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Exhibit 10.22    
    

 
  INDEMNIFICATION AGREEMENT    
    

        INDEMNIFICATION AGREEMENT (this "Agreement") dated as
of                        , 2004 by and among Alibris, Inc.,
a Delaware corporation (the "Company") and the indemnitees listed on the signature pages hereto (individually, as "Indemnitee" and, collectively, the "Indemnitees"). 

RECITALS  

        A.    The
Company and Indemnitees recognize the continued difficulty in obtaining liability insurance for its directors, officers, employees, shareholders, controlling persons,
agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. 

        B.    The
Company and Indemnitees further recognize the substantial increase in corporate litigation in general, which subjects directors, officers, employees, controlling
persons, shareholders, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. 

        C.    The
Indemnitees do not regard the current protection available as adequate under the present circumstances, and Indemnitees and other directors, officers, employees,
controlling persons, agents and fiduciaries of the Company may not be willing to serve in such capacities without additional protection. 

        D.    The
Company (i) desires to attract and retain highly qualified individuals and entities, such as Indemnitees, to serve the Company and, in part, in order to induce
each Indemnitee to be involved with the Company and (ii) wishes to provide for the indemnification and advancing of expenses to each Indemnitee to the maximum extent permitted by law. 

        E.    In
view of the considerations set forth above, the Company desires that each Indemnitee be indemnified by the Company as set forth herein. 

        NOW, THEREFORE, the Company and each Indemnitee hereby agree as follows: 

        1.    Indemnification.    

        a.    Indemnification of Expenses.    

          (i)  Prior
to the effective date of the initial public offering of the Company's Common Stock pursuant to a registration statement declared effective by the Securities and
Exchange Commission (the "IPO") and subject to Section 21 below, the Company shall indemnify and hold harmless each Indemnitee (including its respective directors, officers, partners, members,
employees, agents and spouse, as applicable) and each person who controls any of them or who may be liable within the meaning of Section 15 of the Securities Act of 1933, as amended (the
"Securities Act"), or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the fullest extent permitted by law if such Indemnitee was or is or becomes a party
to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that such Indemnitee believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution
mechanism, whether civil, criminal, administrative, investigative or other (hereinafter a "Claim") by reason of (or arising in part or in whole out of) any event or occurrence related to the fact that
Indemnitee is or was or may be deemed a director, officer, shareholder, employee, controlling person, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was or may be deemed
to be serving at the request of the Company as a director, officer, shareholder, employee, 

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controlling
person, agent or fiduciary of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of
such Indemnitee while serving in such capacity including, without limitation, any and all losses, claims, damages, expenses and liabilities, joint or several (including any investigation, legal and
other expenses actually and reasonably incurred in connection with, and any amount paid in settlement of, any action, suit, proceeding or any claim asserted) under the Securities Act, the Exchange Act
or other federal or state statutory law or regulation, at common law or otherwise or which relate directly or indirectly to the registration, purchase, sale or ownership of any securities of the
Company or to any fiduciary obligation owed with respect thereto or as a direct or indirect result of any Claim made by any shareholder of the Company against an Indemnitee and arising out of or
related to any round of financing of the Company (including but not limited to Claims regarding non-participation, or non-pro rata participation, in such round by such
shareholder) or made by a third party against an Indemnitee based on any misstatement or omission of a material fact by the Company in violation of any duty of disclosure imposed on the Company by
federal or state securities or common laws, provided that the indemnity provided for under this Agreement shall not apply to any Expenses (as defined
below) to the extent that they arise out of or are based on a Claim which occurs in reliance on and in conformity with written information furnished expressly for use in connection with such
registration by such Indemnitee or any partner, member, officer, director, employee, underwriter or controlling person of such Indemnitee (hereinafter, a "Pre-IPO Indemnification Event")
against any and all expenses actually and reasonably incurred (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending a witness in
or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or
investigation), judgments, fines, penalties and amounts paid in settlement (if, and only if, such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld)
of such Claim and any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, (collectively, hereinafter
"Expenses"), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. Such payment of Expenses shall be made by the Company as soon as
practicable but in any event no later than ten (10) days after written demand by the Indemnitee therefor is presented to the Company. 

         (ii)  On
and after the IPO and subject to Section 21 below, the Company shall indemnify and hold harmless each Indemnitee (including its respective directors,
officers, partners, members, employees, agents and spouse, as applicable) and each person who controls any of them or who may be liable within the meaning of Section 15 of the Securities Act,
or Section 20 of the Exchange Act, to the fullest extent permitted by law if such Indemnitee was or is or becomes a party to or witness or other participant in, or is threatened to be made a
party to or witness or other participant in, any Claim by reason of (or arising in part or in whole out of) any event or occurrence related to the fact that Indemnitee is or was or may be deemed a
director, officer, employee, controlling person, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was or may be deemed to be serving at the request of the Company as a
director, officer, employee, controlling person, agent or fiduciary of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, or by reason of any action
or inaction on the part of such Indemnitee while serving in such capacity including, without limitation, any and all losses, claims, damages, expenses and liabilities, joint or several (including any
investigation, legal and other expenses actually and reasonably incurred in connection with, and any amount paid in settlement of, any action, suit, proceeding or any claim asserted) under the
Securities Act, the Exchange Act or other 

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federal
or state statutory law or regulation, at common law or otherwise (hereinafter a "Post Indemnification Event", and collectively with a Pre-IPO Indemnification Event, an
"Indemnification Event") against any and all Expenses. Such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than ten (10) days after written
demand by the Indemnitee therefor is presented to the Company. 

        b.    Reviewing Party.    Notwithstanding the foregoing, (i) the obligations of the Company under
Section 1(a) shall be subject to the condition that the Reviewing Party (as described in Section 10(e) hereof) shall not have determined (in a written opinion, in any case in which the
Independent Legal Counsel referred to in Section 1(e) hereof is involved) that Indemnitee would not be permitted to be indemnified under applicable law or Section 8 hereof, and
(ii) each Indemnitee acknowledges and agrees that the obligation of the Company to make an advance payment of Expenses to Indemnitee pursuant to Section 2(a) (an "Expense Advance") shall
be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law or Section 8
hereof, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has
commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law or Section 8
hereof, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law or Section 8 hereof shall not be binding and Indemnitee shall
not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). Indemnitee's obligation to reimburse the Company for any Expense Advance shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control (as defined in
Section 10(c) hereof), the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control (other than a Change in Control which has been approved by
a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), the Reviewing Party shall be the Independent Legal Counsel referred to in
Section 1(e) hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in
whole or
in part under applicable law or Section 8 hereof, Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by
the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination
by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 

        c.    Contribution.    If the indemnification provided for in Section 1(a) above for any reason (other than the
statutory limits of applicable law or Section 8 hereof) is held by a court of competent jurisdiction to be unavailable to an Indemnitee in respect of any losses, claims, damages, expenses or
liabilities referred to therein, then the Company, in lieu of indemnifying such Indemnitee thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such
Indemnitee as a result of such losses, claims, damages, expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the
Indemnitee, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and the Indemnitee in connection with the action or inaction which resulted in such losses, claims, damages, expenses
or liabilities, as well as any other relevant equitable considerations. In connection with the registration of the Company's securities, the relative benefits received by the Company and the
Indemnitee shall be deemed to be in the same respective proportions that the net proceeds from the offering 

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(before
deducting expenses) received by the Company and the Indemnitee, in each case as set forth in the table on the cover page of the applicable prospectus, bear to the aggregate public offering
price of the securities so offered. The relative fault of the Company and the Indemnitee shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. 

        d.     The
Company and the Indemnitee agree that it would not be just and equitable if contribution pursuant to this Section 1(c) were determined by pro rata or per
capita allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. In connection with the
registration of the Company's securities, in no event shall Indemnitee be required to contribute any amount under this Section 1(c) in excess of the lesser of (i) that proportion of the
total of such losses, claims, damages or liabilities indemnified against equal to the proportion of the total securities sold under such registration statement which is being sold by such Indemnitee
or (ii) the proceeds received by such Indemnitee from its sale of securities under such registration statement. No person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation. 

        e.    Survival Regardless of Investigation.    The indemnification and contribution provided for in this
Section 1 will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnitee or any officer, director, employee, agent or controlling person of the
Indemnitee. 

        f.    Change in Control.    The Company agrees that if there is a Change in Control of the Company (other than a
Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then, with respect to all matters thereafter
arising concerning the rights of Indemnitee to payments of Expenses under this Agreement or any other agreement or under the Company's Certificate of Incorporation, as amended (the "Certificate"), or
Bylaws as now or hereafter in effect, Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected by the Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be
indemnified under applicable law and Section 8 hereof. The Company agrees to abide by such opinion and to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. 

        g.    Mandatory Payment of Expenses.    Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in the defense of any action, suit, proceeding, inquiry or
investigation referred to in Section 1(a) hereof or in the defense of any claim, issue or matter therein, each Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by such Indemnitee in connection herewith. 

        2.    Expenses; Indemnification Procedure.    

        a.    Advancement of Expenses.    Subject to Section 8 and except as prohibited by applicable law, the Company
shall advance all Expenses actually and reasonably incurred by Indemnitee in connection with investigating, defending a witness in or participating in (including on appeal), or 

4

 

preparing
to defend, be a witness in or participate in, any Claim by reason of an Indemnification Event. The advances to be made hereunder shall be paid by the Company to Indemnitee as soon as
practicable but in any event no later than fifteen (15) days after written demand by such Indemnitee therefor to the Company. Each Indemnitee hereby undertakes to promptly repay such amounts
advanced only if, and to the extent that, it shall ultimately be determined by a court of competent jurisdiction that such Indemnitee is not entitled to be indemnified by the Company under the
provisions of this Agreement, the Certificate of Incorporation or Bylaws of the Company, applicable law or otherwise. 

        b.    Notice/Cooperation by Indemnitee.    Indemnitee shall give the Company notice as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company at
the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). 

        c.    No Presumptions; Burden of Proof.    For purposes of this Agreement, the termination of any Claim by judgment,
order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee
has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified
under applicable law, shall be a defense to Indemnitee's claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In
connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled. 

        d.    Notice to Insurers.    If, at the time of the receipt by the Company of a notice of a Claim pursuant to
Section 2(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt written notice of the commencement of such Claim to the insurers in
accordance with the procedures set forth in each of the policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such action, suit, proceeding, inquiry or investigation in accordance with the terms of such policies. 

        e.    Selection of Counsel.    In the event the Company shall be obligated hereunder to pay the Expenses of any Claim,
the Company shall be entitled to assume the defense of such Claim, with counsel reasonably approved by the applicable Indemnitee, upon the delivery to such Indemnitee of written notice of its election
to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to such Indemnitee under this
Agreement for any fees of counsel subsequently incurred by such Indemnitee with respect to the same Claim; provided that, (i) the Indemnitee shall have the right to employ such Indemnitee's
counsel in any such Claim at the Indemnitee's expense; (ii) the Indemnitee shall have the right to employ its own counsel in connection with any such proceeding, at the expense of the Company,
if such counsel serves in a review, observer, advice and counseling capacity and does not otherwise materially control or participate in the defense of such proceeding; and (iii) if
(A) the employment of counsel by the Indemnitee has been previously authorized by the Company, (B) such Indemnitee shall have reasonably concluded that there is a conflict of interest
between the Company and such Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees 

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and
expenses of the Indemnitee's counsel shall be at the expense of the Company. The Company shall have the right to conduct such defense as it sees fit in its sole discretion, including the right to
settle any claim against the Indemnitee with the written consent of the Indemnitee that shall not be unreasonably withheld. 

        3.    Additional Indemnification Rights; Nonexclusivity.    

        a.    Scope.    The Company hereby agrees to indemnify Indemnitee with respect to Claims for Indemnification Events to
the fullest extent permitted by law, even if such indemnification is not specifically authorized by the other provisions of this Agreement or any other agreement, the Certificate, the Company's Bylaws
or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its Board
of Directors or an officer, shareholder, employee, controlling person, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits
afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its Board of Directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the
parties' rights and obligations hereunder except as set forth in Section 8(a) hereof. 

        b.    Nonexclusivity.    Notwithstanding anything in this Agreement, the indemnification provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the Certificate, the Company's Bylaws, any agreement, any vote of shareholders or disinterested directors, the laws of the
State of Delaware, or otherwise. Notwithstanding anything in this Agreement, the indemnification provided under this Agreement shall continue as to each Indemnitee for any action such Indemnitee took
or did not take while serving in an indemnified capacity even though the Indemnitee may have ceased to serve in such capacity and such indemnification shall inure to the benefit of each Indemnitee
from and after Indemnitee's first day of service as a director with the Company or affiliation with a
director from and after the date such director commences services as a director with the Company (subject however to Section 21 below). 

        4.    No Duplication of Payments.    The Company shall not be liable under this Agreement to
make any payment in connection with any Claim made against any Indemnitee to the extent such Indemnitee has otherwise actually received payment (under any insurance policy, Certificate, Bylaws or
otherwise) of the amounts otherwise indemnifiable hereunder. 

        5.    Partial Indemnification.    If any Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for any portion of Expenses actually and reasonably incurred in connection with any Claim, but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which such Indemnitee is entitled. 

        6.    Mutual Acknowledgement.    The Company and each Indemnitee acknowledge that in certain
instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, controlling persons, agents or fiduciaries under this Agreement or
otherwise. 

        7.    Liability Insurance.    To the extent the Company maintains liability insurance
applicable to directors, officers, employees, control persons, agents or fiduciaries, each Indemnitee shall be covered by such policies in such a manner as to provide Indemnitee the same rights and
benefits in all material respects as are accorded to the most favorably insured of the Company's directors, if such Indemnitee is a director, or of the Company's officers, if such Indemnitee is not a
director of the Company but is 

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an
officer; or of the Company's key employees, controlling persons, agents or fiduciaries, if such Indemnitee is not an officer or director but is a key employee, agent, control person, or fiduciary. 

        8.    Exceptions.    Any other provision herein to the contrary notwithstanding, the Company
shall not be obligated pursuant to the terms of this Agreement: 

        a.    Claims Initiated by an Indemnitee.    To indemnify or advance expenses to the Indemnitee with respect to Claims
initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or
statute or law, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit; 

        b.    Claims Under Section 16(b).    To indemnify any Indemnitee for expenses and the payment of profits
arising from the purchase and sale by such Indemnitee of securities in violation of Section 16(b) of the Exchange Act or any similar successor statute; 

        c.    Unlawful Indemnification.    To indemnify an Indemnitee if a final decision by a court having jurisdiction in
the matter shall determine that such indemnification is not lawful or would violate the fiduciary duty of the Board of Directors of the Company, or to indemnify an Indemnitee with respect to any Claim
brought by or in the name of the Company against an Indemnitee if a final decision by a court having jurisdiction in the matter shall determine that such indemnification would violate the fiduciary
duty of the Board of Directors of the Company; 

        d.    Unauthorized Settlements.    To indemnify the Indemnitees hereunder for any amounts paid in settlement of a
proceeding unless the Company consents in advance in writing to such settlement, which consent shall not be unreasonably withheld; 

        e.    Fraud.    To indemnify an Indemnitee if a final decision by a court having jurisdiction in the matter shall
determine that the Indemnitee has committed fraud on the Company or with respect to any intentional misconduct on the part of an Indemnitee; 

        f.    Company Contracts.    To indemnify an Indemnitee with respect to any Claim related to any dispute or breach
arising under any contract or similar obligation between the Company and such Indemnitee; or 

        g.    Insurance.    To indemnify any Indemnitee for which payment is actually and fully made to Indemnitee under a
valid and collectible insurance policy. 

        9.    Period of Limitations.    No legal action shall be brought and no cause of action shall
be asserted by or in the right of the Company against any Indemnitee, any Indemnitee's estate, spouse, heirs, executors or personal or legal representatives after the expiration of five
(5) years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a
legal action within such five (5) year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall
govern. 

        10.    Construction of Certain Phrases.    

        a.     For
purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees,
agents or fiduciaries, so that if Indemnitee is or was or may be deemed a director, officer, employee, agent, control person, or fiduciary of such constituent corporation, or is or was or may be
deemed to be serving at the request of such constituent corporation as a director, officer, employee, control 

7

 

person,
agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, each Indemnitee shall stand in the same position under the provisions
of this Agreement with respect to the resulting or surviving corporation as each Indemnitee would have with respect to such constituent corporation if its separate existence had continued. 

        b.     For
purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on
any Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee, agent or fiduciary of the
Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if
any Indemnitee acted in good faith and in a manner such Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, such Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement. 

        c.     For
purposes of this Agreement a "Change in Control" shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the shareholders of the
Company in substantially the same proportions as their ownership of stock of the Company, (A) who is or becomes the beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then outstanding Voting Securities, increases his beneficial ownership of such securities by 5% or more over the percentage so
owned by such person, or (B) becomes the "beneficial owner" (as defined in Rule 13d-3 under said Exchange Act), directly or indirectly, of securities of the Company
representing more than 30% of the total voting power represented by the Company's then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a majority of the Board of Directors of the Company, or (iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least two-thirds (2/3) of the total voting
power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of
complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company's assets. 

        d.     For
purposes of this Agreement, "Independent Legal Counsel" shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 1(e)
hereof, who shall not have otherwise performed services for the Company or any Indemnitee within the last three (3) years (other than with respect to matters concerning the right of any
Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements). 

        e.     For
purposes of this Agreement, a "Reviewing Party" shall mean any appropriate person or body consisting of a member or members of the Company's Board of Directors or any
other 

8

 

person
or body appointed by the Board of Directors who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel. 

        f.      For
purposes of this Agreement, "Voting Securities" shall mean any securities of the Company that vote generally in the election of directors. 

        11.    Counterparts.    This Agreement may be executed in one or more counterparts, each of
which shall constitute an original. 

        12.    Binding Effect; Successors and Assigns.    This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or
indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance
reasonably satisfactory to each Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such
succession had taken place. This Agreement shall continue in effect with respect to Claims relating to Indemnifiable Events regardless of whether any Indemnitee continues to serve as a director,
officer, employee, agent, controlling person, or fiduciary of the Company or of any other enterprise, including subsidiaries of the Company, at the Company's request. 

        13.    Attorneys' Fees.    In the event that any action is instituted by an Indemnitee under
this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, any Indemnitee shall be entitled to be paid all Expenses
actually and
reasonably incurred by such Indemnitee with respect to such action if such Indemnitee is ultimately successful in such action. In the event of an action instituted by or in the name of the Company
under this Agreement to enforce or interpret any of the terms of this Agreement, the Indemnitee shall be entitled to be paid Expenses actually and reasonably incurred by such Indemnitee in defense of
such action (including costs and expenses actually and reasonably incurred with respect to Indemnitee counterclaims and cross-claims made in such action), and shall be entitled to the advancement of
Expenses with respect to such action, in each case only to the extent that such Indemnitee is ultimately successful in such action. 

        14.    Notice.    All notices and other communications required or permitted hereunder shall
be in writing, shall be effective when given, and shall in any event be deemed to be given (a) five (5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day after the business day of deposit with Federal Express or
similar overnight courier, freight prepaid, or (d) one day after the business day of delivery by facsimile transmission, if deliverable by facsimile transmission, with copy by first class mail,
postage prepaid, and shall be addressed if to Indemnitee, at each Indemnitee's address as set forth beneath the Indemnitee's signature to this Agreement and if to the Company at the address of its
principal corporate offices (attention: Secretary) or at such other address as such party may designate by ten (10) days' advance written notice to the other party hereto. 

        15.    Severability.    The provisions of this Agreement shall be severable in the event that
any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and
the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitations,
each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or unenforceable. 

9

 

        16.    Choice of Law.    For so long as the Company is incorporated under the laws of Delaware
this Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents, entered into and
to be performed entirely within the State of Delaware, without regard to the conflict of laws principles thereof; provided that if in the future the
state of incorporation of the Company should change to another state then from and after such date (i) this Agreement shall be governed by and its provisions construed and enforced in
accordance with the laws of such state of incorporation, as applied to contracts between such state's residents, entered into and to be performed entirely within such state, without regard to the
conflict of laws principles thereof, and (ii) each reference in this Agreement to Delaware shall be replaced with a reference to such state. 

        17.    Subrogation.    In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee who shall execute all documents required and shall do all acts that may be necessary to secure such rights and
to enable the Company effectively to bring suit to enforce such rights. 

        18.    Amendment and Termination.    No amendment, modification, termination or cancellation
of this Agreement shall be effective unless it is in writing signed by the parties to be bound thereby. Notice of same shall be provided to all parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 

        19.    Corporate Authority.    The Board of Directors of the Company and its shareholders in
accordance with Delaware law have approved the terms of this Agreement. 

        20.    No Construction as Employment Agreement.    Nothing contained in this Agreement shall
be construed as giving an Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries. 

        21.    Termination.    Notwithstanding anything herein, the Company shall have no obligations
to any Indemnitee under this Agreement with respect to any Claims for any Indemnification Events arising from or related to events, circumstances and actions or omissions which occur or which are
alleged to have occurred ninety (90) days after the date on which Amal Johnson or any other person designated by or affiliated with (by employment or ownership) Lightspeed Venture Partners
(such date, the "Termination Date") no longer serves as a member of the Board of Directors, it being understood by the parties that each Indemnitee will be entitled to all of the benefits and rights
accorded such party under this Agreement with respect to any Claims for any Indemnification Events arising from or related to events, circumstances and actions or omissions which have occurred or
which are alleged to have occurred prior to the Termination Date. 

        22.    Termination of Previous Agreement.    Upon execution of this Agreement by the parties,
the Company and each Indemnitee acknowledges and agrees that the Indemnification Agreement between the Indemnitee[s] and Alibris, a California corporation, dated as of
                        , (the "California Agreement") is terminated as of
the date of this Agreement and shall have no further force or legal effect, provided
that it being understood by the parties that each Indemnitee will be entitled to all of the benefits and rights accorded such party under the California Agreement with respect to any Claims for any
Indemnification Events arising from or related to events, circumstances and actions or omissions which have occurred or which are alleged to have occurred prior to the date of this Agreement. 

[Remainder
of Page Left Blank] 

10

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written. 

	 	 	ALIBRIS, INC.

a Delaware corporation
	

 	
 	
By:	

 
	 	 	 	

	

 	
 	
INDEMNITEES:
	

 	
 	

Individual:
	

 	
 	

    
	

 	
 	

Entity:
	

 	
 	

 
     
	
 	
 	

By:	

 
	 	 	 	
    

11

QuickLinks

Exhibit 10.22

INDEMNIFICATION AGREEMENTExhibit 10.4

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of January 6, 2004

 

among

 

JOS. A. BANK CLOTHIERS, INC.,

as Company,

 

 

THE LENDERS NAMED HEREIN,

as Lenders,

 

and

 

WELLS FARGO RETAIL FINANCE II, LLC,

as Agent

 

and

 

NATIONAL CITY COMMERCIAL FINANCE, INC.,

as Documentation Agent

 

 

 

TABLE OF CONTENTS

 

	
  Section 1.  DEFINITIONS

  	
   

  
	
   

  	
  1.1.  Certain Defined Terms

  	
   

  
	
   

  	
  1.2. 
  Accounting Terms; Utilization of GAAP for Purposes of Calculations
  Under Agreement

  	
   

  
	
   

  	
  1.3. 
  Other Definitional Provisions.

  	
   

  
	
   

  	
   

  
	
  Section 2.  AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES

  	
   

  
	
   

  	
  2.1.  Loans and Notes

  	
   

  
	
   

  	
  2.2.  Letters of Credit

  	
   

  
	
   

  	
  2.3.  Interest on the Loans

  	
   

  
	
   

  	
  2.4.  Fees.

  	
   

  
	
   

  	
  2.5.  Prepayments and Payments

  	
   

  
	
   

  	
  2.6.  [Intentionally Omitted].

  	
   

  
	
   

  	
  2.7. 
  Special Provisions Governing LIBOR Rate Loans

  	
   

  
	
   

  	
  2.8. 
  Increased Costs; Taxes; Capital Adequacy.

  	
   

  
	
   

  	
  2.9. 
  Lenders’ Obligation to Mitigate.

  	
   

  
	
   

  	
  2.10.  Security for the Loans

  	
   

  
	
   

  	
   

  
	
  Section 3.  CONDITIONS TO LOANS AND LETTERS OF CREDIT

  	
   

  
	
   

  	
  3.1. 
  Conditions to Term Loans and Initial Loans.

  	
   

  
	
   

  	
  3.2.  Conditions to All Loans.

  	
   

  
	
   

  	
  3.3. 
  Conditions to Letters of Credit.

  	
   

  
	
   

  	
   

  
	
  Section 4.  COMPANY’S REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
  4.1. 
  Organization, Powers, Good Standing, Business and Subsidiaries.

  	
   

  
	
   

  	
  4.2. 
  Authorization of Borrowing, etc.

  	
   

  
	
   

  	
  4.3.  Financial Condition

  	
   

  
	
   

  	
  4.4.  No Adverse Material Change

  	
   

  
	
   

  	
  4.5. 
  Title to Properties; Liens

  	
   

  
	
   

  	
  4.6.  Litigation; Adverse
  Facts

  	
   

  
	
   

  	
  4.7.  Payment of Taxes

  	
   

  
	
   

  	
  4.8. 
  Materially Adverse Agreements; Performance

  	
   

  
	
   

  	
  4.9.  Governmental Regulation.

  	
   

  
	
   

  	
  4.10.  [Intentionally
  Omitted].

  	
   

  
	
   

  	
  4.11.  Employee Benefit Plans

  	
   

  
	
   

  	
  4.12.  Disclosure

  	
   

  
	
   

  	
  4.13.  Security Interests

  	
   

  
	
   

  	
  4.14. 
  Environmental Protection.

  	
   

  
	
   

  	
  4.15.  Employee Matters.

  	
   

  
				

 

 

	
  Section 5.  COMPANY’S AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
  5.1. 
  Financial Statements and Other Reports

  	
   

  
	
   

  	
  5.2.  Corporate Existence,
  etc.

  	
   

  
	
   

  	
  5.3. 
  Payment of Taxes and Claims; Tax Consolidation.

  	
   

  
	
   

  	
  5.4. 
  Equal Security for Loans and Notes; No Further Negative Pledges.

  	
   

  
	
   

  	
  5.5. 
  Maintenance of Properties; Insurance

  	
   

  
	
   

  	
  5.6.  Inspection.

  	
   

  
	
   

  	
  5.7.  Compliance with Laws,
  etc

  	
   

  
	
   

  	
  5.8. 
  Collateral Documents: Further Assurances.

  	
   

  
	
   

  	
  5.9. 
  Environmental Disclosure and Inspection.

  	
   

  
	
   

  	
  5.10. 
  Company’s Remedial Action Regarding Hazardous Materials

  	
   

  
	
   

  	
  5.11.  Environmental
  Indemnity.

  	
   

  
	
   

  	
  5.12.  [Intentionally
  Omitted].

  	
   

  
	
   

  	
  5.13.  Appraisals

  	
   

  
	
   

  	
  5.14.  [Intentionally
  Omitted].

  	
   

  
	
   

  	
   

  
	
  Section 6.  COMPANY’S NEGATIVE COVENANTS

  	
   

  
	
   

  	
  6.1.  Indebtedness

  	
   

  
	
   

  	
  6.2.  Liens and Related
  Matters

  	
   

  
	
   

  	
  6.3.  Investments.

  	
   

  
	
   

  	
  6.4.  Contingent Obligations.

  	
   

  
	
   

  	
  6.5.  Restricted Payments

  	
   

  
	
   

  	
  6.6.  Minimum EBITDA.

  	
   

  
	
   

  	
  6.7. 
  Restriction on Fundamental Changes; Issuance of Preferred Stock.

  	
   

  
	
   

  	
  6.8.  Conduct of Business.

  	
   

  
	
   

  	
  6.9.  [Intentionally Omitted].

  	
   

  
	
   

  	
  6.10.  Sales and Lease-Backs

  	
   

  
	
   

  	
  6.11. 
  Sale or Discount of Receivables.

  	
   

  
	
   

  	
  6.12. 
  Transactions with Shareholders and Affiliates.

  	
   

  
	
   

  	
  6.13. 
  Disposal of Subsidiary Stock. Company will not,

  	
   

  
	
   

  	
   

  
	
  Section 7.  EVENTS OF
  DEFAULT

  	
   

  
	
   

  	
  7.1. 
  Failure to Make Payments When Due.

  	
   

  
	
   

  	
  7.2. 
  Default in Other Agreements.

  	
   

  
	
   

  	
  7.3.  Breach of Warranty.

  	
   

  
	
   

  	
  7.4. 
  Other Defaults Under Agreement.

  	
   

  
	
   

  	
  7.5. 
  Involuntary Bankruptcy; Appointment of Receiver, etc

  	
   

  
	
   

  	
  7.6. 
  Voluntary Bankruptcy; Appointment of Receiver, etc.

  	
   

  
	
   

  	
  7.7. 
  Judgments and Attachments.

  	
   

  
	
   

  	
  7.8.  Dissolution.

  	
   

  
	
   

  	
  7.9.  Employee Benefit Plans

  	
   

  
	
   

  	
  7.10.  Invalidity of Guaranty.

  	
   

  
	
   

  	
  7.11.  Failure of Security

  	
   

  
	
   

  	
  7.12. 
  [Intentionally Omitted].

  	
   

  
					

 

2

 

	
   

  	
  7.13.  [Intentionally Omitted].

  	
   

  
	
   

  	
   

  
	
  Section 8.  AGENT

  	
   

  
	
   

  	
  8.1.  Appointment

  	
   

  
	
   

  	
  8.2.  Powers; General
  Immunity.

  	
   

  
	
   

  	
  8.3. 
  Representations and Warranties; No Responsibility For Appraisal of
  Creditworthiness.

  	
   

  
	
   

  	
  8.4.  Right to Indemnity.

  	
   

  
	
   

  	
  8.5. 
  Payee of Note Treated as Owner

  	
   

  
	
   

  	
  8.6.  [Intentionally Omitted].

  	
   

  
	
   

  	
  8.7.  Collateral Documents

  	
   

  
	
   

  	
   

  
	
  Section 9.  MISCELLANEOUS

  	
   

  
	
   

  	
  9.1. 
  Assignments and Participations in Loans and Letters of Credit.

  	
   

  
	
   

  	
  9.2.  Expenses

  	
   

  
	
   

  	
  9.3.  Indemnity

  	
   

  
	
   

  	
  9.4.  Set Off

  	
   

  
	
   

  	
  9.5.  Ratable Sharing

  	
   

  
	
   

  	
  9.6.  Amendments and Waivers

  	
   

  
	
   

  	
  9.7. 
  Independence of Covenants and Defaults

  	
   

  
	
   

  	
  9.8.  Notices

  	
   

  
	
   

  	
  9.9. 
  Survival of Representations, Warranties and Agreements.

  	
   

  
	
   

  	
  9.10. 
  Failure or Indulgence Not Waiver; Remedies Cumulative

  	
   

  
	
   

  	
  9.11. 
  Marshalling; Payments Set Aside.

  	
   

  
	
   

  	
  9.12.  Severability.

  	
   

  
	
   

  	
  9.13. 
  Obligations Several; Independent Nature of Lenders’ Rights

  	
   

  
	
   

  	
  9.14.  Headings

  	
   

  
	
   

  	
  9.15.  Applicable Law.

  	
   

  
	
   

  	
  9.16.  Successors and Assigns

  	
   

  
	
   

  	
  9.17. 
  Consent to Jurisdiction and Service of Process.

  	
   

  
	
   

  	
  9.18.  Waiver of Jury Trial.

  	
   

  
	
   

  	
  9.19.  Confidentiality.

  	
   

  
	
   

  	
  9.20. 
  Counterparts; Effectiveness.

  	
   

  

 

3

 

Exhibits

 

	
  Exhibit I

  	
  Form of Assignment and Acceptance

  
	
  Exhibit II

  	
  Information Certificate

  
	
  Exhibit
  III

  	
  Form
  of Notice of [LIBOR Rate] Borrowing

  
	
  Exhibit IV

  	
  Form of Notice of Conversion or
  Continuation

  
	
  Exhibit V

  	
  Form of Revolving Note

  
	
  Exhibit VI

  	
  Form of Confirmation of Increase in
  Commitment

  
	
  Exhibit VII

  	
  Form of
  Landlord Lien Waiver Language

  

 

Schedules

 

	
  Schedule
  2.1

  	
  Commitments
  of Lenders

  
	
  Schedule
  4.6

  	
  Litigation

  

 

4

 

JOS. A. BANK CLOTHIERS, INC.

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of January 6, 2004

 

This Amended
and Restated Credit Agreement is dated as of January 6, 2004, and entered
into by and among JOS. A. BANK CLOTHIERS, INC., a Delaware corporation
(“Company”), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a “Lender” and collectively as
“Lenders”), and WELLS FARGO RETAIL FINANCE II, LLC (“WFRF”), as agent for
Lenders (in such capacity, “Agent”).

 

RECITALS

 

WHEREAS,
Company, Wells Fargo Bank, National Association (“Wells Fargo”) and certain
other financial institutions (collectively with Wells Fargo, the “Existing
Lenders”) are parties to that certain Fourth Amended and Restated Credit
Agreement dated as of April 30, 1996, as amended (the “Existing Credit
Agreement”).

 

WHEREAS, Wells
Fargo assigned 100% of its interests under the Existing Credit Agreement to
Foothill Capital Corporation (“Foothill”) pursuant to an Assignment and
Acceptance dated as of June 2, 1999;

 

WHEREAS,
Foothill assigned 100% of its interests under the Existing Credit Agreement to
WFRF pursuant to an Assignment and Acceptance dated as of March 26, 2003;

 

WHEREAS,
pursuant to the Existing Credit Agreement, the Existing Lenders have made
certain loans and issued certain letters of credit for the account of Company;

 

WHEREAS,
Company has requested that the credit facilities under the Existing Credit
Agreement be restructured in certain respects, and WFRF is willing to amend and
restate the Existing Credit Agreement to do so; and

 

WHEREAS,
Company, WFRF and Agent desire to amend the Existing Credit Agreement and
restate it in its entirety;

 

NOW,
THEREFORE, in consideration of the foregoing premises and the agreements,
provisions and covenants contained herein, Company, Lenders and Agent agree as
follows:

 

Section 1.  DEFINITIONS

 

1.1.  Certain Defined Terms

 

The following
terms used in this Agreement shall have the following meanings:

 

 

“Accordion
Activation” has the meaning assigned to that term in subsection 2.1H.

 

“Accordion
Amount” means an amount up to $25,000,000.

 

“Accordion
Commitment” means the commitments of Accordion Lenders to fund the Accordion
Amount as set forth in subsections 2.1H.

 

“Accordion
Lenders” means the Lenders identified as “Accordion Lenders” on Schedule 2.1
to this Agreement and, when used in the context of a particular Accordion
Commitment, shall mean Accordion Lenders having that Accordion Commitment.

 

“Adjustment
Date” means the first day of the month immediately following the month in which
a Compliance Certificate is to be delivered by Company pursuant to
subsection 5.1(vi)(b).

 

“Affiliate”,
as applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the
purposes of this definition, “control”, (including with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting Securities or by contract or
otherwise.

 

“Agent” has
the meaning assigned to that term in the introduction to this Agreement.

 

“Aggregate
Amounts Due” has the meaning assigned to that term in subsection 9.5.

 

“Agreement”
means this Amended and Restated Credit Agreement dated as of January 6,
2004, as it may be amended, restated or otherwise modified from time to time in
accordance with its terms.

 

“Applicable
Margin” means, for each period commencing on an Adjustment Date through the date
immediately preceding the next Adjustment Date (each a “Rate  Adjustment
Period”), the Applicable Margin shall be the applicable margin set forth
below with respect to the Excess Availability based on the average Excess
Availability for the fiscal quarter ended immediately prior to the applicable
Rate Adjustment Period.

 

	
  Level

  	
   

  	
  Excess
  Availability

  	
   

  	
  LIBOR

  Rate

  Margin

  	
   

  	
  Prime

  Rate

  Margin

  	
   

  	
  Documentary

  L/Cs

  	
   

  	
  Standby

  L/Cs

  	
   

  
	
  I

  	
   

  	
  Greater than $45,000,000

  	
   

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  	
  0.75

  	
  %

  	
  1.25

  	
  %

  
	
  II

  	
   

  	
  Less than or equal to $45,000,000 but greater than $20,000,000

  	
   

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  	
  1.00

  	
  %

  	
  1.375

  	
  %

  
	
  III

  	
   

  	
  Less
  than or equal to $20,000,000

  	
   

  	
  2.00

  	
  %

  	
  0.25

  	
  %

  	
  1.50

  	
  %

  	
  2.00

  	
  %

  

 

2

 

Notwithstanding
the foregoing, (a) for the Loans outstanding and the Letters of Credit fees
payable during the period commencing on the Closing Date and ending on the last
day of Company’s fiscal quarter ending on or about July of 2004, the
Applicable Margin shall be the Applicable Margin set forth in Level II above,
and (b) if Company fails to deliver any Compliance Certificate pursuant to
subsection 5.1(vi) hereof then, for the period commencing on the next
Adjustment Date to occur subsequent to such failure through the date
immediately following the date on which such Compliance Certificate is
delivered, the Applicable Margin shall be the highest Applicable Margin set
forth above.

 

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

 

“Assignment
and Acceptance” means an Assignment and Acceptance Agreement entered into by a
Lender and an Eligible Assignee, and accepted by Agent, in substantially the
form of Exhibit  I annexed hereto.

 

“Availability
Reserves” means such reserves as Agent from time to time determines in its
reasonable discretion as being appropriate to reflect the impediments to
Agent’s ability to realize upon the Collateral.  Without limiting the generality of the foregoing, Availability
Reserves may include (but are not limited to) reserves based on the
following:  (a) rent (in an amount to be
determined in Agent’s reasonable discretion, but which shall be no more than
two (2) months rent) for any leased store location in a jurisdiction which
recognizes landlord Liens for which a collateral access agreement, landlord
lien waiver or functional equivalent, in each case in form and substance
satisfactory to Agent (it being agreed by the parties hereto that landlord lien
waiver language contained within any lease in form substantially similar to the
language set forth on Exhibit  VII annexed hereto shall be deemed
acceptable by Agent), has not been received by Agent (irrespective of whether
any rent is currently due); (b) returns, customer credits, gift certificates,
layaway obligations, frequent shopper programs and similar liabilities of
Company and its Subsidiaries to their retail customers and prospective
customers; (c) payables (based upon payables which are 60 days or more past
due); (d) customer deposits; (e) taxes and other governmental charges,
including tax Liens, ad valorem, personal property, sales, and other taxes
which may have priority over the security interests of the Lenders in the
Collateral; (f) held or post-dated checks issued by Company; (g) any judgment
lien against Company or any Collateral; (h) Company’s failure to pay when due
and payable Indebtedness owing to any trade creditor; and (i) non-duplicative
Letter of Credit reserves; provided, however, Availability
Reserves shall not include reserves based on gift certificates or customer
deposits so long as Excess Availability exceeds $15,000,000.

 

“Bank
Products” means any service or facility extended to Company or its Subsidiaries
by Wells Fargo or any Affiliate of Wells Fargo including:  (a) credit cards, (b) credit card processing
services, (c) debit cards, (d) purchase cards, (e) automated

 

3

 

clearing house
transactions, (f) cash management, including controlled disbursement, accounts
or services, or (g) Interest Rate Agreements.

 

“Bankruptcy
Code” means Title 11 of the United States Code entitled “Bankruptcy” as now and
hereafter in effect, or any successor statute.

 

“Business Day”
means (i) for all purposes other than as covered by clause (ii) below, any day
excluding Saturday, Sunday and any day which is a legal holiday under the laws
of the Commonwealth of Massachusetts or is a day on which banking institutions
located in the Commonwealth of Massachusetts are authorized or required by law
or other governmental action to close, and (ii) with respect to all notices,
determinations, fundings and payments in connection with any LIBOR Rate Loans,
any day that is a Business Day described in clause (i) above and that is also a
day for trading by and between banks in Dollar deposits in the London interbank
market.

 

“Capital
Lease,” as applied to any Person, means any lease of any property (whether
real, personal or mixed) by that Person as lessee which is accounted for as a
capital lease on the balance sheet of that Person.

 

“Cash
Collateral Account” has the meaning ascribed to it in subsection 2.10 of
this Agreement.

 

“Closing Date”
means the date on or before January 6, 2004, on which the conditions set
forth in subsection 3.1 are satisfied.

 

“Collateral”
means any or all of the real, personal or mixed property subject to a lien or
security interest pursuant to the Collateral Documents.

 

“Collateral
Documents” means all deeds of trust, mortgages, security agreements, pledge
agreements, assignments, financing and continuation statements and all other
instruments or documents delivered by Company or its Subsidiaries pursuant to
this Agreement (including but not limited to the Security Agreements) in order
to grant to Agent on behalf of Lenders, Liens on certain real, personal or
mixed property of Company or its Subsidiaries, as the case may be and all
amendments, modifications and supplements thereto.

 

“Commercial
Letter of Credit” means (i) the commercial letters of credit issued by Wells
Fargo under the Existing Credit Agreement and outstanding on the Closing Date
or drawn but unreimbursed on the Closing Date and any renewals or extensions
thereof and (ii) any commercial sight letter of credit issued by the L/C
Issuing Bank pursuant to subsection 2.2 on or after the Closing Date for
the purpose of providing the primary payment mechanism in connection with the
purchase of inventory by Company in the ordinary course of its business or for
any other general corporate purpose in the ordinary course of its business.

 

“Commitments”
means the commitments of Lenders to make Loans and to issue Letters of Credit
(or purchase participations therein, as the case may be) as set forth in
subsections 2.1 and 2.2.

 

4

 

“Company”
means Jos. A. Bank Clothiers, Inc.

 

“Confirmation
of Increase in Commitment” has the meaning set forth in subsection 2.1H.

 

“Consolidated
Capital Expenditures” means, with respect to the twelve month period
immediately prior to the date of determination, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including that
portion of Capital Leases which is capitalized on the consolidated balance
sheet of Company and its Subsidiaries) by Company and its Subsidiaries during
such period that are included in the property, plant or equipment reflected in
the consolidated balance sheet of Company and its Subsidiaries.

 

“Contingent
Obligation”, as applied to any Person, means any direct or indirect liability,
contingent or otherwise, of that Person (i) with respect to any Indebtedness,
lease, dividend or other obligation of another, if the primary purpose or
intent thereof by the Person incurring the Contingent Obligation is to provide
assurance to the obligee of such obligation of another that such obligation of
another will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be protected
(in whole or in part) against loss in respect thereof, (ii) with respect to any
letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings, or (iii) under
Interest Rate Agreements. Contingent Obligations shall include, without
limitation, (a) the direct or indirect guaranty, endorsement (otherwise than
for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, and (b) any liability of such Person for the obligations of another
through any agreement (contingent or otherwise) (x) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), (y) to maintain
the solvency or any balance sheet item, level of income or financial condition
of another, or (z) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.

 

“Contractual
Obligation”, as applied to any Person, means any provision of any Security
issued by that Person or of any material indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.

 

“Cost” means
the average cost of purchases (determined on a first-in, first out basis), as
reported on the Company’s stock ledger, based upon the Company’s accounting
practices which are in effect on the date of this Agreement.

 

“Current Asset
Borrowing Base” means, as of any date of determination, the result of (a) the
sum of (y) the Eligible Inventory Borrowing Base plus (z) the lesser of:
(i) $10,000,000; and (ii) 85% of the Dollar value of Eligible Credit Card
Receivables (net

 

5

 

of credits as
a result of returns and net of amounts due to franchisees), minus (b)
Availability Reserves.

 

“Dollars” or
“Dollar” means the lawful money of the United States of America.

 

“Drawdown
Date”  means the date on which any Loan
is made or is to be made, and the date on which any Loan is converted or
continued in accordance with subsection 2.3D.

 

“EBITDA”
means, with respect to the 12 month period immediately prior to the date of
determination, Company’s and its Subsidiaries consolidated net earnings (or
loss), minus  one-time
unusual non-cash gains, plus  one-time
unusual non-cash expenses, interest expense, income taxes, and depreciation and
amortization for such period, as determined in accordance with GAAP.

 

“Eligible
Assignee” means any of (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund and (d) any other Person (other than a natural person) approved
by (i) Agent and (ii) unless a Potential Event of Default or an Event of
Default has occurred and is continuing, Company (each such approval not to be
unreasonably withheld or delayed).

 

“Eligible
Credit Card Receivables” means accounts receivable due in less than seven (7)
Business Days on a non-recourse basis from major credit card processors
relating to Mastercard, Visa, Discover, Diner’s Club, American Express and
other credit card companies satisfactory to Agent.

 

“Eligible
Inventory” means Eligible Landed Inventory or Eligible L/C Inventory.

 

“Eligible
Inventory Borrowing Base” means: (i) for the period commencing December 1st
through August 31st of each calendar year, the lesser of: (a)
70% of the Cost of the sum of Eligible Landed Inventory and Eligible L/C
Inventory; and (b) 85% of the Net Liquidation Value of the sum of Eligible
Landed Inventory and Eligible L/C Inventory; (ii) for the period commencing
September 1st through November 30th of each calendar year,
the lesser of: (a) 75% of the Cost of the sum of Eligible Landed Inventory and
Eligible L/C Inventory; and (b) 90% of the Net Liquidation Value of the sum of
Eligible Landed Inventory and Eligible L/C Inventory; plus (iii) the
lesser of (a) $3,000,000 and (b) 80% of the Net Liquidation Value of Eligible
Raw Materials Inventory; minus (iv) the Inventory Reserve.

 

“Eligible
Landed Inventory” means, as of any date determination, Inventory consisting
solely of finished goods, which is and remains acceptable to Agent for lending
purposes; provided that there shall be excluded from Eligible Inventory
(to the extent not excluded above):

 

(i)                                     Finished
goods which are not held by Company or one of its Subsidiaries for sale as
Inventory in the ordinary course of their business or which are obsolete, not
in good condition, not of merchantable quality or not saleable in the ordinary
course of their business or which are subject to defects which would

 

6

 

affect their
market value;

 

(ii)                                  Fashion
Items with respect to which more than 24 months have elapsed since the
applicable Original Purchase Date for those items as designated in the ordinary
course of business by Company and its Subsidiaries;

 

(iii)                               Inventory
in the possession of any Person other than Company or one of its Subsidiaries,
except (subject to any additional requirements imposed by Agent, acting in good
faith in its sole and absolute discretion, to protect title thereto of Company
or one of its Subsidiaries or the Lien thereon granted in favor of Agent on
behalf of Lenders) (A) goods held in storage solely for the account of Company
or one of its Subsidiaries (subject to the Lien thereon granted in favor of
Agent on behalf of Lenders), if the Person in possession has acknowledged in
writing the Lien thereon granted in favor of Agent for the benefit of Lenders
and has not issued a negotiable document of title as to the goods; and (B)
other Inventory in transit between Company and/or Subsidiary locations;

 

(iv)                              Inventory
with respect to which Agent, on behalf of Lenders, does not have a valid and
prior, fully perfected Lien or which is not free of all Liens (other than Liens
in favor of Agent for the benefit of the Lenders) or other claims of all other
Persons; and

 

(v)                                 Inventory
acquired in connection with a Permitted Acquisition with respect to which (a)
Agent shall not have received (1) the results of appraisals of such Inventory
and (2) such other due diligence as Agent may reasonably require, all of the
results of the foregoing to be reasonably satisfactory to Agent, and (b) Agent
shall not have determined an advance rate with respect to such Inventory.

 

“Eligible L/C
Inventory” means those items of Inventory that do not qualify as Eligible
Landed Inventory solely because
they are not in one of Company’s locations or in transit among such locations,
but as to which (a) the Inventory is or was the subject of a Qualified Import
Letter of Credit with an expiry date within 60 days of the date of inclusion as
Eligible L/C Inventory, (b) such Inventory currently is in transit or will be
in transit within 180 days of the issue date of the Qualified Import Letter of
Credit with an expiry date within 60 days of the date of inclusion as Eligible
L/C Inventory relating to such Inventory (whether by vessel, air, or land) from
a location outside of the continental United States to one of Company’s
locations that is the subject of a collateral access agreement, landlord lien
waiver, or functional equivalent, (c) title to such Inventory has passed or
will pass to Company, prior to any draw being made on the Qualified Import
Letter of Credit relating to such Inventory, (d) upon transfer of title, such
Inventory is insured against types of loss, damage, hazards, and risks, and in
amounts, satisfactory to Agent, and (e) such Inventory is subject to a valid
custom broker agreement in favor of Agent; provided, however,
that for purposes of determining the Cost or Net Liquidation Value of Eligible
L/C Inventory, all applicable freight charges with respect to such Eligible L/C
Inventory shall be excluded from such determination.

 

7

 

“Eligible Raw
Materials Inventory” means, as of any date determination, Inventory consisting
solely of raw materials and piece goods (together, “Raw Materials”) owned by
Company and its domestic Subsidiaries from time to time designated by Agent,
which is and remains acceptable to Agent for lending purposes; provided
that there shall be excluded from Eligible Raw Material Inventory (to the
extent not excluded above):

 

(i)                                     Raw
Materials which are not held by Company or one of its Subsidiaries to produce
Company’s finished goods inventory or which are obsolete, not in good
condition, not of merchantable quality or which are subject to defects which
would affect their market value;

 

(ii)                                  Raw
Materials in the possession of any Person other than Company or one of its
Subsidiaries, except (subject to any additional requirements imposed by Agent,
acting in good faith in its sole and absolute discretion, to protect title
thereto of Company or one of its Subsidiaries or the Lien thereon granted in
favor of Agent on behalf of Lenders) Raw Materials held in storage solely for
the account of Company or one of its Subsidiaries (subject to the Lien thereon
granted in favor of Agent on behalf of Lenders), if the Person in possession
has acknowledged in writing the Lien thereon granted in favor of Agent for the
benefit of Lenders and has not issued a negotiable document of title as to the
goods;

 

(iii)                               Raw
Materials with respect to which Agent, on behalf of Lenders, does not have a
valid and prior, fully perfected Lien or which is not free of all Liens (other
than Liens in favor of Lenders) or other claims of all other Persons; and

 

(iv)                              Raw
Materials acquired in connection with a Permitted Acquisition with respect to
which (a) Agent shall not have received (1) the results of appraisals of such
Raw Materials and (2) such other due diligence as Agent may reasonably require,
all of the results of the foregoing to be reasonably satisfactory to Agent, and
(b) Agent shall not have determined an advance rate with respect to such Raw
Materials.

 

“Employee
Benefit Plan” means any employee benefit plan within the meaning of
Section 3(3) of ERISA which is maintained for employees of Company or any
of its ERISA Affiliates.

 

“Environmental
Claim” means any written accusation, allegation, notice of violation, claim,
demand, abatement order or other order or direction (conditional or otherwise)
by any governmental authority or any Person for any damage, including, without
limitation, personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restrictions,
resulting from or based upon (i) the existence of a Release (whether sudden or
non-sudden or accidental or non-accidental)

 

8

 

of, or
exposure to, any Hazardous Material in, into or onto the environment at, in,
by, from, onto or related to any Facility, (ii) the use, handling,
transportation, storage, treatment or disposal of Hazardous Materials in
connection with the operation of any Facility, or (iii) the violation, or
alleged violation, of any Environmental Laws or any Governmental Authorizations
relating to environmental matters in connection with the Facilities.

 

“Environmental
Laws” means all statutes, ordinances, orders, rules, regulations, plans,
policies or decrees and the like relating to (i) environmental matters,
including, without limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or injuries resulting
from the Release or threatened Release of Hazardous Materials, (ii) the
generation, use, storage, transportation, or disposal of Hazardous Materials or
(iii) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner
applicable to Company or any of its Subsidiaries or any of their respective
properties, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. § 9601 et  seq.),
the Hazardous Materials Transportation Act (49 U.S.C. § 1801 seq.),
the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et  seq.),
the Federal Water Pollution Control Act ( 33 U.S.C. § 1251 et  seq.),
the Clean Air Act (42 U.S.C. § 7401 et  seq.), the Toxic Substances
Control Act (15 U.S.C. § 2601 et  seq.), the Occupational
Safety and Health Act (29 U.S.C. § 651 et  seq.) and the
Emergency Planning and Community Right-To-Know Act (42 U.S.C. § 11001 et
seq.), each as amended or supplemented, and any analogous future or
present local, state and federal statutes and regulations promulgated pursuant
thereto, each as in effect as of the date of determination.

 

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

 

“ERISA
Affiliate”, as applied to any Person, means (i) any corporation which is a
member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a
member, (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that
Person is a member, and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Internal Revenue Code of which
that Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above is a member.

 

“ERISA Event”
means (i) a “reportable event” within the meaning of Section 4043 of ERISA
and the regulations issued thereunder with respect to any Pension Plan
(excluding those for which the provision for 30-day notice to the PBGC has been
waived by regulation); (ii) the failure to meet the minimum funding standard of
Section 412 of the Internal Revenue Code with respect to any Pension Plan
(whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment under
Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a

 

9

 

Multiemployer
Plan; (iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company or any of its ERISA Affiliates from any Pension Plan with
two or more contributing sponsors or the termination of any such Pension Plan
resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Company or any of its ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal by
Company or any of its ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer
Plan if there is any potential liability therefor (other than a complete or
partial withdrawal from the Multi-Employer Plan covering employees of Company
or any of its ERISA Affiliates who are members of the Union or any predecessor
not resulting in liability or potential liability to the Company or any of its
ERISA Affiliates that exceeds, in the aggregate, $1,000,000 in any fiscal year
or $4,000,000 overall), or the receipt by Company or any of its ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it
intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which could give rise to the
imposition on Company or any of its ERISA Affiliates of fines, penalties, taxes
or related charges under Chapter 43 of the Internal Revenue Code or under
Section 409 or 502(c), (i) or (1) or 4071 of ERISA in respect of any
Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against Company or any of its
ERISA Affiliates in connection with any such Employee Benefit Plan; (x) receipt
from the Internal Revenue Service of notice of the failure of any Pension Plan
(or any other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a
Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code
or pursuant to ERISA with respect to any Pension Plan.

 

“Event of
Default” means each of the events set forth in Section 7.

 

“Excess
Availability” means, as of any date of determination if such date is a Business
Day, or, if such date of determination is not a Business Day, on the
immediately preceding Business Day, the amount that Company is entitled to
borrow as Loans under subsection 2.1 hereof after giving effect to all
then outstanding Obligations and all sublimits and reserves applicable
hereunder.

 

“Existing
Approved Indebtedness” means the existing Indebtedness of Company and its
Subsidiaries described in the Information Certificate.

 

10

 

“Existing
Credit Agreement” has the meaning set forth in the recitals to this Agreement.

 

“Existing
Letters of Credit” means the letters of credit issued by Wells Fargo pursuant
to subsection 2.2 of the Existing Credit Agreement and outstanding on the
Closing Date or drawn but not reimbursed on the Closing Date.

 

“Existing
Loans” means the loans made under the Existing Credit Agreement which are
outstanding on the Closing Date.

 

“Facilities”
means any and all real property (including, without limitation, all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore,
owned by Company or any of its Subsidiaries or any of their respective
predecessors or Affiliates.

 

“Fashion
Items” means finished goods recorded, in the ordinary course of business, on
the books and records of Company or any of its Subsidiaries, at the time of
wholesale purchase, by product codes corresponding to seasonal, non-basic goods
that do not constitute apparel staples, including, by example and without
limitation, men’s sportswear, men’s sports coats, men’s fancy dress shirts, all
ties and accessories.

 

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

 

“Funding Date”
means the date of the funding of a Loan.

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.

 

“Governmental
Authorization” means any permit, license, authorization, plan, directive,
consent order or consent decree of or from any federal, state or local
governmental authority, agency or court.

 

“Guaranty”
means the Amended and Restated and Consolidated Continuing Guaranty of the
Company’s Obligations hereunder, executed by each of Manufacturing, IS and RS.

 

“Hazardous
Materials” means (i) any chemical, material or substance defined as or included
in the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous waste,” “restricted hazardous waste,”
“infectious waste”, “toxic substances” or any other formulations intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, “TCLP toxicity” or “EP toxicity” or

 

11

 

words of
similar import under any applicable Environmental Laws or publications
promulgated pursuant thereto, (ii) any oil, petroleum or petroleum derived
substance, (iii) any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil,
natural gas or geothermal resources, (iv) any flammable substances or
explosives, (v) any radioactive materials, (vi) asbestos in any form which is
or could become friable, (vii) urea formaldehyde foam insulation, (viii)
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million, (ix)
pesticides or (x) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any governmental authority or which
could reasonably be expected to pose a hazard to the health and safety of the
owners, occupants or any Persons in the vicinity of the Facilities.

 

“Indebtedness”,
as applied to any Person, means (i) all indebtedness for borrowed money, (ii)
that portion of obligations with respect to Capital Leases which is properly
classified as a liability on a balance sheet in conformity with GAAP, (iii)
that portion of the Obligations with respect to Synthetic Leases, (iv) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (v) any obligation owed for all or
any part of the deferred purchase price of property or services which purchase
price is (y) due more than six (6) months from the date of incurrence of the
obligation in respect thereof, or (z) evidenced by a note or similar written
instrument, and (vi) all indebtedness secured by any Lien, on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements constitute
Contingent Obligations and not Indebtedness. 
In addition, for purposes of calculating the financial covenants set
forth in subsection 6.6, Indebtedness shall not include obligations owed
on account of Bank Products.

 

“Indemnified
Liabilities” has the meaning assigned to such term in subsection 9.3.

 

“Indemnitee”
has the meaning assigned to such term in subsection 9.3.

 

“Information
Certificate” means, collectively, the separate Information Certificates for
each of the Borrower, Manufacturing, IS and RS that have been delivered to
Agent, in each case in substantially the form attached hereto as Exhibit
II.

 

“Interest
Payment Date” means (i) as to any Prime Rate Loan, the first day of the
calendar month with respect to interest accrued during the immediately
preceding calendar month, including, without limitation, the calendar month
which includes the Drawdown Date of such Prime Rate Loan (it being understood
that interest with respect to a Loan shall not begin to accrue until the
Drawdown Date of such Loan); and (ii) as to any LIBOR Rate Loan in respect of
which the Interest Period is (a) three (3) months or less, the last day of such
Interest Period and (b) more than three (3) months, the date that is three (3)
months from the first day of such Interest Period and, in addition, the last
day of such Interest Period.

 

12

 

“Interest Period”
has the meaning assigned to that term in subsection 2.3B.

 

“Interest Rate
Agreement” means any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement or other similar agreement or arrangement
entered into between Company and Wells Fargo or its Affiliates designed to
protect Company or any of its Subsidiaries against fluctuations in interest
rates.

 

“Interest Rate
Determination Date” means each date for calculating the LIBOR Rate or Prime
Rate for purposes of determining the interest rate in respect of an Interest
Period. The Interest Rate Determination Date shall be the first day of the
related Interest Period.

 

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

 

“Inventory”
means all goods, merchandise and other personal property which are held for
sale or lease, including those held for display or demonstration or out on
lease or consignment or to be furnished under a contract of service, or are raw
materials, components, work in process or materials used or consumed, or to be
used or consumed, in the business of Company or any of its Subsidiaries.

 

“Inventory
Reserve” means a reserve against the Eligible Inventory Borrowing Base in the
amount of (i) $5,000,000 prior to the Accordion Activation and (ii) $7,500,000
following the Accordion Activation.

 

“Investment”,
as applied to any Person, means any direct or indirect purchase or other
acquisition by that Person of, or a beneficial interest in, stock or other
Securities of any other Person other than a Subsidiary, or any direct or
indirect loan, advance (other than advances to employees for moving and travel
expenses, relocation allowances, residential mortgage payments in connection
with relocation of any employee, loans to employees and similar expenditures in
the ordinary course of business, not to exceed $100,000 in the aggregate) or
capital contribution by that Person to any other Person, including all
indebtedness and accounts receivable from that other Person which are not
current assets or did not arise from sales to that other Person in the ordinary
course of business. The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.

 

“IS” means IS
Servicing Co., Inc. a Delaware corporation.

 

“L/C” has the
meaning set forth in subsection 2.2A.

 

“L/C Guaranty”
has the meaning set forth in subsection 2.2A.

 

“L/C Issuing
Bank” means Wells Fargo or such other issuing bank from time to time designated
hereunder by Agent.

 

13

 

“Lender” and
“Lenders” means the persons identified as “Lenders” and listed on the signature
pages of this Agreement, together with their successors and permitted assigns
pursuant to subsection 9.1; provided that the term “Lenders”, when
used in the context of a particular Commitment, shall mean Lenders having that
Commitment.

 

“Lender
Affiliate”  means with respect to any
Lender, (a) an Affiliate of such Lender or (b) any Approved Fund.

 

“Lender Group
Expenses” means all costs, expenses, fees and charges required to be paid by
Company hereunder and under any of the other Loan Documents that are paid or
incurred by Agent and, as contemplated by subsection 9.2(v), paid or
incurred by the Lenders.

 

“Letter of
Credit” means an L/C or an L/C Guaranty, as the context requires.

 

“Letter of
Credit Application” means (i) with respect to any Standby Letter of Credit, the
L/C Issuing Bank’s printed form “Application for Standby Letter of Credit” or
any other form acceptable to the L/C Issuing Bank on which Company applies for
the issuance by the L/C Issuing Bank of a Standby Letter of Credit, and (ii)
with respect to any Commercial Letter of Credit, the L/C Issuing Bank’s printed
form entitled “Application for Commercial Letter of Credit” or any other form
acceptable to the L/C Issuing Bank on which Company applies for the issuance by
the L/C Issuing Bank of a Commercial Letter of Credit.

 

“Letter of
Credit Usage” means, as at any date of determination, the sum of (a) the
maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding, plus
(b) the aggregate amount of all drawings under Letters of Credit honored by the
L/C Issuing Bank and not theretofore reimbursed by Company.

 

“LIBOR Rate”
means, for any Interest Rate Determination Date with respect to a LIBOR Rate
Loan, the rate per annum (rounded upward, if necessary to the nearest whole
1/16 of 1%) determined by WFRF pursuant to the following formula:

 

	
  LIBOR RATE =

  	
   

  	
  Base LIBOR Rate

  
	
   

  	
   

  	
  100% – LIBOR
  Reserve Percentage

  

 

“Base LIBOR
Rate” shall mean the rate per annum for United States dollar deposits quoted by
WFRF as the interbank market offered rate, with the understanding that such
rate is quoted by WFRF for the purpose of calculating effective rates of
interest for loans making reference thereto, on the first day of an Interest
Period, for delivery of funds on the first day of such Interest Period for a
period of time approximately equal to the number of days comprised therein and
in an amount approximately equal to the amount of the LIBOR Rate Loan to be
outstanding during such Interest Period. Company understands and agrees that
WFRF may base its quotation of the interbank market offered rate upon such
offers or other market indicators of the inter-bank market as WFRF in its
discretion deems appropriate, including, but not limited to, the rate offered
for U.S. dollar

 

14

 

deposits on
the London inter-bank market. “LIBOR Reserve Percentage” shall mean the reserve
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D
of the Federal Reserve Board, as amended), adjusted by WFRF for expected
changes in such reserve percentage during the applicable Interest Period.

 

“LIBOR Rate
Loans” means Loans bearing interest at rates determined by reference to the
LIBOR Rate as provided in subsection 2.3.

 

“Lien” means
any lien, mortgage, pledge, security interest, charge or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest).

 

“Loan” or
“Loans” means one or more Loans advanced pursuant to subsection 2.1A
and/or the Swing Line Loans advanced pursuant to subsection 2.1F.

 

“Loan
Documents” means this Agreement, the Notes, the Letters of Credit, the
Guaranty, the Collateral Documents, the Mortgages, any allonge to a Note and
any applications for, reimbursement agreements and any other documents or
certificates, including, without limitation, the Letter of Credit Applications,
executed in favor of the L/C Issuing Bank relating to the Letters of Credit.

 

“Loan
Exposure” means, with respect to any Lender as of any date of determination (i)
prior to the termination of the Commitments, that Lender’s Commitment and/or
Accordion Commitment, as applicable, and (ii) after the termination of the
Commitments, the aggregate outstanding principal amount of the Loans of that
Lender and participations in Letters of Credit purchased (or deemed purchased)
or otherwise held by that Lender.

 

“Manufacturing”
means The Joseph A. Bank Mfg. Co., Inc., a New Jersey corporation.

 

“Material
Adverse Effect” means (i) a material adverse effect upon the business,
operations, properties, assets, prospects or condition (financial or otherwise)
of Company and its Subsidiaries taken as a whole, or (ii) the material
impairment of Company and its Subsidiaries, taken as a whole, to perform, or of
Agent or Lenders to enforce, the Obligations.

 

“Maturity
Date” means April 30, 2008.

 

“Maximum
Revolving Amount” means the aggregate amount of Loans and other Obligations
that may be borrowed by Company under this Agreement, as such amount may be
increased or decreased from time to time in accordance herewith; provided,
however, that the Maximum Revolving Amount shall in no event exceed (i)
$100,000,000 prior to Company’s exercise of the Accordion Activation and (ii)
$125,000,000 after Company’s exercise of the Accordion Activation.

 

15

 

“Mortgages”
has the meaning assigned to that term in subsection 2.10A.

 

“Multiemployer
Plan” means a “multiemployer plan” as defined in Section 3(37) of ERISA to
which Company or any of its ERISA Affiliates is, or ever has, contributed to or
to which Company or any of its ERISA Affiliates has, or ever has had, an
obligation to contribute.

 

“Net
Liquidation Value” means the net liquidation value of Eligible Inventory as
determined by an appraisal of Company’s Inventory satisfactory to Agent in its
sole discretion.

 

“Note” or
“Notes” means one or more of (i) the promissory notes issued pursuant to
subsection 2.1E to evidence the Loans and (ii) any promissory notes issued
pursuant to the last sentence of subsection 9.1 in connection with
assignments of the Commitments and Loans of any Lenders, in each case
substantially in the form of Exhibit  V annexed hereto as amended,
endorsed or otherwise modified from time to time.

 

“Notice of
Borrowing” or a “Notice of LIBOR Rate Borrowing” means a notice substantially
in the form of Exhibit  III annexed hereto.

 

“Notice of
Conversion/Continuation” means a notice substantially in the form of Exhibit
IV annexed hereto.

 

“Obligations”
means all Loans, advances, debts, principal, interest (including any interest
that, but for the provisions of the Bankruptcy Code, would have accrued),
contingent reimbursement obligations with respect to outstanding Letters of
Credit, premiums, liabilities (including all amounts charged to Company’s Operating
Account pursuant hereto), obligations, fees, charges, costs, lease payments,
guaranties, covenants, and duties of any kind and description owing by Company
to Lenders pursuant to or evidenced by the Loan Documents or any Interest Rate
Agreements and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all costs
and expenses that Company is required to pay or reimburse by the Loan
Documents, by law, or otherwise.  In
addition to the foregoing, for purposes of subsections 2.10 and 7.14 herein and
as used in any of the Collateral Documents, the term “Obligations” shall be
deemed to include any obligations on account of amounts owed by Company under
Bank Products. Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all amendments, changes, extensions, modifications,
renewals, replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any insolvency proceeding.

 

“Operating
Lease” means, as applied to any Person, any lease of any property (whether
real, personal or mixed) which is not a Capital Lease other than any such lease
under which that Person is the lessor.

 

“Original
Purchase Date” means, with respect to any Fashion Item, the first day of the
Season for which such item was purchased by Company for resale.

 

16

 

“Overadvance”
has the meaning set forth in subsection 2.5B(v).

 

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

 

“Pension Plan”
means any Employee Benefit Plan, which is subject to Section 412 of the
Internal Revenue Code or Section 302 of ERISA and which is maintained for
employees of Company or any ERISA Affiliate of Company, other than a
Multiemployer Plan and excluding the Jos. A. Bank Manufacturing Co., Inc.
Post-Retirement Medical Plan.

 

“Permitted
Acquisitions” means acquisitions by Company and its Subsidiaries of real or
personal property not to exceed $20,000,000 in the aggregate after the date
hereof, provided that Excess Availability exceeds $25,000,000 both
before and after giving effect to any such acquisitions.  Notwithstanding the foregoing Excess
Availability requirements, Company and its Subsidiaries may purchase an
aircraft to be used in connection with Company’s and its Subsidiaries’
businesses in an aggregate amount not to exceed $10,000,000.

 

“Permitted Encumbrances”
means the following types of Liens:

 

(i)                                     Liens
for taxes, assessments or governmental charges, or claims the payment of which
is not at the time required by subsection 5.3;

 

(ii)                                  Statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen
and other Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such reserve or
other appropriate provisions, to Agent’s satisfaction shall have been made therefor;

 

(iii)                               Liens
(other than any Lien imposed by ERISA) incurred or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security, or to secure the
performance of tender, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);

 

(iv)                              Leases
or subleases granted to other Persons not interfering with the ordinary conduct
of the business of Company or any of its Subsidiaries;

 

(v)                                 Easements,
rights-of-way, restrictions and other similar charges or encumbrances not
interfering with the ordinary conduct of the business of Company or any of its
Subsidiaries;

 

(vi)                              Any
interest or title of a lessor under any lease permitted hereunder;

 

(vii)         Liens created in connection with the
Existing Approved Indebtedness and existing on the date hereof (other than the
GECC Indebtedness);

 

17

 

(viii)        Liens on the real property of
Manufacturing located at 500 Hanover Pike, Hampstead, Maryland to the extent
and up to the amount in existence as of the Closing Date as evidenced by the
Commercial Indemnity Deed of Trust, Security Agreement, Assignment of Leases
and Fixture Filing dated as of March 28, 2001, in favor of General
Electric Capital Corporation (the “GECC Indebtedness”); and

 

(ix)                                Liens
created for the benefit of Agent and Lenders pursuant to the terms of this
Agreement and the Collateral Documents

 

“Person” means
and includes natural persons, corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.

 

“Potential
Event of Default” means a condition or event which, after notice or lapse of
grace or cure period or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or
cure period.

 

“Prime Rate”
means the rate most recently announced within Wells Fargo at its office in San
Francisco, California as its “Prime Rate”. The Prime Rate is one of Wells
Fargo’s interest rates and serves as a basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Wells Fargo may designate. Each change in the
Prime Rate will be effective on the day the change is announced within Wells
Fargo.

 

“Prime Rate
Loans” means Loans bearing interest at rate determined by reference to the
Prime Rate as provided in subsection 2.3.

 

“Pro Rata
Share” means with respect to all payments, computations and other matters
relating to the Commitment, the Accordion Commitment or the Loans of any Lender
or any Letters of Credit issued or participations therein purchased (or deemed
purchased) by any Lender, the percentage obtained by dividing (x) the
Loan Exposure of that Lender or Accordion Lender, as the case may be, by
(y) the aggregate Loan Exposure of all Lenders or all Accordion Lenders, as the
case may be, as the applicable percentage may be adjusted by assignments
permitted pursuant to subsection 9.1. 
The initial Pro Rata Share of each Lender for purposes of each of the
preceding sentence is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.

 

“Proceedings”
has the meaning set forth for such term in subsection 5.1(xii).

 

“Qualified
Import Letter of Credit” means a Letter of Credit that (a) is issued to
facilitate the purchase by Company of Eligible L/C Inventory, (b) is in form
and substance acceptable to Agent, and (c) is only drawable by the beneficiary
thereof by the presentation of, among other documents, either (i) a negotiable
bill of lading that was issued by the carrier respecting the subject Eligible
L/C Inventory, or (ii) a negotiable cargo receipt that was issued by a
consolidator respecting the subject Eligible L/C

 

18

 

Inventory; provided,
however, that, in the latter case, no bill of lading shall have been
issued by the carrier.

 

“Regulation D”
means Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

 

“Release”
means any release, spill, emission, leaking, pumping, pouring, injection, escaping,
deposit, disposal, discharge, dispersal, dumping, leaching, or migration of
Hazardous Materials into the indoor or outdoor environment (including, without
limitation, the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or into or out of any
Facility, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.

 

“Requisite
Lenders” means Lenders having or holding (i) prior to the termination of the
Commitments, 51% or more of Commitments and (ii) after the termination of the
Commitments, 51% or more of the sum of (a) the aggregate outstanding principal
amount of the Loans plus (b) the aggregate amount of all participations
purchased in any drawings under Letters of Credit honored by the L/C Issuing
Bank and not theretofore reimbursed by Company plus (c) in the case of
the L/C Issuing Bank, the aggregate amount of all drawings under Letters of
Credit honored by the L/C Issuing Bank and not theretofore reimbursed or repaid
by Company (in each case net of any participations purchased by other Lenders
in the applicable Letters of Credit).

 

“RS” means RS
Servicing Co., Inc., a Delaware corporation.

 

“Season” means
a retail selling period of approximately six (6) months, with the Fall/Winter
Season extending from August 1 through January 31 of each year and
the Spring/Summer Season extending from February 1 through July 31 of
each year.

 

“Securities”
means any stock, shares, voting trust certificates, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
“securities” or any certificates of interest, shares or participations in temporary
or interim certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.

 

“Securities
Act” means the Securities Act of 1933, as amended from time to time, and any
successor statute.

 

“Security
Agreements” has the meaning assigned to that term in subsection 2.10D.

 

“Settlement”  The making or receiving of payments, in
immediately available funds, by the Lenders, to the extent necessary to cause
each Lender’s actual share of the outstanding amount of Loans (after giving
effect to any Notice of Borrowing) to be equal to such Lender’s Pro Rata Share
of the outstanding amount of such Loans (after giving

 

19

 

effect to any
Notice of Borrowing), in any case where, prior to such event or action, the
actual share is not so equal.

 

“Settlement
Amount” has the meaning assigned to that term in subsection 2.1G.

 

“Settlement
Date” means any date on which Agent requests a Settlement to be made.

 

“Settling Lender”
has the meaning assigned to that term in subsection 2.1G.

 

“Standby
Letters of Credit” means (i) the standby letters of credit issued by Wells
Fargo under the Existing Credit Agreement and outstanding on the Closing Date
or drawn but not reimbursed on the Closing Date, and any renewals or extensions
thereof and (ii) any standby letters of credit issued or to be issued by the
L/C Issuing Bank on or after the Closing Date pursuant to subsection 2.2.

 

“Subsidiary”
means any corporation, association or other business entity of which more than
50% of the total voting power of shares of stock entitled to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.

 

“Swing Line
Lender” means WFRF.

 

“Swing Line
Loans” has the meaning assigned to that term in subsection 2.1F.

 

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

 

“Total Current
Utilization” means, at any time of determination, the sum of (i) the aggregate
principal amount of outstanding Loans, and (ii) the Letter of Credit Usage.

 

“Wells Fargo”
has the meaning assigned to such term in the recitals of this Agreement.

 

“WFRF” has the
meaning assigned to such term in the introduction of this Agreement.

 

1.2.  Accounting
Terms; Utilization of GAAP for Purpose of Calculations Under Agreement.

 

Except as
otherwise expressly provided in this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP. Financial statements and other information required to be delivered
by Company to Lenders pursuant to clauses (iii), (iv), (v) and (xv) of
subsection 5.1 shall be prepared in accordance with GAAP as in effect at
the time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 5.1(vii)).

 

20

 

Calculations
in connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with those
used to prepare the financial statements referred to in subsection 4.3.

 

1.3.  Other
Definitional Provisions.

 

References to
“Sections” and “subsections” shall be to Sections and subsections,
respectively, of this Agreement unless otherwise specifically provided. Any of
the terms defined in subsection 1.1 may, unless the context otherwise
requires, be used in the singular or the plural depending on the reference.

 

Section 2.  AMOUNT AND TERMS OF COMMITMENTS AND LOANS;
NOTES

 

2.1.  Loans
and Notes.

 

A.                                   Commitments.

 

(i) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender agrees (severally, not jointly or
jointly and severally) to make advances (“Loans”) to Company in an amount at
any one time outstanding not to exceed such Lender’s Pro Rata Share of the lesser of (a) the Maximum Revolving Amount
less the Letter of Credit Usage, or (b) the Current Asset Borrowing Base less
the Letter of Credit Usage. Loans made on any Funding Date as LIBOR Rate Loans
shall be in the minimum principal amount of $1,000,000 and integral multiples
of $500,000 thereafter.

 

(ii)                                  [Intentionally
Omitted].

 

(iii)                               Each
Lender’s commitment to make Loans to Company pursuant to this
subsection 2.1 is herein called its “Commitment” and such commitments of
all Lenders in the aggregate are herein called the “Commitments”. The original
amount of each Lender’s Commitment is set forth opposite its name on Schedule 2.1
annexed hereto; provided, that the Commitments of Lenders shall be adjusted
to give effect to any assignments of Commitments pursuant to
subsection 9.1 and the Accordion Activation pursuant to
subsection 2.1H.

 

B.                                     [Intentionally
Omitted].

 

C.                                     Procedure
for Borrowings.  Whenever Company
desires that Lenders make LIBOR Rate Loans, it shall deliver to Agent a Notice
of LIBOR Rate Borrowing at least three (3) Business Days in advance of the
proposed Funding Date. The Notice of LIBOR Rate Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount of Loans
requested, and (iii) the initial Interest Period requested therefor. In lieu of
delivering the above-described Notice of LIBOR Rate Borrowing, Company may give
Agent facsimile or telephonic notice by the required time of any proposed LIBOR
Rate Loan. Whenever Company desires that Lenders make

 

21

 

Prime Rate
Loans, Company shall give Agent facsimile or telephonic notice prior to 1:00
p.m. (Boston time) on the applicable Funding Date.

 

Neither Agent
nor any Lender shall incur any liability to Company in acting upon any
facsimile or telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Company or for otherwise acting in good faith
under this subsection 2.1C, and upon funding of Loans by Lenders in
accordance with this Agreement pursuant to any such facsimile or telephonic
notice, Company shall have effected Loans hereunder.

 

Except as
otherwise provided in subsections 2.7B, 2.7C and 2.7G, a Notice of LIBOR Rate
Borrowing (or facsimile or telephonic notice in lieu thereof) shall be
irrevocable, and Company shall be bound to make a borrowing in accordance
therewith or be subject to liability for losses to Lenders caused by its
failure to borrow any such Loan.

 

D.                                    Disbursement
of Funds.  The Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares of the Commitments for the particular type of Loans
requested, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender’s obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender to make the particular
type of Loan requested be increased or decreased as a result of a default by
any other Lender in that other Lender’s obligation to make a Loan requested
hereunder. No later than 4:00 p.m. (Boston time) on the Business Day
immediately preceding the Funding Date (provided that Agent has received a
Notice of Borrowing as set forth in subsection 2.1C), Agent shall notify
each Lender of the proposed borrowing. Each Lender shall make the amount of its
Loan available to Agent, in same day funds, at the office of Agent located at
One Boston Place, 18th Floor, Boston, Massachusetts, not later than
1:00 p.m. (Boston time) on the applicable Funding Date. Except as provided in
subsection 2.2E with respect to Loans used to reimburse the L/C Issuing
Bank for the amount of a drawing under a Letter of Credit issued by it, upon
satisfaction or waiver of the conditions precedent specified in subsections 3.1
(in the case of Loans made on the Closing Date) and 3.2 (in the case of all
Loans), Agent shall make the proceeds of such Loans available to Company on the
applicable Funding Date by causing an amount of same day funds equal to the
proceeds of all such Loans received by Agent from Lenders to be credited to the
account of Company at Agent.

 

Unless Agent
shall have been notified by any Lender prior to the Funding Date for any Loans
that such Lender does not intend to make available to Agent the amount of such
Lender’s Loan requested on such Funding Date, Agent may assume that such Lender
has made such amount available to Agent on such Funding Date and Agent may, in
its sole discretion, but shall not be obligated to, make available to Company a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to Agent by such Lender, Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the date such
amount is paid to Agent, at the weighted average interest rate paid by the
Swing Line Lender for federal funds acquired by the Swing Line

 

22

 

Lender during
each day included in such period for three (3) Business Days and thereafter at
the Prime Rate. If such Lender does not pay such corresponding amount forthwith
upon Agent’s demand therefor, Agent shall promptly notify Company and Company
shall immediately pay such corresponding amount to Agent together with interest
thereon, for each day from such Funding Date until the date such amount is paid
to Agent, at the rate payable under this Agreement for Prime Rate Loans.
Nothing in this subsection 2.1D shall be deemed to relieve any Lender from
its obligation to fulfill its Commitments hereunder, to prejudice any rights
that Company may have against any Lender as a result of any default by such
Lender hereunder, or to require Company to pay more than the rate of interest
otherwise applicable to the principal amounts outstanding under the Notes.

 

E.                                      Notes.  Company shall execute and deliver on the Closing
Date to Agent for each Lender a Note to evidence that Lender’s Loans, in the
principal amount of that Lender’s Commitment and with other appropriate
insertions.

 

F.                                      Swing
Line. 
Notwithstanding the notice and minimum amount requirements
set forth in subsections 2.1A and 2.1C but otherwise in accordance with the
terms and conditions of this Agreement, the Swing Line Lender may, in its sole
discretion and without conferring with the Lenders, make Prime Rate Loans
(“Swing Line Loans”) to Company (a) by entry of credits to Company’s operating
account maintained with Wells Fargo as of the Closing Date or such other
account established by Agent and designated the operating account (the
“Operating Account”) with Wells Fargo to cover checks or other charges which
Company has drawn or made against such account or (b) in an amount as otherwise
requested by Company; provided that the outstanding amount of Swing Line
Loans advanced hereunder shall not exceed $5,000,000 at any time. Company
hereby requests and authorizes the Swing Line Lender to make from time to time
such Loans by means of appropriate entries of such credits sufficient to cover
checks and other charges then presented for payment from the Operating Account
or as otherwise so requested.  Company
acknowledges and agrees that the making of such Loans shall, in each case, be
subject in all respects to the provisions of this Agreement as if they were
Loans covered by a Notice of Borrowing including, without limitation, the
limitations set forth in subsection 2.1A and the requirements that the
applicable provisions of subsection 3.1 (in the case of Loans made on the
Closing Date) and subsection 3.2 be satisfied.  All actions taken by the Swing Line Lender pursuant to the
provisions of this subsection 2.1F shall, in the absence of manifest or
demonstrable error, be conclusive and binding on Company and the Lenders absent
the Swing Line Lender’s gross negligence or willful misconduct.  Loans made pursuant to this subsection 2.1F
shall be Prime Rate Loans until converted in accordance with the provisions of
this Agreement and, prior to a Settlement, such interest shall be for the
account of Agent.

 

G.                                     Settlements.

 

(i)                                     General.  On each Settlement Date, Agent shall, on or
before 1:00 p.m. (Boston time), give telephonic or facsimile notice (a) to the
Lenders and Company of the respective outstanding amount of Loans made by the
Swing Line Lender on behalf of the Lenders from the immediately preceding
Settlement Date

 

23

 

through the
close of business on the prior day and the amount of any Prime Rate Loans to be
made (following the giving of notice pursuant to subsection 2.1C) on such
date pursuant to a Notice of Borrowing and (b) to the Lenders of the amount (a
“Settlement Amount”) that each Lender (a “Settling Lender”) shall pay to effect
a Settlement of any Loan.  A statement
of Agent submitted on behalf of the Swing Line Lender to the Lenders and
Company or to the Lenders with respect to any amounts owing under this
subsection 2.1G shall be prima  facie evidence of the amount
due and owing.  Each Settling Lender
shall, not later than 3:00 p.m. (Boston time) on such Settlement Date, effect a
wire transfer of immediately available funds to Agent for the account of the Swing
Line Lender in the amount of the Settlement Amount for such Settling
Lender.  All funds advanced by any
Lender as a Settling Lender pursuant to this subsection 2.1G shall for all
purposes be treated as a Loan made by such Settling Lender to Company and all
funds received by any Lender pursuant to this subsection 2.1G shall for
all purposes be treated as repayment of amounts owed with respect to Loans made
by such Lender.  In the event that any
bankruptcy, reorganization, liquidation, receivership or similar cases or
proceedings in which Company is a debtor prevent a Settling Lender from making
any Loan to effect a Settlement as contemplated hereby, such Settling Lender
will make such dispositions and arrangements with the other Lenders with
respect to such Loans, either by way of purchase of participations,
distribution, pro  tanto assignment of claims, subrogation or
otherwise as shall result in each Lender’s share of the outstanding Loans being
equal, as nearly as may be, to such Lender’s Pro Rata Share of the outstanding
amount of the Loans.

 

(ii)                                  Failure
to Make Funds Available.  The Swing
Line Lender may, unless notified to the contrary by any Settling Lender prior
to a Settlement Date, assume that such Settling Lender has made or will make
available to Agent, for the account of the Swing Line Lender, on such
Settlement Date the amount of such Settling Lender’s Settlement Amount, and the
Swing Line Lender may (but it shall not be required to), in reliance upon such
assumption, make available to Company a corresponding amount.  If any Settling Lender makes available to
Agent for the account of the Swing Line Lender such amount on a date after such
Settlement Date, such Settling Lender shall pay to Agent, for the account of
the Swing Line Lender, on demand an amount equal to the product of (a) the
average computed for the period referred to in paragraph (iii) below, of the
weighted average interest rate paid by the Swing Line Lender for federal funds
acquired by the Swing Line Lender during each day included in such period,
times (b) the amount of such Settlement Amount, times (c) a fraction, the
numerator of which is the number of days that elapse from and including such
Settlement Date to the date on which the amount of such Settlement Amount shall
become immediately available to Agent for the account of the Swing Line Lender,
and the denominator of which is 360.  A
statement of Agent submitted on behalf of the Swing Line Lender to such
Settling Lender with respect to any amounts owing under this subsection 2.1G
shall be prima facie evidence of the amount due and owing to Agent for the
account of the Swing Line Lender by such Settling Lender.  If such Settling Lender’s Settlement Amount
is not made available to Agent for the account of the Swing Line Lender by such
Settling Lender within three (3)

 

24

 

Business Days
following such Settlement Date, Agent shall be entitled to recover such amount
from Company, for the account of the Swing Line Lender, on demand, with
interest thereon at the rate per annum applicable to the Loans as of such
Settlement Date.  Agent shall make
available to the Swing Line Lender all amounts transferred to Agent for the
account of the Swing Line Lender by the Settling Lenders pursuant to this
subsection 2.1G and all amounts recovered by Agent on behalf of the Swing
Line Lender pursuant to this subsection 2.1G.

 

(iii)                               No
Effect on Other Lenders.  The
failure or refusal of any Settling Lender to make available to Agent, for the
account of the Swing Line Lender, at the aforesaid time and place on any
Settlement Date the amount of such Settling Lender’s Settlement Amount shall
not (a) relieve any other Settling Lender from its several obligations
hereunder to make available to Agent, for the account of the Swing Line Lender,
the amount of such other Settling Lender’s Settlement Amount or (b) impose upon
any Lender, other than the Settling Lender so failing or refusing, any
liability with respect to such failure or refusal or otherwise increase the
Commitment of such other Lender.

 

(iv)                              Optional
Overadvances.  Any contrary
provision of this Agreement notwithstanding, Lenders hereby authorize Agent or
the Swing Line Lender, as applicable, and Agent or the Swing Line Lender, as
applicable, may, but is not obligated to, knowingly and intentionally, continue
to make Loans (including Swing Line Loans) to Company notwithstanding that an
Overadvance exists or thereby would be created, so long as (a) after giving
effect to such Loans (including a Swing Line Loan), the sum of then extant
amount of outstanding Loans, plus the then extant amount of the Letter
of Credit Usage does not exceed the Current Asset Borrowing Base by more than
$10,000,000, (b) after giving effect to such Loans (including a Swing Line
Loan) the outstanding Loans plus the Letter of Credit Usage (except for
and excluding amounts charged to the Operating Account for interest, fees and
costs and expenses of Lenders) does not exceed the Maximum Revolving Amount,
and (c) at the time of the making of any such Loan (including any Swing Line
Loan), Agent does not believe, in good faith, that the Overadvance created by
such Loan will be outstanding for more than 90 days.  The foregoing provisions are for the exclusive benefit of Agent,
the Swing Line Lender, and Lenders and are not intended to benefit Company in
any way.  The Loans and Swing Line
Loans, as applicable, that are made pursuant to this subsection 2.1G(iv)
shall be subject to the same terms and conditions as any other Loan or Swing Line
Loan, as applicable, except that they shall not be eligible for the LIBOR Rate
and the rate of interest applicable thereto shall be the rate applicable to
Prime Rate Loans without regard to the presence or absence of a Potential Event
of Default or Event of Default.

 

(1)                                  In
the event Agent obtains actual knowledge that the outstanding Loans plus
the Letter of Credit Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess, Agent shall
notify Lenders as soon as practicable (and prior to making any (or any
additional) intentional Overadvances

 

25

 

(except for
and excluding amounts charged to the Operating Account for interest, fees and
costs and expenses of Lenders) unless Agent determines that prior notice would
result in imminent harm to the Collateral or its value), and Lenders with
Commitments thereupon shall, together with Agent, jointly determine the terms
of arrangements that shall be implemented by the Company and intended to
reduce, within a reasonable time, the outstanding principal amount of the Loans
to Company to an amount permitted by the preceding paragraph.  In the event Agent or any Lender disagrees
over the terms of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according to the
determination of the Requisite Lenders.

 

(2)                                  Each
Lender with a Commitment shall be obligated to settle with Agent as provided in
subsection 2.1G for the amount of such Lender’s Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this subsection 2.1G(iv), and any
Overadvances resulting from the charging to the Operating Account of interest,
fees and costs and expenses of Lenders.

 

H.                                    Accordion
Option.  Unless a Potential Event of
Default or an Event of Default has occurred and is then continuing and except
as otherwise provided herein, Company may make a maximum of one (1) request
that the Accordion Lenders increase their Commitments hereunder (such increase,
the “Accordion Activation”); provided that (i) Company shall have made
such request subsequent to the Closing Date but prior to April 30, 2006,
(ii) in no event shall the Commitments of the Accordion Lenders be increased
pursuant to this subsection 2.1H by an amount which exceeds, in the
aggregate, the Accordion Amount, (iii) in no event shall the Commitment of all
Lenders be increased under this subsection 2.1H so as to exceed, in the
aggregate, the Maximum Revolving Amount, (iv) Company shall have Excess
Availability of (a) $5,000,000 or more prior to the Accordion Activation and
(b) $7,500,000 or more following the Accordion Activation, (v) on the effective
date specified in any Confirmation of Increase in Commitment hereunder (as
defined below), Company shall pay to Agent for the pro rata accounts of the
Accordion Lenders, a nonrefundable activation fee in an amount equal to 0.25%
of the aggregate amount of the increase in Commitments as a result of such
Accordion Activation, and (vi) no Potential Event of Default or Event of
Default will occur as a result of such Accordion Activation.  Upon a request by Company hereunder, each
Accordion Lender shall increase its Commitment by an amount equal to its
Accordion Commitment. The amount of each Accordion Lender’s Accordion
Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto. Each Accordion Lender increasing its Commitment pursuant to this
subsection 2.1H shall execute a Confirmation of Increase in Commitment in
the form of Exhibit VI attached hereto (a “Confirmation of Increase in
Commitment”).

 

On the
effective date of the Accordion Activation effected in accordance with this
subsection 2.1H, Schedule 2.1 annexed hereto shall be
deemed to be amended to reflect

 

26

 

(a) the name,
address, Commitment, and Pro Rata Share of each Lender and (B) the Maximum
Revolving Amount as increased by such Accordion Activation.

 

2.2.                            Letters of Credit.

 

A.                                   Subject
to the terms and conditions of this Agreement, the L/C Issuing Bank agrees to
issue letters of credit for the account of Company (each, an “L/C”) or to issue
guarantees of payment (each such guaranty, an “L/C Guaranty”) with respect to
letters of credit issued by an issuing bank for the account of Company. The L/C
Issuing Bank shall have no obligation to issue a Letter of Credit if either of
the following would result:

 

(i)                                     the
aggregate amount of all undrawn and unreimbursed Letters of Credit, would
exceed the Current Asset Borrowing Base less the amount of outstanding Loans;
or

 

(ii)                                  the
aggregate amount of all undrawn or unreimbursed Letters of Credit would exceed
the lower of: (x) the Maximum Revolving Amount less the amount of outstanding
Loans; or (y) $15,000,000.

 

Company
expressly understands and agrees that Agent and Lenders shall have no
obligation to arrange for the issuance by issuing banks of the letters of
credit that are to be the subject of L/C Guarantees. Each Letter of Credit
shall have an expiry date no later than 60 days prior to the date on which this
Agreement is scheduled to terminate (without regard to any potential renewal
term) and all such Letters of Credit shall be in form and substance acceptable
to the L/C Issuing Bank in its sole discretion. If the issuing bank is
obligated to advance funds under a Letter of Credit, Company shall immediately
reimburse such advance to the issuing bank by paying to Agent an amount equal
to such advance not later than 1:00 p.m. (Boston time) on the date that advance
is made, if Company shall have received written or telephonic notice of such
advance prior to 12:00 noon (Boston time) on such date, or, if such notice has
not been received by Company prior to such time on such date, then not later
than 1:00 p.m. (Boston time) on the Business Day immediately subsequent to the
date that Company receives such notice, and, in the absence of such
reimbursement, any advance reimbursed by Agent immediately and automatically
shall be deemed to be a Loan hereunder and, thereafter, shall bear interest at
the rate then applicable to Loans that are Prime Rate Loans under
subsection 2.3. To the extent any reimbursement of an advance made by the
issuing bank is deemed to be a Loan hereunder, Company’s obligation to
reimburse such advance shall be discharged and replaced by the resulting Loan
and Agent shall be responsible for reimbursing with the funds realized from
such Loan the issuing bank for any such advance under a Letter of Credit.
Promptly following receipt by Agent of any payment from Company pursuant to
this paragraph, Agent and Lenders shall distribute such payment to the issuing
bank or, to the extent that Lenders have made payments pursuant to
subsection 2.2B to reimburse the issuing bank, then to such Lenders and
the issuing bank as their interests may appear.

 

27

 

B.                                     Promptly
following receipt of a notice of an advance under a Letter of Credit pursuant
to subsection 2.2A, each Lender agrees to fund its Pro Rata Share of any
Loan deemed made pursuant to the foregoing subsection on the same terms
and conditions as if Company had requested such Loan and Agent shall promptly
pay to the issuing bank the amounts so received by it from the Lenders. By the
issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of
the issuing bank or the Lenders, the issuing bank shall be deemed to have
granted to each Lender, and each Lender shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata
Share, and each such Lender agrees to pay to Agent, for the account of the
issuing bank, such Lender’s Pro Rata Share of any payments made by the issuing
bank under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
Agent, for the account of the issuing bank, such Lender’s Pro Rata Share of
each advance made by the issuing bank under a Letter of Credit and not
reimbursed by Company on the date due as provided in this subsection 2.2A,
or of any reimbursement payment required to be refunded to Company for any reason.

 

Each Lender
acknowledges and agrees that its obligation to deliver to Agent, for the
account of the issuing bank, an amount equal to its respective Pro Rata Share
pursuant to this subsection 2.2B shall be absolute and unconditional and
such remittance shall be made notwithstanding the occurrence or continuation of
an Event of Default or Default or the failure to satisfy any condition set
forth in Section 3 hereof. If any such Lender fails to make available to
Agent the amount of such Lender’s Pro Rata Share of any payments made by the
issuing bank in respect of such Letter of Credit as provided in this
subsection 2.2, Agent (for the account of the issuing bank) shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Default Rate until paid in full.

 

C.                                     Company
hereby agrees to indemnify, save, defend, and hold Agent and Lenders harmless
from any loss, cost, expense, or liability, including payments made by Agent
and Lenders, expenses, and reasonable attorneys fees incurred by Agent arising
out of or in connection with any Letter of Credit. Company agrees to be bound
by the issuing bank’s regulations and interpretations of any letters of credit
guarantied by Agent and Lenders and opened to or for Company’s account or by
Agent’s interpretations of any Letter of Credit issued by Agent to or for
Company’s account, even though this interpretation may be different from
Company’s own, and Company understands and agrees that neither Agent nor any
Lender shall be liable for any error, negligence, or mistake, whether of
omission or commission, in following Company’s instructions or those contained
in the Letter of Credit or any modifications, amendments, or supplements
thereto. Company understands that the L/C Guarantees may require Agent and
Lenders to indemnify the issuing bank for certain costs or liabilities arising
out of claims by Company against such issuing bank. Company hereby agrees to
indemnify, save, defend, and hold Agent and Lenders harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability
incurred by Agent or any Lender under any L/C Guaranty as a result of Agent’s
and Lenders’ indemnification of any such issuing bank.

 

28

 

D.                                    Company
hereby authorizes and directs any bank that issues a letter of credit
guaranteed by Agent and Lenders to deliver to Agent all instruments, documents,
and other writings and property received by the issuing bank pursuant to such
letter of credit, and to accept and rely upon Agent’s instructions and
agreements with respect to all matters arising in connection with such letter
of credit and the related application. Company may or may not be the
“applicant” or “account party” with respect to such letter of credit.

 

E.                                      Any
and all charges, commissions, fees, and costs incurred by Agent and Lenders
relating to the letters of credit guaranteed by Agent and Lenders shall be
immediately reimbursable by Company to Agent and Lenders.

 

F.                                      Immediately
upon the termination of this Agreement, Company agrees to either (i) provide
cash collateral to be held by Agent in an amount equal to 102% of the maximum
amount of Agent’s and Lenders’ obligations under outstanding Letters of Credit,
or (ii) cause to be delivered to Agent releases of all of Agent’s and Lenders’
obligations under outstanding Letters of Credit. At Agent’s discretion, any
proceeds of Collateral received by Agent or any Lender after the occurrence and
during the continuation of an Event of Default may be held as the cash
collateral required by this subsection 2.2F.

 

G.                                     If
by reason of (i) any change in any applicable law, treaty, rule, or regulation
or any change in the interpretation or application by any governmental
authority of any such applicable law, treaty, rule, or regulation, or (ii)
compliance by the issuing bank, Agent, or any Lender with any direction,
request, or requirement (irrespective of whether having the force of law) of
any governmental authority or monetary authority including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System as from
time to time in effect (and any successor thereto):

 

(i)                                     any
reserve, deposit, or similar requirement is or shall be imposed or modified in
respect of any Letters of Credit issued hereunder, or

 

(ii)                                  there
shall be imposed on the issuing bank, Agent or any Lender any other condition
regarding any letter of credit, or Letter of Credit, as applicable, issued
pursuant hereto;

 

and the result
of the foregoing is to increase, directly or indirectly, the cost to the
issuing bank, Agent or any Lender of issuing, making, guaranteeing, or
maintaining any letter of credit, or Letter of Credit, as applicable, or to
reduce the amount receivable in respect thereof by such issuing bank, Agent or
any Lender, then, and in any such case, Agent may, at any time within a
reasonable period after the additional cost is incurred or the amount received
is reduced, notify Company, and Company shall pay on demand such amounts as the
issuing bank or Agent may specify to be necessary to compensate the

 

29

 

issuing bank,
Agent or any Lender for such additional cost or reduced receipt, together with
interest on such amount from the date of such demand until payment in full
thereof at the rate set forth in subsection 2.3A(i). The determination by
the issuing bank or Agent, as the case may be, of any amount due pursuant to
this subsection 2.2G, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties
hereto, unless challenged by Company within 45 days of the date of delivery of
such certificate to the Company.

 

H.                                    Company
acknowledges and agrees that certain of the Qualified Import Letters of Credit
may provide for the presentation of time drafts to the issuing bank. If an
issuing bank accepts such a time draft that is presented under a Letter of
Credit, it is acknowledged and agreed that (i) the Letter of Credit will
require Agent and Lenders to reimburse the issuing bank for amounts paid on
account of such time draft on or after the maturity date thereof, (ii) the
pricing provisions hereof shall continue to apply, until payment of such time
draft on or after the maturity date thereof, as if the issuing bank’s Letters
of Credit were still outstanding, and (iii) on the date on which Agent on
behalf of Lenders makes payment to the issuing bank of the amounts paid on
account of such time draft, Company immediately shall reimburse such amount to
Agent and such amount shall constitute Loans hereunder.

 

I.                                         Company
shall, on the date of issuance or any extension or renewal of any Letter of
Credit pay a fee (in each case, a “Letter of Credit Fee”) to Agent (a) in
respect of each standby Letter of Credit, an amount equal to the Applicable
Margin per annum of the face amount of such standby Letter of Credit for the
accounts of the Lenders in accordance with their respective Pro Rata Shares and
(b) in respect of each documentary Letter of Credit, an amount equal to the
Applicable Margin per annum of the face amount of such documentary Letter of
Credit for the accounts of the Lenders in accordance with their respective Pro
Rata Shares.  In respect of each Letter
of Credit, Company shall also pay to the L/C Issuing Bank, for the L/C Issuing
Bank’s own account, at such other time or times as such charges are customarily
made by the L/C Issuing Bank, the L/C Issuing Bank’s customary issuance,
amendment, negotiation or document examination and other administrative fees as
in effect from time to time.

 

2.3.  Interest on the Loans.

 

A.                                   Rate
of Interest.  Subject to the
provisions of subsections 2.3E and 2.8, the Loans shall bear interest from the
date made through maturity as follows:

 

(i)                                     if
a Prime Rate Loan, then at a rate per annum equal to the Prime Rate plus
the Applicable Margin with respect to Prime Rate Loans as in effect from time
to time; or

 

(ii)                                  if
a LIBOR Rate Loan, then at a rate per annum equal to the sum of the LIBOR Rate plus
the Applicable Margin with respect to LIBOR Rate Loans as in effect from time
to time.

 

30

 

If on any day
a Loan is outstanding with respect to which notice has not been delivered to
Agent in accordance with the terms of this Agreement specifying the applicable
basis for determining the rate of interest, then for that day that Loan shall
bear interest at the rate of interest otherwise applicable to Prime Rate Loans.

 

B.                                     Interest
Periods.  The Interest Period for
any Prime Rate Loan shall be one calendar month.  If any Interest Period with respect to a Prime Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day.  In
connection with each LIBOR Rate Loan, provided no Event of Default has occurred
and is continuing, Company may, pursuant to the applicable Notice of LIBOR Rate
Borrowing or Notice of Conversion/Continuation, as the case may be, select an
interest period (each an “Interest Period”) to be applicable to such Loan,
which Interest Period shall be, at Company’s option, either a one, two, three,
or six month period. With respect to any Interest Period, as applicable:

 

(i)                                     the
initial Interest Period shall commence on the Funding Date of such Loan, in the
case of a Loan initially made as a LIBOR Rate Loan, or on the date specified in
the applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a LIBOR Rate Loan;

 

(ii)                                  in
the case of immediately successive Interest Periods continued as such pursuant
to a Notice of Conversion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period expires;

 

(iii)                               if
an Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day; provided
that if any Interest Period would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day;

 

(iv)                              any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (v) of this
subsection 2.3B, end on the last Business Day of such calendar month;

 

(v)                                 no
Interest Period with respect to any Loan shall extend beyond the Maturity Date;

 

(vi)                              in
the event Company fails to specify an Interest Period for any LIBOR Rate Loan
in the applicable Notice of Borrowing or Notice of Conversion/Continuation,
Company shall be deemed to have selected an Interest Period of one month.

 

31

 

(vii)                           If
an Event of Default has occurred and is continuing, Agent, at Requisite Lenders
option, may automatically convert all outstanding LIBOR Rate Loans to Prime
Rate Loans at the end of the applicable interest period.

 

C.                                     Interest
Payments.  Subject to the provisions
of subsection 2.3E, interest on each Loan shall be payable in arrears on
and to each Interest Payment Date applicable to that Loan, upon conversion of
that Loan to a Loan bearing interest at a rate determined by reference to the
other basis and at maturity (including final maturity).

 

D.                                    Conversion
or Continuation.  Subject to the
provisions of subsection 2.7, Company shall have the option (i) to convert
at any time all or any part of its Loans equal to $1,000,000 and integral
multiples of $500,000 in excess of that amount from Loans bearing interest at a
rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to the other basis; provided that any such
conversion of Prime Rate Loans into LIBOR Rate Loans shall be in amounts of
$1,000,000 and integral multiples of $500,000 in excess thereof or (ii) upon
the expiration of any Interest Period applicable to a LIBOR Rate Loan, to continue
all or any portion of such Loan equal to $1,000,000 and integral multiples of
$500,000 in excess of that amount as a LIBOR Rate Loan having a particular
Interest Period; provided, however, that a LIBOR Rate Loan may
only be converted into a Prime Rate Loan on (i) the expiration date of an
Interest Period applicable thereto or (ii) any other date, provided that
Company reimburses Agent for all costs incurred pursuant to
subsection 2.7D herein. There shall be no more than seven LIBOR Rate Loans
outstanding at any time.

 

Company shall
deliver a Notice of Conversion/Continuation to Agent no later than 2:00 p.m.
(Boston time) on the Business Day prior to the proposed conversion/continuation
date (in the case of a conversion to a Prime Rate Loan) and at least three (3)
Business Days in advance of the proposed conversion/ continuation date (in the
case of a conversion to, or a continuation of, a LIBOR Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(iv) in the case of a conversion to, or a continuation of, a LIBOR Rate Loan,
the requested Interest Period, and (v) in the case of a conversion to, or a
continuation of, a LIBOR Rate Loan, that no Potential Event of Default or Event
of Default has occurred and is continuing. In lieu of delivering the
above-described Notice of Conversion/Continuation, Company may give Agent
facsimile or telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.3D; provided that
such telephonic notice shall be immediately confirmed in writing by delivery of
a Notice of Conversion/Continuation to Agent.

 

Neither Agent
nor any Lender shall incur any liability to Company in acting upon any
facsimile or telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to act on behalf of Company or for otherwise acting in good faith under this
subsection 2.3D, and upon conversion or continuation of the applicable
basis for determining the interest rate with respect to any Loans in accordance
with this Agreement pursuant to any

 

32

 

such facsimile
or telephonic notice Company shall have effected a conversion or continuation,
as the case may be, hereunder.

 

Except as
otherwise provided in subsections 2.7B, 2.7C and 2.7G, a Notice of
Conversion/Continuation for conversion to, or continuation of, a LIBOR Rate
Loan (or facsimile or telephonic notice in lieu thereof) shall be irrevocable,
and Company shall be bound to effect a conversion or continuation in accordance
therewith.

 

E.                                      Post-Default
Interest.  Upon the occurrence and
during the continuance of an Event of Default, the principal amount of the
Loans and, to the extent permitted by applicable law, any interest payments on
the Loans or any fees or other amounts owed hereunder not paid when due, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on
demand at a rate which is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Prime
Rate Loans); provided that, in the case of LIBOR Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such LIBOR Rate Loans shall thereupon become Prime
Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Prime Rate Loans. Payment or acceptance of the increased
rates of interest provided for in this subsection 2.3E is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Agent or any
Lender.

 

F.                                      Computation
of Interest.  Interest (and fees
payable on a per annum basis) on the Loans shall be computed on the basis of a
360-day year for the actual number of days elapsed in the period during which
it accrues. For purposes of calculating interest on the Loan payments of
principal or other funds received will be applied (conditional upon final
collection) as a principal reduction on the Loans one (1) Business Day
following the date of receipt by Agent of the inter-branch advice of deposit
that such payments or other funds have been deposited in the Cash Collateral
Account. For purposes of calculating the amount of the Loans available to
Company such payments will be applied (conditional upon final collection) to
the Loans on the business day of receipt by Agent, if such payments are
received within sufficient time (in accordance with Agent’s usual and customary
practices as in effect from time to time) to credit Company’s loan account on
such day, and if not, then on the next Business Day.

 

G.                                     Statements.  Agent shall render to Company each month a
statement setting forth the balance in Company’s loan account(s) maintained by
Agent for Company pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Company and
conclusively binding upon Company as an account stated except to the extent
that Agent receives a written notice from Company of any specific exceptions of
Company thereto within 45 days after the date such statement has been

 

33

 

mailed by
Agent. Until such time as Agent shall have rendered to Company a written
statement as provided above, the balance in Company’s loan account(s) shall be
presumptive evidence of the amounts due and owing to the Lenders by Company.

 

2.4.  Fees.

 

A.                                   Fees.
Company agrees to pay to Agent, for the ratable accounts of the Lenders (unless
otherwise specified herein), fees in the following amounts:

 

(i)                                     an
unused line fee equal to: (a) the average daily Maximum Revolving Amount minus
the average daily amount of the sum of the average of the daily amount of Loans
and the Letter of Credit Usage; times (b) 0.375% per annum calculated on
the basis of a 360-day year and the actual number of days elapsed and payable
monthly in arrears on the first day of each calendar month through the Maturity
Date so long as this Agreement has not terminated, provided, however,
that if this Agreement terminates on a date other than the first day of a
month, the unused line fee will be prorated for the partial month on which the
termination occurs and payable on the date of termination;

 

(ii)                                  Letter
of Credit fees (in addition to the charges, commissions, fees, and costs set
forth in subsection 2.2F) as provided in subsection 2.2I;

 

(iii)                               For
the separate account of Agent, audit, appraisal, and valuation fees and charges
as follows (i) a fee of $750 per day, per auditor, plus out-of-pocket
expenses for each financial audit of Company performed by personnel employed by
Agent, (ii) a fee of $1,500 per day per appraiser, plus out-of-pocket
expenses, for each appraisal of the Collateral performed by personnel employed
by Agent, and (iii) the actual charges paid or incurred by Agent if it elects
to employ the services of one or more third Persons to perform financial audits
of Company, to appraise the Collateral, or any portion thereof, or to assess
Company’s business valuation, provided the fee for financial audits performed
by a third party shall not exceed the fees charged by Agent for audits
performed by personnel employed by Agent. Agent and Lenders agree that so long
as no Event of Default has occurred and is continuing, Company will be charged
for no more than two financial audits and two inventory appraisals per year;
and

 

(iv)                              For
the account of Agent, the amounts required to be paid pursuant to the fee
letter of even date herewith, between Agent and Company.

 

B.                                     Early
Termination.  Company has the
option, at any time upon 60 days prior written notice to Agent, to terminate
this Agreement by paying to Agent, for the benefit of the Lenders, in cash, in
full, the Obligations (including either (i) providing cash collateral to be
held by Agent for the benefit of those Lenders in an amount equal to 102% of
the then issued and outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit), or (ii) causing the original Letters of Credit
to be returned to the issuing financial institution.  Except as provided in subsection 2.7D

 

34

 

hereof,
Company will not be required to pay a prepayment fee, penalty or premium in
connection with the early termination of this Agreement. Notwithstanding the
foregoing, Company will still be required to pay any fees due under this
subsection 2.4 and if such termination occurs prior to the date any such
fee is due, Company will pay Agent the relevant fee pro-rated for the period of
time passed since the subject fee was previously paid.

 

2.5.  Prepayments
and Payments

 

A.                                   Prepayments
Due to Reductions or Restrictions of Commitments. Company shall from time
to time prepay the Loans to the extent necessary so that the Total Current
Utilization shall not at any time exceed the lesser of (1) the Maximum Revolving
Amount minus, the Letter of Credit Usage; or (2) the Current Asset
Borrowing Base minus the Letter of Credit Usage.

 

B.                                     General
Provisions Regarding Payments

 

(i)                                     Manner
and Time of Payment.  All payments
by Company of principal, interest, fees and other Obligations hereunder and
under the Notes shall be made in same day funds and without defense, setoff or
counterclaim, free of any restriction or condition, and delivered to Agent not
later than 2:00 p.m. (Boston time) on the date due at its office located at
Boston, Massachusetts, for the account of Lenders; funds received by Agent
after that time on such due date shall be deemed to have been paid by Company
on the next succeeding Business Day. Company hereby authorizes Agent to charge
its accounts with Agent in order to cause timely payment to be made to Agent of
all principal, interest, fees and expenses due hereunder.

 

(ii)                                  [Intentionally
Omitted].

 

(iii)                               Apportionment
of Payments.  Aggregate principal
and interest payments shall be apportioned among all outstanding Loans to which
such payments relate, in each case proportionately to Lenders’ respective Pro
Rata Shares. Agent shall promptly distribute to each Lender, at its primary
address set forth below its name on the appropriate signature page hereof or at
such other address as such Lender may request, its Pro Rata Share of all such
payments received by Agent and the commitment fees of such Lender when received
by Agent pursuant to subsection 2.4.

 

(iv)                              Payments
on Business Days.  Whenever any payment
to be made hereunder shall be stated to be due on a day that is not a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.

 

(v)                                 Overadvances.  If, at any time or for any reason, the
amount of Obligations owed by Company to Lenders is greater than either the

 

35

 

Dollar or percentage
limitations set forth in subsection 2.1 (an “Overadvance”), Company
immediately shall pay to Agent, in cash, the amount of such excess, which
amount shall be used by Agent to reduce the Obligations in accordance with the
priorities set forth in subsection 2.5B(iii).  In addition, Company hereby promises to pay the Obligations
(including principal, interest, fees, costs, and expenses) in Dollars in full
to the Lenders as and when due and payable under the terms of this Agreement
and the other Loan Documents.

 

2.6. 
[Intentionally Omitted].

 

2.7.  Special
Provisions Governing LIBOR Rate Loans.

 

Notwithstanding
any other provision of this Agreement to the contrary, the following provisions
shall govern with respect to LIBOR Rate Loans as to the matters covered:

 

A.                                   Determination
of Applicable Interest Rate.  As
soon as practicable after 11:00 a.m. (London time) on each Interest Rate
Determination Date, Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the LIBOR Rate Loans for which an interest rate is
then being determined for the applicable Interest Period and shall promptly
give notice thereof (in writing or by telephone confirmed in writing) to
Company and each Lender.

 

B.                                     Inability
to Determine Applicable Interest Rate. 
In the event that Agent shall have determined (which determination shall
be final and conclusive and binding upon all parties hereto), on any Interest
Rate Determination Date with respect to any LIBOR Rate Loans, that by reason of
circumstances affecting the certificate of deposit market or the London
interbank Eurodollar market, as the case may be, adequate and fair means do not
exist for ascertaining the interest rate applicable to such Loans on the basis
provided for in the definition of LIBOR Rate, Agent shall on such date give
notice (by facsimile or by telephone confirmed in writing) to Company and each
Lender of such determination, whereupon (i) no Loans may be made as, or
converted to, LIBOR Rate Loans until such time as Agent notifies Company and
Lenders that the circumstances giving rise to such notice no longer exist and
(ii) any Notice of LIBOR Rate Borrowing given by Company with respect to the
Loans in respect of which such determination was made shall be deemed to be a
Notice of LIBOR Rate Borrowing for a Prime Rate Loan, any Notice of
Conversion/Continuation of a Prime Rate Loan into a LIBOR Rate Loan shall be
deemed to be rescinded by Company and any Notice of Conversion/Continuation of
a LIBOR Rate Loan into a LIBOR Rate Loan shall be deemed to be a Notice of
Conversion/Continuation into a Prime Rate Loan.

 

C.                                     Illegality
or Impracticability of LIBOR Rate Loans. 
In the event that on any date any Lender shall have determined (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Company and Agent) that the
making, maintaining or continuation of its LIBOR Rate Loans (i) has become unlawful
as a result of compliance by such Lender

 

36

 

in good faith
with any law, treaty, governmental rule, regulation, guideline or order (or
would conflict with any such treaty, governmental rule, regulation, guideline
or order not having the force of law even though the failure to comply
therewith would not be unlawful) or (ii) has become impracticable (including,
without limitation, because such LIBOR Rate Loan does not adequately reflect
Lender’s costs of funds), or would cause such Lender material hardship, as a
result of contingencies occurring after the date of this Agreement which
materially and adversely affect the London interbank market or the position of
such Lender in that market, then, and in any such event, it shall on that day
give notice (by facsimile or by telephone confirmed in writing) to Company and
Agent of such determination (which notice Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Lender to make Loans as, or
to convert Loans to, LIBOR Rate Loans, as the case may be, shall be suspended
until such notice shall be withdrawn by the Lender, (b) to the extent such
determination by the Lender relates to a LIBOR Rate Loan then being requested
by Company pursuant to a Notice of LIBOR Rate Borrowing or a Notice of
Conversion/ Continuation, the Lender shall make such Loan as (or convert such
Loan to, as the case may be) a Prime Rate Loan, (c) the Lender’s obligation to
maintain its outstanding LIBOR Rate Loans shall be terminated at the earlier to
occur of the expiration of the Interest Period then in effect with respect to
such Loans or when required by law, and (d) the LIBOR Rate Loans shall
automatically convert into Prime Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by a Lender as
described above relates to a LIBOR Rate Loan then being requested by Company
pursuant to a Notice of LIBOR Rate Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.7D, to rescind such Notice of LIBOR Rate
Borrowing or Notice of Conversion/ Continuation as to all Lenders by giving
notice (by facsimile or by telephone confirmed in writing) to Agent of such
rescission on the date on which the Lender gives notice of its determination as
described above (which notice of rescission Agent shall promptly transmit to
each other Lender).

 

D.                                    Compensation
For Breakage or Non-Commencement of Interest Periods.  Company shall compensate each Lender, upon
written request by that Lender (which request shall set forth the basis for
requesting such amounts), for all reasonable losses, expenses and liabilities
(including, without limitation, any interest paid by that Lender to lenders of
funds borrowed by it to make or carry its LIBOR Rate Loans and any loss
(including any loss of anticipated earnings), expense or liability sustained by
that Lender in connection with the liquidation or re-employment of such funds)
which that Lender may sustain: (i) if for any reason (other than a default by
that Lender) a borrowing of any LIBOR Rate Loan does not occur on a date
specified therefor in a Notice of LIBOR Rate Borrowing or a facsimile or
telephonic request for borrowing, or a conversion to or continuation of any
LIBOR Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a facsimile or telephonic request for conversion or
continuation or a LIBOR Rate Loan is not extended as specified in a notice
thereof, (ii) if any prepayment or conversion of any of its LIBOR Rate Loans
occurs on a date that is not the last day of an Interest Period applicable to
that Loan, (iii) if any prepayment of any of its LIBOR Rate Loans is not made
on any date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company to repay its LIBOR Rate Loans when
required by the terms of this Agreement.

 

37

 

E.                                      Booking
of LIBOR Rate Loans.  Any Lender may
make, carry or transfer LIBOR Rate Loans at, to, or for the account of any of
its branch offices or the office of an Affiliate of that Lender.

 

F.                                      Assumptions
Concerning Funding of LIBOR Rate  Loans. Calculation of all amounts
payable to a Lender under this subsection 2.7 and under
subsection 2.8A shall be made as though that Lender had actually funded
each of its relevant LIBOR Rate Loans through the purchase of a London
interbank eurodollar deposit bearing interest at the rate obtained pursuant to
the first paragraph of the definition of LIBOR Rate in an amount equal to the
amount of such LIBOR Rate Loan and having a maturity comparable to the relevant
Interest Period and through the transfer of such London interbank eurodollar
deposit from an offshore office of that Lender to a domestic office of that
Lender in the United States of America; provided, however, that
each Lender may fund each of its LIBOR Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of
calculating amounts payable under this subsection 2.7 and under
subsection 2.8A.

 

G.                                     LIBOR
Rate Loans After Default.  After the
occurrence of and during the continuation of a Potential Event of Default or an
Event of Default, (i) Company may not elect to have a Loan be made or
maintained as, or converted to, a LIBOR Rate Loan after the expiration of any
Interest Period then in effect for that Loan and (ii) subject to the provisions
of subsection 2.7D, any Notice of LIBOR Rate Borrowing or Notice of
Conversion/ Continuation given by Company with respect to a requested borrowing
or conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.

 

2.8.  Increased
Costs; Taxes; Capital Adequacy.

 

A.                                   Compensation
for Increased Costs and Taxes.  In
the event that any Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental
authority, in each case that becomes effective after the date hereof, or
compliance by such Lender with any guideline, request or directive issued or
made after the date hereof by any central bank or other governmental or
quasi-governmental authority (whether or not having the force of law):

 

(i)                                     subjects
such Lender (or its applicable lending office or its controlling corporation)
to any additional tax, levy, impost, deduction, charge or withholding or any
penalty, interest or other liability with respect thereto (collectively, a
“Tax”) (other than any Tax on the overall net income of such Lender) with
respect to this Agreement or any of the Loans or Letters of Credit or any of
its obligations hereunder, or changes the basis of taxation of payments to such
Lender (or its applicable lending office) of principal, interest, fees or any

 

38

 

other amount
payable hereunder (except for changes in the rate of Tax on the overall net
income of such Lender or its applicable lending office);

 

(ii)                                  imposes,
modifies or holds applicable any reserve (including without limitation any
marginal, emergency, supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, or advances or loans
by, or letters of credit issued by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such reserve
or other requirements with respect to LIBOR Rate Loans that are reflected in
the definition of LIBOR Rate); or

 

(iii)                               imposes
any other condition on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the London interbank market;

 

and the result
of any of the foregoing is to increase the cost to such Lender of agreeing to
make, making or maintaining Loans hereunder or of agreeing to issue, issuing,
maintaining or purchasing participations in any Letter of Credit or to reduce
any amount received or receivable by such Lender (or its applicable lending
office) with respect thereto; then, in any such case, Company shall promptly
pay to such Lender, upon demand, such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender on an after-tax basis for any such
increased cost or reduction in amounts received or receivable hereunder. Such
Lender shall deliver to Company a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to such
Lender under this subsection 2.8A, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.

 

B.                                     Withholding
of Taxes.

 

(i)                                     Payments
to Be Free and Clear.  All sums
payable by Company under this Agreement and the other Loan Documents shall be
paid free and clear of and (except to the extent required by law) without any
deduction or withholding on account of any Tax imposed, levied, collected,
withheld or assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other jurisdiction
from or to which a payment is made by or on behalf of Company or by any
federation or organization of which the United States of America or any such
jurisdiction is a member at the time of payment.

 

(ii)                                  Grossing-up
of Payments.  If Company or any
other Person is required by law to make any deduction or withholding on account
of any such Tax from any sum paid or payable by Company to Agent or any Lender
under any of the Loan Documents:

 

39

 

(a)                                  Company
shall notify Agent of any such requirement or any change in any such
requirement as soon as Company becomes aware of it;

 

(b)                                 Company
shall pay any such Tax before the date on which penalties attach thereto, such
payment to be made (if the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Agent or such Lender, as the case
may be) on behalf of and in the name of Agent or such Lender;

 

(c)                                  the
sum payable by Company in respect of which the relevant deduction, withholding
or payment is required shall be increased to the extent necessary to ensure
that, after the making of that deduction, withholding or payment, Agent or such
Lender, as the case may be, receives on the due date and retains (free from any
liability in respect of any such deduction, withholding or payment) a net sum
equal to what it would have received and so retained had no such deduction,
withholding or payment been required or made; and

 

(d)                                 within
30 days after paying any sum from which it is required by law to make any deduction
or withholding, and within 30 days after the due date of payment of any Tax
which it is required by clause (b) above to pay, Company shall deliver to Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing or
other authority;

 

(iii)                               U.S.
Tax Certificates.  Each Lender and
Agent that is not a U.S. Person as defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended (the “Code”), for federal income tax
purposes (a “Non-U.S. Lender”) hereby agrees that, if and to the extent it is
legally able to do so, it shall, prior to the date of the first payment by
Company hereunder to be made to such Lender or Agent or for such Lender’s or
Agent’s account, deliver to Company and Agent, as applicable, such
certificates, documents or other evidence, as and when required by the Code or
Treasury Regulations issued pursuant thereto, including (a) in the case of a
Non-U.S. Lender that is a “bank” for purposes of Section 881(c)(3)(A) of
the Code, two (2) duly completed copies of Internal Revenue Service Form W-8BEN
or Form W-8ECI and any other certificate or statement of exemption required by
Treasury Regulations, or any subsequent versions thereof or successors thereto,
properly completed and duly executed by such Lender or Agent establishing that
with respect to payments of principal, interest or fees hereunder it is (i) not
subject to United States federal withholding tax under the Code because such
payment is effectively connected with the conduct by such Lender or Agent of a
trade or business in the United States or (ii) totally exempt or partially
exempt from United States federal withholding tax under a provision of an
applicable tax treaty and (b) in the case of a Non-U.S. Lender that is not a

 

40

 

“bank” for
purposes of Section 881(c)(3)(A) of the Code, a certificate in form and
substance reasonably satisfactory to Agent and Company and to the effect that
(i) such Non-U.S. Lender is not a “bank” for purposes of
Section 881(c)(3)(A) of the Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been treated as a
bank for purposes of any tax, securities law or other filing or submission made
to any governmental authority, any application made to a rating agency or
qualification for any exemption from any tax, securities law or other legal
requirements, (ii) is not a ten (10) percent shareholder for purposes of
Section 881(c)(3)(B) of the Code and (iii) is not a controlled foreign
corporation receiving interest from a related person for purposes of
Section 881(c)(3)(C) of the Code, together with a properly completed
Internal Revenue Service Form W-8 or W-9, as applicable (or successor forms).
Each Lender or Agent agrees that it shall, promptly upon a change of its
lending office or the selection of any additional lending office, to the extent
the forms previously delivered by it pursuant to this section are no longer
effective, and promptly upon Company’s or Agent’s reasonable request after the
occurrence of any other event (including the passage of time) requiring the
delivery of a Form W-8BEN, Form W-8ECI, Form W-8 or W-9 in addition to or in
replacement of the forms previously delivered, deliver to Company and Agent, as
applicable, if and to the extent it is properly entitled to do so, a properly
completed and executed Form W-8BEN, Form W-8ECI, Form W-8 or W-9, as applicable
(or any successor forms thereto).  Company
shall not be required to pay any additional amounts to any Non-U.S. Lender in
respect of United States federal withholding tax pursuant to
subsection 2.8B above to the extent that the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender to comply with the provisions of this subsection 2.8B(iii); provided,
however, that the foregoing shall not relieve Company of its obligation
to pay additional amounts pursuant to subsection 2.8A in the event that,
as a result of any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in interpretation, administration or
application thereof, a Non-US Lender that was previously entitled to receive
all payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding.

 

C.                                     Capital
Adequacy Adjustment.  If any Lender
shall have determined that the adoption, effectiveness, phase-in or
applicability of any law, rule or regulation (or any provision thereof)
regarding capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office or its controlling
corporation) with any guideline, request or directive regarding capital
adequacy (whether or not having the force of law) of any such governmental
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such
Lender’s Loans or Commitments or Letters of Credit or participations therein or

 

41

 

other
obligations hereunder with respect to the Loans or the Letters of Credit to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five (5) Business Days after demand by such Lender (with a copy of
such demand to Agent), Company shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Each Lender, upon determining in good faith
that any additional amounts will be payable pursuant to this subsection 2.8C,
will give prompt written notice thereof to Company, which notice shall set
forth the basis of the calculation of such additional amounts, although the
failure to give any such notice shall not release or diminish any of Company’s
obligations to pay additional amounts under this subsection 2.8C.

 

2.9.  Lenders’
Obligation to Mitigate.

 

Each Lender
agrees that, as promptly as practicable after the officer of such Lender
responsible for administering the Loans under this Agreement becomes aware of
the occurrence of an event or the existence of a condition that would cause
such Lender to become subject to subsections 2.8A or 2.8C entitle such Lender
to receive payments under subsection 2.8A or 2.8C, it will, to the extent
not inconsistent with such Lender’s internal policies, use reasonable efforts
(i) to make, fund or maintain the Commitments of such Lender or the affected
Loans of such Lender through another lending office of such Lender, or (ii)
take such other measures as such Lender may deem reasonable, if as a result
thereof the circumstances which would cause such Lender to become subject to
subsections 2.8A or 2.8C would cease to exist or the additional amounts which
would otherwise be required to be paid to such Lender pursuant to subsection 2.8A
or 2.8C would be materially reduced and if, as determined by such Lender in its
sole discretion, the making, funding or maintaining of such Commitments or
Loans through such other lending office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect
such Commitments or Loans or the interests of such Lender; provided that
such Lender will not be obligated to utilize such other lending office pursuant
to this subsection 2.9 unless Company agrees to pay all expenses incurred
by such Lender in utilizing such other lending office. A certificate as to the
amount of any such expenses payable by Company pursuant to this
subsection 2.9 (setting forth in reasonable detail the basis for
requesting such amount) submitted by such Lender to Company shall be conclusive
absent manifest error.

 

2.10. 
Security for the Loans.

 

A.                                   Mortgages.  The Agent reserves the right to require, as
security for the payment and performance of the Obligations of Company and its
Subsidiaries, Company and its Subsidiaries to execute and deliver to Agent
deeds of trust and/or mortgages, in form satisfactory to Agent, pursuant to
which Company and its Subsidiaries shall grant to Agent, for the benefit of the
Lenders and Agent, a first lien security interest on all or any fee interests
in real property and fixtures of Company and its Subsidiaries (the
“Mortgages”); provided, however, that with

 

42

 

respect to any
such fee interests in real property or fixtures subject to Liens provided for
in clauses (i) through (ix) of the definition of “Permitted Encumbrances”,
Company and its Subsidiaries shall be required to use commercially reasonable
efforts to obtain any necessary third party consents in order to grant a
security interest in favor of Agent in respect of such interests and, to the
extent that any such third party consents cannot be obtained through
commercially reasonable efforts, Company and its Subsidiaries shall not be
required to grant a security interest in such interests.

 

B.                                     Title Policies.  Company, at its sole cost and expense, shall
deliver to Agent ALTA lender’s extended coverage policies of title insurance on
all properties encumbered by the Mortgages, in liability amount and form and
issued by a title company or companies satisfactory to Agent, showing the
Mortgages as first liens upon the respective properties described therein,
subject only to Permitted Encumbrances and those exceptions approved by Agent
in writing, together with any endorsements required by Agent.

 

C.                                     [Intentionally
Omitted].

 

D.                                    Security
Agreements; Stock Pledge Agreements. 
As security (i) for the payment and performance of the Obligations of
Company, and (ii) for the payment and performance of the obligations of
Manufacturing, IS and RS under the Guaranty, Company, Manufacturing, IS and RS
shall execute and deliver to WFRF, Security Agreements and, to the extent
applicable, Stock Pledge Agreements, in each case in form and content
acceptable to Agent (as such agreements may from time to time be amended,
supplemented or modified, the “Security Agreements”) granting to Agent, for the
benefit of the Lenders and Agent, a first priority security interest (except
for Liens provided for in clauses (i) through (ix) of the definition of
“Permitted Encumbrances”) upon the Collateral described therein.

 

E.                                      Further
Assurances.  Company hereby agrees
to execute and deliver and to cause to be executed and delivered to Agent, at
Company’s sole cost and expense, such guarantees, financing or continuation
statements, collateral search reports, third party consents and such other
amendments, agreements, documents, assignments, statements or instruments as
Agent may from time to time reasonably request to evidence, perfect or otherwise
implement the security for performance and repayment of the Obligations and the
obligations of Manufacturing, IS and RS under the Guaranty provided for in this
subsection 2.10. All of the foregoing shall be reasonably satisfactory in
form and substance to Agent.

 

F.                                      Cash
Collateral Account. Company shall maintain with Wells Fargo, and Company
hereby grants to Agent, for the benefit of the Lenders and Agent, a security
interest in, a non-interest bearing deposit account (“Cash  Collateral
Account”). Company and all of its affiliates and subsidiaries shall,
subject to the security interest of Agent and the Lenders as provided herein
and in the Collateral Documents, receive any monies, checks, notes, drafts, or
any other payment relating to and/or proceeds of Collateral which come into
their possession or under their control and immediately upon

 

43

 

receipt
thereof, shall deposit or cause the same to be deposited in the Cash Collateral
Account, or, if such proceeds arise from non-credit card sales from retail
stores, may deposit such proceeds with local financial institutions
satisfactory to Agent who shall be directed by Company in writing to remit all
such proceeds at any time (subject to good faith errors made by Company which
shall be corrected by Company promptly upon Company becoming aware of such
errors) in excess of (i) $5,000 during the months of January through
October and (ii) $10,000 during the months of November and
December at each financial institution to the Cash Collateral
Account.  In addition, all credit card
processors shall be required by Company pursuant to their respective credit
card processing agreements with Company to remit all proceeds to the Cash
Collateral Account.  Prior to the occurrence
of an Event of Default, Company shall not be required to apply the proceeds on
deposit in the Cash Collateral Account to pay down the Obligations and Company
may otherwise withdraw such proceeds for general corporate use.  In no event shall any proceeds of assets not
constituting Collateral be commingled with Company’s own funds, except to the
extent permitted in this subsection. 
Company shall be fully liable to Lenders for the acts or omissions of
its shareholders, directors, employees and/or agents if such acts or omissions
result in or cause a breach of this subsection.

 

Section 3.  CONDITIONS TO LOANS AND LETTERS OF CREDIT

 

The
obligations of Lenders to make Loans and the issuance of Letters of Credit
hereunder are subject to the satisfaction of the following conditions.

 

3.1.  Conditions to Initial Loans.

 

The amendment
and restatement of the Existing Credit Agreement and the obligations of Lenders
to make the initial Loans in addition to the conditions precedent specified in
subsection 3.2, shall be subject to prior or concurrent satisfaction of
the following conditions except as otherwise set forth in a post-closing
agreement in form and substance satisfactory to Agent:

 

A.                                   Company
Documents.  On or before the Closing
Date, Company shall deliver or cause to be delivered to Lenders (or to Agent
for Lenders with sufficient originally executed copies, where appropriate, for
each Lender and its counsel) the following, each, unless otherwise noted, dated
the Closing Date:

 

(i)                                     Certified
copies of its Restated Certificate of Incorporation, together with a good
standing certificate from the Secretary of State of the State of Delaware and
each other state in which it is qualified as a foreign corporation to do
business (other than those states in which failure to so qualify could not have
a Material Adverse Effect), each dated a recent date prior to the Closing Date;

 

(ii)                                  Copies
of its Bylaws, certified as of the Closing Date by its corporate secretary or
an assistant secretary;

 

44

 

(iii)                               Resolutions
of its Board of Directors approving and authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents, certified as of the
Closing Date by its corporate secretary or an assistant secretary as being in
full force and effect without modification or amendment;

 

(iv)                              Signature
and incumbency certificates of its officers executing this Agreement and the
other Loan Documents;

 

(v)                                 Executed
originals of this Agreement and the Notes (duly executed in accordance with
subsection 2.1E, drawn to the order of each Lender and with appropriate
insertions); and

 

(vi)                              Such
other documents as Agent may reasonably request.

 

B.                                     Guaranty
Documents.  On or before the Closing
Date, Company shall deliver, or cause to be delivered, to Lenders (or to Agent
for Lenders with sufficient originally executed copies, where appropriate, for
each Lender and its counsel) the following with respect to each of
Manufacturing, IS and RS unless otherwise noted, dated the Closing Date:

 

(i)                                     Certified
copies of its Certificate of Incorporation together with good standing
certificates, dated a recent date prior to the Closing Date, from its
jurisdiction of incorporation and of its principal place of business;

 

(ii)                                  Copies
of its Bylaws, certified as of the Closing Date by its corporate secretary or
an assistant secretary;

 

(iii)                               Resolutions
of its Board of Directors approving and authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, with respect to the
Guaranty and the Collateral Documents to which it is a party, certified as of
the Closing Date by its corporate secretary or an assistant secretary as being
in full force and effect without modification or amendment; and

 

(iv)                              Signature
and incumbency certificates of its officers executing the Loan Documents to
which it is a party.

 

C.                                     [Intentionally
Omitted].

 

D.                                    Collateral
Documents.  On or before the Closing
Date, Agent shall have received executed Collateral Documents.

 

E.                                      Insurance.  Agent shall have received evidence that the
insurance policies required under subsection 5.5 and the Collateral
Documents are in full force and effect, certified by the insurer thereof
and appropriate evidence showing Agent as an additional named insured or loss
payee for such policies.

 

45

 

F.                                      Inventory
Appraisal. On or before the Closing Date, Agent shall have received an
Inventory appraisal, in form and substance satisfactory to Agent, which appraisal
shall set forth the Net Liquidation Value of the Inventory.

 

G.                                     Commercial
Finance Exam.  On or before the
Closing Date, Agent shall have received the results, satisfactory in form and
substance satisfactory to Agent, of a commercial financial examination of
Company and its Subsidiaries from an independent, third party appraiser
acceptable to Agent.

 

H.                                    Legal
Opinions.  On or before the Closing
Date, Agent shall have received opinions of counsel to Company and its
Subsidiaries, in form and substance satisfactory to Agent.

 

I.                                         Trademark
Assignments.  On or before the
Closing Date, Agent shall have received evidence, in form and substance
satisfactory to Agent, that each of the trademarks listed on Schedule A to
that certain Amended and Restated Trademark Security Agreement of even date
herewith, between RS and Agent, are owned by, and/or have been properly
assigned to, RS.

 

J.                                        Pledge
of Intercompany Note.  On or before
the Closing Date, Agent shall have received evidence, in form and substance
satisfactory to Agent, that the Demand Note dated May 27, 2000, representing
Indebtedness of IS to Company in the original principal amount of $953,312, has
been pledged and delivered to Agent, together with a duly executed endorsement
thereto.

 

K.                                    Payment
of Fees.  On or before the Closing
Date, Company shall have paid to Agent and the Lenders, as applicable, all fees
and expenses pursuant to subsections 2.4 and 9.2.

 

3.2.  Conditions
to All Loans.

 

The
obligations of Lenders to make Loans on each Funding Date are subject to the
following further conditions precedent in addition to those set forth in
subsection 3.1:

 

A.                                   As
of that Funding Date:

 

(i)                                     The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date and except for changes therein expressly permitted or expressly
contemplated by this Agreement or any other Loan Document and Agent or
Requisite Lenders determine to make any such Loan or convert or continue any
Loan as a LIBOR Loan despite the fact that any such warranty or representation
is untrue or incorrect;

 

(ii)                                  No
Potential Event of Default or Event of Default has occurred and is continuing
or would result after giving effect to any such Loan, or Agent or

 

46

 

Requisite
Lenders shall determine to make any such Loan or convert or continue any such
Loan as a LIBOR Loan despite the occurrence and continuation of any such
Potential Event of Default or Event of Default;

 

(iii)                               Company
shall have performed in all material respects all agreements and satisfied all
conditions which this Agreement provides shall be performed or satisfied by it
on or before that Funding Date;

 

(iv)                              No
order, judgment or decree of any court, arbitrator or governmental authority
shall purport to enjoin or restrain any Lender from making the Loans to be made
by it on that Funding Date;

 

(v)                                 The
making of the Loans requested on such Funding Date shall not violate any law
including, without limitation, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System;

 

(vi)                              There
shall not be pending or, to the knowledge of Company, threatened, any action,
suit, proceeding, governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or any
of its Subsidiaries that has not been disclosed by Company in writing pursuant
to subsection 4.6 or 5.1(x) prior to the making of the last preceding
Loans (or, in the case of the initial Loans, prior to the execution of this
Agreement), and there shall have occurred no development not so disclosed in
any such action, suit, proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of Agent or of Requisite
Lenders, would be expected to have a Material Adverse Effect; and no injunction
or other restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or noticed
with respect to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated by this Agreement or the making of
Loans hereunder; and

 

(vii)                           Since
the Closing Date, no Material Adverse Effect shall have occurred. Company may assume
that no Lender has made such a determination unless and until it receives
written notice thereof from any Lender.

 

3.3.  Conditions
to Letters of Credit.

 

The issuance
of any Letter of Credit hereunder is subject to the following conditions
precedent:

 

A.                                   On
or before the date of issuance of the initial Letter of Credit pursuant to this
Agreement, each of the conditions set forth in subsection 3.1 shall have
been satisfied.

 

B.                                     On
or before the date of issuance of such Letter of Credit, Agent and the L/C
Issuing Bank shall have received such documents or information as Agent

 

47

 

and the L/C
Issuing Bank may reasonably require in connection with the issuance of such
Letter of Credit.

 

C.                                     On
the date of issuance of such Letter of Credit, all conditions precedent
described in subsection 3.2 shall be satisfied to the same extent as if
the issuance of such Letter of Credit were the making of a Loan and the date of
issuance of such Letter of Credit were a Funding Date.

 

Section 4.  COMPANY’S REPRESENTATIONS AND WARRANTIES

 

In order to
induce Lenders to enter into this Agreement and to make the Loans, to induce
the L/C Issuing Bank to issue Letters of Credit and to induce other Lenders to
purchase participations therein, Company represents and warrants to each
Lender, on the date of this Agreement, on each Funding Date and on the date of
issuance of each Letter of Credit, that the following statements are true,
correct and complete:

 

4.1.  Organization,
Powers, Good Standing, Business and Subsidiaries.

 

A.                                   Organization
and Powers.  Company is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and proposed
to be conducted, to enter into each Loan Document to which it is a party, to
issue and pay the Notes, and to carry out the transactions contemplated hereby
and thereby. Manufacturing is a corporation duly organized validly existing and
in good standing under the laws of New Jersey, each of IS and RS is a
corporation validly existing and in good standing under the laws of Delaware,
and each has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to be
conducted, to enter into each Loan Document to which it is a party and to carry
out the transactions contemplated thereby.

 

B.                                     Good
Standing.  Each of Company,
Manufacturing, IS and RS is qualified to do business and in good standing in
every jurisdiction where it has a fee or leasehold interest in real property
and wherever necessary to carry on its present business and operations, except
in jurisdictions in which the failure to be so qualified or in good standing
has not had and will not have, individually or in the aggregate, a Material
Adverse Effect.

 

C.                                     Conduct
of Business.  Manufacturing and
Company were incorporated on December 22, 1978 and June 22, 1982,
respectively, and IS and RS were each incorporated on July 18, 2000.
Company, Manufacturing, IS and RS are engaged only in the businesses and
substantially similar and related businesses in which they are engaged on the
Closing Date.

 

D.                                    Subsidiaries.  All of the Subsidiaries, if any, of each of
Company, Manufacturing, IS and RS, as of the date hereof, are identified in the
Information Certificate. The capital stock of each of the Subsidiaries
identified in the Information Certificate is duly authorized, validly issued, fully
paid and nonassessable and none of such stock constitutes Margin Stock. Each of
the Subsidiaries identified on the

 

48

 

Information
Certificate is validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and has full corporate power and
authority to own its assets and properties and to operate its business as
presently owned and conducted and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, except where failure to be
so qualified or in good standing or a lack of such corporate power and
authority has not had and will not have, individually or in the aggregate, a
Material Adverse Effect. The Information Certificate correctly sets forth the
ownership interest of each of Company, Manufacturing, IS and RS in each of its
Subsidiaries, if any.

 

4.2.  Authorization
of Borrowing, etc.

 

A.                                   Authorization
of Borrowing.  The execution,
delivery and performance of this Agreement and the Loan Documents and the
issuance, delivery and payment of the Notes have been duly authorized by all
necessary corporate action by Company, Manufacturing, IS and RS.

 

B.                                     No
Conflict.  The execution, delivery
and performance by each of Company, Manufacturing, IS and RS of the Agreement,
each Loan Document to which it is a party and the issuance, delivery and
payment of the Notes and the consummation of the transactions contemplated by the
Loan Documents do not and will not (i) violate any provision of law applicable
to Company, Manufacturing, IS or RS, the Certificate of Incorporation or Bylaws
of Company, Manufacturing, IS or RS, or any order, judgment or decree of any
court or other agency of government binding on Company, Manufacturing, IS or
RS, (ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of Company,
Manufacturing, IS or RS, (iii) result in or require the creation or imposition
of any Lien upon any of their properties or assets, or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company, Manufacturing, IS or RS.

 

C.                                     Governmental
Consents.  The execution, delivery
and performance by Company, Manufacturing, IS and RS of this Agreement, the
Loan Documents and the issuance, delivery and payment of the Notes and the
consummation of the transactions contemplated by the Loan Documents did not, do
not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any Federal, state or other
governmental authority or regulatory body.

 

D.                                    Binding
Obligation.  Each of the Loan Documents
executed prior to the Closing Date are, and this Agreement, the other Loan
Documents, and the Notes to be executed and delivered on or after the Closing
Date, when executed and delivered will be, to the extent such persons are a
party thereto, the legally valid and binding obligations of Company,
Manufacturing, IS and RS, enforceable against Company, Manufacturing, IS and RS
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or by equitable principles relating
to enforceability.

 

49

 

The Collateral
Documents, along with all action required to fully perfect Lenders’ liens and
security interests thereunder, which action has been taken or completed create
and constitute or will create and constitute, as the case may be, valid and
perfected first priority (except for Liens provided for in clauses (i) through (ix)
of the definition of “Permitted Encumbrances”) liens and security interests in
and to the collateral described therein, enforceable against all third parties;
and secure or will secure, as the case may be, the performance and payment of
the Obligations and the obligations of Manufacturing, IS and RS under the
Guaranty.

 

4.3.  Financial
Condition.

 

All financial
statements delivered to Agent were prepared in accordance with GAAP and fairly
present the consolidated financial position of Company, Manufacturing, IS and
RS as at the respective dates thereof and the consolidated results of
operations and cash flows of Company, Manufacturing, IS and RS for each of the
relevant periods. Except as permitted by this Agreement, none of Company,
Manufacturing, IS or RS or any of their respective Subsidiaries have any
material Contingent Obligation, contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment, which is not
reflected in the foregoing financial statements, the notes thereto, the
schedules to this Agreement or the most recent financial statements delivered
pursuant to subsection 5.1 of this Agreement except those incurred in the
ordinary course of business consistent with past practice.

 

4.4.  [Intentionally Omitted].

 

4.5.  Title
to Properties; Liens.

 

Company,
Manufacturing, IS and RS have good, sufficient and legal title to all their
respective properties and assets reflected in the most recent consolidated
balance sheet referred to in subsection 4.3 or in the most recent
financial statements delivered pursuant to subsection 5.1 of this
Agreement, except for assets acquired or disposed of in the ordinary course of
business since the date of such consolidated balance sheet. Except for
Permitted Encumbrances, all such properties and assets are free and clear of
Liens.

 

The
Information Certificate contains a complete and accurate list of the street
addresses for all real property owned in fee by Company, Manufacturing, IS or
RS on the Closing Date with the name of such owner indicated for each such
property. The Information Certificate contains a complete and accurate list of
the street addresses for all real properties leased by Company, Manufacturing,
IS or RS as tenant on the Closing Date, with the name of such lessee indicated
for each such property.

 

4.6.  Litigation;
Adverse Facts.

 

There is no
action, suit, proceeding, governmental investigation or arbitration (whether or
not purportedly on behalf of Company, Manufacturing, IS, RS or any of their
respective Subsidiaries) at law or in equity or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or

 

50

 

instrumentality,
domestic or foreign, pending or, to the knowledge of Company, Manufacturing, IS
or RS threatened against or affecting Manufacturing, Company, IS or RS or any
property of Company, Manufacturing, IS or RS which, individually or in the
aggregate, could reasonably be expected to (i) as of the Closing Date, except
as set forth on Schedule 4.6 annexed hereto, result in
liability in excess of $100,000 and (ii) thereafter result in a Material
Adverse Effect. None of Company, Manufacturing, IS, RS or any of their
respective Subsidiaries’ is (i) in violation of any applicable law that,
individually or in the aggregate, has had, or could reasonably be expected to
result in, a Material Adverse Effect or (ii) subject to or in default with
respect to any final judgment, writ, injunction, decree, rule or regulation of
any court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
that, individually or in the aggregate, has had, or could reasonably be
expected to result in, a Material Adverse Effect.

 

4.7.  Payment
of Taxes.

 

Except to the
extent permitted by subsection 5.3, all tax returns and reports of
Company, Manufacturing, IS, RS and each of their respective Subsidiaries
required to be filed by any of them have been timely filed, and all taxes,
assessments, fees and other governmental charges upon Company, Manufacturing,
IS, RS and each of their respective Subsidiaries and upon their respective
properties, assets, income and franchises which are due and payable have been
paid when due and payable. Except as set forth on the Information Certificate,
Company knows of no proposed tax assessment against Company, Manufacturing, IS,
RS or any of their respective Subsidiaries which is not being actively
contested by Company or such Subsidiary in good faith and by appropriate
proceedings and as to which adequate reserves have not been established; provided
that the adequacy of such reserves shall be subject to the sole discretion of
Agent. Company does not intend to treat the Loans, Letters of Credit and/or
related transactions hereunder as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4).

 

4.8.  Materially
Adverse Agreements; Performance.

 

A.                                   Agreements.  None of Manufacturing, Company, IS, RS or
any of their respective Subsidiaries is a party to or is subject to any
material agreement or instrument or charter or other internal restriction
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

B.                                     Performance.  None of Manufacturing, Company, IS, RS or
any of their respective Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation of Manufacturing, Company, IS, RS or
any of their respective Subsidiaries, and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute such a default,
except where the consequences, direct or indirect, of such default or defaults,
if any, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

51

 

4.9.  Governmental
Regulation.

 

None of
Manufacturing, Company, IS, RS or any of their respective Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company Act of
1940 or under any other federal or state statute or regulation which may limit
its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.

 

4.10. 
[Intentionally Omitted].

 

4.11. 
Employee Benefit Plans.

 

A.                                   Company
and each of its ERISA Affiliates are in material compliance with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and have
performed all their material obligations under each Employee Benefit Plan.

 

B.                                     No
ERISA Event has occurred or is reasonably expected to occur except ERISA Events
that, individually or in the aggregate, could not reasonably be expected to
result in a liability of Company or any of its ERISA Affiliates in excess of
$250,000.

 

C.                                     Except
to the extent required under Section 4980B of the Internal Revenue Code,
no Employee Benefit Plan provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employees of
Company or any of its ERISA Affiliates.

 

D.                                    As
of the most recent valuation date for any Pension Plan, the amount of unfunded
benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $250,000.

 

4.12. 
Disclosure.

 

No
representation or warranty of Manufacturing, Company, IS or RS contained in
this Agreement, Information Certificate, or any other Loan Document,
certificate or written statement furnished to Lenders by or on behalf of
Manufacturing, Company, IS or RS for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact (known to Manufacturing, Company, IS or RS in
the case of any document not furnished by it) necessary in order to make the
statements contained herein or therein not misleading. The projections
contained in such materials are based upon good faith estimates and assumptions
believed by Company to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may differ from the projected results. There is no fact known to
Company,

 

52

 

Manufacturing,
IS or RS (other than matters of a general economic nature) which, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect,
which has not been disclosed herein or in such other documents certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.

 

4.13. 
Security Interests.

 

The Liens
granted to Agent on behalf of Lenders by Company, Manufacturing, IS and RS
pursuant to the Collateral Documents are perfected first priority Liens (except
as set forth in subsection 2.10 hereof or in Section 24 of the
Information Certificate) in the Collateral described therein including the
proceeds and products thereof.

 

4.14. 
Environmental Protection.

 

Except as set
forth in the Information Certificate:

 

(i)                                     the
operations of Company and each of its Subsidiaries (including, without
limitation, all operations and conditions at or in the Facilities) comply in
all material respects with all Environmental Laws;

 

(ii)                                  Company
and each of its Subsidiaries have obtained all Governmental Authorizations
under Environmental Laws necessary to their respective operations, and all such
Governmental Authorizations are in good standing, and Company and each of its
Subsidiaries are in compliance with all material terms and conditions of such
Governmental Authorizations;

 

(iii)                               neither
Company nor any of its Subsidiaries has received (a) any notice or claim to the
effect that it is or may be liable to any Person as a result of or in
connection with any Hazardous Materials or (b) any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9604) or comparable state
laws, and, to the best of Company’s knowledge, none of the operations of
Company or any of its Subsidiaries is the subject of any federal or state
investigation relating to or in connection with any Hazardous Materials at any
Facility or at any other location;

 

(iv)                              none
of the operations of Company or any of its Subsidiaries is subject to any
judicial or administrative proceeding alleging the violation of or liability
under any Environmental Laws which if adversely determined is reasonably likely
to have a Material Adverse Effect, individually or in the aggregate;

 

(v)                                 neither
Company nor any of its Subsidiaries nor any of their respective Facilities or
operations are subject to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any Environmental Laws
or (b) any Environmental Claims;

 

53

 

(vi)                              neither
Company nor any of its Subsidiaries has any contingent liability in connection
with any Release of any Hazardous Materials by Company or any of its
Subsidiaries;

 

(vii)         neither company nor
any of its Subsidiaries nor, to the best knowledge of Company, any predecessor
of Company or any of its Subsidiaries has filed any notice under any
Environmental Law indicating past or present treatment or Release of Hazardous
Materials at any Facility, and none of Company’s or any of its Subsidiaries’
operations involves the generation, transportation, treatment, storage or
disposal of any hazardous waste, as defined under 42 U.S.C. §6903(5), any
hazardous substances as defined by 42 U.S.C. §9601(14), any pollutant or
contaminant as defined by 42 U.S.C. §9601(33) or any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws or any state equivalent of any of the foregoing;

 

(viii)        no Hazardous
Materials exist on, under or about any Facility in a manner that has a
reasonable possibility of giving rise to an Environmental Claim having a
Material Adverse Effect, and neither Company nor any of its Subsidiaries has
filed any notice or report of a Release of any Hazardous Materials that has a
reasonable possibility of giving rise to an Environmental Claim, individually
or in the aggregate, having a Material Adverse Effect;

 

(ix)                                neither
Company nor any of its Subsid iaries nor, to the best knowledge of Company, any
of their respective predecessors has disposed of any Hazardous Materials in a
manner that has a reasonable possibility of giving rise to an Environmental
Claim, individually or in the aggregate, having a Material Adverse Effect;

 

(x)                                   no
underground storage tanks or surface impoundments are on or at any Facility;
and

 

(xi)                                no
Lien in favor of any Person relating to or in connection with any Environmental
Claim has been filed or has been attached to any Facility.

 

4.15. 
Employee Matters.

 

There is no
strike or work stoppage in existence or threatened involving Company or any of
its Subsidiaries that, individually or in the aggregate, may have a Material
Adverse Effect.

 

4.16.  Use of Proceeds.

 

The proceeds
of the Loans shall be used solely as follows: 
(a) to refinance or make payments on existing Indebtedness of Company
under the Existing Credit Agreement; (b) to fund working capital in the
ordinary course of Company’s business; (c) to fund capital expenditures; (d) to
make payments and distributions permitted hereunder; and (e) for other general
corporate purposes.

 

54

 

4.17.  Foreign Assets Control Regulations, Etc.

 

None of the
requesting or borrowing of the Loans, the requesting or issuance, extension or
renewal of any Letters of Credit or the use of the proceeds of any thereof will
violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended)
(the “Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any
enabling legislation or executive order relating thereto (which for the
avoidance of doubt shall include, but shall not be limited to (a) Executive
Order 13224 of September 21, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56)).  Furthermore, neither Company nor any of its Subsidiaries or other
Affiliates (a) is or will become a “blocked person” as described in the
Executive Order, the Trading With the Enemy Act or the Foreign Assets Control
Regulations or (b) engages or will engage in any dealings or transactions, or
be otherwise associated, with any such “blocked person”.

 

Section 5.  COMPANY’S AFFIRMATIVE COVENANTS

 

Company
covenants and agrees that, so long as any of the Commitments hereunder shall
remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent, Company shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 5.

 

5.1.  Financial
Statements and Other Reports.

 

Company will
maintain, and cause each of its Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with
GAAP. Company will deliver to Agent and Lenders:

 

(i)                                     Borrowing
Base Certificates.  If Company has
Excess Availability of less than (i) $10,000,000 prior to the Accordion
Activation and (ii) $12,500,000 following the Accordion Activation, in each
case prior to 2:00 p.m. (Boston time) on each Tuesday, a borrowing base
certificate, in form and detail acceptable to Agent, as of the close of
Company’s business on the immediately preceding Saturday; or if Company has
Excess Availability of (i) $10,000,000 or more prior to the Accordion
Activation and (ii) $12,500,000 or more following the Accordion Activation, in
each case prior to 2 (Boston time) on the third Business Day of any fiscal
month, a borrowing base certificate, in form and detail acceptable to Agent, as
of the close of Company’s business on the last day of the immediately preceding
fiscal month;

 

55

 

(ii)                                  Monthly
Reports.  As soon as available, but
in no event later than ten (10) days after and as of the last day of each
fiscal month, store activity reports which set forth a listing of all retail
stores opened or closed during such month, together with the addresses of such
stores, as well as the total number of retail stores in operation during such
month, agings of accounts receivable and accounts payable, a perpetual stock
ledger report, and such other reports and materials as Agent may reasonably
request from time to time, all in form and detail acceptable to Agent;

 

(iii)                               Monthly
Financials.  As soon as available
and in any event within 30 days after the end of each fiscal month ending after
the Closing Date, the consolidated balance sheets of Company and its
Subsidiaries as at the end of such fiscal month and the related consolidated
statements of income, stockholders’ equity and cash flows of Company and its
Subsidiaries for such fiscal month and for the period from the beginning of the
then current fiscal year to the end of such fiscal month, setting forth in each
case in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year, all
in reasonable detail and certified by a senior financial officer of Company
that they fairly present the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from audit
and normal year-end adjustments;

 

(iv)                              Quarterly
Financials.  As soon as available
and in any event within 45 days after the end of each fiscal quarter of each
fiscal year, the 10Q report filed with the SEC and the consolidated balance
sheets of Company and its Subsidiaries as at the end of such fiscal quarter and
the related consolidated statements of income, stockholders’ equity and cash
flows of Company and its Subsidiaries for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of such
fiscal quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous fiscal
year, all in reasonable detail and certified by the senior financial officer of
Company that they fairly present the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments;

 

(v)                                 Year-End
Financials.  As soon as available
and in any event within 90 days after the end of each fiscal year, (a) the 10K
report filed with the SEC, and the consolidated balance sheets of Company and
its Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income, stockholders’ equity and cash flows of Company and its
Subsidiaries for such fiscal year, setting forth in each case in comparative
form the corresponding figures for the previous fiscal year, all in reasonable
detail and certified by the senior financial officer of Company that they
fairly present the financial condition of Company and its Subsidiaries as at
the dates indicated and the results of their operations and their cash flows for
the periods indicated, (b) a list of all liabilities

 

56

 

of
Manufacturing as at the end of such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year, all in
reasonable detail and certified by the senior financial officer of Company that
they fairly present the liabilities of Manufacturing as at the dates indicated,
and (c) in the case of such consolidated financial statements described in
clause (a) above, a report thereon of independent certified public accountants
of recognized national standing selected by Company and reasonably satisfactory
to Agent, which report shall be unqualified, shall express no doubts about the
ability of Company and its Subsidiaries to continue as a going concern, and
shall state that such consolidated financial statements fairly present the
consolidated financial position of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except as otherwise disclosed in such financial statements) and
that the examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards;

 

(vi)                              Officers’
and Compliance Certificates.

 

(a)                                  Together
with each delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (i), (ii) and (iii) above, a certificate, executed by
an officer of Company, stating that the signers have reviewed the terms of this
Agreement and have made, or caused to be made under their supervision, a review
in reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial statements
and that such review has not disclosed the existence during or at the end of
such accounting period, and that the signers do not have knowledge of the
existence as at the date of such certificate, of any condition or event that
constitutes an Event of Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action Company has taken, is taking and proposes to
take with respect thereto; and (b) together with each delivery of financial
statements of Company and its Subsidiaries pursuant to subdivisions (iv) or (v)
above, a certificate, executed by an officer of the Company demonstrating in
reasonable detail compliance during and at the end of the applicable accounting
periods with the restrictions contained in subsection 6.6 if applicable
for any such period;

 

(vii)                           Reconciliation
Statements.  If, as a result of any
change in accounting principles and policies from those used in the preparation
of the audited financial statements referred to in subsection 4.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (iii), (iv), (v) or (xv) of this subsection 5.1
will differ in any material respect from the consolidated financial statements
that would have been delivered pursuant to such subdivisions had no such change
in accounting principles and policies been made, then, if requested by Agent,
(a) together with the first delivery of financial statements pursuant to
subdivision (iii), (iv), (v) or (xv) of this subsection 5.1 following such
change, consolidated financial statements of

 

57

 

Company and
its Subsidiaries for (y) the current fiscal year to the effective date of such
change and (z) the two full fiscal years immediately preceding the fiscal year
in which such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (iii), (iv), (v) or
(xv) of this subsection 5.1 following such change, a written statement of
the chief accounting officer or senior financial officer of Company setting
forth the differences which would have resulted if such financial statements
had been prepared without giving effect to such change;

 

(viii)                        Accountants’
Certification.  Together with each delivery
of consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (v) above, a written statement by the independent certified
public accountants giving the report thereon (a) stating that their audit
examination has included a review of the terms of this Agreement and the other
Loan Documents as they relate to accounting matters, (b) stating whether, in
connection with their audit examination, any condition or event that
constitutes an Event of Default or Potential Event of Default has come to their
attention and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default that would
not be disclosed in the course of their audit examination, and (c) stating that
based on their audit examination nothing has come to their attention that
causes them to believe either or both that the information contained in the
certificates delivered therewith pursuant to subdivision (vi) above is not
correct or that the matters set forth in the Compliance Certificates delivered
therewith pursuant to clause (b) of subdivision (vi) above for the applicable
fiscal year are not stated in accordance with the terms of this Agreement;

 

(ix)                                Accountants’
Reports.  Promptly upon receipt
thereof (unless restricted by applicable professional standards), copies of all
reports submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants, including,
without limitation, any comment letter submitted by such accountants to
management in connection with their annual audit;

 

(x)                                   SEC
Filings and Press Releases. 
Promptly upon their becoming available, copies of (a) all financial
statements, reports, notices and proxy statements sent or made available
generally by Company to its security holders or by any Subsidiary of Company to
its security holders other than Company or another Subsidiary of Company, (b)
all regular and periodic reports and all registration statements (other than on
Form S-8 or a similar form) and prospectuses, if any, filed by Company or any
of its Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority, and
(c) all press releases and other statements made available generally by Company
or any of its Subsidiaries to the

 

58

 

public
concerning material developments in the business of Company or any of its
Subsidiaries;

 

(xi)                                Events
of Default, etc.  Promptly upon any
officer of Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that any Lender has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default, (b) that
any Person has given any notice to Company or any of its Subsidiaries or taken
any other action with respect to a claimed default or event or condition of the
type referred to in subsection 7.2, (c) of any condition or event that
would be required to be disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such
Form as in effect on the date hereof) if Company were required to file such
reports under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect, an officers’ Certificate specifying the nature and
period of existence of such condition, event or change, or specifying the
notice given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition, and
what action Company has taken, is taking and proposes to take with respect
thereto;

 

(xii)                             Litigation.  (a) Promptly upon any officer of Company
obtaining knowledge of the institution of, or nonfrivolous threat of, any
action, suit, proceeding, governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or any
of its Subsidiaries (collectively, “Proceedings”) seeking no less than
$500,000, written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to evaluate
such matters;

 

(xiii)                          ERISA
Events.  Promptly upon becoming
aware of the occurrence of or forthcoming occurrence of any ERISA Event, a
written notice specifying the nature thereof, what action Company or any of its
ERISA Affiliates has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto;

 

(xiv)                         ERISA
Notices.  With reasonable promptness,
copies of (a) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by Company or any of its ERISA Affiliates with the
Internal Revenue Service with respect to each Pension Plan; (b) all notices
received by Company or any of its ERISA Affiliates from a Multiemployer Plan
sponsor concerning an ERISA Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Agent shall
reasonably request;

 

59

 

(xv)                            Financial
Plans.  (A) As soon as practicable
and in any event within 30 days after the end of each fiscal year of Company, a
consolidated plan and financial forecast for the next succeeding fiscal year of
Company and its Subsidiaries, including, without limitation, (1) a forecasted
consolidated balance sheet, statement of income and statement of cash flows for
such fiscal year, (2) forecasted consolidated balance sheets, statements of
income and statements of cash flows of Company and its Subsidiaries for each
fiscal month of such fiscal year and (B) as soon as practicable, all material
amendments, updates and revisions, if any, to the information provided pursuant
to clause A above;

 

(xvi)                         Environmental
Audits and Reports.  As soon as
practicable following receipt thereof, copies of all environmental audits and
reports, whether prepared by personnel of Company or any of its Subsidiaries or
by independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim which could result in
a Material Adverse Effect;

 

(xvii)                      Board
of Directors.  With reasonable
promptness, written notice of any change in the Board of Directors of Company
or any of its Subsidiaries;

 

(xviii)                   Other
Information.  With reasonable
promptness, such other information and data with respect to Company or any of
its Subsidiaries as from time to time may be reasonably requested by any
Lender.

 

5.2.  Corporate
Existence, etc.

 

Company will
at all times preserve and keep in full force and effect its corporate existence
and rights and franchises material to its business and those of each of its
Subsidiaries; provided, however, that the corporate existence of
any such Subsidiary of Company (other than Manufacturing,  RS and IS) may be terminated if such
termination is in the best interest of its parent and is not disadvantageous to
the holder of any Note. Company will provide Lenders with a complete and
correct list of its direct and indirect Subsidiaries on the Closing Date and on
the first date financial statements are required to be delivered pursuant to
subsection 5.1(iv) after the occurrence of any change in such list from
the form most recently delivered to Lenders.

 

5.3.  Payment
of Taxes and Claims; Tax Consolidation.

 

Company will,
and will cause each of its Subsidiaries to, pay all taxes, assessments and
other governmental charges imposed upon it or any of its properties or assets
or in respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if
being contested in good faith by appropriate proceedings promptly

 

60

 

instituted and
diligently conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made
therefor.

 

5.4.  Equal
Security for Loans and Notes; No Further Negative Pledges.

 

A.                                   If
Company or any of its Subsidiaries shall create or assume any Lien upon any of
its property or assets, whether now owned or hereafter acquired, other than
Liens excepted by the provisions of subsection 6.2 (unless prior written
consent to the creation or assumption thereof shall have been obtained from
Agent and Requisite Lenders), it shall make or cause to be made concurrently
therewith effective provision whereby the Loans and the Notes will be secured
by such Lien equally and ratably with any and all other Indebtedness thereby
secured as long as any such other Indebtedness shall be so secured; provided
that this covenant shall not be construed as consent by Requisite Lenders to
any violation of the provisions of subsection 6.2.

 

B.                                     Except
with respect to specific property encumbered to secure payment of particular
Indebtedness, neither Company nor any of its Subsidiaries shall enter into any
agreement (other than the Loan Documents) prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.

 

5.5.  Maintenance
of Properties; Insurance.

 

Company will
maintain or cause to be maintained in good repair, working order and condition
all material properties used or reasonably determined to be useful in the
business of Company and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof.
Company will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and business of its Subsidiaries against loss or damage of the
kinds customarily insured against by corporations of established reputation
engaged in the same type or similar businesses and similarly situated, of such
types and in such amounts as are customarily carried under similar
circumstances by such other corporations; provided that the amount of
coverage of such insurance shall not be less than the amount of insurance
maintained on the Closing Date and the ratings of insurers issuing such
insurance as set forth in “Best’s Insurance Guide” shall be the same or better
than the ratings of the insurers providing such insurance on the Closing Date.

 

5.6.  Inspection.

 

Company will
permit any authorized representatives designated by Agent, at the expense of
Company, to visit and inspect any of the properties of Company or any of its
Subsidiaries, including its financial and accounting records, and to make
copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its or their officers and independent public
accountants, all upon reasonable notice and at such reasonable times during
normal business hours and as often as may be reasonably requested.

 

61

 

5.7.  Compliance
with Laws, etc.

 

Company shall,
and shall cause each of its Subsidiaries to, comply with the requirements of
all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which is reasonably likely to cause a Material
Adverse Effect.

 

5.8.  Collateral
Documents: Further Assurances.

 

A.                                   As
soon as practicable, but in no event more than the number of days specified
below from the Closing Date, Company shall provide to Agent, at Company’s sole
cost and expense, in form and substance satisfactory to Agent, the following:

 

(i)                                     within
60 days, an agreement with Company’s credit card processor(s); and

 

(ii)                                  within
120 days, landlord lien waivers or functional equivalent (it being agreed by
the parties hereto that landlord lien waiver language in form substantially
similar to the language set forth on Exhibit  VII annexed hereto
shall be deemed acceptable by Agent) from all landlords of any location where
Collateral is maintained and which jurisdiction has a statutory landlord’s
lien, failing which the Current Asset Borrowing Base shall be reducing by two
(2) months’ rent for each location with respect to which a waiver is not so
provided.

 

B.                                     As
soon as practicable, but in no event more than 120 days from the date on which
Company enters into any new depository arrangements with a financial
institution which will act as a local depository with respect to non-credit
card sales at two (2) or more retail stores, a triparty agreement with such
financial institution.

 

C.                                     Company
from time to time shall or shall cause Manufacturing, IS and RS to execute,
deliver, record, register and file all such notices, statements and other
documents and take such other steps, including but not limited to the amendment
of the Collateral Documents and any financing statements prepared thereunder,
as may be reasonably necessary or advisable, or that Agent may reasonably
request, to render fully valid and enforceable under all applicable laws, the rights,
liens and priorities of Agent on behalf of Lenders with respect to all security
from time to time furnished under this Agreement or the Collateral Documents or
intended to be so furnished in each case in such form and at such times as
shall be reasonably satisfactory to Agent.

 

5.9.  Environmental
Disclosure and Inspection.

 

A.                                   Company
shall, and shall cause each of its Subsidiaries to, exercise all due diligence
in order to comply and cause (i) all tenants under any leases or occupancy
agreements affecting any portion of the Facilities and (ii) all other Persons
on or occupying such property, to comply with all Environmental Laws, except
where failure to comply could not have a Material Adverse Effect.

 

62

 

B.                                     Company
agrees that Agent on behalf of Lenders may, from time to time and in its sole
and absolute discretion, retain, at Company’s expense, an independent
professional consultant to review any report relating to Hazardous Materials
prepared by or for Company and to conduct its own investigation of any Facility
currently owned, leased, operated or used by Company or any of its
Subsidiaries, and Company agrees to use its best efforts to obtain permission
for Agent’s professional consultant to conduct its own investigation of any
Facility previously owned, leased, operated or used by Company or any of its
Subsidiaries. Company hereby grants to Agent and its agents, employees,
consultants and contractors the right to enter into or on to the Facilities
currently owned, leased, operated or used by Company or any of its Subsidiaries
to perform such tests on such property as are reasonably necessary to conduct
such a review and/or investigation. Any such investigation of any Facility
shall be conducted, unless otherwise agreed to by Company and Agent, during
normal business hours and, to the extent reasonably practicable, shall be
conducted so as not to interfere with the ongoing operations at any such
Facility or to cause any damage or loss to any property at such Facility.
Company and Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of Agent pursuant to this
subsection 5.9B will be obtained and shall be used by Agent and Lenders
for the purposes of Lenders’ internal credit decisions, to monitor and police
the Loans and to protect the security interests created by the Loan Documents.
Agent agrees to deliver a copy of any such report to Company with the
understanding that Company acknowledges and agrees that (i) it will indemnify
and hold harmless Agent and each Lender from any costs, losses or liabilities
relating to Company’s use of or reliance on such report, (ii) neither Agent nor
any Lender makes any representation or warranty with respect to such report, and
(iii) by delivering such report to Company, neither Agent nor any Lender is
requiring or recommending the implementation of any suggestions or
recommendations contained in such report.

 

C.                                     Promptly
after it becomes aware of any of any of the following, Company shall advise
Lenders in writing and in reasonable detail of (i) any Release of any Hazardous
Materials required to be reported to any federal, state or local governmental
or regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any Release of Hazardous Materials required to be reported to any
federal, state or local governmental or regulatory agency, (iii) any remedial
action taken by Company or any other Person in response to (x) any Hazardous
Materials on, under or about any Facility, the existence of which has a
reasonable possibility of resulting in an Environmental Claim having a Material
Adverse Effect, or (y) any Environmental Claim that could have a Material
Adverse Effect, (iv) Company’s discovery of any occurrence or condition on any
real property adjoining or in the vicinity of any Facility that could cause such
Facility or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws, and (v) any request for information from any governmental agency that
suggests such agency is investigating whether Company or any of its
Subsidiaries may be potentially responsible for a Release of Hazardous
Materials. Company shall promptly deliver to Lenders a copy of (a) any
environmental reports prepared by or for the Company or any of its Subsidiaries

 

63

 

regarding a
groundwater investigation at 500 Hanover Pike, Hampstead, Maryland, completed
on or about August 31, 1995, and any subsequent environmental reports
related to the groundwater at such site, and (b) any Complaint filed by the
Company or any of its Subsidiaries against any party alleged to be liable for
any costs of remediation at such site.

 

D.                                    Company
shall promptly notify Lenders of (i) any proposed acquisition of stock, assets,
or property by Company or any of its Subsidiaries that could reasonably be
expected to expose Company or any of its Subsidiaries to, or result in,
Environmental Claims that could have a Material Adverse Effect or that could
reasonably be expected to have a material adverse effect on any Governmental
Authorization then held by Company or any of its Subsidiaries and (ii) any
proposed action to be taken by Company or any of its Subsidiaries to commence
manufacturing, industrial or other operations that could reasonably be expected
to subject Company or any of its Subsidiaries to additional laws, rules or
regulations, including, without limitation, laws, rules and regulations
requiring additional environmental permits or licenses.

 

E.                                      Company
shall, at its own expense, provide copies of such documents or information as
Agent may reasonably request in relation to any matters disclosed pursuant to
this subsection 5.9.

 

5.10. 
Company’s Remedial Action Regarding Hazardous  Materials.

 

Company shall
promptly take, and shall cause each of its Subsidiaries promptly to take, any
and all necessary remedial action in connection with the presence, storage,
use, disposal, transportation or Release of any Hazardous Materials on, under
or about any Facility in order to comply with all applicable Environmental Laws
and Governmental Authorizations, except where failure to comply could not have
a Material Adverse Effect. In the event Company or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Materials on,
under or about any Facility, Company or such Subsidiary shall conduct and
complete such remedial action in compliance with all applicable Environmental
Laws, and in accordance with the policies, orders and directives of all
federal, state and local governmental authorities except when, and only to the
extent that, Company’s or such Subsidiary’s liability for such presence,
storage, use, disposal, transportation or discharge of any Hazardous Materials
is being contested in good faith by Company or such Subsidiary.

 

5.11. 
Environmental Indemnity.

 

Company shall
fully and promptly pay, perform, discharge, defend, indemnify and hold harmless
each Indemnitee from and against any action, suit, proceeding, claim or loss
suffered or incurred by that Indemnitee under or on account of any
Environmental Laws or Release of any Hazardous Materials relating to any
Facility or any action or failure to act by Company or any of its Subsidiaries
with respect to such Environmental Laws or Release.

 

64

 

5.12.  Additional Subsidiaries.

 

A.                                   If,
after the Closing Date, Company creates or acquires, either directly or
indirectly, any Subsidiary, Company will promptly notify Agent of such creation
or acquisition, as the case may be, and contemporaneously with the formation of
such Subsidiary, Company shall take all other action required by this
subsection 5.12.

 

B.                                     Company
will cause each Subsidiary (including any Subsidiary which, on or after the
Closing Date, becomes a Subsidiary) created, acquired or otherwise existing, on
or after the Closing Date to promptly become a guarantor and shall cause such
Subsidiary to execute and deliver to Agent, for the benefit of Agent and the
Lenders, a joinder to each of the Guaranty and the Security Agreement and to
comply with all conditions precedent set forth therein.

 

5.13. 
Appraisals.

 

Company agrees
that Agent on behalf of Lenders may retain, at Company’s expense, appraisers to
conduct appraisals of any Collateral; provided, however, that
prior to the occurrence of a Potential Event of Default or Event of Default,
Company shall be responsible for the costs and expenses of no more than two (2)
appraisals per calendar year with regards to each type of Collateral.  Company hereby grants to Agent and its
agents, employees, appraisers, consultants and contractors the right to enter
into or on to the Facilities currently owned, leased, operated or used by
Company or any of its Subsidiaries to conduct such appraisals, including, any
review or investigation related thereto. Any such review, investigation or
appraisal of any Collateral shall be conducted, unless otherwise agreed to by
Company and Agent, during normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with the ongoing
operations at any such Facility or to cause any damage or loss to any property
at such Facility.

 

5.14. 
Use of Proceeds.

 

Company will
use the proceeds of the Loans and obtain Letters of Credit solely for the
purposes set forth in subsection 4.16.

 

Section 6.  COMPANY’S NEGATIVE COVENANTS

 

Company
covenants and agrees that, so long as any of the Commitments hereunder shall
remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent, Company shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.

 

6.1.  Indebtedness.

 

Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or guaranty, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except:

 

65

 

(i)                                     Company
may become and remain liable with respect to the Obligations;

 

(ii)                                  Company
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations permitted by subsection 6.4 and, upon any matured obligations
actually arising pursuant thereto, the Indebtedness corresponding to the
Contingent Obligation so extinguished;

 

(iii)                               Manufacturing,
IS and RS may become and remain liable with respect to Indebtedness to Company
to the extent permitted by subsection 6.3; provided that (a) all
such intercompany Indebtedness shall be evidenced by an open promissory note,
and (b) any payment by such Person under any guaranty of the Obligations shall,
by the terms of such note, result in a pro  tanto reduction of the
amount of any intercompany indebtedness owed by such Person to Company; provided
further, that the parties hereby acknowledge that Agent reserves the
right to require Company and its Subsidiaries to pledge to Agent, as security
for the payment and performance of the Obligations of Company and its
Subsidiaries, any such open promissory notes representing intercompany
Indebtedness now held or hereafter acquired by Company or any of its
Subsidiaries;

 

(iv)                              Company
and its Subsidiaries, as applicable, may remain liable with respect to Existing
Approved Indebtedness described in the Information Certificate (as it may be
extended, renewed or modified, provided that such extension, renewal or
modification does not increase the principal amount of such Existing Approved
Indebtedness above the amount outstanding on the date of such extension,
renewal or modification); Company may become and remain liable with respect to
Indebtedness to IS to the extent permitted by subsection 6.3; provided
that all such intercompany Indebtedness shall be evidenced by one or more
promissory notes;

 

(v)                                 Company and its
Subsidiaries may become and remain liable with respect to Permitted
Acquisitions; and

 

(vi)                              Company
and its Subsidiaries may become and remain liable with respect to Indebtedness
in addition to Indebtedness described in clauses (i)-(vi) above in an aggregate
principal amount not to exceed $2,000,000 at any time outstanding.

 

6.2.  Liens
and Related Matters.

 

Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or permit to exist any Lien on or with respect to any
property or asset of any kind (including any document or instrument in respect
of goods or accounts receivable) of Company or any of its Subsidiaries, whether
now owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform

 

66

 

Commercial
Code of any State or under any similar recording or notice statute, except
Permitted Encumbrances.

 

6.3.  Investments.

 

Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly
make or own any Investment in any Person, except: (i) Company’s direct
Investments in IS, RS and Manufacturing; (ii) IS’s ownership of the capital
stock of RS; (iii) extensions of credit made by IS to Company; and (iv)
Investments in Permitted Acquisitions.

 

6.4.  Contingent
Obligations.

 

Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
create or become or be liable with respect to any Contingent Obligation,
except:

 

(i)                                     guaranties
resulting from endorsement of negotiable instruments for collection in the
ordinary course of business;

 

(ii)                                  Manufacturing,
IS, and RS may become and remain liable with respect to the Guaranty;

 

(iii)                               contingent
reimbursement obligations with respect to Letters of Credit; and

 

(iv)                              Contingent
Obligations set forth on the Information Certificate.

 

6.5.  Restricted
Payments;
Repurchases.

 

Company will
not, and will not permit its Subsidiaries to, directly or indirectly, declare,
order, pay, make or set apart any sum for dividends, distributions or
repurchases of capital stock; provided, however, any Subsidiary
of Company may declare and pay dividends to Company or any wholly owned
Subsidiary and Company or any wholly owned Subsidiary may declare and pay
dividends and/or repurchase shares of its outstanding capital stock in an
aggregate amount not to exceed $15,000,000 in any twelve month period so long
as (i) no Potential Event of Default or Event of Default exists or would exist
after giving effect to such dividend payment or share repurchase and (ii)
Excess Availability exceeds $30,000,000 both before and, on a pro forma basis,
after giving effect to such dividend payment or share repurchase.

 

6.6.  Minimum
EBITDA.  For Company’s 2004 fiscal year,
Company shall, as of the last day of each fiscal month thereof, have EBITDA of
not less than $27,500,000.  In addition,
in no event shall Consolidated Capital Expenditures exceed $30,000,000 during
Company’s 2004 fiscal year.  The
foregoing covenants may be adjusted upwards each subsequent fiscal year based
upon Company’s projections for the fiscal year containing that fiscal month and
fiscal year, for which projections must be

 

67

 

delivered to
Agent as soon as practicable, but in any event within 30 days after the end of
each fiscal year of Company. The projections shall be satisfactory to Agent in
its reasonable credit judgment.  Agent
may set the minimum EBITDA level upwards for future periods based on 85% of the
expected performance set forth in such projections delivered to Agent.  The covenants set forth in this
Section will not be applicable to Company in any fiscal month during which
Company maintains Excess Availability at all times of (i) $7,500,000 or more
prior to the Accordion Activation and (ii) $10,000,000 or more following the
Accordion Activation, provided, that in each case no Event of Default
has occurred and is continuing.

 

6.7.  Restriction
on Fundamental Changes; Issuance of Preferred Stock.

 

A.                                   Subject
to subsection 5.2, Company will not, and will not permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
business, property or fixed assets outside of the ordinary course of business,
whether now owned or hereafter acquired, or acquire by purchase or otherwise all
or substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person, except:

 

(i)                                     Any
Subsidiary of Company may be merged or consolidated with or into Company,
Manufacturing, IS or RS, or be liquidated, wound up or dissolved, or all or
substantially all of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a series of
transactions, to Company, Manufacturing, IS or RS;

 

(ii)                                  Company
and its Subsidiaries may sell or otherwise dispose of any of their assets
outside of the ordinary course of business; provided (a) that any such
sale or other disposition is made for the fair market value of such assets, and
(b) that not more than $250,000 in fair market value of assets (excluding
inventory) may be sold or otherwise disposed of in any one transaction or
series of related transactions and not more than $500,000 in fair market
value-of assets (excluding inventory) in the aggregate may be sold or otherwise
disposed of in any fiscal year of Company, provided, however,
that all net proceeds of any such sale or disposition shall be immediately
turned over to Agent to be applied to reduce the Obligations as it sees fit,
and (c) Company may franchise or otherwise sell all or substantially all of the
assets of up to five (5) retail stores per calendar year upon at least five (5)
days prior written notice received by Agent in connection with each such
franchise or sale, on the condition that all net proceeds of each such
franchise or sale shall be, upon Company’s receipt, deposited into the Cash
Collateral Account; and

 

(iii)                               Company
and its Subsidiaries may acquire leasehold interests in connection with the
opening of new stores subject to the terms of subsection 6.10.

 

68

 

B.                                     Company
will not, and will not permit any of its Subsidiaries to, issue any preferred
stock, except pursuant to a stock rights plan applicable to all shareholders.

 

6.8.  Conduct
of Business.

 

Company will
not engage in any business other than the business engaged in by Company,
Manufacturing, IS, or RS on the date hereof, substantially similar or related
businesses and other lines of business consented to by Agent and Requisite
Lenders. Company will not permit Manufacturing, IS, and RS to engage in any
business other than the business engaged in by Manufacturing, IS and RS on the
date hereof or substantially similar or related businesses, or to sell or
dispose of its products in any manner different from the manner in which
Manufacturing, IS, or RS sold or disposed of its products on the date hereof.
Company will not form, create, or take any interest in, any Subsidiary other
than those Subsidiaries listed in the Information Certificate.

 

6.9. 
[Intentionally Omitted].

 

6.10.  Sales and Lease-Backs.

 

Except in
connection with a Permitted Acquisition, Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, become or remain liable as
lessee or as guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real or personal
or mixed) whether now owned or hereafter acquired, (i) which Company or any of
its Subsidiaries has sold or transferred or is to sell or transfer to any other
Person; or (ii) which Company or any such Subsidiary intends to use for
substantially the same purpose as any other property which has been or is to be
sold or transferred by Company or any such Subsidiary to any Person in
connection with such lease.

 

6.11. 
Sale or Discount of Receivables.

 

Company will
not, and will not permit any of its Subsidiaries, without the prior written
consent of the Agent, to, directly or indirectly, sell with recourse or, so
long as no Potential Event of Default or Event of Default has occurred and is
continuing, with or without recourse, or discount or otherwise sell for less
than the face value thereof, any of its notes or accounts receivable, provided
that all proceeds permitted hereunder shall be immediately turned over to Agent
to be applied to the Obligations as it sees fit; provided, however,
this Section 6.11 shall not prohibit Company from establishing a credit
card affiliation program on a non-recourse basis pursuant to which receivables
may be generated for the benefit of Company and sold and/or assigned through a
credit card securitization program, all of the terms and conditions of which
are acceptable to Agent.

 

6.12. 
Transactions with Shareholders and Affiliates.

 

Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with

 

69

 

any holder of
10% or more of any class of equity Securities of Company, or with any Affiliate
of Company or of any such holder, on terms which in the sole discretion of the
Board of Directors of Company (such discretion, however, to be exercised in
good faith and evidenced by a resolution) are less favorable to Company or that
Subsidiary, as the case may be, than those which might be obtained at the time
from Persons who are not such a holder or Affiliate; provided that the
foregoing restriction shall not apply to any transaction between Company and
any of its wholly-owned Subsidiaries or between any of its wholly-owned
Subsidiaries.

 

6.13.  Disposal of Subsidiary Stock.

 

Company will
not:

 

(i)                                     directly
or indirectly sell, assign, pledge or otherwise encumber or dispose of any
shares of capital stock or other equity Securities of (or warrants, rights or
options to acquire shares or other equity Securities of) any of its
Subsidiaries, except to qualify directors if required by applicable law; or

 

(ii)                                  permit
any of its Subsidiaries directly or indirectly to sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock or other
Securities (or warrants, rights or options to acquire shares or other
Securities) of such Subsidiary, except to Company, another Subsidiary of
Company or to qualify directors if required by applicable law.

 

Section 7.  EVENTS OF DEFAULT

 

If any of the
following conditions or events (“Events of Default”) shall occur and be
continuing:

 

7.1.  Failure
to Make Payments When Due.

 

Failure to pay
any installment of principal of any Loan when due, whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise; failure to pay when due
any amount payable in reimbursement of the L/C Issuing Bank in respect of a
drawing under a Letter of Credit; or failure to pay when due any interest on
any Loan or any other amount due under this Agreement; or

 

7.2.  Default
in Other Agreements.

 

Failure of
Company or any of its Subsidiaries to pay when due or any default in the
payment when due of any principal or interest on any other Indebtedness in an
aggregate principal amount of $100,000 or more or in the payment when due of
any Contingent Obligation in an aggregate principal amount of $100,000 or more,
in each case beyond any period of grace provided; or breach or default with
respect to any other material term of any evidence of any other Indebtedness in
an aggregate principal amount of $100,000 or more or of any loan agreement,
mortgage, indenture or other agreement relating thereto, if the effect of such
failure, default or breach is to cause, or to permit the holder or holders of
that Indebtedness (or a trustee on behalf of such holder or holders) to

 

70

 

cause, that
Indebtedness to become or be declared due prior to its stated maturity (upon
the giving or receiving of notice, lapse of time, both, or otherwise); or

 

7.3.  Breach
of Warranty.

 

Any of
Company’s representations or warranties made herein or in any statement or
certificate at any time given by Company in writing pursuant hereto or in
connection herewith shall be false in any material respect on the date as of
which made; or

 

7.4.  Other
Defaults Under Agreement.

 

A.                                   Company
shall default in the performance of or compliance with Section 5 (other
than paragraphs 5.1(iii) to and including (x), 5.1 (xiii) to and including
(xvii), subsections 5.3, 5.7, 5.9, 5.10 or 5.11) or Section 6 of this
Agreement; or

 

B.                                     Company
shall default in the performance of or compliance with any term contained in
this Agreement other than those referred to above in subsections 7.1, 7.3 or
7.4A (although the terms of the Agreement covered by this subsection 7.4B
shall include those paragraphs of subsection 5.1 excluded from
subsection 7.4A) and such default shall not have been remedied or waived
within 30 days of its occurrence; or

 

7.5.  Involuntary
Bankruptcy; Appointment of Receiver, etc.

 

A court having
jurisdiction in the premises shall enter a decree or order for relief in
respect of Company or any of its Subsidiaries in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal or state law; or
(B) (i) a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; (ii)
the involuntary appointment of an interim receiver, trustee or other custodian
of Company or any of its Subsidiaries for all or a substantial part of its
property; or (iii) the issuance of a warrant of attachment, execution or
similar process against any substantial part of the property of Company or any
of its Subsidiaries, and the continuance of any such events in subpart (B) for
45 days unless dismissed or discharged provided that Lenders shall not be
required to make Loans or issue Letters of Credit during such 45 day period; or

 

7.6.  Voluntary
Bankruptcy; Appointment of Receiver, etc.

 

Company or any
of its Subsidiaries shall have an order for relief entered with respect to it
or commence a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion to an involuntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its

 

71

 

property; the
making by Company or any of its Subsidiaries of any assignment for the benefit
of creditors; or the inability or failure of Company or any of its
Subsidiaries, or the admission by Company or any of its Subsidiaries in writing
of its inability to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof)
adopts any resolution or otherwise authorizes action to approve any of the
foregoing; or

 

7.7.  Judgments
and Attachments.

 

Any money
judgment, writ or warrant of attachment, or similar process involving in any
case an amount in excess of $500,000 or, together with all other such money
judgments, writs or warrants of attachments or similar processes involving an
aggregate amount in excess of $1,000,000, shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 45 days or
in any event later than five (5) days prior to the date of any proposed sale
thereunder (provided that Lenders shall not be required to make Loans or issue
Letter of Credit during such 45 day period); or

 

7.8.  Dissolution.

 

Any order, judgment
or decree shall be entered against Company or any of its Subsidiaries decreeing
the dissolution or split up of Company or that Subsidiary and such order shall
remain undischarged or unstayed for a period in excess of 30 days (provided
that Lenders shall not be obligated to make Loans or issue Letters of Credit
during such 30 day period); or

 

7.9.  Employee
Benefit Plans.

 

There occurs
one or more ERISA Events which individually or in the aggregate results in or
otherwise is associated with liability of the Company or any of its ERISA
Affiliates in excess of $500,000 annually; provided, however,
that it shall be an Event of Default if there exists, as of any valuation date
for a Pension Plan, or in the aggregate for all Pension Plans (excluding
Pension Plans with assets in excess of benefit liabilities) an excess of the
actuarial present value (determined on the basis of reasonable assumptions
employed by the independent actuary for such Plan) of benefit liabilities (as
defined in Section 4001(a)(16) of ERISA) over the fair market value of the
assets of such Plan, only if such excess individually or in the aggregate for
all Pension Plans (excluding in such computation any Pension Plans with assets
greater than benefit liabilities) exceeds $500,000 annually; or

 

7.10. 
Invalidity of Guaranty.

 

The Guaranty
for any reason, other than the satisfaction in full of all Obligations, is
declared by a court of competent jurisdiction to be null and void, or any of
Manufacturing, IS or RS denies that it has any further liability, including
without limitation with respect to future advances by Lenders, under the
Guaranty or gives notice to such effect; or

 

72

 

7.11. 
Failure of Security.

 

From and after
the execution, acknowledgement and recordation or filing, as appropriate, of
any Collateral Document by Company or any of its Subsidiaries, any such
Collateral Document shall be revoked by Company or such Subsidiary or shall be
declared by a court of competent jurisdiction to be null and void or shall
cease to be in full force and effect as a result of any change in law or the
protection or security afforded Lenders in any substantial portion of the
property secured thereby is in any material respect impaired as a result of the
destruction or condemnation thereof or for any similar reason; or Company or
such Subsidiary shall default in any material respect in the performance or
observance of any material term, covenant, condition or agreement on its part
to be performed or observed under such Collateral Document beyond any
applicable grace period; or Lenders shall fail to have a valid, perfected and
enforceable first priority Lien (subject to the Liens permitted by
subsection 6.2) on Company’s or such Subsidiary’s right, title and
interest in all or any material portion of the real property described therein
as a result of any change in law, the expiration of any required filings or
recordations with respect thereto, the declaration by a court of competent
jurisdiction that such Lien is null and void or the imposition of any “super
Lien” under applicable state or federal law and such failure shall not be a
circumstance covered by the Title Policies; or Company or such Subsidiary shall
contest in any manner that such Collateral Document constitutes its valid and
enforceable agreement or shall assert in any manner that it has no further
obligation or liability under such Collateral Documents.

 

7.12.  Termination of Commitments.

 

If any one or
more of the foregoing Events of Default shall have occurred and be continuing,
Agent may, and upon the request of the Requisite Lenders shall, by notice in
writing to Company declare all amounts owing with respect to this Agreement,
the Notes and the other Loan Documents and all reimbursement obligations with
respect to Letters of Credit to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by Company; provided
that in the event of any Event of Default specified in subsection 7.5 or
subsection 7.6 shall occur, all such amounts shall become immediately due
and payable automatically and without any requirement of notice from Agent or
any Lender and any unused portion of the credit hereunder shall forthwith
terminate and each of the Lenders shall be relieved of all further obligations
to make Loans to Company and the L/C Issuing Bank shall be relieved of all
further obligations to issue, extend or renew Letters of Credit.  If any other Event of Default shall have
occurred and be continuing, Agent may and, upon the request of the Requisite
Lenders, shall, by notice to Company, terminate the unused portion of the
credit hereunder, and upon such notice being given such unused portion of the
credit hereunder shall terminate immediately and each of the Lenders shall be
relieved of all further obligations to make Loans and the L/C Issuing Bank
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit.  No termination of the credit
hereunder shall relieve Company or any of its Subsidiaries of any of the
Obligations.

 

73

 

7.13. 
Remedies.

 

In case any
one or more Events of Default shall have occurred and be continuing, and
whether or not the Lenders shall have accelerated the maturity of the Loans
pursuant to subsection 7.12, each Lender, if owed any amount with respect
to the Loans or Letter of Credit obligations, may, with the consent of the Requisite
Lenders but not otherwise, proceed to protect and enforce its rights by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations to
such Lender are evidenced, including as permitted by applicable law the
obtaining of the ex  parte appointment of a receiver, and, if such
amount shall have become due, by declaration or otherwise, proceed to enforce
the payment thereof or any other legal or equitable right of such Lender; provided,
however, Agent hereby agrees that in no event shall Agent sell or assign
any promissory notes representing intercompany Indebtedness and pledged to
Agent hereunder except together with all assets of Company and for an amount
not less than face value.  No remedy
herein conferred upon any Lender or Agent or the holder of any Note or
purchaser of any Letter of Credit participation is intended to be exclusive of
any other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or any other provision of law.

 

7.14.  Distribution of Collateral Proceeds.

 

In the event
that, following the occurrence or during the continuance of any Potential Event
of Default or Event of Default, Agent or any Lender, as the case may be,
receives any monies in connection with the enforcement of any the Collateral Documents,
or otherwise with respect to the realization upon any of the Collateral, such
monies shall be distributed for application as follows:

 

A.                                   first,
to pay any Lender Group Expenses then due to Agent under the Loan Documents,
until paid in full,

 

B.                                     second,
to pay any Lender Group Expenses then due to the Lenders under the Loan
Documents, on a ratable basis, until paid in full,

 

C.                                     third,
to pay any fees then due to Agent (for its separate accounts, after giving
effect to any letter agreements between Agent and the individual Lenders) under
the Loan Documents until paid in full,

 

D.                                    fourth,
to pay any fees then due to any or all of the Lenders (after giving effect to
any letter agreements between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,

 

E.                                      fifth,
ratably to pay interest due in respect of the Loans until paid in full,

 

F.                                      sixth,
to pay the principal of all Swing Line Loans until paid in full,

 

74

 

G.                                     seventh,
to pay the principal of all Loans until paid in full,

 

H.                                    eighth,
to Agent, to be held by Agent, for the ratable benefit of the L/C Issuing Bank
and those Lenders having a Commitment, as cash collateral in an amount up to
102% of the then extant Letter of Credit Usage until paid in full,

 

I.                                         ninth,
to pay any other Obligations (other than on account of Interest Rate Agreements
and other Bank Products) until paid in full,

 

J.                                        tenth,
to pay any Obligations on account of Interest Rate Agreements and other Bank
Products until paid in full, and

 

K.                                    eleventh,
to Company (to be wired to the Designated Account) or such other Person
entitled thereto under applicable law.

 

Section 8.  AGENT

 

8.1.  Appointment.

 

WFRF is hereby
appointed Agent hereunder and under the other Loan Documents and each Lender
hereby authorizes Agent to act as its agent in accordance with the terms of
this Agreement and the other Loan Documents, except to the extent reasonably
necessary or advisable in Agent’s discretion to create or perfect the security
interests referred to in subsections 2.10 and 5.8 hereof, to be held by Agent
on behalf of Lenders, in which event, no consent of any Lender is required.
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 8
are solely for the benefit of Agent and Lenders, and Company shall have no
rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for Company or any of its Subsidiaries.

 

8.2.  Powers;
General Immunity.

 

A.                                   Duties
Specified.  Each Lender irrevocably
authorizes Agent to take such action on such Lender’s behalf and to exercise
such powers hereunder and under the other Loan Documents as are specifically
delegated to Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto. Agent shall have only those duties and
responsibilities that are expressly specified in this Agreement and the other
Loan Documents and it may perform such duties by or through its agents or
employees. Agent shall not have, by reason of this Agreement or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.

 

75

 

B.                                     No
Responsibility for Certain Matters. 
Agent shall not be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document or for any representations,
warranties, recitals or statements made herein or therein or made in any
written or oral statement or in any financial or other statements, instruments,
reports or certificates or any other documents furnished or made by Agent to
Lenders or by or on behalf of Company to Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or
as to the use of the proceeds of the Loans or the use of the Letters of Credit
or as to the existence or possible existence of any Event of Default or
Potential Event of Default. Anything contained in this Agreement to the
contrary notwithstanding, Agent shall not have any liability arising from
confirmations of the amount of outstanding Loans or the Letter of Credit Usage
or the component amounts thereof.

 

C.                                     Exculpatory
Provisions.  Neither Agent nor any
of its officers, directors, employees or agents shall be liable to Lenders for
any action taken or omitted by Agent hereunder or in connection herewith except
to the extent caused by Agent’s gross negligence or willful misconduct. If
Agent shall request instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents, 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 Lenders where unanimity is required
hereunder. Without prejudice to the generality of the foregoing, (i) Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of
Requisite Lenders or all Lenders where unanimity is required hereunder. Agent
shall be entitled to refrain from exercising any power, discretion or authority
vested in it under this Agreement or any of the other Loan Documents unless and
until it has obtained the instructions of Requisite Lenders or all Lenders
where unanimity is required hereunder.

 

D.                                    Agent
Entitled to Act as Lender.  The
agency hereby created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, Agent in its individual
capacity as a Lender hereunder. With respect to its participation in the Loans
and the Letters of Credit, Agent shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
performing the duties and functions delegated to it hereunder, and the term
“Lender” or “Lenders” or any similar term shall, unless the context clearly
otherwise indicates,

 

76

 

include Agent
in its individual capacity. Agent and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of banking, trust, financial
advisory or other business with Company or any of its Affiliates as if it were
not performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection with this Agreement and
otherwise without having to give notice thereof or account for the same to
Lenders.

 

E.                                      Agent
May File Proofs of Claim.

 

(i)                                     In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial,
administrative or like proceeding or any assignment for the benefit of
creditors relative to Company, Agent (irrespective of whether the principal of
any Loan or reimbursement obligation under any Letter of Credit shall then be
due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Agent shall have made any demand on Company) shall be
entitled and empowered, by intervention in such proceeding, under any such
assignment or otherwise:

 

(a)                                  to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, or Unpaid reimbursement obligations in
respect of any Letter of Credit and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders
and Agent and their respective agents and counsel and all other amounts due the
Lenders and Agent under subsections 2.4 and 9.2) allowed in such proceeding or
under any such assignment; and

 

(b)                                 to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

 

(ii)                                  Any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such proceeding or under any such assignment is hereby
authorized by each Lender to make such payments to Agent and, in the event that
Agent shall consent to the making of such payments directly to the Lenders,
nevertheless to pay to Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of Agent and its agents and counsel, and
any other amounts due Agent under subsections 2.4 and 9.2.

 

(iii)                               Nothing
contained herein shall authorize Agent to consent to or accept or adopt on
behalf of any Lender any plan of reorganization, arrangement, adjustment or
composition affecting the Obligations owed to such Lender or the rights of any
Lender or to authorize Agent to vote in respect of the claim of any Lender in
any such proceeding or under any such assignment.

 

77

 

8.3.  Representations
and Warranties; No Responsibility  For Appraisal of
Creditworthiness.

 

Each Lender
represents and warrants that it has made its own independent investigation of
the financial condition and affairs of Company and its Subsidiaries in
connection with the making of the Loans and the issuance of Letters of Credit
hereunder and that it has made and shall continue to make its own appraisal of
the creditworthiness of Company. Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto (other than
information that Company is required to furnish to Agent on behalf of Lenders,
and that actually is so furnished, pursuant to the express terms of this
Agreement or any other Loan Document), whether coming into its possession
before the making of the Loans or at any time or times thereafter, and Agent
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.

 

8.4.  Right
to Indemnity.

 

Each Lender,
in proportion to its Pro Rata Share, severally agrees to indemnify Agent, to
the extent that Agent shall not have been reimbursed by Company, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against Agent in
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as Agent in any way relating to or arising out of this
Agreement or the other Loan Documents or any action taken or omitted by Agent
under or in connection therewith or herewith; 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. If any indemnity
furnished to Agent for any purpose shall, in the opinion of Agent, be
insufficient or become impaired, Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished.

 

8.5.  Payee
of Note Treated as Owner.

 

Agent may deem
and treat the payee of any Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof shall
have been filed with Agent. Any request, authority or consent of any person or
entity who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of that Note or of any Note or Notes
issued in exchange therefor.

 

8.6.  Resignation. 
Agent may resign at any time by giving sixty (60) days prior written
notice thereof to the Lenders and Company. 
Upon any such resignation, the Requisite Lenders shall have the right to
appoint a successor Agent.

 

78

 

Unless a
Potential Event of Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to
Company.  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 retiring Agent’s giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a financial institution having a rating of
not less than A or its equivalent by Standard & Poor’s Ratings Group.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder.  After
any retiring Agent’s resignation, the provisions of this Agreement and the
other Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent. If no
successor Agent has accepted appointment as Agent by the date which is sixty
(60) days following a retiring Agent’s notice of resignation, the retiring
Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of Agent hereunder until such time, if
any, as the Lenders appoint a successor Agent as provided for above.

 

8.7.  Collateral
Documents.

 

Each Lender
hereby further authorizes Agent to enter into the Collateral Documents as
secured party on behalf of and for the benefit of Lenders and agrees to be
bound by the terms of the Collateral Documents; provided that Agent
shall not enter into or consent to any amendment, modification, termination or
waiver of any provision contained in the Collateral Documents without the prior
consent of Requisite Lenders; provided  further, that any
amendment, modification, termination or waiver of any provision contained in
the Collateral Documents which has the effect of releasing any Collateral
pursuant to one or more related transactions in an aggregate amount greater
than $1,000,000 shall require the consent of all Lenders.  Agent may (i) release Collateral without the
consent of any Lender to the extent the disposition thereof complies with
subsection 6.7A(ii), (ii) release Collateral with the consent of Requisite
Lenders; provided that such release relates to one transaction or a
series of related transactions and the aggregate amount of the Collateral so
released does not exceed $1,000,000 and (iii) in all other instances, release
Collateral with the consent of all Lenders. Each Lender agrees that no Lender
shall have any right individually to realize upon any of the Collateral under
the Collateral Documents, it being understood and agreed that all rights and
remedies under the Collateral Documents may be exercised solely by Agent for
the benefit of Lenders in accordance with the terms thereof. Agent hereby
agrees to hold all Collateral under the Collateral Documents executed and
delivered prior to the Closing Date for the benefit of itself and Lenders.

 

8.8.  Documentation Agent. 
National City Commercial Finance, Inc., in its capacity as Documentation
Agent, shall have no duties or responsibilities and shall incur no liability
under this Agreement or any other Loan Document.

 

79

 

Section 9.  MISCELLANEOUS

 

9.1.  Assignments
and Participations in Loans and Letters of Credit.

 

A.                                   General.  Each Lender shall have the right at any time
to (i) sell, assign, transfer or negotiate to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of any Loan or Loans made
by it or its Commitments or its Letters of Credit or participations therein or
any other interest herein or in any other Obligations owed to it; provided
that no such assignment or participation shall, without the consent of Company,
require Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such assignment or participation of the
Loans, the Letters of Credit or participations therein or the other Obligations
under the Securities laws of any state. Except as otherwise provided in this
subsection 9.1, no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or any granting of participations in,
all or any part of the Loans, the Commitments, the Letters of Credit or
participations therein or the other Obligations owed to such Lender.

 

B.                                     Assignments.

 

(i)                                     Amounts
and Terms of Assignments. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that:

 

(a)                                  except
in the cases of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or of an assignment
to a Lender or a Lender Affiliate, the aggregate amount of the Commitment
(which for this purpose includes Loans outstanding thereunder) or, if the
applicable Commitment is not then in effect, the principal outstanding balance
of the Loan of the assigning Lender subject to each such assignment (determined
as of the date on which the Assignment and Acceptance with respect to such
assignment is delivered to Agent) shall not be less than $10,000,000 unless
each of Agent and, so long as no Potential Event of Default or Event of Default
has occurred and is continuing, Company otherwise consent (each such consent
not to be unreasonably withheld or delayed);

 

(b)                                 each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement with
respect to the Loan or the Commitment assigned, it being understood that non- pro rata assignments of or among any of
the Commitments, the Loans and Letters of Credit are not permitted;

 

(c)                                  any
assignment of a Commitment must be approved by Agent and the L/C Issuing Bank
(each such approval not to be unreasonably withheld or delayed) unless the
Person that is the proposed

 

80

 

assignee is
itself a Lender with a Commitment (whether or not the proposed assignee would
otherwise qualify as an Eligible Assignee); and

 

(d)                                 the
parties to each assignment shall execute and deliver to Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, and the
Eligible Assignee, if it shall not be a Lender, shall deliver to Agent an
administrative questionnaire in form and detail satisfactory to Agent.

 

Subject to
acceptance and recording thereof by Agent pursuant to subsection 9.1B(ii)
below, from and after the effective date specified in each Assignment and
Acceptance, the Eligible Assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and Acceptance
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the
benefits of (i) subsections 2.7C, 2.7D, and 2.8 with respect to facts and
circumstances occurring prior to the effective date of such assignment and (ii)
subsection 9.3 notwithstanding such assignment.  Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with subsection 9.1B(iii). Agent
may, from time to time at its election, prepare and deliver to Lenders and
Company a revised Schedule 2.1.

 

(ii)                                  Acceptance
by Agent.  Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing fee
referred to in subsection 9.1B(i) and any certificates, documents or other
evidence with respect to United States federal income tax withholding matters
that such assignee may be required to deliver to Agent pursuant to
subsection 2.8B(iii), Agent shall, if such Assignment and Acceptance has been
completed, (a) accept such Assignment and Acceptance by executing a counterpart
thereof as provided therein (which acceptance shall evidence any required
consent of Agent to such assignment) and (b) give prompt notice thereof to
Company.  Agent, acting solely for this
purpose as an agent of Company, shall maintain at Agent’s office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amounts of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). 
The entries in the Register shall be conclusive, and Company, Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be

 

81

 

available for
inspection by Company and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.

 

C.                                     Participations.  Participants shall have no rights under this
Agreement or any other Loan Document except as provided below. The holder of
any participation, other than an Affiliate of the Lender granting such
participation, shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting (i) the extension of
the regularly scheduled maturity of any portion of the principal amount of or
interest on any Loan allocated to such participation or (ii) a reduction of the
principal amount of or the rate of interest payable on any Loan allocated to
such participation, and all amounts payable by Company hereunder shall be
determined as if such Lender had not sold such participation. No agreement
pursuant to which any Lender sells a participating interest to a Person other
than a Lender may permit the purchaser to transfer, pledge, assign, sell
participations or otherwise encumber its participating interest. Company hereby
acknowledges and agrees that any participation will give rise to a direct
obligation of Company to the participant and the participant shall, for
purposes of subsections 2.7D, 2.8, 9.4 and 9.5, be considered to be a “Lender”.

 

D.                                    Information.  Each Lender may furnish any information
concerning Company and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to subsection 9.19.

 

E.                                      Miscellaneous
Assignment Provisions.  A Lender may
at any time grant a security interest in all or any portion of its rights under
this Agreement to secure obligations of such Lender, including without
limitation (i) any pledge or assignment to secure obligations to any of the
twelve Federal Reserve Banks organized under §4 of the Federal Reserve Act, 12
U.S.C. §341 and (ii) with respect to any Lender that is a Fund, to any lender
or any trustee for, or any other representative of, holders of obligations owed
or securities issued by such Fund as security for such obligations or
securities or any institutional custodian for such Fund or for such lender; provided
that no such grant shall release such Lender from any of its obligations
hereunder, provide any voting rights hereunder to the secured party thereof,
substitute any such secured party for such Lender as a party hereto or affect
any rights or obligations of Company or Agent hereunder[; provided  further,
that any Lender exercising its rights pursuant to this subsection 9.1E
shall provide notice of the same to Company].

 

9.2.  Expenses.

 

Whether or not
the transactions contemplated hereby shall be consummated, Company agrees to
pay promptly (i) all the actual and reasonable costs and expenses (including
attorneys’ fees of counsel to Agent) of preparation of the Loan Documents; (ii)
all the costs of furnishing all opinions by counsel for Company (including
without limitation any opinions requested by Agent as to any legal matters
arising hereunder) and of Company’s performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including, without limitation, with
respect to confirming

 

82

 

compliance
with environmental and insurance requirements; (iii) the reasonable fees,
expenses and disbursements of counsel to Agent (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution
and administration of the Loan Documents and the Loans and any consents,
amendments, waivers or other modifications hereto or thereto and any other
documents or matters requested by Company; (iv) all other actual and reasonable
costs and expenses incurred by Agent in connection with the negotiation,
arrangement, preparation, closing, execution and administration of the Loan
Documents and the transactions contemplated hereby and thereby, including,
without limitation, printing costs, appraisal expenses, all reasonable costs
and expenses (other than those described in clause (iii) above or otherwise
payable hereunder) incurred in connection with any renegotiation of the Loan
Documents or the Loans and all reasonable travel and lodging expenses (other
than those otherwise payable hereunder) incurred by any employee or other
representative of Agent in connection with visiting the facilities of Company
or its Subsidiaries to discuss, evaluate or investigate the credit of Company
or its Subsidiaries; and (v) after the occurrence of an Event of Default, all
costs and expenses, including reasonable attorneys’ fees (including allocated
costs of internal counsel) and reasonable consulting, accounting, appraisal,
investment banking and similar professional fees and charges and costs of
settlement, incurred by Agent and Lenders in enforcing and preserving rights
with respect to any Obligations of or in collecting any payments due from
Company hereunder or under the other Loan Documents by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings.

 

9.3.  Indemnity.

 

In addition to
the payment of expenses pursuant to subsection 9.2, whether or not the
transactions contemplated hereby shall be consummated, Company agrees to
defend, indemnify, pay and hold harmless Agent and Lenders and any holder of
any of the Notes, and the officers, directors, employees, agents and affiliates
of Agent, Lenders and such holders (collectively called the “Indemnitees”) from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including without limitation the reasonable
fees and disbursements of counsel for such Indemnities in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party
or a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including without limitation securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby (including without limitation Lenders’ agreement
to make the Loans hereunder or the use or intended use of the proceeds of any
of the Loans or the issuance of Letters of Credit hereunder or the use or
intended use of any of the Letters of Credit) or the statements contained in
the commitment letter delivered by any Lender to Company with respect thereto
(collectively called the

 

83

 

“Indemnified
Liabilities”); provided that Company shall not have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise solely from (i) the illegality of any
participation agreement regarding the Obligations among any two or more of the
Lenders, (ii) the lack of power or authority of Agent or any Lender to enter
into any of the Loan Documents, (iii) any federal, state or local tax liability
of Agent or any Lender except to the extent set forth elsewhere herein, and
(iv) the gross negligence or willful misconduct of that Indemnitee as
determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Company shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnities or any
of them.

 

9.4.  Set
Off.

 

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 of any Event of Default each
Lender and each subsequent holder of any Note is hereby authorized by Company
at any time or from time to time, without notice to Company or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender or that subsequent holder
to or for the credit or the account of Company against and on account of the
obligations and liabilities of Company to that Lender or that subsequent holder
under this Agreement, the Notes, the Letters of Credit and participations
therein, including, but not limited to, all claims of any nature or description
arising out of or connected with this Agreement, the Notes, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender or that subsequent holder shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other amounts due hereunder
shall have become due and payable pursuant to Section 7 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
Company hereby further grants to Agent and each Lender a security interest in
all deposits and accounts maintained with Agent or such Lender as security for
the Obligations.

 

9.5.  Ratable
Sharing.

 

Lenders and
each subsequent holder by acceptance of a Note hereby agree among themselves
that if any of them shall, whether by voluntary payment, by realization upon
security, through the exercise of any right of set-off or banker’s lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit,

 

84

 

fees and other
amounts then due and owing to that Lender or holder hereunder or under the
other Loan Documents (collectively, the “Aggregate Amounts Due” to such Lender
or holder) which is greater than the proportion received by any other Lender or
holder of the Notes in respect of the Aggregate Amounts Due to such other
Lender or holder, then the Lender or holder of the Notes receiving such
proportionately greater payment shall (i) notify Agent and each other Lender of
the receipt of such payment and (ii) apply a portion of such payment to
purchase participations (which it shall be deemed to have purchased from each
seller of a participation simultaneously upon the receipt by such seller of its
portion of such payment) in the Aggregate Amounts Due to the other Lenders and
holders so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders and holders of the Notes in proportion to the Aggregate Amounts Due
to them; provided that if all or part of such proportionately greater
payment received by such purchasing Lender or holder is thereafter recovered
from such Lender or holder upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender or holder
ratably to the extent of such recovery, on the same ratable basis, if and to
the extent such purchasing Lender or holder is required to pay interest on the
amounts that are recovered. Company expressly consents to the foregoing
arrangement and agrees that any holder of a participation so purchased may
exercise any and all rights of banker’s lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.

 

9.6.  Amendments
and Waivers.

 

No amendment,
modification, termination or waiver of any provision of this Agreement or of
the Notes, or consent to any departure by Company therefrom, shall in any event
be effective without the written concurrence of Requisite Lenders; provided
that any amendment, modification, termination or waiver of or with respect to:
the amount of the Commitments or the principal amount of the Loans; the maximum
amount of Letters of Credit; each Lender’s Pro Rata Share; the definition of
“Requisite Lenders”; the definitions of “Current Asset Borrowing Base” and
“Eligible Inventory Borrowing Base”; any provision expressly requiring the
approval or concurrence of all Lenders; the scheduled final maturity dates of
the Loans; the dates and amounts of any scheduled payments (but not
prepayments) of principal of the Loans; the dates on which interest or any fees
are payable; decreases in the interest rates borne by the Loans (other than any
waiver of any increase in the interest rate applicable to the Loans pursuant to
subsection 2.3E) or in the amount of any fees payable hereunder; the
maximum duration of Interest Periods; the provisions contained in
subsection 2.1G(iv) relating solely to Overadvances; the amount or due
date of any amount payable in respect of any Letters of Credit; the requirement
that no Letter of Credit have an expiration date later than the Maturity Date;
the obligations of Lenders relating to the purchase of participations in
Letters of Credit; the obligations of any guarantor hereunder that results in a
release of such guarantor; and the provisions contained in subsections 7.1, 8.7
and 9.6 shall be effective only if evidenced by a writing signed by or on
behalf of all Lenders. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in Section 3
shall be effective only if evidenced by a writing signed by or on behalf of

 

85

 

Agent and
Requisite Lenders, (ii) 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, (iii) no amendment, modification, termination or
waiver of any provision of Section 8 or of any other provision of this
Agreement expressly requiring the approval or concurrence of Agent shall be
effective without the written concurrence of Agent, and (iv) no amendment,
modification, termination or waiver of any provision of this Agreement relating
to Swing Line Loans or Letters of Credit shall be effective without the written
concurrence of Agent and the Swing Line Lender or L/C Issuing Bank, as
applicable. Agent may, but shall have no obligation to, with the concurrence of
any Lender, execute amendments, modifications, waivers or consents on behalf of
that Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Company in any case shall entitle Company 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
subsection 9.6 shall be binding upon each holder of the Notes at the time
outstanding, each future holder of the Notes and, if signed by Company,
Company. Notwithstanding anything to the contrary contained herein, (i) no
Lender that is not then in compliance with its obligations hereunder shall have
any right to approve or disapprove any amendment, modification, termination,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender, (ii) each Lender
is entitled to vote as such Lender sees fit on any bankruptcy or insolvency
reorganization plan that affects the Loans, (iii) each Lender acknowledges that
the provisions of Section 1126(c) of the Bankruptcy Code supersede the
unanimous consent provisions set forth herein, and (iv) the Requisite Lenders
may consent to allow Company to use cash collateral in the context of a
bankruptcy or insolvency proceeding.

 

9.7.  Independence
of Covenants and Defaults.

 

All covenants
and defaults hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants (or
otherwise constitutes a default), the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
(or would otherwise not constitute a default) shall not avoid the occurrence of
an Event of Default or Potential Event of Default if such action is taken or
condition exists.

 

9.8.  Notices.

 

Unless
otherwise specifically provided herein, any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telecopied, telexed or sent by United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telecopy or telex, or four (4) Business Days
after depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed; provided that notices to Agent shall
not be effective until received. For the purposes hereof, the address of each
party hereto shall be as set forth under such party’s name on the signature
pages hereof or (i) as to Company and Agent, such other address as shall be
designated

 

86

 

by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Agent.

 

9.9.  Survival
of Representations, Warranties and  Agreements.

 

A.                                   All
representations, warranties and agreements made herein shall survive the
execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder.

 

B.                                     Notwithstanding
anything in this Agreement or implied by law the contrary, the agreements of
Company set forth in subsections 2.7D, 2.8, 5.11, 9.2 and 9.3 and the
agreements of Lenders set forth in subsections 8.2C, 8.4, 9.4 and 9.5 shall
survive the payment of the Loans, the cancellation or expiration of the Letters
of Credit and the reimbursement of any amounts drawn thereunder, and the
termination of this Agreement.

 

9.10. 
Failure or Indulgence Not Waiver; Remedies Cumulative.

 

No failure or
delay on the part of any Lender or any holder of any Note or any interest in
any Letter of Credit in the exercise of any power, right or privilege hereunder
or under such Note or Letter of Credit shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement, the
Notes, the Letters of Credit and the other Loan Documents are cumulative to,
and not exclusive of, any rights or remedies otherwise available.

 

9.11. 
Marshalling; Payments Set Aside.

 

Neither Agent
nor any Lender shall be under any obligation to marshal any assets in favor of
Company or any other party or against or in payment of any or all of the
obligations. To the extent that Company makes a payment or payments to Agent or
Lenders (or to Agent for the benefit of Lenders), or Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.

 

9.12. 
Severability.

 

In case any
provision in or obligation under this Agreement or the Notes shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and

 

87

 

enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired
thereby.

 

9.13. 
Obligations Several; Independent Nature of Lenders’ Rights.

 

The
obligations of Lenders hereunder are several and no Lender shall be responsible
for the obligations or Commitments of any other Lender hereunder. Nothing
contained herein or in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.

 

9.14. 
Headings.

 

Section and
subsection headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose or be given any substantive effect.

 

9.15. 
Applicable Law.

 

THIS AGREEMENT
AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

9.16. 
Successors and Assigns.

 

This Agreement
shall be binding upon the parties hereto and their respective successors and
assigns and shall inure to the benefit of the parties hereto and the successors
and assigns of Lenders. The terms and provisions of this Agreement shall inure
to the benefit of any assignee or transferee of any of the Loans, and in the
event of any such transfer or assignment the rights and privileges herein
conferred upon Lenders shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. Neither
Company’s rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders. Lenders’ rights of assignment are subject to subsection 9.1.

 

9.17. 
Consent to Jurisdiction and Service of Process.

 

ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF
MASSACHUSETTS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS
FOR ITSELF AND IN CONNECTION WITH

 

88

 

ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Company hereby agrees that service
of process sufficient for personal jurisdiction in any action against Company
in the Commonwealth of Massachusetts may be made by registered or certified
mail, return receipt requested, to the chief executive officer or senior
financial officer of Company from time to time in office at Company’s address
provided in subsection 9.8, and Company hereby acknowledges that such
service shall be effective and binding in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of any Lender to bring proceedings against Company in the
courts of any other jurisdiction.

 

9.18. 
Waiver of Jury Trial.

 

EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER
RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to
be all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that
each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

 

9.19. 
Confidentiality.

 

Each Lender
shall hold all non-public information obtained pursuant to the requirements of
this Agreement which has been identified as confidential by Company in
accordance with such Lender’s customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices, it being understood and agreed by Company that in any event a Lender
may make disclosures reasonably required by any bona fide assignee, transferee
or participant in

 

89

 

connection
with the contemplated assignment or transfer by such Lender of any Loans or any
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided that,
unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure
of such information (provided that no Lender shall have any liability to
Company for failure to deliver such notice); and provided, further,
that in no event shall any Lender be obligated or required to return any
materials furnished by Company or any of its Subsidiaries.

 

9.20. 
Counterparts; Effectiveness.

 

This Agreement
and any amendments, waivers, consents or supplements hereto or in connection
herewith may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document. This Agreement
shall become effective upon the execution of a counterpart hereof by each of
the parties hereto and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery thereof. Upon the
effectiveness of this Agreement, all references in the Loan Documents to the
“Credit Agreement” shall be deemed to be references to this Agreement as it may
be subsequently amended, amended and restated, supplemented or otherwise
modified in accordance with the terms hereof. References in any Collateral
Document to the “Secured Obligations” shall include the Obligations.

 

SIGNATURES ON FOLLOWING PAGE

 

90

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.

 

	
   

  	
  JOS. A BANK CLOTHIERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David E. Ullman

  	
   

  
	
   

  	
  Title:

  	
  EVP-CFO

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  Jos. A. Bank Clothiers, Inc.

  500 Hanover Pike

  Hampstead, Maryland 21074-2095

  
	
   

  	
  Attn:

  	
  David E. Ullman,

  
	
   

  	
   

  	
  Executive Vice President

  
						

 

 

	
   

  	
  LENDERS AND AGENT:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO RETAIL FINANCE II, LLC,

  
	
   

  	
  as Lender and as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jennifer Blanchette

  	
   

  
	
   

  	
  Title:

  	
  Assistant Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
  Commercial Finance Division

  One Boston Place, 18th Floor

  Boston, Massachusetts

  
	
   

  	
  Attn:

  	
  Jennifer Blanchette

  
	
   

  	
   

  	
  A.V.P./Associate Account Executive

  
	
   

  	
  Email Address: jblanchette@wfretail.com

  
						

 

 

	
   

  	
  WELLS FARGO BANK,

  NATIONAL ASSOCIATION,

  as the L/C Issuing Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
  One Boston Place, 18th Floor

  	
   

  
	
   

  	
  Boston, Massachusetts

  	
   

  
	
   

  	
  Attn:

  	
  Timothy Tobin

  	
   

  
								

 

 

	
   

  	
  NATIONAL CITY COMMERCIAL

  FINANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James C. Ritchie

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  1965 East 6th Street, Suite 400

  Mail Locator 01-3049

  Cleveland, OH 44114

  
	
   

  	
  Attn:

  	
  James C. Ritchie

  	
   

  
							

 

 

	
   

  	
  WHITEHALL RETAIL FINANCE, a division

  of Whitehall Business Credit Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Brian Kennedy

  	
   

  
	
   

  	
  Title:

  	
  V.P.

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
  45 Braintree Hill Office Park, Suite 303

  	
   

  
	
   

  	
  Braintree, MA 02184

  	
   

  
	
   

  	
  Attn:

  	
  Brian Kennedy

  	
   

  
								

 

 

	
   

  	
  SIEMENS FINANCIAL SERVICE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Title:

  	
  S V P

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
  200 Somerset Corporate Blvd

  	
   

  
	
   

  	
  Bridgewater, NJ 08807

  	
   

  
	
   

  	
  Attn:

  	
  Michael Coiley

  	
   

  
								

 

 

	
   

  	
  WACHOVIA BANK

  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles O’ Donnell

  	
   

  
	
   

  	
  Title:

  	
  VICE PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
  1339 CHESTNOT STREET, PA4812

  	
   

  
	
   

  	
  PHILADELPHIA, PA 19107

  	
   

  
	
   

  	
  Attn:

  	
  CHARLES O’ DONNELL

  	
   

  
								

 

 

Exhibit I

 

FORM OF

ASSIGNMENT
AND ACCEPTANCE

 

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

 

For an agreed consideration,
the Assignor hereby irrevocably sells and assigns to the Assignee, and the
Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit
Agreement, as of the Effective Date inserted by the Administrative Agent as
contemplated below, (a) all of the Assignor’s rights and obligations in its
capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including without limitation any letters of credit, guarantees, and swingline
loans included in such facilities) and (b) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (a)
above (the rights and obligations sold and assigned pursuant to clauses (a) and
(b) above being referred to herein collectively as, the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Acceptance, without representation or warranty by the Assignor.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower(s):

  	
   

  	
  Jos. A. Bank Clothiers, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative Agent:

  	
   

  	
  Wells Fargo Retail Finance II, LLC,

  as the administrative agent under the Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit Agreement:

  	
   

  	
  Amended and Restated Credit Agreement dated as of January 6, 2004, as
  amended, among Jos. A. Bank Clothiers, Inc., the Lenders parties thereto and
  Wells Fargo Retail Finance II, LLC, as Administrative Agent.

  

 

 

	
  6.

  	
   

  	
  Assigned Interest:

  	
   

  	
   

  

 

	
  Facility Assigned

  	
   

  	
  Aggregate Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned

  of

  Commitment/Loans(1)

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
   %

  

 

	
  Effective Date:

  	
   

  	
   

  

 

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

 

	
   

  	
  ASSIGNOR

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name of Assignor]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name of Assignee]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
					

 

	
  Consented to and Accepted:

  
	
   

  
	
  Wells Fargo Retail Finance
  II, LLC, as

  Administrative Agent

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

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

 

2

 

ANNEX 1

 

Amended and Restated Credit
Agreement dated as of January 6, 2004 as amended, among Jos. A. Bank Clothiers,
Inc., the Lenders parties thereto and Wells Fargo Retail Finance II, LLC, as
Administrative Agent

 

STANDARD TERMS AND
CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

 

1.               Representations and Warranties.

 

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

 

1.2.  Assignee.  The
Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and
Acceptance and to consummate the transactions contemplated hereby and to become
a Lender under the Credit Agreement, (ii) it meets all requirements of an
Eligible Assignee under the Credit Agreement (subject to receipt of such
consents as may be required under the Credit Agreement), (iii) from and after
the Effective Date, it shall be bound by the provisions of the Credit Agreement
as a Lender thereunder and, to the extent of the Assigned Interest, shall have
the obligations of a Lender thereunder,  and
(iv) it has received a copy of the Credit Agreement, together with copies of
the most recent financial statements delivered pursuant to 5.1 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (b) agrees that (i) it
will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Loan Documents, and (ii) it will
perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender.

 

2.     Payments.  From
and after the Effective Date, the Administrative Agent shall make all payments
in respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignee whether such amounts have accrued prior
to, on or after the Effective Date.  The
Assignor and the Assignee shall make all appropriate adjustments in payments by
the Administrative Agent for periods prior to the Effective Date or with
respect to the making of this assignment directly between themselves.

 

3.     General Provisions. 
This Assignment and Acceptance shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and
assigns.  This Assignment and Acceptance
may be executed in any number of counterparts, which together shall constitute
one instrument.  Delivery of an executed
counterpart of a signature page of this

 

 

Assignment and Acceptance by telecopy shall be effective as delivery of
a manually executed counterpart of this Assignment and Acceptance.  This Assignment and Acceptance shall be governed
by, and construed in accordance with, the laws of the Commonwealth of
Massachusetts.

 

2

 

Exhibit II

 

INFORMATION CERTIFICATE

OF

 

 

Dated: November
    , 2003

 

Wells Fargo Bank, National Association

Commercial Finance Division

9000 Flair Drive

El Monte, CA 91731

 

In order to assist you in the continuing evaluation of the financing
you are considering of Jos. A. Bank Clothiers, Inc. (the “Corporation”) and to
expedite the preparation of any documentation which may be required and to
induce you to provide such financing to the Corporation, we represent and
warrant to you the following information about the Corporation, its
organizational structure and other matters of interest to you:

 

	
  1.

  	
   

  	
  The full and exact name of the Corporation as set forth in its
  Articles of incorporation (please attach copy) is:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jos. A. Bank Clothiers, Inc.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  The Corporation uses and owns the following trade name(s) in the
  operation of its business (e.g. billing, advertising, etc.; note: do not
  include names which are product names only), (please attach a copy of the
  Ficticious Name Registration):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jos. A. Bank Clothiers, Inc. (No Registrations)

  
	
   

  	
   

  	
   

  
	
  In the event any trade name appears on an invoice, a sample copy of
  such invoice is annexed.

  
	
   

  	
   

  	
   

  
	
  3.
          The date of incorporation of
  the Corporation was February 28, 1994, under the laws of the State of
  Delaware, and the Corporation is in good standing under those laws. The
  Corporation has never been involved in a bankruptcy or reorganization except:
  (explain)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  The Corporation is duly qualified and authorized to transact business
  as a foreign corporation in the following states and is in good standing in
  such states:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maryland – See Also Store Address List – Attachment 9-1

  

 

 

 

	
  5.

  	
   

  	
  Since the date of incorporation, the corporate name of the
  Corporation has been changed as follows:

  

 

	
  Date

  	
   

  	
  Prior Name

  
	
   

  	
   

  	
   

  
	
  None

  	
   

  	
   

  

 

	
  6.

  	
   

  	
  Since the date of incorporation, the
  Corporation has made or entered into the following mergers or acquisitions:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  See Attachment 6

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  The chief executive office of the Corporation is located at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  500 Hanover Pike

  	
   

  	
  Hampstead

  	
   

  	
  MD

  	
   

  	
  Carroll

  	
   

  
	
   

  	
   

  	
  Street   Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  The books and records of the Corporation pertaining to accounts,
  contract rights, inventory, etc. are located at (if other than the chief
  executive office referred to in Section 7 above):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Same as #7

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Street   Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  The Corporation has other places of business and/or maintains
  inventory or other assets at the following addresses indicate whether
  locations are owned, leased or operated by third parties and if leased or
  operated by third parties, their name and address):

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  See Store List –
  Attachment 9-1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  See Company Owned Real Estate/NTS Locations – Attachment 9-2

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lessor/Operator

  	
   

  	
  Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  See Vendors With Jos. A Bank Inventory – Attachment 9-2

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lessor/Operator

  	
   

  	
   

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
																					

 

 

	
   

  	
   

  	
  Lessor/Operator

  	
   

  	
   

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attach additional sheets for other locations.

  
	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  The premises listed below owned by the Corporation are subject to
  mortgages as follows (state name and address of mortgagee and approximate
  principal balance of mortgage):

  

 

	
  Location

  	
   

  	
  Mortgagee

  	
   

  	
  Principal
  Balance

  
	
  113 W. North Ave.

  	
   

  	
  Mayor and City

  	
   

  	
  $

  	
  127,000

  
	
  Baltimore, MD

  	
   

  	
  Council of Baltimore

  	
   

  	
   

  
	
  21201-5809

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  A.

  	
  The information required by UCC §9-502(b) or former UCC §9-402(5) of
  each state in which any of the Collateral consisting of fixtures are or are
  to be located and the name and address of each real estate recording office
  where a mortgage on the real estate on which such fixtures are or are to be
  located would be recorded:

  

 

	
  Name

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  

 

	
  11.

  	
   

  	
  The places of business or other locations of any assets used by the
  Corporation during the last twelve (12) months other than those listed above
  are as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4500 E. Golf Rd.

  	
   

  	
  Schawanburg   IL 60173

  	
   

  	
  Closed 3/96

  	
   

  
	
   

  	
   

  	
  Street Address City

  	
   

  	
  State

  	
   

  	
  CountyLessor/Operator

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4217 E. Golf Rd.

  	
   

  	
  Schawanburg   IL 60173

  	
   

  	
  Closed 3/96

  	
   

  
	
   

  	
   

  	
  Street Address City

  	
   

  	
  State

  	
   

  	
  CountyLessor/Operator

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  The Corporation is affiliated with, or has ownership in, the
  following corporations (including subsidiaries):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Chief

  	
  Jurisdiction Ownership

  	
   

  
	
   

  	
   

  	
   

  	
  Executive

  	
  of Percentage or

  	
   

  
	
  Name

  	
   

  	
  Office

  	
  Incorporation Relationship

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  See Attachment #12

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  The Federal Employer Identification Number of the Corporation is as
  follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  36-3189198

  	
   

  
										

 

 

	
  14.

  	
   

  	
  There is no provision in the Articles of Incorporation or By-laws of
  the Corporation, or in the laws of the State of its incorporation, requiring any vote or consent of
  shareholders to borrow or to authorize the mortgage or pledge of or creation
  of a security interest in any assets of the Corporation or any subsidiary.
  Such power is vested exclusively in its Board of Directors.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  The officers of the Corporation and their respective titles are as
  follows:

  

 

	
  Title

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
  See Attachment 15

  	
   

  	
   

  

 

	
  The following will have signatory powers as to all of your
  transactions with the Corporation:

  
	
   

  
	
  16.

  	
   

  	
  With respect to the officers noted above, such officers are
  affiliated with or have ownership in the following corporations (indicate
  name and address of affiliated. companies, type of operations, ownership
  percentage or other relationship) :

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Finley – Chairman, The Finley Group; Director, Cole National
  Corporation and Venture Stores, Inc.

  
	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  The members of the Board of Directors of the Corporation are:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  See Attachment 17

  
	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  The name of the stockholders of the Corporation and their stock
  holdings are as follows (if stock is widely held indicate only stockholders
  owning 10% or more of the voting stock)

  

 

	
  Name

  	
   

  	
  No. of
  Shares

  	
   

  	
  Ownership

  Percentage

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  None
  Over 10% as of April 22, 1996

  	
   

  	
   

  

 

	
  19.

  	
   

  	
  There are no judgments or litigation pending by or against the
  Corporation, its subsidiaries and/or affiliates or any of its
  officers/principals, except as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jos. A. Bank Clothiers, Inc. v. J.A.B. of Lexington, Inc.

  
	
   

  	
   

  	
  U.S. District Court for the District of Maryland MIG95-3826 (1995)

  
	
   

  	
   

  	
  Also Refer to 10-K

  
	
   

  	
   

  	
  Hampstead Ground Water Contamination
  (Previously                     )

  

 

 

	
  20.

  	
   

  	
  At the present time, there are no delinquent taxes due (including,
  but not limited to, all payroll taxes, personal property taxes, real estate
  taxes or income taxes) except as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  The aircraft, boats, motor vehicles and all other inventory,
  equipment and other goods of the Corporation which are subject to any
  certificate of title or other registration statute of the United States, any
  state or any other jurisdiction are as follows:

  

 

	
  Goods

  	
   

  	
  Registration
  System

  	
   

  	
  Jurisdiction

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  22.

  	
   

  	
  The Corporation maintains bank accounts (including securities and
  commodities accounts) with the following banks:

  

 

	
  Depositary Bank

  	
   

  	
  Bank
  Address

  	
   

  	
  Type of
  Account

  	
   

  	
  Acct. No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  23.

  	
   

  	
  The stocks, bonds, debentures, notes and other securities and
  investment property owned by the Company other than those listed above are as
  follows:

  

 

	
  Name

  	
   

  	
  Description

  	
   

  	
  Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  24.

  	
   

  	
  The Corporation’s assets are owned and held free and clear of any
  security interests, liens or attachments, except as follows:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lienholder

  	
   

  	
  Assets

  	
   

  	
  Amount of

  Debt Secured

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  See #10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  The Corporation has not guaranteed and is not otherwise liable for
  the obligations of others, except as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Debtor

  	
   

  	
  Creditor

  	
   

  	
  Amount of

  Obligation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  26.

  	
   

  	
  Other than Collateral acquired by the Corporation in a transaction
  described in Attachment 6, all of the Collateral has been originated by the
  Corporation in the ordinary course of the Corporation’s business or consists
  of goods which have been acquired by the Corporation in the ordinary course
  from a person in the business of selling goods of that kind, except for the
  following:

  

 

	
  Collateral

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  

 

	
  27.

  	
   

  	
  The Corporation does not own or license any trademarks, patents,
  copyrights or other intellectual property, except as follows (indicate type
  of intellectual property and whether owned or licensed, registration number,
  date of registration, and, if licensed, he name and address of the licensor):

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Reg #

  	
   

  	
  Reg. Date

  	
   

  
	
  US

  	
  Jos. A. Bank

  	
   

  	
  1337264

  	
   

  	
  5/21/95

  	
   

  
	
   

  	
  Jos. A. Bank

  	
   

  	
  1182109

  	
   

  	
  12/15/81

  	
   

  
	
  Japan

  	
  Jos. A. Bank

  	
   

  	
  2141936

  	
   

  	
  5/30/89

  	
   

  
	
   

  	
  Jos. A. Bank

  	
   

  	
  2194845

  	
   

  	
  12/25/89

  	
   

  
	
  Mexico

  	
  Jos. A. Bank

  	
   

  	
  336284

  	
   

  	
  9/29/95 (Approx.)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  The corporation’s fiscal year
  end:                                      .

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Saturday Closest to January 31.  
  Most recent Year Ended 2/3/96.

  
	
   

  	
   

  	
   

  
	
  29.

  	
  With regard to any pension or profit sharing plan:

  
	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  A determination as to qualification has been issued.

  
	
   

  	
   

  	
  (b)

  	
  Funding is on a current basis and in compliance with established
  requirements.

  
	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
   

  	
  Certified Public Accountants for the Corporation is the firm of:

  
	
   

  	
   

  	
   

  
	
  Name             Arthur
  Andersen LLP

  
	
  Address         120 E.
  Baltimore Street, Baltimore, MD 21202

  
	
  Partner Handling
  Relationship         James L.
  Nace

  
	
  Were statements uncertified for any fiscal
  year?      No

  
	
   

  
	
  31.

  	
   

  	
  Attorney for the Corporation is the firm of:

  
	
  Name             Kronish
  Lieb, Weiner & Hellman LLP 

  
	
  Address         1114
  Avenue of the Americas, New York, NY 10036-

  
	
  Partner Handling
  Relationship         Ralph
  Sutcliffe

  
	
  Telephone      212-479-6170

  
										

 

 

	
  32.

  	
   

  	
  Insurance company for the Corporation is:

  
	
  Name

  	
  North Brook Insurance

  
	
  Address

  	
  110 E. Lombard Street, Baltimore, MD 21202

  
	
  Contact

  	
  Henry F. Schoenfeld/Charles Batser

  
	
  Telephone

  	
  410-727-3272

  
	
  Policy Number(s)

  	
  Numerous – See Summary
  Attached – Attachment 28

  
	
   

  	
   

  
	
  33.

  	
   

  	
  Prompt written notice will be given you of any change or amendment
  with respect to any of the foregoing. Until such notice is received by you,
  you shall be entitled to rely upon the foregoing in all respects.

  
					

 

	
   

  	
  Very truly yours,

  
	
  CORPORATE SEAL TO BE

  	
  Jos. A. Bank Clothiers, Inc.

  
	
  AFFIXED HEREINBELOW

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

Exhibit III

 

NOTICE OF [LIBOR RATE]
BORROWING

 

Wells Fargo Retail Finance II, LLC

Commercial Finance Division

One Boston Place, 18th Floor

Boston, MA 02108

Attn: 

 

Reference
is made to the Amended and Restated Credit Agreement dated as of January 6,
2004 (as amended, restated or otherwise modified and in effect from time to
time, the “Credit Agreement”), among Jos. A. Bank Clothiers, Inc. (“Borrower”),
the financial institutions from time to time parties thereto (collectively, the
“Lenders”), and Wells Fargo Retail Finance II, LLC, as agent for the Lenders
(in such capacity, “Agent”). Capitalized terms used but not defined herein
shall have the respective meanings assigned to them in the Credit Agreement.

 

1.             Pursuant to the Credit Agreement,
Borrower hereby requests a [LIBOR/Prime] Rate Loan(s) upon the following terms:

 

(a)  The principal amount of the requested
[LIBOR/Prime] Rate Loan (s) is
$                .

 

(b)  The date of the requested [LIBOR/Prime] Rate
Loan(s) is to be
                           .

 

(c)  The aggregate amounts of said [LIBOR/Prime]
Rate Loan(s) [and each requested Interest Period if a LIBOR Rate Loan], are:

 

	
  Amount

  	
   

  	
  [Interest Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  month(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  month(s)]

  	
   

  

 

2.             Borrower hereby certifies to Agent and the Lenders that,
on the date of this Notice of [LIBOR Rate] Borrowing and after giving effect to
the requested advance (including the use of the proceeds thereof):

 

(a)                                  the representations and warranties set forth
in the Credit Agreement are true and correct as if made on such date;

 

(b)                                 no Potential Event of Default or Event of
Default has occurred and is continuing; and

 

 

(c)                                  each of the Loan Documents remains in full
force and effect.

 

The
party signing below on behalf of Borrower is a duly authorized representative
of Borrower and has caused this Notice of [LIBOR Rate] Borrowing to be duly
executed on behalf of Borrower as of this
        day of
              ,
200  .

 

JOS. A. BANK CLOTHIERS, INC.

 

 

	
  By: 

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

2

 

Exhibit IV

 

NOTICE OF CONVERSION OR
CONTINUATION

 

Wells Fargo Retail Finance II, LLC

Commercial Finance Division

One Boston Place, 18th Floor

Boston, MA 02108

Attn: Eileen

 

Reference
is made to the Amended and Restated Credit Agreement dated as of January 6,
2004 (as amended, restated or otherwise modified and in effect from time to
time, the “Credit Agreement”), among Jos. A. Bank Clothiers, Inc. (“Borrower”),
the financial institutions from time to time parties thereto (collectively, the
“Lenders”), and Wells Fargo Retail Finance II, LLC, as agent for the Lenders
(in such capacity, “Agent”). Capitalized terms used but not defined herein
shall have the respective meanings assigned to them in the Credit Agreement.

 

1.
Pursuant to the Credit Agreement, Borrower hereby requests [the continuation of
all or part of its outstanding LIBOR Rate Loans with Interest Periods ending
on] [the conversion of all or part of its outstanding Prime Rate Loans], as
follows:

 

(a)
The effective date of continuation and/or conversion is to be
[                    
      , 200  ].

 

(b)
The aggregate amount of [said outstanding LIBOR Rate Loans to be continued as]
[said outstanding Prime Rate Loans to be converted to] LIBOR Rate Loans, and
each requested Interest Period, are:

 

	
  Amount

  	
   

  	
  Interest Periods

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  month(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $_______

  	
   

  	
  month(s)

  	
   

  

 

(c)
The aggregate amount of said outstanding LIBOR Rate Loans to be continued as
Prime Rate Loans is
$                      .

 

2.             Borrower hereby certifies to Agent and the Lenders that,
on the date of this Notice of Conversion or Continuation, no Potential Event of
Default or Event of Default has occurred and is continuing.

 

The
party signing below on behalf of Borrower is a duly authorized representative
of Borrower and has caused this Notice of Conversion or Continuation to be duly
executed on behalf of Borrower as of this       
day of
                      ,
200  .

 

 

	
  JOS. A. BANK CLOTHIERS, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

2

 

Exhibit V

 

REVOLVING NOTE

 

	
  $                      

  	
   

  	
  January 6, 2004

  

 

FOR VALUE RECEIVED, the undersigned, JOS. A.
BANK CLOTHIERS, INC., a Delaware corporation (“Borrower”), hereby promises to
pay to the order
of                                                             (“Lender”)
on the Maturity Date the principal sum of
                                          Dollars
($                  ),
or such lesser amount as shall equal the aggregate outstanding principal
balance of all Loans hereunder made by Lender to Borrower pursuant to the
Credit Agreement referred to below.

 

This promissory note is one of the Notes
referred to in, and subject to the terms of, that certain Amended and Restated
Credit Agreement, dated as of January 6, 2004 (as amended, restated or
otherwise modified and in effect from time to time, the “Credit Agreement”),
among Borrower, Lender and the other financial institutions from time to time
parties thereto (collectively, the “Lenders”), and Wells Fargo Retail Finance
II, LLC, as agent for the Lenders. Capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Credit
Agreement.

 

Borrower further promises to pay interest on
the outstanding principal balance hereof at the interest rates, and payable on
the dates, set forth in the Credit Agreement. All payments of principal and
interest hereunder shall be made in lawful money of the United States and in
same day or immediately available funds.

 

Lender is authorized but not required to
record the date and amount of each advance made hereunder, each conversion to a
different interest rate and the length of each Interest Period, the date and
amount of each payment of principal and interest hereunder, and the resulting
unpaid principal balance hereof, in Lender’s internal records, and any such
recordation shall be prima  facie evidence of the accuracy of the
information so recorded; provided  however, that Lender’s failure
to so record shall not limit or otherwise affect the obligations of Borrower
hereunder and under the Credit Agreement to repay the principal hereof and
interest hereon.

 

The Credit Agreement provides, among other
things, for acceleration (which in certain cases shall be automatic) of the
maturity hereof upon the occurrence of certain stated events, in each case
without presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by Borrower.

 

This promissory note is secured by certain
collateral more specifically described in the Credit Agreement and the
Collateral Documents.

 

This promissory note is intended to take
effect as a sealed instrument and shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.

 

 

As of the date first set forth above, this
promissory note, together with each other promissory note executed and
delivered in connection with the Credit Agreement, shall cancel and supersede
that certain promissory note executed by Borrower and payable to
[                                              ]
pursuant to the [Existing] Fourth Amended and Restated Credit Agreement, as
amended.

 

2

 

EXHIBIT
VI

 

FORM OF CONFIRMATION OF INCREASE OF
COMMITMENT

 

Dated as
of                    

 

Reference is hereby made to the Amended and Restated Credit Agreement,
dated as of January 6, 2004 (as amended, amended and restated or otherwise
modified and in effect from time to time, the “Credit  Agreement”),
among  Jos. A. Bank Clothiers, Inc.
(the “Borrower”), the financial institutions from time to time parties
thereto (collectively, the “Lenders”) and Wells Fargo Retail Finance,
II, LLC, as agent for the Lenders (in such capacity, the “Agent”).  Capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Credit
Agreement.

 

Pursuant to the terms of the Credit Agreement, the Borrower, the Agent
and [INSERT NAME OF BANK INCREASING COMMITMENT] (the “Increasing  Lender”)
hereby agree as follows:

 

1.                                       Subject
to the terms and conditions of this Confirmation, the Increasing Lender hereby
agrees to increase its Commitment by
[$          ] on the
Effective Date (as defined below) such that after such increase its Commitment
shall be
[$              ].  Upon such increase, the Commitment of the
Increasing Lender shall be automatically increased by the amount of such
increase.  The Increasing Lender hereby
agrees to be bound by, and hereby requests the agreement of the Borrower and
the Agent that the Increasing Lender shall be entitled to the benefits of all
of the terms, conditions and provisions of the Credit Agreement associated with
such Commitment as increased hereby.

 

2.                                       The
effective date for this Confirmation shall be
[                       ]
(the “Effective  Date”). 
Following the execution of this Confirmation by the Borrower, the
Increasing Lender and the Agent, it will be delivered to the Agent for
recording. Schedule 2.1 to the Credit Agreement shall
thereupon be replaced as of the Effective Date by the Schedule 2.1
annexed hereto.  The Agent shall
thereafter notify the other Lenders of the revised Schedule 2.1.

 

3.                                       From
and after the Effective Date, the Borrower shall make all payments in respect
of the Increasing Lender’s Commitment as increased hereby (including payments
of principal, interest, fees and other amounts) to the Agent for the account of
the Increasing Lender.

 

4.                                       THIS CONFIRMATION SHALL FOR ALL PURPOSES BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW).

 

 

5.                                       This
Confirmation may be executed in any number of counterparts which shall together
constitute but one and the same agreement.

 

2

 

IN WITNESS WHEREOF,
intending to be legally bound, each of the undersigned has caused this
Confirmation to be executed as a sealed instrument on its behalf by its officer
thereunto duly authorized, to take effect as a sealed instrument as of the date
first above written.

 

	
   

  	
  [NAME OF INCREASING LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  JOS. A. BANK CLOTHIERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO RETAIL FINANCE II, LLC,

  as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

3

 

Schedule 2.1

 

Commitments

 

	
  Regular Lenders

  	
   

  	
  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
  Wells Fargo Retail Finance II, LLC

  	
   

  	
  $

  	
  37,500,000

  	
   

  	
  37.5

  	
  %

  
	
  One Boston Place, 18th Floor

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Boston, MA 02108

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: Timothy R. Tobin

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National City Commercial Finance, Inc.

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  30.0

  	
  %

  
	
  1965 E. Sixth Street, Suite 400

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cleveland, OH 44114-2214

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: James Ritchie

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Whitehall Retail Finance, a Division of

  	
   

  	
  $

  	
  12,500,000

  	
   

  	
  12.5

  	
  %

  
	
  Whitehall Business Credit Corporation

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  45 Braintree Hill Office Park, Suite 303

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Braintree, MA 02184

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: Brian Kennedy

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Siemens Financial Services, Inc.

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  10.0

  	
  %

  
	
  200 Somerset Corporate Blvd.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bridgewater, NJ 08807-2843

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: A. Keith Broyles

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  10.0

  	
  %

  
	
  1339 Chestnut Street, PA 4812

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Philadelphia, PA 19107

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn:
  [                    ]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
  100,000,000

  	
   

  	
  100

  	
  %

  

 

Accordion Commitments

 

	
  Accordion Lenders

  	
   

  	
  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
  Wells Fargo Retail Finance II, LLC

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  40.0

  	
  %

  
	
  One Boston Place, 18th Floor

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Boston, MA 02108

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: Timothy R. Tobin

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  40.0

  	
  %

  
	
  1339 Chestnut Street, PA 4812

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Philadelphia, PA 19107

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn:
  [                ]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National City Commercial Finance, Inc.

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  20.0

  	
  %

  
	
  1965 E. Sixth Street, Suite 400

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cleveland, OH 44114-2214

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn: James Ritchie

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  100

  	
  %

  

 

 

Schedule 4.6

 

Litigation

 

Ronald
Lankford v. Jos. A. Bank Clothiers, Inc. Case No.
CV03-204LHL in the Circuit Court of Madison County, Alabama – suit for unjust
retention of funds collected as a result of improper calculations and excessive
sales tax from consumers on its sales of 
item through catalog and internet sales.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]