change in such laws occurring after the Closing Date (or the date of such
      Assignment Agreement or the date of such appointment of such Agent or the date
      such L/C Issuer becomes an L/C Issuer), (C) any other United States federal
      taxes, and (D) all liabilities, penalties and interest with respect to any
      of
      the foregoing.

     

    “Existing
      Credit Agreement”
has
      the
      meaning ascribed to it in the Recitals.

    
      
        
        

      

      
        Annex
          A -
          12

        
          

        

      

      
        
        

      

    

    “Factor
      Guaranties”
means
      collectively the factor guaranties dated as of December 9, 2002 issued by GE
      Capital Commercial Services, Inc, to Finlay, guaranteeing receivables from
      certain customers of Finlay and any future factor guaranties in form and
      substance similar to the existing factor guaranties or otherwise reasonably
      acceptable to Agent. 

     

    “Fair
      Labor Standards Act”
means
      the Fair Labor Standards Act, 29 U.S.C. §201 et seq.

     

    “Federal
      Funds Rate”
means,
      for any day, a floating rate equal to the weighted average of the rates on
      overnight Federal funds transactions among members of the Federal Reserve
      System, as determined by Agent in its sole discretion, which determination
      shall
      be final, binding and conclusive (absent manifest error).

     

    “Federal
      Reserve Board”
means
      the Board of Governors of the Federal Reserve System.

     

    “Fees”
means
      any and all fees payable to Agent or any Lender pursuant to the Agreement or
      any
      of the other Loan Documents.

     

    “Financial
      Covenants”
means
      the financial covenants set forth in Annex
      G.

     

    “Financial
      Statements”
means
      the consolidated and consolidating income statements, statements of cash flows
      and balance sheets of Borrowers delivered in accordance with Section
      3.4
      and
Annex
      E.

     

    “Finlay”
shall
      have the meaning ascribed to it in the Preamble.

     

    “Finlay
      Credit Parties”
means,
      collectively, Finlay, Finlay Jewelry, Finlay Merchandising and eFinlay;
      provided, that “Finlay Credit Parties” shall not include the division of Finlay
      known as the Bailey Banks & Biddle brand.

     

    “Finlay
      Employment Agreements”
shall
      mean each written employment agreement filed as an exhibit to Parent’s Form 10-K
      in effect at any time, as each may be amended, modified, supplemented, restated,
      renewed, replaced or extended from time to time.

     

    “Finlay
      Jewelry”
mean
      Finlay Jewelry, Inc., a Delaware corporation.

     

    “Finlay
      License Agreement”
shall
      mean the Trade Name License Agreement dated as of October 28, 1998 among Finlay
      Merchandising, Finlay and the Parent, as such may be amended, modified or
      supplemented from time to time in accordance with its terms and the terms
      hereof.

     

    “Finlay
      Merchandising”
means
      Finlay Merchandising and Buying, Inc. a Delaware corporation and wholly-owned
      Subsidiary of Finlay.

     

    “Fiscal
      Month”
means
      any of the monthly accounting periods of Borrowers.

     

    “Fiscal
      Quarter”
means
      any of the quarterly accounting periods of Borrowers, beginning on the day
      that
      the Fiscal Year begins and ending three months following such date, with each
      subsequent Fiscal Quarter beginning on the day immediately following the end
      of
      the preceding Fiscal Quarter and ending three months following such
      date.

    
      
        
        

      

      
        Annex
          A -
          13

        
          

        

      

      
        
        

      

    

    “Fiscal
      Year”
means
      any of the annual accounting periods of Borrowers which begins on the day
      immediately following the end of the preceding period and ends on the Saturday
      closest to January 31 of each year.

     

    “Fixtures”
means
      all “fixtures” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party.

     

    “Foreign
      Subsidiary”
shall
      mean a subsidiary of the Parent organized under the laws of a country other
      than
      the United States or any State thereof.

     

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

     

    “GE
      Capital”
means
      General Electric Capital Corporation, a Delaware corporation.

     

    “GE
      Capital Fee Letter”
means
      that certain letter, dated as of September 26, 2007 between GE Capital and
      Finlay with respect to certain Fees to be paid from time to time by Borrowers
      to
      GE Capital.

     

    “General
      Intangibles”
means
      all “general intangibles,” as such term is defined in the Code, now owned or
      hereafter acquired by any Credit Party, including all right, title and interest
      that such Credit Party may now or hereafter have in or under any Contract,
      all
      payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents,
      and all applications therefor and reissues, extensions or renewals thereof,
      rights in Intellectual Property, interests in partnerships, joint ventures
      and
      other business associations, licenses, permits, copyrights, trade secrets,
      proprietary or confidential information, inventions (whether or not patented
      or
      patentable), technical information, procedures, designs, knowledge, know-how,
      software, data bases, data, skill, expertise, experience, processes, models,
      drawings, materials and records, goodwill (including the goodwill associated
      with any Trademark or Trademark License), all rights and claims in or under
      insurance policies (including insurance for fire, damage, loss and casualty,
      whether covering personal property, real property, tangible rights or intangible
      rights, all liability, life, key man and business interruption insurance, and
      all unearned premiums), uncertificated securities, choses in action, deposit,
      checking and other bank accounts, rights to receive tax refunds and other
      payments, rights to receive dividends, distributions, cash, Instruments and
      other property in respect of or in exchange for pledged Stock and Investment
      Property, rights of indemnification, all books and records, correspondence,
      credit files, invoices and other papers, including without limitation all tapes,
      cards, computer runs and other papers and documents in the possession or under
      the control of such Credit Party or any computer bureau or service company
      from
      time to time acting for such Credit Party.

     

    “Goods”
means
      all “goods” as defined in the Code, now owned or hereafter acquired by any
      Credit Party, wherever located, including embedded software to the extent
      included in “goods” as defined in the Code, manufactured homes, standing timber
      that is cut and removed for sale and unborn young of animals.

    
      
        
        

      

      
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    “Governmental
      Authority”
means
      any nation or government, any state or other political subdivision thereof,
      and
      any agency, department or other entity exercising executive, legislative,
      judicial, regulatory or administrative functions of or pertaining to
      government.

     

    “Guaranteed
      Indebtedness”
means
      as to any Person, any obligation of such Person guaranteeing, providing
      assurance or otherwise supporting any Indebtedness, lease, dividend, or other
      obligation (“primary
      obligation”)
      of any
      other Person (the “primary
      obligor”)
      in any
      manner, including any obligation or arrangement of such Person to (a) purchase
      or repurchase any such primary obligation, (b) advance or supply funds (i)
      for
      the purchase or payment of any such primary obligation or (ii) to maintain
      working capital or equity capital of the primary obligor or otherwise to
      maintain the net worth or solvency or any balance sheet condition of the primary
      obligor, (c) purchase property, securities or services primarily for the purpose
      of assuring the owner of any such primary obligation of the ability of the
      primary obligor to make payment of such primary obligation, (d) protect the
      beneficiary of such arrangement from loss (other than product warranties given
      in the ordinary course of business) or (e) indemnify the owner of such primary
      obligation against loss in respect thereof. The amount of any Guaranteed
      Indebtedness at any time shall be deemed to be an amount equal to the lesser
      at
      such time of (x) the stated or determinable amount of the primary obligation
      in
      respect of which such Guaranteed Indebtedness is incurred and (y) the maximum
      amount for which such Person may be liable pursuant to the terms of the
      instrument embodying such Guaranteed Indebtedness, or, if not stated or
      determinable, the maximum reasonably anticipated liability (assuming full
      performance) in respect thereof.

     

    “Guaranties”
means,
      collectively, the Parent Guaranty, each Subsidiary Guaranty and any other
      guaranty executed by any Guarantor in favor of Agent and Lenders in respect
      of
      the Obligations.

     

    “Guarantors”
means
      Parent, each Subsidiary of each Borrower and each other Person, if any, that
      executes a guaranty or other similar agreement in favor of Agent, for itself
      and
      the ratable benefit of Lenders, in connection with the transactions contemplated
      by the Agreement and the other Loan Documents.

     

    “Hazardous
      Material”
means
      any substance, material or waste that is regulated by, or forms the basis of
      liability now or hereafter under, any Environmental Laws, including any material
      or substance that is (a) defined as a “solid waste,” “hazardous waste,”
“hazardous material,” “hazardous substance,” “extremely hazardous waste,”
“restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous
      constituent,” “special waste,” “toxic substance” or other similar term or phrase
      under any Environmental Laws, or (b) petroleum or any fraction or by-product
      thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive
      substance.

     

    “Hedge
      Agreements”
shall
      mean all obligations of a Person under any foreign exchange contract, currency
      swap agreement, interest rate swap, cap or collar agreement or other similar
      agreement or arrangement designed to alter the risks of that Person arising
      from
      fluctuations in currency values or interest rates, in each case whether
      contingent or matured.

    
      
        
        

      

      
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    “Indebtedness”
means,
      with respect to any Person, without duplication, (a) all indebtedness of such
      Person for borrowed money or for the deferred purchase price of property payment
      for which is deferred 6 months or more, but excluding obligations to trade
      creditors incurred in the ordinary course of business that are unsecured and
      not
      overdue by more than 6 months unless being contested in good faith, (b) all
      reimbursement and other obligations with respect to letters of credit, bankers’
acceptances and surety bonds, whether or not matured, (c) all obligations
      evidenced by notes, bonds, debentures or similar instruments, (d) all
      indebtedness created or arising under any conditional sale or other title
      retention agreement with respect to property acquired by such Person (even
      though the rights and remedies of the seller or lender under such agreement
      in
      the event of default are limited to repossession or sale of such property),
      (e)
      all Capital Lease Obligations and the present value (discounted at the Index
      Rate as in effect on the Closing Date) of future rental payments under all
      synthetic leases, (f) all obligations of such Person under commodity purchase
      or
      option agreements or other commodity price hedging arrangements, in each case
      whether contingent or matured, (g) Hedge Agreements, (h) all Indebtedness
      referred to above secured by (or for which the holder of such Indebtedness
      has
      an existing right, contingent or otherwise, to be secured by) any Lien upon
      or
      in property or other assets (including accounts and contract rights) owned
      by
      such Person, even though such Person has not assumed or become liable for the
      payment of such Indebtedness, and (i) the Obligations.

     

    “Indemnification
      Agreements”
means,
      collectively, each of the indemnification agreements among the Parent and
      Finlay, and each of their (and their Subsidiaries’) respective directors and
      executive officers, substantially in the form of Exhibit A-1 attached hereto,
      as
      each may be amended, modified or supplemented from time to time in accordance
      with its terms and the terms hereof.

     

    “Indemnified
      Liabilities”
has
      the
      meaning ascribed to it in Section
      1.13.

     

    “Indemnified
      Person”
has
      the
      meaning ascribed to in Section
      1.13.

     

    “Independent
      Retail Store”
shall
      mean a retail store location operated by any of the Specialty Stores Credit
      Parties as an independent retail establishment (and not as a department in
      an
      establishment owned or operated by another person) selling fine jewelry and
      fine
      giftware and related products or services in a location consisting of a
      standalone store or a store located in a shopping mall or similar
      location.

     

    “Index
      Rate”
means,
      for any day, a floating rate equal to the higher of (i) the rate publicly quoted
      from time to time by The Wall Street Journal
      as the
“prime rate” (or, if The Wall Street
      Journal
      ceases
      quoting a prime rate, the highest per annum rate of interest published by the
      Federal Reserve Board in Federal Reserve statistical release H.15 (519)
      entitled “Selected Interest Rates” as the Bank prime loan rate or its
      equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
      Each change in any interest rate provided for in the Agreement based upon the
      Index Rate shall take effect at the time of such change in the Index
      Rate.

     

    “Index
      Rate Loan”
means
      a
      Loan or portion thereof bearing interest by reference to the Index
      Rate.

    
      
        
        

      

      
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    “Initial
      License Expense”
shall
      mean any franchise or other fee or other expense paid in cash by Finlay or
      a
      Foreign Subsidiary as consideration for the initial granting of a license under
      a License Agreement. 

     

    “Instruments”
means
      all “instruments,” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party, wherever located, and, in any event, including
      all
      certificated securities, all certificates of deposit, and all promissory notes
      and other evidences of indebtedness, other than instruments that constitute,
      or
      are a part of a group of writings that constitute, Chattel Paper.

     

    “Intellectual
      Property”
means
      any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill
      associated with such Trademarks.

     

    “Intercompany
      Notes”
has
      the
      meaning ascribed to it in Section
      6.3.

     

    “Interest
      Payment Date”
means
      (a) as to any Index Rate Loan, the first Business Day of each month to occur
      while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day
      of
      the applicable LIBOR Period; provided,
      that in
      the case of any LIBOR Period greater than three months in duration, interest
      shall be payable at three-month intervals and on the last day of such LIBOR
      Period; and provided further
      that, in
      addition to the foregoing, each of (x) the date upon which all of the
      Commitments have been terminated and the Loans have been paid in full and (y)
      the Commitment Termination Date shall be deemed to be an “Interest Payment Date”
with respect to any interest that has then accrued under the
      Agreement.

     

    “Inventory”
means
      all “inventory,” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party, wherever located, and in any event including
      inventory, merchandise, goods and other personal property that are held by
      or on
      behalf of any Credit Party for sale or lease or are furnished or are to be
      furnished under a contract of service, or that constitute raw materials, work
      in
      process, finished goods, returned goods, or materials or supplies of any kind,
      nature or description used or consumed or to be used or consumed in such Credit
      Party’s business or in the processing, production, packaging, promotion,
      delivery or shipping of the same, including all supplies and embedded software.
      Without limiting the foregoing, “Inventory”
shall
      include such inventory as is on consignment to third party consignees, leased
      to
      customers of the Borrowers, or otherwise temporarily out of the custody or
      possession of the Borrowers, excluding any Consignment Inventory.

     

    “Inventory
      Advance Rate”
means
      82.5%, except that it shall have the meaning set forth in the table below during
      the periods listed:

    

      
        	
                Period
                  Covered: 

              	 	
                Inventory

                Advance
                  Rate:

              	 
	
                Closing
                  Date through December 15, 2007

              	 	 	
                87.5

              	
                %

              
	
                December
                  16, 2007 through April 30, 2008

              	 	 	
                85.0

              	
                %

              
	
                May
                  1, 2008 through December 15, 2008

              	 	 	
                90.0

              	
                %

              
	
                May
                  1, 2009 through December 15, 2009

              	 	 	
                87.5

              	
                %

              
	
                May
                  1, 2010 through December 15, 2010

              	 	 	
                85.0

              	
                %

              

      

    

    
      
        
        

      

      
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    ;
      provided, that if any License Agreement is not renewed, or notice is received
      by
      Agent or a Credit Party that a License Agreement will not be renewed, the then
      prevailing Inventory Advance Rate with respect to that portion of the Eligible
      Inventory located at the locations affected by such non-renewal shall be reduced
      by ten (10) percentage points.

     

    
      “Investment”
has
        the
        meaning ascribed to it in Section 6.2 hereof.

    

     

    “Investment
      Property”
means
      all “investment property” as such term is defined in the Code now owned or
      hereafter acquired by any Credit Party, wherever located, including (i) all
      securities, whether certificated or uncertificated, including stocks, bonds,
      interests in limited liability companies, partnership interests, treasuries,
      certificates of deposit, and mutual fund shares; (ii) all securities
      entitlements of any Credit Party, including the rights of any Credit Party
      to
      any securities account and the financial assets held by a securities
      intermediary in such securities account and any free credit balance or other
      money owing by any securities intermediary with respect to that account; (iii)
      all securities accounts of any Credit Party; (iv) all commodity contracts of
      any
      Credit Party; and (v) all commodity accounts held by any Credit
      Party.

     

    “IRC”
means
      the Internal Revenue Code of 1986 and all regulations promulgated
      thereunder.

     

    “IRS”
means
      the Internal Revenue Service.

     

    “L/C
      Issuer”
means
      issuers of Letters of Credit to Borrowers as contemplated by the
      Agreement.

     

    “L/C
      Sublimit”
has
      the
      meaning ascribed to it in Annex
      B.

     

    “Lenders”
means
      (a) GE Capital, the other Lenders named on the signature pages of the Agreement,
      and, if any such Lender shall decide to assign all or any portion of the
      Obligations in accordance with the terms of the Agreement, such term shall
      include any assignee of such Lender, and (b) solely
      for the purpose of obtaining the benefit of the Liens granted to the Agent
      for
      the benefit of the Lenders under the Collateral Documents, a Person to whom
      any
      Obligations in respect of a Secured Rate Contract are owed. For the avoidance
      of
      doubt, any Person to whom any Obligations in respect of a Secured Rate Contract
      are owed and which does not hold any Loans or Commitments shall not be entitled
      to any other rights as a “Lender” under this Agreement or any other Loan
      Document.

     

    “Letter
      of Credit Fee”
has
      the
      meaning ascribed to it in Annex
      B.

     

    “Letter
      of Credit Obligations”
means
      all outstanding obligations incurred by Agent, Lenders at the request of
      Borrower Representative, whether direct or indirect, contingent or otherwise,
      due or not due, in connection with the issuance of Letters of Credit by the
      L/C
      Issuer or the purchase of a participation as set forth in Annex B
      with
      respect to any Letter of Credit. The amount of such Letter of Credit Obligations
      shall equal the maximum amount that may be payable at such time or at any time
      thereafter by Agent or Lenders thereupon or pursuant thereto.

    
      
        
        

      

      
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    “Letters
      of Credit”
means
      documentary or standby letters of credit issued for the account of any Borrower
      by any L/C Issuer, and bankers’ acceptances issued by any Borrower, for which
      Agent and Lenders have incurred Letter of Credit Obligations.

     

    “Letter-of-Credit
      Rights”
means
      “letter-of-credit rights” as such term is defined in the Code, now owned or
      hereafter acquired by any Credit Party, including rights to payment or
      performance under a letter of credit, whether or not such Credit Party, as
      beneficiary, has demanded or is entitled to demand payment or
      performance.

     

    “LIBOR
      Business Day”
means
      a
      Business Day on which banks in the City of London are generally open for
      interbank or foreign exchange transactions.

     

    “LIBOR
      Loan”
means
      a
      Loan or any portion thereof bearing interest by reference to the LIBOR
      Rate.

     

    “LIBOR
      Period”
means,
      with respect to any LIBOR Loan, each period commencing on a LIBOR Business
      Day
      selected by Borrower Representative pursuant to the Agreement and ending one,
      two, three or six months thereafter, as selected by Borrower Representative’s
      irrevocable notice to Agent as set forth in Section
      1.5(e);
      provided,
      that the
      foregoing provision relating to LIBOR Periods is subject to the
      following:

     

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

     

    (b)any
      LIBOR
      Period that would otherwise extend beyond the Commitment Termination Date shall
      end two (2) LIBOR Business Days prior to such date;

     

    (c)
      any
      LIBOR
      Period that begins on the last LIBOR 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 LIBOR Period) shall end on the last LIBOR Business Day of a
      calendar month;

     

    (d)Borrower
      Representative shall select LIBOR Periods so as not to require a payment or
      prepayment of any LIBOR Loan during a LIBOR Period for such Loan;
      and

     

    (e)Borrower
      Representative shall select LIBOR Periods so that there shall be no more than
      seven (7) separate LIBOR Loans in existence at any one time.

     

    “LIBOR
      Rate”
means
      for each LIBOR Period, a rate of interest determined by Agent equal
      to:

     

    (a) the
      offered rate for deposits in United States Dollars for the applicable
 LIBOR
      Period that appears on Reuters Screen LIBOR01 Page as of 11:00 a.m. (London
 time),
      on
      the second full LIBOR Business Day next preceding the first day of such
 LIBOR
      Period (unless such date is not a Business Day, in which event the next
 succeeding
      Business Day will be used); divided by

    
      
        
        

      

      
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    (b) a
      number
      equal to 1.0 minus
      the
      aggregate (but without duplication) of the rates (expressed as a decimal
      fraction) of reserve requirements in effect on the day that is two (2) LIBOR
      Business Days prior to the beginning of such LIBOR Period (including basic,
      supplemental, marginal and emergency reserves under any regulations of the
      Federal Reserve Board or other Governmental Authority having jurisdiction with
      respect thereto, as now and from time to time in effect) for Eurocurrency
      funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
      the Federal Reserve Board that are required to be maintained by a member bank
      of
      the Federal Reserve System.

     

    If
      such
      interest rates shall cease to be available from Telerate News Service (or its
      successor satisfactory to Agent), the LIBOR Rate shall be determined from such
      financial reporting service or other information as shall be mutually acceptable
      to Agent and Borrower Representative.

     

    “License”
means
      any Copyright License, Patent License, Trademark License or other license of
      rights or interests now held or hereafter acquired by any Credit
      Party.

     

    “License
      Agreement”
shall
      mean an agreement (or an arrangement not in writing which has been described
      by
      Borrowers in writing to Agent and approved by Agent in writing) between a
      Borrower or eFinlay and another Person (which is not an Affiliate of the
      Borrowers), whether entered into prior to or after the Closing Date, granting
      to
      such Borrower the right to operate a fine jewelry department in an establishment
      owned or operated by such Person or, in the case of eFinlay, granting eFinlay
      the right to sell fine jewelry through a website owned or operated by such
      Person, in each case in the form as in effect on the Closing Date or as amended,
      modified, extended or supplemented in accordance with the terms thereof and
      hereof. If a License Agreement which is an approved arrangement as of the
      Closing Date is memorialized in a writing signed by the licensor after the
      Closing Date, it shall be deemed entered into and effective as of the Closing
      Date. The failure of Borrowers to obtain the written approval of the Agent
      for
      an Unapproved License Agreement, shall result in such arrangement not
      constituting a License Agreement hereunder (including, without limitation,
      for
      the purpose of the definition of Eligible Accounts) but shall not be an Event
      of
      Default hereunder.

     

    The
      Agent
      reserves the right, in its reasonable judgment, to withdraw at any time its
      approval with respect to any License Agreement which is not evidenced by a
      written agreement and immediately upon such withdrawal of its approval of such
      arrangement, such arrangement shall cease to constitute a License Agreement
      for
      purposes of the Agreement.

     

    “Lien”
means
      any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
      arrangement, lien, charge, claim, security interest, easement or encumbrance,
      or
      preference, priority or other security agreement or preferential arrangement
      of
      any kind or nature whatsoever (including any lease or title retention agreement,
      any financing lease having substantially the same economic effect as any of
      the
      foregoing, and the filing of, or agreement to give, any financing statement
      perfecting a security interest under the Code or comparable law of any
      jurisdiction).

    
      
        
        

      

      
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    “Litigation”
has
      the
      meaning ascribed to it in Section
      3.13.

     

    “Loan
      Account”
has
      the
      meaning ascribed to it in Section
      1.12.

     

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

     

    “Loans”
means
      the Tranche A Revolving Loan, the Tranche B Revolving Loan and the Swing Line
      Loan.

     

    “Long
      Term Incentive Plan”
means
      the Long Term Incentive Plan of the Parent, as amended, modified, supplemented,
      restated, renewed or replaced from time to time in accordance with its terms
      and
      the terms hereof, which shall include the 1997 Long Term Incentive Plan of
      the
      Parent.

     

    “Lock
      Boxes”
has
      the
      meaning ascribed to it in Annex
      C.

     

    “Margin
      Stock”
has
      the
      meaning ascribed to in Section
      3.10.

     

    “Master
      Documentary Agreement”
means
      the Master Agreement for Documentary Letters of Credit dated as of the Closing
      Date among Borrowers, as Applicant(s), and GE Capital.

     

    “Master
      Standby Agreement”
means
      the Master Agreement for Standby Letters of Credit dated as of the Closing
      Date
      among Borrowers, as Applicant(s), and GE Capital as issuer.

     

    “Material
      Adverse Effect”
means
      a
      material adverse effect on (a) the business, assets, operations or financial
      or
      other condition of the Credit Parties considered as a whole, (b) the Parent’s,
      the Borrowers’ and their Subsidiaries’ collective ability to pay any of the
      Loans or any of the other Obligations in accordance with the terms of the
      Agreement, (c) the Agent’s Liens, on behalf of itself and Lenders, on the
      Collateral or the priority of such Liens or (d) Agent’s or any Lender’s rights
      and remedies under the Agreement and the other Loan Documents.

     

    “Mortgaged
      Properties”
has
      the
      meaning assigned to it in Annex
      D.

    
      
        
        

      

      
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    “Mortgages”
means
      each of the mortgages, deeds of trust, leasehold mortgages, leasehold deeds
      of
      trust, collateral assignments of leases or other real estate security documents
      delivered by any Credit Party to Agent on behalf of itself and Lenders with
      respect to the Mortgaged Properties, all in form and substance reasonably
      satisfactory to Agent.

     

    “Multiemployer
      Plan”
means
      a
“multiemployer plan” as defined in Sections 3(37) or 4001(a)(3) of ERISA, and to
      which any Credit Party or ERISA Affiliate is making, is obligated to make or
      has
      made or been obligated to make, contributions on behalf of participants who
      are
      or were employed by any of them.

     

    “Net
      Amount of Finlay Receivables”
means
      the excess of (A) amounts payable to a Finlay Credit Party, whether or not
      due
      under the License Agreements (and attributable to an underlying sale of
      inventory to a customer of the host store), including, without limitation,
      at
      any time during any calendar month (or other relevant calculation period under
      a
      License Agreement), amounts which, based on gross sales in accordance with
      the
      terms of the License Agreements, the Finlay Credit Parties have calculated
      will
      become due and payable to the Finlay Credit Parties under the License Agreements
      as of the end of such calendar month (or other relevant calculation period
      under
      a License Agreement), in each case, over (B) (a) all amounts payable by a Finlay
      Credit Party (by set-off or otherwise), whether or not due under the License
      Agreements, including, without limitation, at any time during any calendar
      month
      (or other relevant calculation period under a License Agreement), all amounts
      which, based on the terms of such License Agreement or otherwise, the Finlay
      Credit Parties have calculated will become due and payable (by set-off or
      otherwise) by the Finlay Credit Parties (including, without limitation, by
      means
      of offset or deduction from amounts payable to the Finlay Credit Parties under
      the License Agreements) as of the end of such calendar month (or other relevant
      calculation period under a License Agreement), such amounts payable by the
      Finlay Credit Parties to include, without limitation, the percentage of sales,
      net sales or other amount which is withheld from the Finlay Credit Parties
      by
      the other party thereto as a license fee, rental fee or otherwise, all amounts
      denominated as “Other Costs” or any similar term under any License Agreement,
      including, without limitation, discounts payable in respect of credit card
      sales, interest, carrying or service charges collected by the other party to
      any
      License Agreements, and charges payable by or charged to the Finlay Credit
      Parties in respect of advertising or promotion, (b) the amount of all sales
      in
      respect of which goods have been returned and (c) all other amounts or
      adjustments which, based on the License Agreements or otherwise, was or as
      of
      the end of any calendar month (or other relevant calculation period) will be
      deducted from amounts payable to the Finlay Credit Parties or will be payable
      by
      the Finlay Credit Parties under the License Agreements.

     

    “Net
      Liquidation Percentage”
means
      the applicable percentage of the book value of Eligible Inventory for the Finlay
      Credit Parties and the Specialty Stores Credit Parties that is estimated to
      be
      recoverable in an orderly liquidation of such inventory net of all associated
      costs and expenses of such liquidation, as determined from time to time by
      a
      qualified appraisal company selected by Agent; provided, that, Agent may, in
      its
      reasonable discretion, average the monthly Net Liquidation Percentage to take
      account of monthly fluctuations in the Net Liquidation Percentage within
      seasonal periods.

    
      
        
        

      

      
        Annex
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    “Non-Funding
      Lender”
has
      the
      meaning ascribed to it in Section
      9.9(a)(ii).

     

    “Notes”
means,
      collectively, the Tranche A Revolving Notes, the Tranche B Revolving Notes
      and
      the Swing Line Notes.

     

    “Notice
      of Conversion/Continuation”
has
      the
      meaning ascribed to it in Section 1.5(e).

     

    “Notice
      of Tranche A Revolving Credit Advance”
has
      the
      meaning ascribed to it in Section 1.1(a).

     

    “Notice
      of Tranche B Revolving Credit Advance”
has
      the
      meaning ascribed to it in Section 1.1(a). 

     

    “Obligations”
means
      all loans, advances, debts, liabilities and obligations for the performance
      of
      covenants, tasks or duties or for payment of monetary amounts (whether or not
      such performance is then required or contingent, or such amounts are liquidated
      or determinable) owing by any Credit Party to Agent, any Lender or any Secured
      Swap Provider, and all covenants and duties regarding such amounts, of any
      kind
      or nature, present or future, whether or not evidenced by any note, agreement,
      letter of credit agreement or other instrument, arising under the Agreement,
      any
      of the other Loan Documents or any Secured Rate Contract. This term includes
      all
      principal, interest (including all interest that accrues after the commencement
      of any case or proceeding by or against any Credit Party in bankruptcy, whether
      or not allowed in such case or proceeding), Fees, hedging obligations under
      swaps, caps and collar arrangements provided by any Lender in accordance with
      the terms of the Agreement, expenses,
      reasonable attorneys’ fees and any other sum chargeable to any Credit Party
      under the Agreement, any of the other Loan Documents or any Secured Rate
      Contract.

     

    “Other
      Taxes”
shall
      mean any present or future stamp or documentary taxes or any other excise or
      property taxes, charges or similar levies by any state, county, city or other
      political subdivision within the United States or by any applicable foreign
      jurisdiction, and all liabilities with respect thereto, which arise in respect
      of this Agreement, any Note, or any other Loan Document.

     

    “Parent”
has
      the
      meaning ascribed thereto in the recitals to the Agreement.

     

    “Parent
      Guaranty”
means
      the guaranty of even date herewith executed by Parent in favor of Agent and
      Lenders.

     

    “Park
      Promenade”
means
      Park Promenade LLC, a Florida limited liability company.

     

    “Patent
      License”
means
      rights under any written agreement now owned or hereafter acquired by any Credit
      Party granting any right with respect to any invention on which a Patent is
      in
      existence.

     

    “Patent
      Security Agreements”
means
      the Patent Security Agreements made in favor of Agent, on behalf of itself
      and
      Lenders, by each applicable Credit Party.

    
      
        
        

      

      
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    “Patents”
means
      all of the following in which any Credit Party now holds or hereafter acquires
      any interest: (a) all letters patent of the United States or of any other
      country, all registrations and recordings thereof, and all applications for
      letters patent of the United States or of any other country, including
      registrations, recordings and applications in the United States Patent and
      Trademark Office or in any similar office or agency of the United States, any
      State, or any other country, and (b) all reissues, continuations,
      continuations-in-part or extensions thereof.

     

    “Patriot
      Act”
has
      the
      meaning ascribed to it in Section
      11.18.

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation or any successor thereof under
      ERISA.

     

    “Pension
      Plan”
means
      a
      Plan described in Section 3(2) of ERISA.

    

      “Permitted
        Acquisition”
has
        the
        meaning ascribed to it in Section 6.1.

    

     

    “Permitted
      Encumbrances”
means
      the following encumbrances: (a) Liens for taxes or assessments or other
      governmental Charges not yet due and payable or which are being contested in
      accordance with Section
      5.2(b);
      (b)
      pledges or deposits of money securing statutory obligations under workmen’s
      compensation, unemployment insurance, social security or public liability laws
      or similar legislation (excluding Liens under ERISA); (c) pledges or deposits
      of
      money securing bids, tenders, contracts (other than contracts for the payment
      of
      money) or leases to which any Credit Party is a party as lessee made in the
      ordinary course of business; (d) inchoate and unperfected workers’, mechanics’
or similar liens arising in the ordinary course of business, so long as such
      Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers’,
      warehousemen’s, suppliers’ or other similar possessory liens arising in the
      ordinary course of business and securing liabilities in an outstanding aggregate
      amount not in excess of $ $500,000 at any time; (f) deposits securing, or in
      lieu of, surety, appeal or customs bonds in proceedings to which any Credit
      Party is a party; (g) any attachment or judgment lien not constituting an Event
      of Default under Section
      8.1(j);
      (h)
      zoning restrictions, easements, licenses, or other restrictions on the use
      of
      any Real Estate or other minor irregularities in title (including leasehold
      title) thereto, so long as the same do not materially impair the use, value,
      or
      marketability of such Real Estate; (i) presently existing or hereafter created
      Liens in favor of Agent, on behalf of Lenders; (j) Liens expressly permitted
      under clauses
      (b)
      and
(c)
      of
Section
      6.7
      of the
      Agreement; (k) Liens in favor of any Credit Party or any Subsidiary thereof,
      provided that if such Liens are on any Collateral that such Liens are
      collaterally assigned to Agent, on behalf of Lenders; (l) Liens solely on any
      cash earnest money deposits made by any Credit Party or any of their
      Subsidiaries in connection with any letter of intent or purchase agreement
      permitted hereunder in connection with a Permitted Acquisition; (m) purported
      Liens evidenced by the filing of precautionary UCC financing statements relating
      solely to operating leases of personal property entered into in the ordinary
      course of business; (n) Liens in favor of customs and revenue authorities
      arising as a matter of law to secure payment of customs duties in connection
      with the importation of goods; (o) licenses of patents, copyrights, trademarks
      and other intellectual property rights granted by any Credit Party or any of
      its
      Subsidiaries in the ordinary course of business and not interfering in any
      material respect with the ordinary course of business of any Credit Party or
      such Subsidiary; and (p) liens arising under statutes or other legal provisions
      related to unclaimed property or escheats.

    
      
        
        

      

      
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    “Person”
means
      any individual, sole proprietorship, partnership, joint venture, trust,
      unincorporated organization, association, corporation, limited liability
      company, institution, public benefit corporation, other entity or government
      (whether federal, state, county, city, municipal, local, foreign, or otherwise,
      including any instrumentality, division, agency, body or department
      thereof).

     

    “Plan”
means,
      at any time, an “employee benefit plan”, as defined in Section 3(3) of ERISA,
      that any Credit Party or ERISA Affiliate maintains, contributes to or has an
      obligation to contribute to or has maintained, contributed to or had an
      obligation to contribute to at any time within the past 7 years on behalf of
      participants who are or were employed by any Credit Party or ERISA
      Affiliate.

     

    “Pledge
      Agreement”
means,
      the Pledge Agreement of even date herewith executed by each of the Credit
      Parties in favor of Agent, on behalf of itself and Lenders, pledging all Stock
      of their respective Subsidiaries and all Intercompany Notes owing to or held
      by
      any of them and any pledge agreements entered into after the Closing Date by
      any
      Credit Party (as required by the Agreement or any other Loan
      Document).

     

    “Proceeds”
means
      “proceeds,” as such term is defined in the Code, including (a) any and all
      proceeds of any insurance, indemnity, warranty or guaranty payable to any Credit
      Party from time to time with respect to any of the Collateral, (b) any and
      all
      payments (in any form whatsoever) made or due and payable to any Credit Party
      from time to time in connection with any requisition, confiscation,
      condemnation, seizure or forfeiture of all or any part of the Collateral by
      any
      Governmental Authority (or any Person acting under color of governmental
      authority), (c) any claim of any Credit Party against third parties (i) for
      past, present or future infringement of any Patent or Patent License, or (ii)
      for past, present or future infringement or dilution of any Copyright, Copyright
      License, Trademark or Trademark License, or for injury to the goodwill
      associated with any Trademark or Trademark License, (d) any recoveries by any
      Credit Party against third parties with respect to any litigation or dispute
      concerning any of the Collateral including claims arising out of the loss or
      nonconformity of, interference with the use of, defects in, or infringement
      of
      rights in, or damage to, Collateral, (e) all amounts collected on, or
      distributed on account of, other Collateral, including dividends, interest,
      distributions and Instruments with respect to Investment Property and pledged
      Stock, and (f) any and all other amounts, rights to payment or other property
      acquired upon the sale, lease, license, exchange or other disposition of
      Collateral and all rights arising out of Collateral.

     

    “Projections”
means
      Borrowers’ forecasted consolidated and consolidating: (a) balance sheets; (b)
      profit and loss statements; (c) cash flow statements; and (d) capitalization
      statements, all prepared on a Subsidiary by Subsidiary or division-by-division
      basis, if applicable, and otherwise consistent with the historical Financial
      Statements of the Borrowers, together with appropriate supporting details and
      a
      statement of underlying assumptions.

    
      
        
        

      

      
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    “Pro
      Rata Share”
means
      with respect to all matters relating to any Lender, (a) with respect to the
      Tranche A Revolving Loan, the percentage obtained by dividing (i) the Tranche
      A
      Revolving Loan Commitment of that Lender by (ii) the aggregate Tranche A
      Revolving Loan Commitments of all Lenders, (b) with respect to the Tranche
      B
      Revolving Loan, the percentage obtained by dividing (i) the Tranche B Revolving
      Commitment of that Lender by (ii) the aggregate Tranche B Revolving Commitments
      of all Lenders, (c) with respect to all Loans, the percentage obtained by
      dividing (i) the aggregate Commitments of that Lender by (ii) the aggregate
      Commitments of all Lenders, and (d) with respect to all Loans on and after
      the
      Commitment Termination Date, the percentage obtained by dividing (i) the
      aggregate outstanding principal balance of the Loans held by that Lender, by
      (ii) the outstanding principal balance of the Loans held by all
      Lenders.

     

    “Purchased
      Accounts”
shall
      mean all accounts receivable of the Carlyle Credit Parties that are purchased
      by
      the Receivables Purchaser pursuant to the Receivables Purchase
      Agreement.

     

    “Qualified
      Plan”
means
      a
      Pension Plan that is intended to be tax-qualified under Section 401(a) of the
      IRC.

     

    “Qualified
      Assignee”
means
      (a) any Lender, any Affiliate of any Lender and, with respect to any Lender
      that
      is an investment fund that invests in commercial loans, any other investment
      fund that invests in commercial loans and that is managed or advised by the
      same
      investment advisor as such Lender or by an Affiliate of such investment advisor,
      and (b) any commercial bank, savings and loan association or savings bank or
      any
      other entity which is an “accredited investor” (as defined in Regulation D under
      the Securities Act of 1933) which extends credit or buys loans as one of its
      businesses, including insurance companies, mutual funds, lease financing
      companies and commercial finance companies, in each case, which has a rating
      of
      BBB or higher from S&P and a rating of Baa2 or higher from Moody’s at the
      date that it becomes a Lender and which, through its applicable lending office,
      is capable of lending to Borrowers without the imposition of any withholding
      or
      similar taxes; provided
      that no
      Person proposed to become a Lender after the Closing Date and determined by
      Agent to be acting in the capacity of a vulture fund or distressed debt
      purchaser shall be a Qualified Assignee, and no Person or Affiliate of such
      Person proposed to become a Lender after the Closing Date and that holds Stock
      issued by any Credit Party shall be a Qualified Assignee.

     

    “Rate
      Contracts”
means
      swap agreements (as such term is defined in Section 101 of the Bankruptcy Code)
      and any other agreements or arrangements designed to provide protection against
      fluctuations in interest or currency exchange rates.

     

    “Real
      Estate”
has
      the
      meaning ascribed to it in Section
      3.6.

     

    “Receivables
      Intercreditor Agreement”
means
      (i) that certain Intercreditor Agreement and Assignment of Proceeds dated as
      of
      May 19, 2005 by and among the Agent, the Receivables Purchaser and Carlyle,
      as
      from time to time amended, supplemented or replaced or (ii) any replacement
      Intercreditor Agreement by and among Agent, Carlyle and any replacement
      Receivables Purchaser as provided for in clause (ii) of the definition of
“Receivables Purchaser” below.

    
      
        
        

      

      
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    “Receivables
      Purchaser”
means
      (i) Shoppers Charge Accounts Co., a division of TD Banknorth, N.A., as a
      purchaser of the accounts receivable pursuant to the Receivables Purchase
      Agreements or (ii) any replacement receivables purchaser provided such
      replacement receivables purchaser has entered into an intercreditor agreement
      with the Agent in form and substance substantially identical to the Receivables
      Intercreditor Agreement in effect on the Closing Date.

     

    “Receivables
      Purchase Agreements”
means
      (i) that certain Credit Card Program and Security Agreement dated September
      28,
      1998 between Carlyle and the Receivables Purchaser, that certain Operating
      Agreement, undated, between Carlyle and the Receivables Purchaser, and all
      related documents and agreements executed or delivered in connection with the
      Receivables Purchase Program, as amended, supplemented or restated from time
      to
      time with the written consent of Agent or (ii) any other receivables purchase
      agreement between any Specialty Stores Credit Party and a receivables purchaser
      that qualifies as a “Receivables Purchaser” under clause (ii) of the definition
      of “Receivables Purchaser” above in form and substance similar and not less
      advantageous to such Specialty Stores Credit Party and its Subsidiaries than
      any
      Receivables Purchase Agreement in effect on the Closing Date and all related
      documents and agreements executed and delivered in connection
      therewith.

     

    “Receivables
      Purchase Program”
means
      the credit card account purchase program of any Specialty Stores Credit Party
      and a Receivables Purchaser established pursuant to a Receivables Purchase
      Agreement. 

     

    “Refunded
      Swing Line Loan”
has
      the
      meaning ascribed to it in Section 1.1(b)(iii).

     

    “Registration
      Rights Agreement”
means
      the registration rights agreement, dated as of May 26, 1993, among the Parent,
      certain existing holders of the common Stock of the Parent and the Lee Group,
      as
      such may be amended, modified, supplemented, restated, renewed or replaced
      from
      time to time in accordance with its terms and the terms hereof.

     

    “Related
      Transactions”
means
      the initial borrowings under the Tranche A Revolving Loan and Tranche B
      Revolving Loan on the Closing Date, the Acquisition, the payment of all fees,
      costs and expenses associated with all of the foregoing and the execution and
      delivery of all of the Related Transactions Documents.

     

    “Related
      Transactions Documents”
means
      the Loan Documents, the Acquisition Agreement, and all other agreements or
      instruments executed in connection with the Related Transactions.

     

    “Release”
means
      any release, threatened release, spill, emission, leaking, pumping, pouring,
      emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal,
      dumping, leaching or migration of Hazardous Material in the indoor or outdoor
      environment, including the movement of Hazardous Material through or in the
      air,
      soil, surface water, ground water or property.

    
      
        
        

      

      
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    “Requisite
      Lenders”
means
      Lenders having (a) more than 50% of the Commitments of all Lenders, or (b)
      if
      the Commitments have been terminated, more than 50% of the aggregate outstanding
      amount of all Loans, and in any event, shall include at least two (2)
      non-affiliated Lenders. 

     

    “Reserves”
means
      (a) reserves established by Agent from time to time against Eligible Inventory
      pursuant to Section 5.9,
      (b)
      reserves established pursuant to Section
      5.4(c),
      and (c)
      such other reserves against Eligible Accounts, Eligible Inventory, Tranche
      A
      Borrowing Base, Tranche B Borrowing Base or Borrowing Availability that Agent
      may, in its reasonable credit judgment, establish from time to time upon prior
      notice to Borrowers. Without limiting the generality of the foregoing, Reserves
      established to ensure the payment of accrued interest expenses or Indebtedness
      shall be deemed to be a reasonable exercise of Agent’s credit
      judgment.

     

    
      “Restated
        Notes”
has
        the
        meaning ascribed to such term in Section 11.19.

    

     

    “Restricted
      Payment”
means,
      with respect to any Credit Party (a) the declaration or payment of any dividend
      or the incurrence of any liability to make any other payment or distribution
      of
      cash or other property or assets in respect of Stock; (b) any payment on account
      of the purchase, redemption, defeasance, sinking fund or other retirement of
      such Credit Party’s Stock or any other payment or distribution made in respect
      thereof, either directly or indirectly; (c) any payment made to redeem,
      purchase, repurchase or retire, or to obtain the surrender of, any outstanding
      warrants, options or other rights to acquire Stock of such Credit Party now
      or
      hereafter outstanding; (d) any payment of a claim for the rescission of the
      purchase or sale of, or for material damages arising from the purchase or sale
      of, any shares of such Credit Party’s Stock or of a claim for reimbursement,
      indemnification or contribution arising out of or related to any such claim
      for
      damages or rescission; (e) any payment, loan, contribution, or other transfer
      of
      funds or other property to any Stockholder of such Credit Party other than
      payment of compensation in the ordinary course of business to Stockholders
      who
      are employees of such Person or provide services to such Person; and (f) any
      payment of management fees (or other fees of a similar nature) by such Credit
      Party to any Stockholder of such Credit Party or its Affiliates.

     

    “Retiree
      Welfare Plan”
means,
      at any time, a welfare plan (within the meaning of Section 3(1) of ERISA) that
      provides for continuing coverage or benefits for any participant or any
      beneficiary of a participant after such participant’s termination of employment,
      other than continuation coverage provided pursuant to Section 4980B of the
      IRC
      or other similar state law and at the sole expense of the participant or the
      beneficiary of the participant.

     

    “Rolex
      Intercreditor Agreement”
means
      that certain Intercreditor Agreement dated as of May 19, 2005 by and between
      Rolex Watch U.S.A. and the Agent. 

     

    “Rolex
      Security Agreement”
shall
      mean that certain Security Agreement dated as of May 19, 2005 by and between
      Rolex Watch U.S.A. and Carlyle

    
      
        
        

      

      
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    “Security
      Agreement”
means
      the Security Agreement of even date herewith entered into by and among Agent,
      on
      behalf of itself and Lenders, and each Credit Party that is a signatory
      thereto.

     

    “Secured
      Rate Contract”
means
      any Rate Contract between Borrower and the counterparty thereto which has been
      provided or arranged by GE Capital or an Affiliate of GE Capital.

     

    “Secured
      Swap Provider”
means
      a
      Person with whom Borrower has entered into a Secured Rate Contract provided
      or
      arranged by GE Capital or an Affiliate of GE Capital, and any assignee
      thereof.

     

    “Sellers”
has
      the
      meaning ascribed to it in the definition of Acquisition Agreement
      herein.

     

    “Senior
      Note Indenture”
means
      the Indenture dated as of June 3, 2004 between Finlay and HSBC Bank USA, as
      trustee under which the Senior Notes were issued.

     

    “Senior
      Notes”
means
      Finlay’s 8.375% Senior Notes due 2012 in the original principal amount of
      $200,000,000 and any notes that may be subsequently issued in exchange therefore
      that are substantially identical in all material respects (other than with
      respect to any transfer restrictions).

     

    “Services
      Agreement”
means
      the Services Agreement dated as of October 28, 1998 between Finlay Merchandising
      and Finlay, as such may be amended,
      modified or supplemented from time to time in accordance with its terms and
      the
      terms hereof.

     

    “Shareholders
      Agreement”
means
      the stockholders’ agreement dated as of March 6, 1995 among the Parent and
      certain existing holders of the common stock of the Parent, as such may be
      amended, modified or supplemented from time to time in accordance with its
      terms
      and the terms hereof. 

     

    “Software”
means
      all “software” as such term is defined in the Code, now owned or hereafter
      acquired by any Credit Party, other than software embedded in any category
      of
      Goods, including all computer programs and all supporting information provided
      in connection with a transaction related to any program.

     

    “Solvent”
means,
      with respect to any Person on a particular date, that on such date (a) the
      fair
      value of the property of such Person is greater than the total amount of
      liabilities, including contingent liabilities, of such Person; (b) the present
      fair salable value of the assets of such Person is not less than the amount
      that
      will be required to pay the probable liability of such Person on its debts
      as
      they become absolute and matured; (c) such Person does not intend to, and does
      not believe that it will, incur debts or liabilities beyond such Person’s
      ability to pay as such debts and liabilities mature; and (d) such Person is
      not
      engaged in a business or transaction, and is not about to engage in a business
      or transaction, for which such Person’s property would constitute an
      unreasonably small capital. The amount of contingent liabilities (such as
      litigation, guaranties and pension plan liabilities) at any time shall be
      computed as the amount that, in light of all the facts and circumstances
      existing at the time, represents the amount that can be reasonably be expected
      to become an actual or matured liability.

    
      
        
        

      

      
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    “Sonab
      Entities”
means,
      collectively, Sonab Holdings and Sonab International.

     

    “Sonab
      Holdings”
means
      Sonab Holdings, Inc., a Delaware corporation.

     

    “Sonab
      International”
means
      Sonab International, Inc., a Delaware corporation.

     

    “Specialty
      Stores Credit Party”
shall
      mean each of the Carlyle Credit Parties, Congress, the division of Finlay known
      as the Bailey Banks & Biddle brand and any other Credit Party (other than
      the Finlay Credit Parties and the Parent). 

     

    “Stock”
means
      all shares, options, warrants, general or limited partnership interests,
      membership interests or other equivalents (regardless of how designated) of
      or
      in a corporation, partnership, limited liability company or equivalent entity
      whether voting or nonvoting, including common stock, preferred stock or any
      other “equity security” (as such term is defined in Rule 3a11-1 of the General
      Rules and Regulations promulgated by the Securities and Exchange Commission
      under the Securities Exchange Act of 1934).

     

    “Stockholder”
means,
      with respect to any Person, each holder of Stock of such Person.

     

    “Subsidiary”
means,
      with respect to any Person, (a) any corporation of which an aggregate of more
      than 50% of the outstanding Stock having ordinary voting power to elect a
      majority of the board of directors of such corporation (irrespective of whether,
      at the time, Stock of any other class or classes of such corporation shall
      have
      or might have voting power by reason of the happening of any contingency) is
      at
      the time, directly or indirectly, owned legally or beneficially by such Person
      or one or more Subsidiaries of such Person, or with respect to which any such
      Person has the right to vote or designate the vote of 50% or more of such Stock
      whether by proxy, agreement, operation of law or otherwise, and (b) any
      partnership or limited liability company in which such Person and/or one or
      more
      Subsidiaries of such Person shall have an interest (whether in the form of
      voting or participation in profits or capital contribution) of more than 50%
      or
      of which any such Person is a general partner or may exercise the powers of
      a
      general partner. Unless the context otherwise requires, each reference to a
      Subsidiary shall be a reference to a Subsidiary of a Borrower.

     

    “Subsidiary
      Guaranty”
means
      the Subsidiary Guaranty of even date herewith executed by each Subsidiary of
      each Borrower in favor of Agent, on behalf of itself and Lenders.

     

    “Supporting
      Obligations”
means
      all “supporting obligations” as such term is defined in the Code, including
      letters of credit and guaranties issued in support of Accounts, Chattel Paper,
      Documents, General Intangibles, Instruments, or Investment
      Property.

     

    “Swing
      Line Advance”
has
      the
      meaning ascribed to it in Section
      1.1(b)(i).

     

    “Swing
      Line Availability”
has
      the
      meaning ascribed to it in Section
      1.1(b)(i).

    
      
        
        

      

      
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    “Swing
      Line Commitment”
means,
      as to the Swing Line Lender, the commitment of the Swing Line Lender to make
      Swing Line Advances as set forth on Annex J
      to the
      Agreement, which commitment constitutes a subfacility of the Tranche A Revolving
      Loan Commitment of the Swing Line Lender.

     

    “Swing
      Line Lender”
means
      GE Capital.

     

    “Swing
      Line Loan”
means,
      as the context may require, at any time, the aggregate amount of Swing Line
      Advances outstanding to any Borrower or to all Borrowers.

     

    “Swing
      Line Note”
has
      the
      meaning ascribed to it in Section
      1.1(b)(ii).

     

    “Tax
      Allocation Agreement”
means
      the tax allocation agreement dated as of November 1, 1992 between the Parent
      and
      Finlay, as such may be amended, modified or supplemented from time to time
      in
      accordance with its terms and the terms hereof.

     

    “Taxes”
means
      taxes, levies, imposts, deductions, Charges or withholdings, and all liabilities
      with respect thereto, excluding Excluded Taxes. 

     

    “Termination
      Date”
means
      the date on which (a) the Loans have been indefeasibly repaid in full, (b)
      all
      other Obligations under the Agreement and the other Loan Documents have been
      completely discharged (other than contingent obligations not then due and
      payable) (c) all Letter of Credit Obligations have been cash collateralized,
      canceled or backed by standby letters of credit in accordance with Annex
      B,
      and (d)
      none of Borrowers shall have any further right to borrow any monies under the
      Agreement.

     

    “Title
      IV Plan”
means
      a
      Pension Plan (other than a Multiemployer Plan), that is subject to Title IV
      of
      ERISA or Section 412 of the IRC, and that any Credit Party or ERISA Affiliate
      maintains, contributes to or has an obligation to contribute to on behalf of
      participants who are or were employed by any of them.

     

    “Trade
      Name License Agreements”
means
      the Carlyle License Agreement and the Finlay License Agreement.

     

    “Trademark
      Security Agreements”
means
      the Trademark Security Agreements made in favor of Agent, on behalf of Lenders,
      by each applicable Credit Party.

     

    “Trademark
      License”
means
      rights under any written agreement now owned or hereafter acquired by any Credit
      Party granting any right to use any Trademark.

     

    “Trademarks”
means
      all of the following now owned or hereafter existing or adopted or acquired
      by
      any Credit Party: (a) all trademarks, trade names, corporate names, business
      names, trade styles, service marks, logos, other source or business identifiers,
      prints and labels on which any of the foregoing have appeared or appear, designs
      and general intangibles of like nature (whether registered or unregistered),
      all
      registrations and recordings thereof, and all applications in connection
      therewith, including registrations, recordings and applications in the United
      States Patent and Trademark Office or in any similar office or agency of the
      United States, any state or territory thereof, or any other country or any
      political subdivision thereof; (b) all reissues, extensions or renewals thereof;
      and (c) all goodwill associated with or symbolized by any of the
      foregoing.

    
      
        
        

      

      
        Annex
          A -
          31

        
          

        

      

      
        
        

      

    

    “Tranche
      A Borrowing Base”
means,
      as of any date of determination by Agent, from time to time, an amount equal
      to
      the sum at such time of:

     

    a. 85%
      of
      the book value of the Finlay Credit Parties’ Eligible Accounts; and

     

    b. the
      Inventory Advance Rate multiplied by the applicable Net Liquidation Percentage
      of the book value of the Finlay Credit Parties’ and the Specialty Stores Credit
      Parties’ Eligible Inventory valued at the lower of cost (determined on a
      first-in, first-out basis) or market;

     

    less
      a
      Reserve in the amount of the Tranche B Deficiency Amount and any other Reserves
      established by Agent at such time.

     

    “Tranche
      A Maximum Amount”
means,
      as of any date of determination, an amount equal to the Tranche A Revolving
      Loan
      Commitment of all Lenders as of that date.

     

    “Tranche
      A Revolving Credit Advance”
has
      the
      meaning ascribed to it in Section 1.1(a)(i).

     

    “Tranche
      A Revolving Lenders”
means,
      as of any date of determination, Lenders having a Tranche A Revolving Loan
      Commitment.

     

    “Tranche
      A Revolving Loan”
means,
      at any time, the sum of (i) the aggregate amount of Tranche A Revolving Credit
      Advances outstanding to Borrowers plus
      (ii) the
      aggregate Letter of Credit Obligations incurred on behalf of Borrowers. Unless
      the context otherwise requires, references to the outstanding principal balance
      of the Tranche A Revolving Loan shall include the outstanding balance of Letter
      of Credit Obligations.

     

    “Tranche
      A Revolving Loan Commitment”
means
      (a) as to any Lender, the aggregate commitment of such Lender to make Tranche
      A
      Revolving Credit Advances or incur Letter of Credit Obligations as set forth
      on
Annex J
      to the
      Agreement or in the most recent Assignment Agreement executed by such Lender
      and
      (b) as to all Lenders, the aggregate commitment of all Lenders to make Tranche
      A
      Revolving Credit Advances or incur Letter of Credit Obligations, which aggregate
      commitment shall be Five Hundred Twelve Million Five Hundred Thousand Dollars
      ($512,500,000) on the Closing Date, as such amount may be adjusted, if at all,
      from time to time in accordance with the Agreement.

     

    “Tranche
      A Revolving Note”
has
      the
      meaning ascribed to it in Section 1.1(a)(ii).

     

    “Tranche
      B Borrowing Base”
means,
      as of any date of determination by Agent, from time to time, an amount equal
      to
      7.5% multiplied by the applicable Net Liquidation Percentage of the book value
      of the Finlay Credit Parties’ and the Specialty Stores Credit Parties’ Eligible
      Inventory valued at the lower of cost (determined on a first-in, first-out
      basis) or market, less any Reserves established by Agent at such time.

    
      
        
        

      

      
        Annex
          A -
          32

        
          

        

      

      
        
        

      

    

    “Tranche
      B Deficiency Amount”
means,
      at any time, the excess of (a) the aggregate amount of the Tranche B Revolving
      Loan then outstanding over (b) the Tranche B Borrowing Base at such
      time.

     

    “Tranche
      B Maximum Amount”
means,
      as of any date of determination, an amount equal to the Tranche B Revolving
      Loan
      Commitment of all Lenders as of that date.

     

    “Tranche
      B Revolving Credit Advance”
has
      the
      meaning ascribed to it in Section 1.1(a)(iii).

     

    “Tranche
      B Revolving Lenders”
means,
      as of any date of determination, Lenders having a Tranche B Revolving Loan
      Commitment. 

     

    “Tranche
      B Revolving Loan”
means,
      at any time, the aggregate amount of Tranche B Revolving Credit Advances
      outstanding to Borrowers. 

     

    “Tranche
      B Revolving Loan Commitment”
means
      (a) as to any Lender, the aggregate commitment of such Lender to make Tranche
      B
      Revolving Credit Advances as set forth on Annex J
      to the
      Agreement or in the most recent Assignment Agreement executed by such Lender
      and
      (b) as to all Lenders, the aggregate commitment of all Lenders to make Tranche
      B
      Revolving Credit Advances, which aggregate commitment shall be Thirty Seven
      Million Five Hundred Thousand Dollars ($37,500,000) on the Closing Date, as
      such
      amount may be adjusted, if at all, from time to time in accordance with the
      Agreement.

     

    “Tranche
      B Revolving Note”
has
      the
      meaning ascribed to it in Section 1.1(a)(iv).

     

    “Unapproved
      License Agreement”
means
      an unwritten arrangement (not yet approved in writing by the Agent or as to
      which the approval of the Agent has been withdrawn) between Finlay or a Foreign
      Subsidiary and another Person, granting to Finlay or a Foreign Subsidiary the
      right to operate a fine jewelry department in an establishment owned or operated
      by such Person.

     

    “Unfunded
      Pension Liability”
means,
      at any time, the aggregate amount, if any, of the sum of (a) the amount by
      which
      the present value of all accrued benefits under each Title IV Plan exceeds
      the
      fair market value of all assets of such Title IV Plan allocable to such benefits
      in accordance with Title IV of ERISA, all determined as of the most recent
      valuation date for each such Title IV Plan using the actuarial assumptions
      for
      funding purposes in effect under such Title IV Plan, and (b) for a period of
      five (5) years following a transaction which might reasonably be expected to
      be
      covered by Section 4069 of ERISA, the liabilities (whether or not accrued)
      that
      could have been avoided by any Credit Party or any ERISA Affiliate as a result
      of such transaction.

     

    Rules
      of
      construction with respect to accounting terms used in the Agreement or the
      other
      Loan Documents shall be as set forth in Annex
      G.
      All
      other undefined terms contained in any of the Loan Documents shall, unless
      the
      context indicates otherwise, have the meanings provided for by the Code to
      the
      extent the same are used or defined therein; in the event that any term is
      defined differently in different Articles or Divisions of the Code, the
      definition contained in Article or Division 9 shall control. Unless otherwise
      specified, references in the Agreement or any of the Appendices to a Section,
      subsection or clause refer to such Section, subsection or clause as contained
      in
      the Agreement. The words “herein,” “hereof” and “hereunder” and other words of
      similar import refer to the Agreement as a whole, including all Annexes,
      Exhibits and Schedules, as the same may from time to time be amended, restated,
      modified or supplemented, and not to any particular section, subsection or
      clause contained in the Agreement or any such Annex, Exhibit or
      Schedule.

    
      
        
        

      

      
        Annex
          A -
          33

        
          

        

      

      
        
        

      

    

    Wherever
      from the context it appears appropriate, each term stated in either the singular
      or plural shall include the singular and the plural, and pronouns stated in
      the
      masculine, feminine or neuter gender shall include the masculine, feminine
      and
      neuter genders. The words “including”, “includes” and “include” shall be deemed
      to be followed by the words “without limitation”; the word “or” is not
      exclusive; references to Persons include their respective successors and assigns
      (to the extent and only to the extent permitted by the Loan Documents) or,
      in
      the case of governmental Persons, Persons succeeding to the relevant functions
      of such Persons; and all references to statutes and related regulations shall
      include any amendments of the same and any successor statutes and regulations.
      Whenever any provision in any Loan Document refers to the knowledge (or an
      analogous phrase) of any Credit Party, such words are intended to signify that
      such Credit Party has actual knowledge or awareness of a particular fact or
      circumstance.

    
      
        
        

      

      
        Annex
          A -
          34

        
          

        

      

      
        
        

      

    

    ANNEX
      B (SECTION 1.2)

     

    TO

     

    CREDIT
      AGREEMENT

     

    LETTERS
      OF CREDIT

     

    a. Issuance.
      Subject
      to the terms and conditions of the Agreement, Agent and Tranche A Revolving
      Lenders agree to incur, from time to time prior to the Commitment Termination
      Date, upon the request of Borrower Representative on behalf of the applicable
      Borrower and for such Borrower’s account, Letter of Credit Obligations by
      causing Letters of Credit to be issued by GE Capital or a Subsidiary
      thereof or a bank or other legally authorized Person selected by or acceptable
      to Agent in its sole discretion (each, an “L/C
      Issuer”)
      for
      such Borrower’s account and guaranteed by Agent; provided,
      that if
      the L/C Issuer is a Tranche A Revolving Lender, then such Letters of Credit
      shall not be guaranteed by Agent but rather each Tranche A Revolving Lender
      shall, subject to the terms and conditions hereinafter set forth, purchase
      (or
      be deemed to have purchased) risk participations in all such Letters of Credit
      issued with the written consent of Agent, as more fully described in paragraph
      (b)(ii) below. The aggregate amount of all such Letter of Credit Obligations
      shall not at any time exceed the least of (i) Seventy Five Million Dollars
      ($75,000,000) (the “L/C
      Sublimit”),
      (ii)  the Tranche A Maximum Amount less the aggregate outstanding principal
      balance of the Tranche A Revolving Credit Advances and the Swing Line Loan,
      and
      (iii)  the Tranche A Borrowing Base less the aggregate outstanding
      principal balance of the Tranche A Revolving Credit Advances and the Swing
      Line
      Loan. No such Letter of Credit shall have an expiry date that is more than
      one
      year following the date of issuance thereof, unless otherwise determined by
      the
      Agent, in its discretion (including with respect to customary evergreen
      provisions), and neither Agent nor Tranche A Revolving Lenders shall be under
      any obligation to incur Letter of Credit Obligations in respect of, or purchase
      risk participations in, any Letter of Credit having an expiry date that is
      later
      than the Commitment Termination Date.

     

    b. (i) Advances
      Automatic; Participations.
      In the
      event that Agent or any Tranche A Revolving Lender shall make any payment on
      or
      pursuant to any Letter of Credit Obligation, such payment shall then be deemed
      automatically to constitute a Tranche A Revolving Credit Advance to the
      applicable Borrower under Section
      1.1(a)
      of the
      Agreement regardless of whether a Default or Event of Default has occurred
      and
      is continuing and notwithstanding any Borrower’s failure to satisfy the
      conditions precedent set forth in Section
      2,
      and
      each Tranche A Revolving Lender shall be obligated to pay its Pro Rata Share
      thereof in accordance with the Agreement. The failure of any Tranche A Revolving
      Lender to make available to Agent for Agent’s own account its Pro Rata Share of
      any such Tranche A Revolving Credit Advance or payment by Agent under or in
      respect of a Letter of Credit shall not relieve any other Tranche A Revolving
      Lender of its obligation hereunder to make available to Agent its Pro Rata
      Share
      thereof, but no Tranche A Revolving Lender shall be responsible for the failure
      of any other Tranche A Revolving Lender to make available such other Tranche
      A
      Revolving Lender’s Pro Rata Share of any such payment. 

    
      
        
        

      

      
        Annex
          B -
          1

        
          

        

      

      
        
        

      

    

    (ii) If
      it
      shall be illegal or unlawful for any Borrower to incur Tranche A Revolving
      Credit Advances as contemplated by paragraph (b)(i) above because of an Event
      of
      Default described in Sections
      8.1(h)
      or
(i)
      or
      otherwise or if it shall be illegal or unlawful for any Tranche A Revolving
      Lender to be deemed to have assumed a ratable share of the reimbursement
      obligations owed to an L/C Issuer, or if the L/C Issuer is a Tranche A Revolving
      Lender, then (A) immediately and without further action whatsoever, each Tranche
      A Revolving Lender shall be deemed to have irrevocably and unconditionally
      purchased from Agent (or such L/C Issuer, as the case may be) an undivided
      interest and participation equal to such Tranche A Revolving Lender’s Pro Rata
      Share (based on the Tranche A Revolving Loan Commitments) of the Letter of
      Credit Obligations in respect of all Letters of Credit then outstanding and
      (B)
      thereafter, immediately upon issuance of any Letter of Credit, each Tranche
      A
      Revolving Lender shall be deemed to have irrevocably and unconditionally
      purchased from Agent (or such L/C Issuer, as the case may be) an undivided
      interest and participation in such Tranche A Revolving Lender’s Pro Rata Share
      (based on the Tranche A Revolving Loan Commitments) of the Letter of Credit
      Obligations with respect to such Letter of Credit on the date of such issuance.
      Each Tranche A Revolving Lender shall fund its participation in all payments
      or
      disbursements made under the Letters of Credit in the same manner as provided
      in
      the Agreement with respect to Tranche A Revolving Credit Advances.

     

    c. Cash
      Collateral.

     

    (i) If
      Borrowers are required to provide cash collateral for any Letter of Credit
      Obligations pursuant to the Agreement, including Section
      8.2
      of the
      Agreement, prior to the Commitment Termination Date, each Borrower will pay
      to
      Agent for the ratable benefit of itself and Tranche A Revolving Lenders cash
      or
      cash equivalents acceptable to Agent (“Cash
      Equivalents”)
      in an
      amount equal to 105% of the maximum amount then available to be drawn under
      each
      applicable Letter of Credit outstanding for the benefit of such Borrower. Such
      funds or Cash Equivalents shall be held by Agent in a cash collateral account
      (the “Cash
      Collateral Account”)
      maintained at a bank or financial institution acceptable to Agent. The Cash
      Collateral Account shall be in the name of the applicable Borrower and shall
      be
      pledged to, and subject to the control of, Agent, for the benefit of Agent
      and
      Lenders, in a manner reasonably satisfactory to Agent. Each Borrower hereby
      pledges and grants to Agent, on behalf of itself and Lenders, a security
      interest in all such funds and Cash Equivalents held in the Cash Collateral
      Account from time to time and all proceeds thereof, as security for the payment
      of all amounts due in respect of the Letter of Credit Obligations and other
      Obligations, whether or not then due. The Agreement, including this Annex
      B,
      shall
      constitute a security agreement under applicable law. 

     

    (ii) If
      any
      Letter of Credit Obligations, whether or not then due and payable, shall for
      any
      reason be outstanding on the Commitment Termination Date, Borrowers shall either
      (A) provide cash collateral therefor in the manner described above, or (B)
      cause
      all such Letters of Credit and guaranties thereof, if any, to be canceled and
      returned, or (C) deliver a stand-by letter (or letters) of credit in guaranty
      of
      such Letter of Credit Obligations, which stand-by letter (or letters) of credit
      shall be of like tenor and duration (plus thirty (30) additional days) as,
      and
      in an amount equal to 105% of the aggregate maximum amount then available to
      be
      drawn under, the Letters of Credit to which such outstanding Letter of Credit
      Obligations relate and shall be issued by a Person, and shall be subject to
      such
      terms and conditions, as are be satisfactory to Agent in its sole discretion.
      

    
      
        
        

      

      
        Annex
          B -
          2

        
          

        

      

      
        
        

      

    

    (iii) From
      time
      to time after funds are deposited in the Cash Collateral Account by any
      Borrower, whether before or after the Commitment Termination Date, Agent may
      apply such funds or Cash Equivalents then held in the Cash Collateral Account
      to
      the payment of any amounts, and in such order as Agent may elect, as shall
      be or
      shall become due and payable by such Borrower to Agent and Lenders with respect
      to such Letter of Credit Obligations of such Borrower and, upon the satisfaction
      in full of all Letter of Credit Obligations of such Borrower, to any other
      Obligations of any Borrower then due and payable.

     

    (iv) No
      Borrower nor any Person claiming on behalf of or through any Borrower shall
      have
      any right to withdraw any of the funds or Cash Equivalents held in the Cash
      Collateral Account, except that upon the termination of all Letter of Credit
      Obligations and the payment of all amounts payable by Borrowers to Agent and
      Lenders in respect thereof, any funds remaining in the Cash Collateral Account
      shall be applied to other Obligations then due and owing and upon payment in
      full of such Obligations, any remaining amount shall be paid to Borrowers or
      as
      otherwise required by law. Interest earned on deposits in the Cash Collateral
      Account shall be held as additional collateral.

     

    (v) Fees
      and Expenses.
      Borrowers agree to pay to Agent for the benefit of Tranche A Revolving Lenders,
      as compensation to such Lenders for Letter of Credit Obligations incurred
      hereunder, (i) all costs and expenses incurred by Agent or any Lender on account
      of such Letter of Credit Obligations, and (ii) for each month during which
      any
      Letter of Credit Obligation shall remain outstanding, a fee (the “Letter
      of Credit Fee”)
      in an
      amount equal to (x) in the case of trade Letters of Credit, the greater of
      (1)
      1.50% per annum and (2) 0.25% less than the Applicable Tranche A Revolver LIBOR
      Margin per annum at such time, and (y) in the case of all other Letters of
      Credit, the Applicable Tranche A Revolver LIBOR Margin per annum, in each case,
      multiplied by the maximum amount available from time to time to be drawn under
      the applicable Letter of Credit. Such fee shall be paid to Agent for the benefit
      of the Tranche A Revolving Lenders in arrears, on the first day of each month
      and on the Commitment Termination Date. In addition, Borrowers shall pay to
      any
      L/C Issuer, on demand, such fees (including all per annum fees), charges and
      expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
      amendment, transfer and payment of such Letter of Credit or otherwise payable
      pursuant to the application and related documentation under which such Letter
      of
      Credit is issued.

     

    d. Request
      for Incurrence of Letter of Credit Obligations.
      Borrower Representative shall give Agent at least two (2) Business Days’ prior
      written notice requesting the incurrence of any Letter of Credit Obligation.
      The
      notice shall be accompanied by the form of the Letter of Credit (which shall
      be
      acceptable to the L/C Issuer) and a completed Application for Standby Letter
      of
      Credit or Application for Documentary Letter of Credit (as applicable) in the
      form of Exhibit
      B-1 or B-2
      attached
      hereto. Notwithstanding anything contained herein to the contrary, Letter of
      Credit applications by Borrower Representative and approvals by Agent and the
      L/C Issuer may be made and transmitted pursuant to electronic codes and security
      measures mutually agreed upon and established by and among Borrower
      Representative, Agent and the L/C Issuer. 

    
      
        
        

      

      
        Annex
          B -
          3

        
          

        

      

      
        
        

      

    

    e. Obligation
      Absolute.
      The
      obligation of Borrowers to reimburse Agent and Tranche A Revolving Lenders
      for
      payments made with respect to any Letter of Credit Obligation shall be absolute,
      unconditional and irrevocable, without necessity of presentment, demand, protest
      or other formalities, and the obligations of each Tranche A Revolving Lender
      to
      make payments to Agent with respect to Letters of Credit shall be unconditional
      and irrevocable. Such obligations of Borrowers and Tranche A Revolving Lenders
      shall be paid strictly in accordance with the terms hereof under all
      circumstances including the following:

     

    (i) any
      lack
      of validity or enforceability of any Letter of Credit or the Agreement or the
      other Loan Documents or any other agreement;

     

    (ii) the
      existence of any claim, setoff, defense or other right that any Borrower or
      any
      of their respective Affiliates or any Lender may at any time have against a
      beneficiary or any transferee of any Letter of Credit (or any Persons or
      entities for whom any such transferee may be acting), Agent, any Lender, or
      any
      other Person, whether in connection with the Agreement, the Letter of Credit,
      the transactions contemplated herein or therein or any unrelated transaction
      (including any underlying transaction between any Borrower or any of their
      respective Affiliates and the beneficiary for which the Letter of Credit was
      procured);

     

    (iii) any
      draft, demand, certificate or any other document presented under any Letter
      of
      Credit proving to be forged, fraudulent, invalid or insufficient in any respect
      or any statement therein being untrue or inaccurate in any respect;

     

    (iv) payment
      by Agent (except as otherwise expressly provided in paragraph (f)(ii)(C) below)
      or any L/C Issuer under any Letter of Credit or guaranty thereof against
      presentation of a demand, draft or certificate or other document that does
      not
      comply with the terms of such Letter of Credit or such guaranty;

     

    (v) any
      other
      circumstance or event whatsoever, that is similar to any of the foregoing;
      or

     

    (vi) the
      fact
      that a Default or an Event of Default has occurred
      and is continuing.

     

    f. Indemnification;
      Nature of Lenders’ Duties.

     

    (i) In
      addition to amounts payable as elsewhere provided in the Agreement, Borrowers
      hereby agree to pay and to protect, indemnify, and save harmless Agent and
      each
      Lender from and against any and all claims, demands, liabilities, damages,
      losses, costs, charges and expenses (including reasonable attorneys’ fees and
      allocated costs of internal counsel) that Agent or any Lender may incur or
      be
      subject to as a consequence, direct or indirect, of (A) the issuance of any
      Letter of Credit or guaranty thereof, or (B) the failure of Agent or any Lender
      seeking indemnification or of any L/C Issuer to honor a demand for payment
      under
      any Letter of Credit or guaranty thereof as a result of any act or omission,
      whether rightful or wrongful, of any present or future de jure or de facto
      government or Governmental Authority, in each case other than to the extent
      solely as a result of the gross negligence or willful misconduct of Agent or
      such Lender (as finally determined by a court of competent
      jurisdiction).

    
      
        
        

      

      
        Annex
          B -
          4

        
          

        

      

      
        
        

      

    

    (ii) As
      between Agent and any Lender and Borrowers, Borrowers assume all risks of the
      acts and omissions of, or misuse of any Letter of Credit by beneficiaries,
      of
      any Letter of Credit. In furtherance and not in limitation of the foregoing,
      to
      the fullest extent permitted by law, neither Agent nor any Lender shall be
      responsible for: (A) the form, validity, sufficiency, accuracy, genuineness
      or
      legal effect of any document issued by any party in connection with the
      application for and issuance of any Letter of Credit, even if it should in
      fact
      prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
      or forged; (B) the validity or sufficiency of any instrument transferring or
      assigning or purporting to transfer or assign any Letter of Credit or the rights
      or benefits thereunder or proceeds thereof, in whole or in part, that may prove
      to be invalid or ineffective for any reason; (C) failure of the beneficiary
      of
      any Letter of Credit to comply fully with conditions required in order to demand
      payment under such Letter of Credit; provided,
      that in
      the case of any payment by Agent under any Letter of Credit or guaranty thereof,
      Agent shall be liable to the extent such payment was made solely as a result
      of
      its gross negligence or willful misconduct (as finally determined by a court
      of
      competent jurisdiction) in determining that the demand for payment under such
      Letter of Credit or guaranty thereof complies on its face with any applicable
      requirements for a demand for payment under such Letter of Credit or guaranty
      thereof; (D) errors, omissions, interruptions or delays in transmission or
      delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
      or not they may be in cipher; (E) errors in interpretation of technical terms;
      (F) any loss or delay in the transmission or otherwise of any document required
      in order to make a payment under any Letter of Credit or guaranty thereof or
      of
      the proceeds thereof; (G) the credit of the proceeds of any drawing under any
      Letter of Credit or guaranty thereof; and (H) any consequences arising from
      causes beyond the control of Agent or any Lender. None of the above shall
      affect, impair, or prevent the vesting of any of Agent’s or any Lender’s rights
      or powers hereunder or under the Agreement.

     

    (iii) Nothing
      contained herein shall be deemed to limit or to expand any waivers, covenants
      or
      indemnities made by Borrowers in favor of any L/C Issuer in any letter of credit
      application, reimbursement agreement or similar document, instrument or
      agreement between or among Borrowers and such L/C Issuer, including an
      Application and Agreement For Documentary Letter of Credit, a Master Documentary
      Agreement and a Master Standby Agreement entered into with Agent.

     

    g. Letter
      of Credit Amounts.
      Unless
      otherwise specified herein, the amount of a Letter of Credit at any time shall
      be deemed to be the stated amount of such Letter of Credit in effect at such
      time; provided,
      however,
      that
      with respect to any Letter of Credit that, by its terms or the terms of any
      document issued in connection with such Letter of Credit, provides for one
      or
      more automatic increases in the stated amount thereof, the amount of such Letter
      of Credit shall be deemed to be the maximum stated amount of such Letter of
      Credit after giving effect to all such increases, whether or not such maximum
      stated amount is in effect at such time.

    
      
        
        

      

      
        Annex
          B -
          5

        
          

        

      

      
        
        

      

    

    ANNEX
      G (SECTION 6.10)

     

    TO

     

    CREDIT
      AGREEMENT

     

    FINANCIAL
      COVENANTS

     

    Borrowers
      shall not breach or fail to comply with any of the following financial
      covenants, each of which shall be calculated in accordance with GAAP
      consistently applied:

     

    a. Minimum
      Borrowing Availability.
      Borrowers shall maintain Borrowing Availability of not less that $30,000,000
      at
      all times.

    
      
        
        

      

      
        Annex
          G -
          1VALUE-ADDED
      RESELLER AGREEMENT

     

    THIS
      AGREEMENT
      is made
      and entered into as of Dec 10, 2007 (herein called the “Effective Date”) by and
      between Splinternet Holdings, Inc. a Delaware corporation with its principal
      place of business located at 535 Connecticut Ave. Norwalk, CT 06854
      (“SPLINTERNET”) and VIDIATION, LLC, a limited liability company organized and
      existing under the laws of the State of Nevada, and having a principal place
      of
      business located at 108 South Wynstone Park Drive, Suite #117, N. Barrington,
      Illinois 60010, its heirs and assigns (“RESELLER”).

     

    WHEREAS,
      SPLINTERNET has developed technology related to analyzing streams of
      surveillance video and/or utilizing surveillance video equipment in conjunction
      with proprietary software or other technology to detect radiation and/or other
      hazardous or dangerous conditions (the “Technology”); 

     

    WHEREAS,
      RESELLER distributes certain products and/or services and wishes to incorporate,
      embed or make use of SPLINTERNET’s technology in conjunction with such products
      or services; and 

     

    WHEREAS,
      SPLINTERNET seeks channel or alliance partners to resell and distribute its
      Technology and RESELLER wishes to serve as a channel or alliance partner of
      SPLINTERNET. 

     

    For
      good
      and valuable consideration, the receipt and sufficiency of which is hereby
      expressly acknowledged, IT IS HEREBY AGREED as follows:

     

    ARTICLE
      1.  DEFINITIONS

     

    1.1
      “Party”
      or “Parties”
      shall,
      as the content indicates in this Agreement, mean SPLINTERNET and RESELLER and
      their respective successors and/or assigns.

     

    1.2
      “Affiliate”
      shall
      mean, with respect to a Party, any Person now or in the future directly or
      indirectly controlling, controlled by, or under common control with such
      Party.

     

    1.3
      “Person”
      shall
      mean any individual, corporation, partnership, firm, joint venture, association,
      joint-stock company, trust, unincorporated organization, government body or
      agency or other entity not actually a Party to this Agreement.

     

    1.4
      “The
      Products”
      shall
      mean systems (including software), apparatuses or devices developed,
      manufactured, acquired, marketed or sold by SPLINTERNET, which systems,
      apparatuses or devices are listed in Appendix A hereto or as amended from time
      to time.

     

    1.5 “Application”
      means a
      value-added application, surveillance solution, computer program, system,
      equipment or product which is developed or assembled and distributed by RESELLER
      and which embeds, integrates, makes use of or incorporates one or more
      SPLINTERNET Products.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.6 “Basic
      Maintenance”
      means
      SPLINTERNET’s maintenance program which offers new releases (other than those
      designated as new products by SPLINTERNET) for existing Products during a twelve
      month period for an annual fee payable in advance. SPLINTERNET reserves the
      right, in its sole discretion, to change the form and content of its maintenance
      program from time to time and will provide RESELLER with a thirty (30) day
      advance notice of any such change(s).

     

    1.7 “End
      User”
      means
      any third party individual, business or governmental customer of RESELLER which
      acquires one or more Applications for personal or internal business use, and
      not
      to transfer to others.

     

    1.8 “Level
      1 Support”
      means
      SPLINTERNET’s support program that provides telephone support during
      SPLINTERNET’s normal business hours, and Basic Maintenance for existing Products
      during a twelve month period for an annual fee payable in advance. SPLINTERNET
      reserves the right, in its sole discretion, to change the form and content
      of
      its maintenance program from time to time upon notice and will provide RESELLER
      with a thirty (30) day advance notice of any such change(s).

     

    1.9 “Level
      2 Support”
      means
      SPLINTERNET’s support program that provides twenty-four hours per day and seven
      days per week telephone support, and Basic Maintenance for existing Products
      during a twelve month period for an annual fee payable in advance. SPLINTERNET
      reserves the right, in its sole discretion, to change the form and content
      of
      its maintenance program from time to time upon notice and will provide RESELLER
      with a thirty (30) day advance notice of any such change(s).

     

    1.10 “Level
      3 Support”
      means
      assistance or troubleshooting in cases which are deemed too difficult or
      involved to be handled by Level 2 Support and include cases involving the
      reproduction of high severity/difficulty issues, those of which require
      verification of problem reproduction developed by Level 2 Support staff, and
      those which involve undocumented features or functionality. 

     

    1.11 “Consulting
      Services”
      are any
      services provided by SPLINTERNET that are not covered by any standard annual
      license fees paid by RESELLER and which are available for SPLINTERNET at its
      customary time and materials rates, plus any related travel or business
      expenses. 

     

    1.12 “Software
      Copy or Copies”
      means
      any SPLINTERNET software (in object code form only) utilized in any Product
      identified in Appendix A hereto and licensed hereunder in accordance with this
      Agreement and for the fees specified in Appendix B which SPLINTERNET allows
      RESELLER to imbed, integrate or utilize as part of its product or service
      offerings (i.e., Applications) to End Users.

     

    1.13 “User
      Documentation”
      means
      the then-current SPLINTERNET user manual(s) and other written materials on
      the
      proper installation and use of the Products, and which are normally distributed
      with the Products.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    1.14 “Confidential
      Information”
      or “Confidential
      Materials”
      means
      any information or materials, and any intellectual and/or proprietary rights
      therein, including, without limitation, any technical, business, financial
      or
      customer information, drawings, specifications, designs, records or other
      information disclosed by any Party to the other that is identified or treated
      as
      confidential by the disclosing Party. “Confidential Information” does not
      include information already in the public domain, or in the rightful possession
      of the other Party prior to the execution of this Agreement, or which enters
      the
      public domain other than by unauthorized acts of any person, or which is
      independently developed by either Party without the use of the Confidential
      Information or in violation of the terms of this Agreement or any other
      contractual or other obligation of confidentiality.

     

    1.15 “Export
      Laws”
      means
      all export laws, administrative regulations and executive orders of any
      applicable jurisdiction relating to the control of imports and exports of
      commodities and technical data, including, without limitation, the U.S.
      Department of Commerce.

     

    ARTICLE
      2.  APPOINTMENT
      OF RESELLER

     

    2.1 Appointment.
      SPLINTERNET hereby appoints RESELLER as an authorized, non-exclusive Value-Added
      Reseller and channel or alliance partner of SPLINTERNET (“VAR”). A VAR develops,
      owns and licenses (to more than one End User) one or more valued-added
      Applications. RESELLER must at a minimum license its Application with each
      Software Copy it distributes.

     

    2.2 Relationship
      of the Parties.
      The
      relationship of the Parties shall be that of RESELLER licensing and embedding,
      integrating or incorporating SPLINTERNET’s Products (including Software Copies)
      for the fees specified in Appendix B, and purchasing services as an independent
      contractor from SPLINTERNET and reselling and sublicensing End Users. RESELLER
      and its employees are not agents or representatives of SPLINTERNET for any
      purpose and have no power or authority to represent, act for, bind or commit
      SPLINTERNET.

     

    ARTICLE
      3.  RESELLER’S
      RIGHTS, REPRESENTATIONS AND OBLIGATIONS

     

    3.1 License
      Grant.
      SPLINTERNET hereby grants and RESELLER hereby accepts the non-exclusive
      non-transferable right to license (“License”) a subset of SPLINTERNET’s Products
      (including Software Copies) as outlined in Appendix A in conjunction with
      RESELLER’s product and service offerings (i.e., Applications), in accordance
      with the User Documentation and this Agreement: (a) to internally use and
      develop Applications; (b) to distribute as part of an embedded or integrated
      offering SPLINTERNET’s Software Copies for use solely as part of an Application;
      and (c) to use in unaltered form the SPLINTERNET trademarks, service marks
      or
      marketing logos (the “SPLINTERNET Trademarks”) solely to promote the
      Applications, provided RESELLER obtains SPLINTERNET’s prior written approval for
      each new usage. SPLINTERNET retains all title and, except as unambiguously
      licensed herein, all rights, including all intellectual property rights, in
      and
      to the Products, and all copies and derivative works thereof (by whomever
      produced). RESELLER shall pay SPLINTERNET the requisite license and other fees
      specified in Appendix B hereto.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    3.2 Minimum
      Commitment.
      In
      consideration for the license conferred hereunder and the support on other
      services provided hereunder by SPLINTERNET, RESELLER agrees to exercise its
      best
      efforts to satisfy the minimum sales commitment specified in Appendix C hereto.
      

     

    3.3 Restrictions.
      RESELLER
      shall not (a) distribute the Software Copies on a stand-alone basis, (b)
      distribute the Software Copies in any way except as part of an Application,
      (c)
      modify or alter the object code of the Products or Software Copies in any way,
      (d) use any SPLINTERNET trademarks or trade names in a way that implies RESELLER
      is an agency or branch of SPLINTERNET, or (e) distribute, provide, lease, lend,
      use or allow others to use the Product or Software Copies to or for the benefit
      of any third parties who are or may be competitors of SPLINTERNET.

     

    3.4 Authorized
      End Users.
      RESELLER
      agrees not to resell, distribute or sublicense SPLINTERNET’s Software Copies to
      customers other than End Users, except where such customers are approved in
      writing in advance by SPLINTERNET; such approval not to be unreasonably
      withheld.

     

    3.5 Marketing
      of Applications.
      RESELLER, within a reasonable time period, and after an Application is made
      available by RESELLER, shall actively market the Application consistent with
      RESELLER’s marketing goals and market conditions.

     

    3.6 Back-Up
      Copies.
      RESELLER
      may make one (1) back-up copy of Products used internally to develop
      Applications.

     

    3.7 Marketing
      Claims and Obligations.
      RESELLER agrees that all statements and/or claims not previously provided in
      writing to RESELLER by SPLINTERNET regarding product functionality and/or
      capabilities incorporated into any RESELLER marketing materials or sales
      proposals must be submitted to SPLINTERNET for written approval five (5) days
      prior to any public release.

     

    3.8 End
      User Agreement.
      RESELLER
      shall ensure that the end user agreement utilized by RESELLER is no less
      restrictive than SPLINTERNET’s own End User License Agreement (a copy of which
      is attached as Appendix D hereto) for each copy of an Application that has
      embedded pr integrated SPLINTERNET’s Software Copies and is distributed by
      RESELLER. In addition, RESELLER shall perform any other actions reasonably
      necessary to assure adequate protection of SPLINTERNET’s interests in its
      intellectual property rights contained in the Product(s) and Software Copies.
      In
      all jurisdictions where SPLINTERNET’s End User Agreement must be in writing and
      signed by the End User in order to be effective, the Software Copies may not
      be
      distributed unless RESELLER’s End User signs a written license agreement which
      is no less restrictive than SPLINTERNET’s own End User License Agreement.
      SPLINTERNET does not undertake to inform RESELLER of the jurisdictions where
      a
      signed, written software license is necessary.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    3.9
       SPLINTERNET’s
      Intellectual Property Rights.
      The
      Product, Software Copies and all related documentation are protected under
      patent and/or copyright and/or trade secret laws and contain proprietary
      information of SPLINTERNET and/or its licensors. RESELLER shall abide by the
      terms of any proprietary notices or markings, and shall use the documentation
      and the Software Copies only for the purposes contemplated by this Agreement,
      and shall not disclose to others or reproduce the Product (except as
      specifically permitted under this Agreement), unless specifically authorized
      by
      SPLINTERNET, and shall be liable for all loss or damage to SPLINTERNET from
      any
      failure to so abide or from any unauthorized disclosure by RESELLER, its agents
      or End Users of the Product, Software Copies or related documentation. RESELLER
      shall not translate any portion of the Software Copies or associated
      documentation into any other format or language without the prior written
      consent of SPLINTERNET. In the event such translation is made by RESELLER,
      RESELLER shall grant to SPLINTERNET all right, title and interest in any such
      translation or, if applicable, an exclusive, royalty free license to exploit
      any
      copyright or other intellectual property rights created by such
      translation.

     

    3.10
       Notice
      of Unauthorized Use of Confidential Information.
      RESELLER
      shall promptly notify SPLINTERNET of any actual or suspected unauthorized use
      or
      disclosure of any Confidential Information received from SPLINTERNET, and shall
      provide reasonable assistance to SPLINTERNET in the investigation and
      prosecution of unauthorized uses or disclosure.

     

    3.11
       Restrictions
      On Use of Confidential Information and SPLINTERNET’s Intellectual Property and
      Technology.
      Except
      as specifically permitted by this Agreement, RESELLER shall not directly or
      indirectly (i) use any Confidential Information of SPLINTERNET to create any
      computer software program or user documentation which is substantially similar
      to any Product; (ii) reverse engineer, disassemble or decompile, or otherwise
      attempt to derive the source code for, any Product; (iii) encumber, timeshare,
      rent or lease the rights granted by this Agreement; or (iv) copy, manufacture,
      adapt, create derivative works of, translate, localize, port or otherwise modify
      any Products or other SPLINTERNET Confidential Information or allow any agent
      or
      End User of RESELLER to engage in similar conduct. The Parties acknowledge
      that
      money damages will not be an adequate remedy if this Section is breached and
      therefore, SPLINTERNET may, in addition to any other legal or equitable
      remedies, seek an injunction or similar equitable relief against any such
      breach.

     

    3.12
       RESELLER’s
      Obligation to Honor SPLINTERNET’s Confidential Information and Intellectual
      Property.
      RESELLER
      does not have, and shall not claim that it has any right in or to any of the
      Products, Software Copies, or the Confidential Information received from
      SPLINTERNET other than as specifically granted by this Agreement.

     

    3.13
       Compliance
      With Export Laws and Regulations.
      Any and
      all obligations of SPLINTERNET to provide the Products, as well as any technical
      assistance, will be subject in all respects to such United States laws and
      regulations as will from time to time govern the license and deliver of
      technology and products abroad by persons subject to the jurisdiction of the
      United States, including the Export Administration Act of 1979, as amended,
      any
      successor legislation, and the Export Administration Regulations issued by
      the
      Department of Commerce, Bureau of Export Administration. RESELLER warrants
      that
      it will not export or re-export the Product, Software Copies or any Confidential
      Information or a Solution, or technical data related thereto, except in
      conformity with such laws and regulations. RESELLER agrees that unless prior
      written authorization is obtained from the Bureau of Export Administration
      or
      the Export Administration Regulations explicitly permit the re-export without
      such written authorization, it will not export, re-export, or transship,
      directly or indirectly, the Product, Software Copies or any Confidential
      Information or a Solution to country groups S or Z (as defined in the export
      Administration Regulations), or to any other country as to which the U.S.
      Government has placed an embargo against the shipment of products which is
      in
      effect during the term of this Agreement.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    If
      at any
      time SPLINTERNET determines in its sole discretion that the laws of any country
      are or become insufficient to protect SPLINTERNET’s intellectual or proprietary
      rights in the Products, SPLINTERNET reserves the right to restrict or terminate
      RESELLER’s rights to use Products, Software Copies or distribute Software Copies
      or Confidential Information in that country. RESELLER shall take all actions
      reasonable necessary to enforce this restriction to protect SPLINTERNET’s
      rights.

     

    3.14
       U.S.
      Government Sales.
      This
      provision applies to all Products, and Software Copies acquired directly or
      indirectly by or on behalf of the United States Government. The Products and
      Software Copies are commercial products, licensed on the open market at market
      prices, and were developed entirely at private expense and without the use
      of
      any U.S. Government funds. If the Products or Software Copies are supplied
      to
      the Department of Defense, the U.S. Government acquires only the license rights
      customarily provided to the public and specified in this Agreement. If the
      Products or Software Copies are supplied to any unit or agency of the U.S.
      Government other than the Department of Defense, the license to the U.S.
      Government is granted only with restricted rights. Use, duplication, or
      disclosure by the U.S. Government is subject to the restrictions set forth
      in
      subparagraph (c) of the Commercial Computer Software Restricted Rights clause
      of
      FAR 52.227-19.

     

    3.15
       SPLINTERNET
      Trademark.
      During
      the term of this Agreement, RESELLER shall have the right to use the SPLINTERNET
      Trademarks in accordance with Section 3.1, provided that upon thirty (30) days
      prior written notice, SPLINTERNET may substitute alternative marks for any
      or
      all of the SPLINTERNET Trademarks. All representations of SPLINTERNET Trademarks
      that RESELLER intends to use shall first be submitted to SPLINTERNET for
      approval (which shall not be unreasonably withheld) of design, color and other
      details, or shall be exact copies of those used by SPLINTERNET. In addition,
      RESELLER shall fully comply with all reasonable guidelines, if any, communicated
      by SPLINTERNET concerning the use of SPLINTERNET Trademarks.

     

    RESELLER
      will not alter or remove any of the SPLINTERNET Trademarks applied to the
      Software, Products or User Documentation by SPLINTERNET. Except for the
      authorization set forth in this Section 3.13, nothing herein grants or will
      be
      deemed to grant to RESELLER any right, title or interest in SPLINTERNET
      Trademarks. All uses of the SPLINTERNET Trademarks will inure solely to
      SPLINTERNET, and RESELLER shall obtain no rights with respect to any of these
      SPLINTERNET Trademarks, other than the right to distribute the Products and
      Software Copies as set forth herein, and RESELLER irrevocably assigns to
      SPLINTERNET all such right, title and interest, if any, in any SPLINTERNET
      Trademarks. At no time during the term of this Agreement will RESELLER challenge
      or assist others in challenging the SPLINTERNET Trademarks or the registration
      thereof, or attempt to register any trademarks, marks or trade names confusingly
      similar to those of SPLINTERNET. Upon termination of this Agreement, RESELLER
      shall immediately cease to use any and all of the SPLINTERNET
      Trademarks.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    3.16
       Developer
      Credit.
      In
      connection with any Applications promoted, marketed, distributed or sold by
      RESELLER, RESELLER agrees to include in its promotional materials, on its
      website and/or on any goods or labels that its radiation detection solution
      or
      application is “powered by SPLINTERNET Radiation Analytic Detection System
      (V-RADsTM)”.

     

    3.17
       Insurance.
      With
      respect to any occurrences during the term of this Agreement, RESELLER shall
      carry and maintain policies with at least the coverage amounts listed below
      and
      in such form and with an insurance company having an A-(Excellent) or better
      Best’s Rating:

    

    
      	
              Coverage

            	
              Amount

            
	 	 
	
              Professional
                Liability

            	
              $10
                million

            
	 	 
	
              Employer’s
                Liability

            	
              $2
                million

            
	 	 
	
              Automobile
                Liability

            	
              $2
                million

            
	 	 
	
              General
                Liability

            	
              $2
                million

            
	 	 
	
              Workers’
                Compensation

            	
              as
                required by law

            
	 	 
	
              Excess
                Liability (excess coverage for at least General Liability and Advertising
                Injury)

            	
              $5
                million

            
	 	 
	
              E&O

            	
              $10
                million

            
	 	 
	
              Media
                Liability

            	
              $10
                million

            
	 	 
	
              Advertising
                Injury

            	
              $2
                million

            

    

     

    SPLINTERNET
      shall be named as an additional insured in all policies (other than Employer’s
      Liability and Workers’ Compensation) required under this Section and RESELLER
      shall be solely responsible for any deductibles under any such policies. Within
      thirty (30) days of the Effective Date, RESELLER shall deliver to SPLINTERNET
      a
      certificate of insurance showing that all policies are in full force and effect,
      and that such policies can not be cancelled during the term of this Agreement
      without at least thirty (30) days written notice to SPLINTERNET from the carrier
      issuing the policy.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    3.18
       Non-Compete.
      RESELLER
      agrees during the term of this Agreement and for one-year thereafter not to
      develop, distribute and/or offer for sale to any End User any radiation
      detection system or solution other than that of SPLINTERNET.

     

    3.19
       Intellectual
      Property.
      RESELLER
      acknowledges and agrees that any new discoveries, inventions, developments
      or
      derived works resulting in improvements in or to SPLINTERNET’s Products or
      Technology (including new or improved functionability, features, capabilities
      or
      efficiencies), whether made singly or in combination with anyone else, shall
      be
      considered a work made for hire under United States copyright law and shall
      be
      owned exclusively by SPLINTERNET (the “Improvements”). RESELLER shall have a
      non-exclusive license in or to any Improvements for the term of the Agreement.
      RESELLER agrees to take any actions reasonably requested of it by SPLINTERNET
      to
      effect or document SPLINTERNET’s ownership rights in and to any Improvements,
      including executing any assignments or other writings.

     

    ARTICLE
      4.  SPLINTERNET’S
      OBLIGATIONS

     

    4.1 Delivery
      of Systems.
      In
      consideration for payment of an initial up-front fee and an annual license
      fee,
      SPLINTERNET shall provide RESELLER for its own internal use a radiation
      surveillance system for research and product development purposes and a second
      system for demonstration purposes.

     

    4.2 Integration
      Support. SPLINTERNET
      during the first year of this Agreement shall provide RESELLER with __40_ hours
      of front-end engineering and integration support to assist RESELLER in the
      development of Applications that integrate or embed SPLINTERNET’s Products as
      part of RESELLER’s surveillance solutions or equipment. 

     

    4.3 Marketing
      Support.
      SPLINTERNET during the term of this Agreement shall provide RESELLER with
      marketing and promotional support, including sales leads. RESELLER agrees that
      all statements and/or claims not previously provided in writing to RESELLER
      by
      SPLINTERNET regarding SPLINTERNET radiation detection alert product
      functionality and/or capabilities incorporated into any RESELLER marketing
      materials or sales proposals must be submitted to SPLINTERNET for written
      approval prior to any public release.

     

    4.4 Training.
      SPLINTERNET during the first year of this Agreement shall provide _40__ hours
      of
      technical training to RESELLER to enable RESELLER to provide Level 1 and Level
      2
      Support to its end users in connection with SPLINTERNET’s Products that are
      incorporated, embedded or integrated into any Application.

     

    4.5 Technology
      Support.
      SPLINTERNET will commit to providing RESELLER with up to __40__ hours of
      technical support per year, including installation, calibration and consulting
      services, on a time and materials basis.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    ARTICLE
      5.  TRAINING
      AND SUPPORT SERVICES

     

    5.1 Training.
      Within a
      reasonable time period, and after the Applications are made available by
      RESELLER, RESELLER shall train and maintain a sufficient number of capable
      technical and sales personnel as SPLINTERNET and RESELLER shall mutually deem
      necessary and appropriate for RESELLER to carry out its obligations and
      responsibilities under this Agreement.

     

    5.2 End-User
      Support.
      Regardless of whether RESELLER or any End Users purchase maintenance or support
      services directly from SPLINTERNET, RESELLER shall provide an appropriate level
      of support, skilled instruction and assistance to End Users. In any event,
      RESELLER must provide all support for its Application(s). Unless otherwise
      agreed in a specific instance, SPLINTERNET has no obligation to provide support
      to RESELLER’s end users, customers or distributors.

     

    5.3 SPLINTERNET
      Support.
      For
      Products used internally by RESELLER in accordance with the terms of this
      Agreement, RESELLER may purchase from SPLINTERNET on an annual basis, Level
      1
      Support, Level 2 Support or Level 3 Support in accordance with the terms of
      the
      then-current support and maintenance programs made available by SPLINTERNET
      for
      the fees described in Appendix B (as amended from time to time).

     

    5.4 SPLINTERNET
      Maintenance Services.
      For
      Products and Software Copies distributed by RESELLER in accordance with the
      terms of this Agreement, RESELLER may purchase from SPLINTERNET for the initial
      year, and thereafter may purchase on an annual basis, Level 1 Support or Level
      2
      Support in accordance with the terms of the then current support and maintenance
      programs made available by SPLINTERNET for the fees described in Appendix B
      (as
      amended from time to time).

     

    ARTICLE
      6.  LIMITED
      WARRANTIES

     

    6.1 SPLINTERNET’s
      Warranties.
      SPLINTERNET warrants that (i) it has full power to enter into and perform this
      Agreement; (ii) during the first thirty (30) days from the date RESELLER
      receives an unmodified Product (“Warranty Period”) manufactured by SPLINTERNET,
      the Products will, under normal use and operating conditions, be free of defects
      in materials and workmanship and will substantially conform to the User
      Documentation.

     

    EXCEPT
      FOR THESE EXPRESS LIMITED WARRANTIES, RESELLER AND ANY END USER ACCEPT THE
      PRODUCTS “AS IS” WITH NO OTHER EXPRESS OR IMPLIED WARRANTIES OR CONDITIONS OF
      ANY KIND, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR
      FITNESS FOR A PARTICULAR PURPOSE. RESELLER MAKES NO WARRANTIES REGARDING THE
      APPLICATION(S) OR SOLUTIONS.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    6.2 Hold
      Harmless.
      Both
      SPLINTERNET and RESELLER shall mutually hold its officers, directors, agents
      and
      employees harmless from damages awarded to a third party by a final appealed
      court judgment on account of such third party’s claim of infringement by the
      Products of any U.S. patent issued as of the date of the first copy of the
      applicable Product or Software Copies, or any copyright, trademark or trade
      secret, provided SPLINTERNET is promptly notified of any and all threats, claims
      and proceedings related thereto and given reasonable assistance and the
      opportunity to assume sole control over the defense and all negotiations for
      a
      settlement or compromise; SPLINTERNET will not be responsible for any settlement
      it does not approve in writing. THE FOREGOING IS IN LIEU OF ANY WARRANTIES
      OF
      NON-INFRINGEMENT, WHICH ARE HEREBY DISCLAIMED. The foregoing obligation of
      SPLINTERNET does not apply with respect to any products or portions or
      components thereof (i) not supplied by SPLINTERNET, (ii) made in whole or in
      part in accordance to RESELLER specifications, (iii) which are modified after
      shipment by RESELLER, if the alleged infringement relates to such modification,
      (iv) combined with other products, processes or materials where the alleged
      infringement relates to such combination, (v) where RESELLER continues allegedly
      infringing activity after being notified thereof or after being informed of
      modifications that would have avoided the alleged infringement, or (vi) where
      RESELLER’s use of the Products or Software is incident to an infringement not
      resulting primarily from the Products or is not strictly in accordance with
      the
      License.

     

    6.3 Remedy.
      RESELLER’s sole remedy for SPLINTERNET’s breach of Section 5.1(ii) is outlined
      under SPLINTERNET’s Support policy in Exhibit B. SPLINTERNET shall, in its sole
      discretion and at its option, provide modifications to keep the Software in
      substantial conformance with the related User Documentation, replace the
      Products, or refund the license fees paid to SPLINTERNET for the defective
      Products.

     

    6.4 Indemnification.
      RESELLER
      and SPLINTERNET shall, at their own expense, indemnify, defend, save and hold
      harmless each other from and against any claim, loss, expense, or judgment
      (including reasonable attorneys fees) which arises (i) from any asserted failure
      by either party to act in accordance with this Agreement; (ii)
      misrepresentations made by either party, or (iii) from any other act or failure
      to act by either party, its employees or agents.

     

    6.5 RESELLER’s
      Indemnification.
      RESELLER
      shall, at its expense, indemnify, defend, save and hold harmless SPLINTERNET
      from and against any claim, loss, expense, or judgment (including reasonable
      attorneys fees) which arises (i) from any warranties granted in excess of those
      made by SPLINTERNET in this Agreement, (ii) inadequate installation maintenance
      or support of the Products or Software Copies by RESELLER; (iii) the marketing
      of the Products or Software Copies by RESELLER; or (iv) from infringement by
      the
      Applications or solutions or any material supplied by RESELLER of any patent,
      copyright, trademark or trade secret of any third party.

     

    ARTICLE
      7.  LIMITATION
      OF LIABILITY

     

    7.1 IN
      NO
      EVENT WILL SPLINTERNET BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL
      DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST REVENUES OR PROFITS), EVEN IF
      ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT FOR ITS OBLIGATIONS UNDER
      SECTION 5.2 ABOVE, SPLINTERNET’S LIABILITY TO RESELLER OR ANY THIRD PARTY FOR A
      CLAIM OF ANY KIND RELATED TO THIS AGREEMENT OR ANY PRODUCTS WHETHER FOR BREACH
      OF CONTRACT OR WARRANTY, STRICT LIABILITY, NEGLIGENCE OR OTHERWISE, SHALL NOT
      EXCEED THE AGGREGATE OF FEES PAID TO SPLINTERNET FOR THE PRODUCTS OR SERVICES
      INVOLVED IN THE CLAIM. NO ACTION, REGARDLESS OF FORM ARISING OUT OF THE
      TRANSACTIONS UNDER THIS AGREEMENT MAY BE BROUGHT BY EITHER PARTY MORE THAN
      1
      YEAR AFTER THE EVENTS WHICH GAVE RISE TO THE CAUSE OF ACTION
      OCCURRED.

     

    
      
         

      

      
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    ARTICLE
      8.  RECORDS,
      FEES, AUDITS, PAYMENTS, DISCOUNTS

     

    8.1 License
      Fees.

     

    (a) RESELLER
      shall pay to SPLINTERNET a license fee (“License Fee”) for Products licensed
      hereunder, as set forth in Appendix B.

     

    (b) RESELLER
      acknowledges and agrees that all fees payable by RESELLER to SPLINTERNET for
      Products or Software Copies resold by RESELLER hereunder shall be based upon
      the
      number of embedded Software Copies or Products distributed by RESELLER with
      its
      Applications. Each payment shall be accompanied by the corresponding Copy Record
      as described in this Section 8. RESELLER shall have the right to set the fees
      it
      charges to End Users in its sole discretion. 

     

    (c) For
      each
      Software Copy manufactured, distributed or sold by RESELLER, RESELLER shall
      maintain complete and accurate records (“Copy Records”) indicating for each
      quarter: the Product name and the number of licenses resold. Within 30 business
      days of the end of each quarter, RESELLER shall deliver to SPLINTERNET the
      Copy
      Records applicable to that quarter in a report in the form of Appendix E
      accompanied by any additional payment due to SPLINTERNET relating to such Copy
      Records.

     

    (d) No
      more
      than once each year, at SPLINTERNET’s expense and with ten (10) days prior
      written notice, SPLINTERNET may audit all records of RESELLER relating to this
      Agreement during RESELLER’s normal business hours. If an audit reveals that the
      amount which should have been paid to SPLINTERNET is at least five percent
      (5%)
      more than the amount reported by RESELLER, RESELLER shall pay the cost of the
      audit to SPLINTERNET. Any shortfall uncovered as a result of an audit as well
      as
      the cost of the audit, if required by the preceding sentence, shall be paid
      by
      RESELLER to SPLINTERNET within 30 days of the date SPLINTERNET notifies RESELLER
      that an amount is due.

     

    (e) RESELLER
      shall pay any amounts owed to SPLINTERNET on the first day of the second month
      of each quarter according to the schedule in Appendix E. The amounts owed must
      be paid in full. Any amount that is recognized by RESELLER above the minimum
      commitments specified in the Schedule in Appendix E, may be rolled forward
      for a
      maximum of one (1) quarter and according to the terms of this Agreement. Each
      party is solely responsible for its own expenses incurred in the performance
      of
      this Agreement. If RESELLER fails to make any payment when due, and upon 10
      days
      advance written notice, this Agreement will terminate.

     

    
      
         

      

      
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    (f) Payments
      will be in United States dollars. Any overdue amount shall bear interest at
      a
      rate of eight percent (8%) per annum or the maximum rate allowed by law if
      less.
      Costs of conversion, outside collection and related bank charges shall be paid
      by RESELLER. RESELLER shall be responsible for all taxes, tariffs and
      transportation costs related to this Agreement (including any value added or
      sales taxes) other than taxes measured by or in relation to SPLINTERNET’s
      income. All shipments by SPLINTERNET shall be F.O.B. origin. Risk of loss and
      damage will pass to RESELLER upon delivery to a shipper at SPLINTERNET’s
      facility.

     

    (g) Discounts
      do not apply to User Documentation ordered separately, marketing collateral
      materials, or other products or services offered by SPLINTERNET and not
      mentioned in Appendix B.

     

    (h) Subsequent
      to the end of the Initial Term, discounts shall continue in the Initial Term
      until such a time as otherwise negotiated between the parties.

     

    ARTICLE
      9.  TERM
      AND TERMINATION

     

    9.1 Initial
      Term.
      The term
      of this Agreement shall be three (3) years from December 15, 2007 (“Initial
      Term”). At the expiration of the Initial Term, this Agreement shall
      automatically renew annually for successive calendar years unless terminated
      according to this Section 9.

     

    9.2 Termination.
      This
      Agreement will terminate: (a) for breach of any material term of this Agreement
      or for failure to pay any amount when due, upon 10 days prior written notice
      by
      the non-breaching party to the other, unless the cause is susceptible of being
      cured and is cured within the 10 day notice period; (b) immediately upon written
      notice to RESELLER in the event RESELLER breaches Sections 3.3, 3.7, 3.8, 3.10,
      3.14, 5.2, 5.4 and 5.5; (c) immediately in the event RESELLER assigns this
      Agreement without SPLINTERNET’s prior written consent; (d) immediately and
      automatically if a receiver or other liquidating officer is appointed for
      substantially all of the assets or business of RESELLER, or if RESELLER makes
      an
      assignment for the benefit of creditors, or RESELLER becomes insolvent or
      bankrupt or the rights or interest of RESELLER under this Agreement become
      attached under any bankruptcy, insolvency or reorganization proceedings; (e)
      at
      RESELLER’s option if a receiver or other liquidating officer is appointed for
      substantially all of the assets or business of SPLINTERNET, or if SPLINTERNET
      makes an assignment for the benefit of creditors, or SPLINTERNET becomes
      insolvent or bankrupt or the rights or interest of SPLINTERNET under this
      Agreement become attached under any bankruptcy, insolvency or reorganization
      proceedings; or (f) upon written notice given by either party to the other
      at
      least 60 days prior to the end of the then current term. The date termination
      becomes effective is called the “Termination Date”.

     

    9.3 Rights
      Upon Termination.
      If this
      Agreement is terminated pursuant to Section 9.2 all rights granted under this
      Agreement will terminate. If this Agreement is terminated for any other reason,
      all rights granted under this Agreement shall terminate, except for RESELLER’s
      continued right to use Software Copies for the sole purpose of fulfilling any
      existing contractual obligations for services to End Users and for its internal
      Development License. Use after the Termination Date shall be subject to all
      the
      restrictions contained herein and those provisions of this Agreement which
      survive termination. Upon termination or expiration of this Agreement, RESELLER
      will immediately cease to be an authorized SPLINTERNET VAR and shall refrain
      from representing itself as such and from using any SPLINTERNET trademark or
      tradename.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    9.4 Return
      of Confidential Information.
      Subject
      to Section 9.3, within thirty (30) days of the Termination Date, all Products,
      Confidential Information of SPLINTERNET and related materials in RESELLER’s
      possession or control shall be returned to SPLINTERNET, or, upon SPLINTERNET’s
      written request, destroyed by RESELLER. Similarly, subject to Section 9.3,
      within 30 days of the Termination Date, all Confidential Information of RESELLER
      and related materials in SPLINTERNET’s possession or control shall be returned
      to RESELLER or, upon RESELLER’s written request, destroyed by
      SPLINTERNET.

     

    9.5 Payment
      Upon Termination.
      All
      outstanding obligations due on or before the Termination Date per the Agreement
      will become due and payable within thirty (30) days after such termination
      or
      the period otherwise provided in this Agreement, whichever is
      earlier.

     

    9.6 Survival
      of Obligations.
      All
      sections of this Agreement which by their terms imply an on-going obligation
      shall survive any termination of this Agreement.

     

    ARTICLE
      10.  ESCROW

     

    10.1 Escrow
      of Source Code.
      SPLINTERNET and RESELLER shall enter into an escrow agreement in the form
      attached as Appendix F (“Escrow Agreement”) where SPLINTERNET shall place in
      escrow with Escrow Associates, or a third party acceptable to RESELLER fully
      annotated source code of the Product only for the purpose of maintaining and
      supporting the Application and all related documentation. RESELLER shall be
      solely responsible for all charges related to the establishment and
      implementation of the Escrow Agreement. RESELLER shall be entitled to receive
      a
      copy of the foregoing materials from escrow in accordance with the terms and
      conditions of the Escrow Agreement executed by the parties.

     

    ARTICLE
      11.  GENERAL
      TERMS

     

    11.1 Independent
      Contractor.
      The
      parties hereto expressly understand and agree that each party is an independent
      contractor in the performance of each and every part of this Agreement, is
      solely responsible for all of its employees and agents and its labor costs
      and
      expenses arising in connection therewith. Neither party is in any manner
      associated with or otherwise connected with the actual performance of this
      Agreement on the part of the other party, nor with the other party’s employment
      of other persons or incurring of other expenses.

     

    
      
         

      

      
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    11.2 Changes
      to Products.
      SPLINTERNET has the right at its sole discretion, with sixty (60) days advanced
      notice to RESELLER, to make changes in the design or specifications of the
      Products at any time.

     

    11.3 Assignments.
      This
      Agreement may not be assigned by RESELLER without the prior written consent
      of
      SPLINTERNET, which shall not be unreasonably withheld. Any purported assignment
      in contravention of this section is null and void. Notwithstanding the foregoing
      this Agreement shall bind and inure to the benefit of any successors or
      assigns.

     

    11.4 Force
      Majeure.
      Neither
      party will be responsible for failure of performance, other than for any
      obligation to pay money, due to causes beyond its control, including without
      limitation, acts of God or nature; acts of war or terrorism; communications
      or
      power line failures or interruptions; labor disputes; sovereign acts of any
      federal, state or foreign government; or shortage of materials.

     

    11.5 Notices.
      Notices
      will be delivered to a party’s address to the following individuals outlined
      below, or to another address which a party properly notified the other that
      notices should be sent:

    

    
      	
              If
                to SPLINTERNET:

               

              James
                Ackerly

              Splinternet
                Holdings, Inc

              535
                Connecticut Avenue

              Norwalk,
                CT 06854

              P:
                203-354-9164

              F:
                800-536-1952

            	
              If
                to VIDIATION, LLC:

               

              108
                South Wynstone Park Drive

              Suite
                #117

              N.
                Barrington, IL 60010

              Attention:
                Frank O’Connor, CEO

              Phone:
                (224) 633-2362

              Fax:
                (847) 387-3137

            

    

     

    11.6 Entire
      Agreement.
      This
      Agreement, including all attachments, exhibits and appendices, is the complete
      and exclusive statement of the parties to this Agreement on these subjects,
      and
      supersedes all prior written or oral proposals and understandings relating
      thereto. Except as otherwise provided, this Agreement may only be modified
      by a
      writing signed by an authorized officer of each of the parties. This Agreement
      takes precedence over any purchase order issued by RESELLER, which is accepted
      by SPLINTERNET for administrative convenience only. To the extent there is
      a
      conflict between this Agreement and the End User Agreement, the terms of this
      Agreement control. If any court of competent jurisdiction determines that any
      provision of this Agreement is invalid, the remainder of the Agreement will
      continue in full force and effect. The offending provision shall be interpreted
      to whatever extent possible to give effect to its stated intent.

     

    11.7 No
      Waiver.
      Failure
      to require performance of any provisions or waiver of a breach of a provision
      does not waive a party’s right to subsequently require full and proper
      performance of that provision. Singular terms will be construed as plural,
      and
      vice versa. Section headings are for convenience only and will not be considered
      part of this Agreement.

     

    
      
         

      

      
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    11.8 Governing
      Law.
      This
      Agreement is governed by the laws of the State of Connecticut without giving
      effect to its conflict of law provisions. The United Nations Convention on
      Contracts for the International Sales of Goods will not apply to this Agreement.
      SPLINTERNET may seek to enforce or prevent a breach of any term of this
      Agreement in the appropriate courts of any state or country in which the
      Products are deployed by RESELLER or in which RESELLER maintains an office.
      The
      prevailing party in any suit under this Agreement shall recover all costs,
      expenses and reasonable attorney fees incurred in such action. Nothing in this
      Agreement will be deemed a waiver by either party of any and all available
      legal
      or equitable remedies.

    

    
      	
              VIDIATION,
                LLC

               

              By:
                

              Frank
                O’Connor

              CEO

              108
                South Wynstone Park Drive

              Suite
                #117

              N.
                Barrington, IL 60010

            	
              SPLINTERNET

               

              

            

    

     

    
      
         

      

      
        15

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