Document:

EXHIBIT 10.1

 

SECOND AMENDMENT TO THE HOMEBANC MORTGAGE CORPORATION 

401(K) RETIREMENT PLAN 

 

THIS SECOND AMENDMENT TO THE HOMEBANC MORTGAGE CORPORATION 401(K) RETIREMENT PLAN (the “Plan”) is made effective on the date indicated below by HomeBanc Corp.

W I T N E S S E T H:

WHEREAS, the Plan was adopted effective May 1, 2000 and amended and restated effective April 1, 2005; and

WHEREAS, certain employees of HomeBanc Corp. and HomeBanc Mortgage Corporation will be terminated and be immediately rehired by a joint venture created between HomeBanc Mortgage Corporation and an unrelated third party (the “Joint Venture”);

WHEREAS, subsequent to their termination of their employment, these individuals will have their account balance transferred to the HMB Mortgage Partners LLC 401(k) Retirement Plan;

WHEREAS, HomeBanc Corp. desires to recognize services for eligibility and vesting purposes for those individuals who return to employment with HomeBanc Corp. or HomeBanc Mortgage Corporation following their transfer from and to a Joint Venture; and

WHEREAS, HomeBanc Corp. now desires to amend the Plan to provide for such transfers and for other reasons.

NOW, THEREFORE, the Plan is hereby amended as follows:

1.

A new Appendix A is hereby added to the Plan as follows:

“APPENDIX A

TRANSFERS OF PARTICIPANTS BETWEEN THIS PLAN

 AND THE HMB 401(k) PLAN

	
            1.01
 	
            Background.   From time to time, it is anticipated that a Participant in this Plan will transfer employment from an Employer to a Joint Venture employer.  A Joint Venture employer is not part of the Employer’s controlled group of corporations.  If the Joint Venture participates in the HMB 401(k) Plan, the provisions of this Appendix A shall apply and shall supersede any conflicting provisions in this Plan to the contrary.
 

	
            1.02
 	
            Initial Joint Venture and Transfer of Employees.  On July 10, 2006, certain employees of HomeBanc Corp. and/or HomeBanc Mortgage Corporation terminated employment and were immediately rehired by a joint venture between HomeBanc Mortgage Corporation and an unrelated 
 

 

 

 

third party.  HomeBanc Mortgage Corporation owns less than 80% of this joint venture and accordingly, the joint venture is not part of the HomeBanc Mortgage Corporation controlled group.  Prior to the transfer of employment, such individuals participated in this Plan.  Subsequent to August 1, 2006, those individuals who did not previously request a distribution of their vested account balance from this Plan will have their account balance in this Plan transferred from the HomeBanc Plan to this Plan in a trustee to trustee transfer.  The provisions of this Appendix A shall apply to the transfer of such account balances.

	
            1.03
 	
            Subsequent Joint Ventures.  It is anticipated that additional Joint Ventures shall be formed and Employees will be transferred from HomeBanc Corp., HomeBanc Mortgage Corporation or their affiliates to the Joint Venture.  The provisions of this Appendix A shall apply to the transfer of such account balances.
 

	
            1.04
 	
            Provisions Governing the Transfer of Employees
 

	
             
 	
            (a)
 	
            Transfers from the HomeBanc 401(k) Plan.  An Eligible Employee who immediately prior to his or her employment by a Joint Venture was employed by HomeBanc Corp. or an Affiliated Employer and who participated in this Plan shall be known as a “HomeBanc Transferee.”  A HomeBanc Transferee (other than as provided in Section 1.02) shall not be permitted to receive a distribution of his or her Account balance in this Plan.  Instead, the assets and liabilities (including any plan loan) from this Plan attributable to a HomeBanc Transferee shall be transferred from the HomeBanc Plan to the HMB 401(k) Plan as determined by the plan administrator of each plan.  All amounts transferred to the HMB 401(k) Plan shall become 100% immediately vested including amounts held in the Match Account and the Profit
Sharing Account.  All amounts transferred shall be subject to the terms and conditions of the HMB 401(k) Plan.
 

	
             
 	
            (b)
 	
            Transfers from the HMB 401(k) Plan to this Plan.  An Eligible Employee who immediately prior to his or her employment by an Employer was employed by a Joint Venture or its affiliates and who participated in the HMB 401(k) Plan shall be known as a “Joint Venture Transferee.”  The assets and liabilities (including any plan loan) from the  HMB 401(k) Plan attributable to the Joint Venture Transferee shall be transferred from the HMB 401(k) Plan to this Plan as determined by the plan administrator of each plan.  All amounts transferred shall be subject to the terms and conditions of this Plan.
 

 

 

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            (c)
 	
            Investments.  The Plan shall accept trustee to trustee transfers from the HMB Mortgage Partners LLC 401(k) Retirement Plan. All amounts shall initially be invested in accordance with rules established by the Administrator.
 

	
             
 	
            (d)
 	
            Vesting.  All amounts transferred from the HMB 401(k) Plan to this Plan shall remain 100% vested. 
 

	
             
 	
            (e)
 	
            Plan Administration.  The Administrator may take such action as is necessary to account for the amounts transferred from the HMB 401(k) Plan including, but not limited to, the establishment of sub-accounts as the Administrator deems appropriate.
 

	
             
 	
            (f)
 	
            Amendment.  In addition to the amendment powers set forth in Section 13.02, the Board of Directors delegates to any senior officer of HomeBanc Corp. the right to approve and adopt, without approval of the Board of Directors, any amendment to this Appendix A.
 

1.05       Break in Service.  A Participant who formerly participated in the Plan and who is reemployed by an Employer after having been employed by a Joint Venture shall participate in the Plan immediately upon reemployment (if the Participant is an Eligible Employee) and shall be treated as not having incurred a Break in Service as a result of his or her employment with the Joint Venture.  In addition, Years of Service with a Joint Venture shall be recognized as Years of Service for purposes of this Plan.

1.06       Limitations on In-Service Distributions.  Amounts transferred from the HMB 401(k) Plan to this Plan attributable to a Participant’s non-elective contributions (e.g., profit sharing contributions required by a safe harbor 401(k) plan) may not be distributed in hardship distribution under this Plan.

	
            1.07
 	
            Definitions.   
 

	
             
 	
            (a)
 	
            “Joint Venture” means a joint venture between (i) HomeBanc Mortgage Corporation or an Affiliated Employer and (ii) an unrelated third party in which HomeBanc Mortgage Corporation or an Affiliated Employer owns less than 80% of the joint venture and which joint venture participates in the HMB 401(k) Plan.
 

	
             
 	
            (b)
 	
            “HMB 401(k) Plan” means the HMB Mortgage Partners LLC 401(k) Retirement Plan sponsored by HMB Mortgage Partners LLC and established August 1, 2006.”
 

 

 

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2.

Subsection 1.57(a) of the Plan is hereby amended by adding at the end of this subsection the following sentence:

“For purposes of this definition, amounts that are not available to a Participant in cash in lieu of group health coverage because the Employee is not able to certify that he or she has other health coverage shall be treated as amounts that were not includible in the gross income of such Participant by reason of Code section 125, or as “deemed section 125 compensation;” provided, however, that an amount is permitted to be treated as “deemed section 125 compensation” only if the Employer does not otherwise request or collect information regarding the Participant’s other health coverage as part of the enrollment process for the health plan.”

3.

Subsection 3.09(b) of the Plan is hereby deleted and a new subsection 3.09(b) is replaced as follows:

	
             
 	
            “(b)
 	
            Correction of Excess Annual Additions.  If for any Limitation Year, the amount to be allocated to a Participant’s Account exceeds the limitation described in subsection 3.09(a) (and for this purpose Employer Matching Contributions and Profit Sharing Contributions shall be deemed to be allocated after After-Tax Contributions and 401(k) Contributions), the excess will be disposed of as follows.  First, if the Participant’s Annual Additions exceed the limitation described in subsection 3.09(a) as a result of (i) a reasonable error in estimating the Participant’s Compensation, (ii) a reasonable error in estimating the amount of After-Tax Contributions and 401(k) Contributions that the Participant could make under Code section 415 or (iii) other facts and circumstances that the
Internal Revenue Service finds justifiable, the Fiduciary Committee may direct the Trustee to return to the Participant his After-Tax Contributions followed by his 401(k) Contributions for such Plan Year to the extent necessary to reduce the excess amount.  Such returned After-Tax Contributions and 401(k) Contributions shall be ignored in performing the discrimination tests of section 3.08 of the Plan. Second, any excess annual additions (beginning with Employer Matching Contributions followed by Profit Sharing Contributions) still remaining after the return of After-Tax Contributions and 401(k) Contributions shall be reallocated as determined by the Fiduciary Committee among the Participants whose accounts have not exceeded the limit in the same proportion that the Compensation of each such Participant 
 

 

 

 

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bears to the Compensation of all such Participants.  If such reallocation would result in an addition to another Participant’s Account which exceeds the permitted limit, that excess shall likewise be reallocated among the Participants whose Accounts do not exceed the limit.  However, if the allocation or reallocation of the excess amounts pursuant to these provisions causes the limitations of Code section 415 to be exceeded with respect to each Participant for the limitation year, then any such excess shall be held unallocated in a suspense account.  If the suspense account is in existence at any time during a Limitation Year, other than the Limitation Year described in the preceding sentence, all amounts in the suspense account shall be allocated and reallocated to Participants’ Accounts (subject to the limitations of Code section 415) before any Contributions which would
constitute annual additions may be made to the Plan for that limitation year.”

4.

Subsection 7.03(a) of the Plan is hereby deleted and a new subsection 7.03(a) is added as indicated below.  The purpose of this amendment is to delete the third sentence to the former subsection 7.03(a).

 “(a)       Restrictions.  A Participant shall not be permitted to make a withdrawal unless he is employed by the Employer or an Affiliated Employer.  The minimum withdrawal permitted under Plan sections 7.01 and 7.02 shall be $100 or, if less, the total value of the Participant’s vested Accounts available for a withdrawal.  A Participant may not obtain more than two in-service withdrawals each under Plan section 7.01(a) and (b) in any Plan year.”

5.

Subsection 13.01(a) of the Plan is hereby deleted and a new subsection 13.01(a) is added as indicated below.  The purpose of this amendment is to add a new sentence to the end of Section 13.01(a).

“(a)        Authority to Amend.  The Board of Directors reserves the right at any time or from time to time, and for any reason, to modify, alter or amend, in whole or in part, any or all of the provisions of the Plan or its concomitant Trust agreement, prospectively or retroactively, if deemed necessary or appropriate, by a majority vote of its members at a meeting, by unanimous consent in lieu of a meeting, or in any other manner permissible under applicable state law.  In addition, the Board of Directors in its sole discretion may delegate all or part of the authority to amend the Plan or its concomitant Trusts to an appropriate officer or officers of HomeBanc Corp.  Specifically, the Board of Directors delegates to any senior officer of the Company the right to approve and adopt, without
approval of the Board, any amendment required by law or necessary to maintain the tax qualified status of the Plan or any amendment that does not materially increase the costs associated with the Plan.”

 

 

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6.

Section 13.02 of the Plan is hereby deleted and a new subsection 13.02 is added as indicated below.  The purpose of this amendment is to clarify that a senior officer may act as the designee of the board of directors in certain specified occasions.

	
             
 	
            “13.02.
 	
            Additional Employers
 

(a)          Adoption of Plan.  If any company is or becomes a subsidiary of or associated with HomeBanc Corp., the Board of Directors or its delegate (including any senior officer of HomeBanc Corp.) may authorize the employees of that subsidiary or associated company to participate in the Plan upon appropriate action by that company necessary to adopt the Plan.  By adopting the Plan, such subsidiary or associated company shall be deemed to have delegated to the Board of Directors the sole authority to amend, merge or otherwise modify the Plan, except to the extent such authority has been delegated to an appropriate officer or officers of HomeBanc Corp.  Such Employer’s employees shall be subject to the terms of the Plan; provided, however, that by a written addendum to the Plan certain
employees employed in one or more specified divisions, plants, locations or other identifiable employee groups may be excluded from participation in the Plan; and provided, further, that the terms and provisions of the Plan with respect to such employees may be modified or supplemented as described in such written addendum.

(b)          Termination of Participation.  Each Employer reserves the right to terminate its participation in the Plan prospectively or to prospectively discontinue accruals under the Plan with respect to its otherwise eligible employees by action of its board of directors and in accordance with applicable law.  Further, with the consent of the Board of Directors, or its delegate, any entity participating in the Plan may, by action of its board of directors, withdraw from the Plan by giving six months’ advance notice of its intention to the Administrator, unless a shorter notice period shall be agreed to in writing by the Board of Directors, or its delegate.  The withdrawal of an Employer shall be effected in accordance with such terms and conditions as may be agreed upon by the Board
of Directors, or its delegate, and the withdrawing Employer under applicable law.  Should the Board of Directors or its delegate, and the withdrawing Employer not reach agreement, the accrued benefits of affected Participants shall continue to be held under the Plan until distributed.  For purposes of this Section 13.02, the Board designates any senior officer of the Company as its delegate.”

7.

	
             
 	
            The provisions of this Amendment shall be effective August 30, 2006.
 

IN WITNESS WHEREOF, the Board of Directors of HomeBanc Corp. has caused this Second Amendment to be duly executed as of the day and year first above written.

	
             
 	
            HOMEBANC CORP.
 
	
             
 	
             
 
	
             
 	
            By: /s/ CHARLES W. MCGUIRE                  
 Its: Executive Vice President, General
           Counsel and SecretarySecond Amendment to Loan Agreement

    Exhibit
      10(a)

     

    SECOND
      AMENDMENT TO LOAN AND SECURITY AGREEMENT

     

    This
      SECOND
      AMENDMENT
      TO LOAN AND SECURITY AGREEMENT
      (this
      “Second Amendment”),
      is
      entered into as of August 31, 2006 by and among, on the one hand, the lenders
      identified on the signature pages hereof (such lenders, together with their
      respective successors and permitted assigns, are referred to hereinafter each
      individually as, a “Lender”
and
      collectively as, the “Lenders”),
      WELLS
      FARGO RETAIL FINANCE, LLC,
      a
      Delaware limited liability company, as the arranger and administrative agent
      for
      the Lenders (the “Agent”),
      and,
      on the other hand, THE
      BOMBAY COMPANY, INC.,
      a
      Delaware corporation (the “Parent”),
      and
      each of the Parent’s Subsidiaries identified on the signature pages hereof (such
      Subsidiaries, together with the Parent, are referred to hereinafter each
      individually as, a “Borrower”,
      and
      individually and collectively, jointly and severally, as, the “Borrowers”).

     

    WHEREAS,
      the
      Borrowers, the Lenders, and the Agent are parties to that certain Loan and
      Security Agreement dated as of September 29, 2004, as amended by a First
      Amendment to Loan and Security Agreement, dated as of November 23, 2004 (as
      the
      same may be amended, amended and restated or otherwise modified and in effect
      from time to time, the “Loan
      Agreement”);
      and

     

    WHEREAS,
      the
      parties desire to amend the Loan Agreement as hereinafter set
      forth.

     

    NOW
      THEREFORE,
      in
      consideration of the mutual agreements contained in the Loan Agreement and
      herein and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto hereby agree
      as
      follows:

     

    §1.  Defined
      Terms. Terms
      not
      otherwise defined herein which are defined in the Loan Agreement shall have
      the
      same respective meanings herein as therein.

     

    §2.  Amendment
      to Exhibits and Schedules of the Loan Agreement.
      The
      listing of the Exhibits and Schedules to the Loan Agreement is hereby amended
      by
      inserting “Exhibit C-3 Form of Instrument of Accession” in the proper
      alphabetical and numerical order therein.

     

    §3.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Accordion Activation
      Fee).
      The
      definition of “Accordion Activation Fee” in Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting such definition in its
      entirety.

     

    §4.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Accordion
      Commitment).
      The
      definition of “Accordion Commitment” in Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting such definition in its
      entirety.

     

     

    §5.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Applicable
      Margin).
      The
      definition of “Applicable Margin” in Section
      1.1
      of the
      Loan Agreement is hereby amended by (a) deleting clause (a) in the paragraph
      following the table in such definition and substituting the following clause
      (a)
      therefore, (b) inserting the following new clause (b) therein and (c)
      relettering clause (b) therein as clause “(c)”:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (a)  commencing
      upon receipt by the Agent of an irrevocable written notice prior to or during
      any Incremental Seasonal Period from an Authorized Person of the Administrative
      Borrower’s intent to utilize the Incremental Facility and until the later of (i)
      December 15 of each Incremental Seasonal Period and (ii) such time as any extant
      Incremental Revolver Usage is reduced to $0, the Applicable Margin shall be
      the
      Applicable Margin set forth above plus 0.25%,

    

    (b)
      the
      LIBOR Rate Margin for all Real Property Advances shall at all times be equal
      to
      2.25%, and

     

    §6.  Amendment
      to Section 1.1 of the Loan Agreement (definition of
      Borrowing).
      The
      definition of “Borrowing” in Section
      1.1
      of the
      Loan Agreement is hereby amended by inserting “Real Property Advances made on
      the same day by the Real Property Lenders” immediately after the reference to
“Canadian Lenders” in the third line therein.

     

     

    §7.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Canadian
      Availability).
      The
      definition of “Canadian Availability” in Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting clause (ii) therein in its entirety
      and substituting the following therefore:

     

    (ii)
      the
      Maximum Original Revolver Amount minus U.S. Revolver Usage, 

     

    §8.  Amendment
      to Section 1.1 of the Loan Agreement (definition of
      Collateral).
      The
      definition of “Collateral” in Section
      1.1
      of the
      Loan Agreement is hereby amended by (a) deleting “and” at the end of clause (i)
      in such definition therein, (b) inserting the following new clause (j) therein,
      “(j) all of its Real Property Collateral (unless otherwise released pursuant
      to
Sections
      6.20,
      7.4(c)(iv)
      or
7.5(a)),
      and”
and (c) re-lettering clause (j) therein to clause “(k)”.

     

    §9.  Amendment
      to Section 1.1 of the Loan Agreement (definition of
      Commitment).
      The
      definition of “Commitment” in Section
      1.1
      of the
      Loan Agreement is hereby amended by inserting “, each Real Property Lender’s
      Real Property Commitment” immediately after the word “Commitments” in the second
      line therein.

     

    §10.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Defaulting
      Lender).
      The
      definition of “Defaulting Lender” in Section
      1.1
      of the
      Loan Agreement is hereby amended by inserting “or a Real Property Lender”
immediately after the reference to “a U.S. Lender” in the first line
      therein.

     

    §11.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Eligible
      Transferee).
      The
      definition of “Eligible Transferee” in Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting “and” before clause (b) therein,
      inserting “and” at the end of clause (b) therein and inserting the following new
      clause (c):

     

    (c) in
      connection with Obligations of U.S. Borrowers in respect of the Real Property
      Advances, the Real Property Commitment and the other rights and obligations
      of
      Real Property Lenders hereunder, (i) (A) any Lender hereunder and (B) any
      Affiliate (other than individuals) of a Lender and (ii) so long as no Event
      of
      Default has occurred and is continuing, with the approval of the Administrative
      Borrower (which approval of Administrative Borrower shall not be unreasonably
      withheld, delayed, or conditioned) (A) a commercial bank organized under the
      laws of the United States, or any state thereof, and having total assets in
      excess of $250,000,000, (B) a commercial bank organized under the laws of any
      other country which is a member of the Organization for Economic Cooperation
      and
      Development or a political subdivision of any such country and which has total
      assets in excess of $250,000,000, provided
      that
      such bank is acting through a branch or agency located in the United States,
      (C)
      a finance company, insurance company, or other financial institution or fund
      that is engaged in making, purchasing, or otherwise investing in commercial
      loans in the ordinary course of its business and having (together with its
      Affiliates) total assets in excess of $250,000,000, and (D) any other Person
      approved by Agent.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    §12.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Lender and
      Lenders).
      The
      definition of “Lender” and “Lenders” in Section
      1.1
      of the
      Loan Agreement is hereby amended by inserting “Real Property Lenders,”
immediately after “Canadian Lenders,” in the second line therein.

     

    §13.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Lender
      Group).
      The
      definition of “Lender Group” in Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting the parenthetical therein in its
      entirety.

     

    §14.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Loan
      Documents).
      The
      definition of “Loan Documents” in Section
      1.1
      of the
      Loan Agreement is hereby amended by inserting “Mortgage and Mortgage Documents
      (if applicable),” immediately after “Guaranty” in the second line
      therein.

     

    §15.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Permitted
      Dispositions).
      The
      definition of “Permitted Dispositions” is hereby amended by deleting “and”
before each of clauses (f) and (h) therein and inserting the following new
      clause (i):

     

    and
      (i)
      the entering into of real property leases in respect of any portion of the
      Bombay Office Complex in the ordinary course of business.

    

    §16.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Permitted
      Liens).
      The
      definition of “Permitted Liens” in Section 1.1 of the Loan Agreement is hereby
      amended by:

     

    (a)  deleting
      clause (n) therein in its entirety and substituting the following
      therefor:

     

    (n) (i)
      prior
      to a release of the Real Property Collateral in accordance with Sections
6.20,
      7.4
      or
7.5,
      as
      applicable, Liens on the Real Property Collateral as and to the extent permitted
      by the Mortgage and (ii) following a release of the Real Property Collateral
      in
      accordance with Sections
      6.20,
      7.4
      or
7.5,
      as
      applicable, Liens securing Permitted Office Building Indebtedness so long as
      such Lien attaches only to the Bombay Office Complex and the proceeds thereof
      (including insurance proceeds) and Liens on funds placed in an escrow account
      in
      connection with sale leaseback transactions permitted by Section
      7.5
      and in
      amounts no greater than that necessary or required to consummate any sale
      leaseback transaction permitted by Section
      7.5

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    §17.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Permitted Office Building
      Indebtedness).
      The
      definition of “Permitted Office Building Indebtedness” in Section
      1.1
      of the
      Loan Agreement is hereby amended by inserting “, following a release of the Real
      Property Collateral in accordance with Section
      6.20,”
      immediately after “means” therein.

     

    §18.  Amendment
      to Section 1.1 of the Loan Agreement (definition of Pro Rata
      Share).
      The
      definition of “Pro Rata Share” in Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting the period at the end of clause
      (d)
      therein and substituting a comma therefore and inserting the following new
      clause (e):

     

    (e) with
      respect to a Real Property Lender’s obligation to make Real Property Advances
      and receive payments of principal, interest, fees, costs, and expenses with
      respect thereto, (i) prior to the Real Property Commitment being terminated
      or
      reduced to zero, the percentage obtained by dividing (w) such Real Property
      Lender’s Real Property Commitment, by (x) the Maximum Real Property Revolver
      Amount, and (ii) from and after the time that the Real Property Commitment
      has
      been terminated or reduced to zero, the percentage obtained by dividing (y)
      the
      aggregate outstanding principal amount of such Real Property Lender’s Real
      Property Advances by (z) the aggregate outstanding amount of all Real Property
      Advances.

    

     

    §19.  Amendment
      to Section 1.1 of the Loan Agreement (definition of U.S.
      Availability).
      The
      definition of “U.S. Availability” in Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting clause (i) therein in its entirety,
      and substituting the following therefore:

     

    (i)
      the
      Maximum Original Revolver Amount minus Canadian Revolver Usage, 

     

    §20.  Amendment
      to Section 1.1 of the Loan Agreement (Definitions).
      Section
      1.1
      of the
      Loan Agreement is hereby amended by deleting the following definitions therein
      in their entirety and substituting the following therefore:

     

    “Accordion
      Lenders”
means
      any U.S. Lender which makes U.S. Advances to the U.S. Borrowers pursuant to
      Section
      2.2.A(h)
      and
      identified as an “Accordion Lender” on Schedule
      C-1
      to this
      Agreement, as set forth after an Accordion Activation.

    

    “Adjusted
      Availability”
means
      as of any date of determination, if such date is a Business Day, and determined
      at the close of business on the immediately preceding Business Day, if such
      date
      of determination is not a Business Day, the amount as determined by Agent at
      any
      time, in its Permitted Discretion equal to (x) the sum of the U.S. Borrowing
      Base plus
      the
      Canadian Borrowing Base, minus
      (y) the
      sum of U.S. Revolver Usage plus
      Canadian
      Revolver Usage (in each case, determined after giving effect to all sublimits
      and Reserves then applicable hereunder).

    

    “Advances”
means
      collectively, U.S. Advances, Canadian Advances and Real Property
      Advances.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Aggregate
      Borrowing Base”
means
      as of any date of determination, an amount equal to the U.S. Borrowing Base
      plus
      the
      Canadian Borrowing Base plus
      the Real
      Property Borrowing Base. Notwithstanding the foregoing, that portion of the
      Aggregate Borrowing Base attributable to Eligible In-Transit Inventory shall
      not
      exceed $15,000,000 at any time. 

    

    “Availability”
means,
      as of any date of determination, if such date is a Business Day, and determined
      at the close of business on the immediately preceding Business Day, if such
      date
      of determination is not a Business Day, the amount as determined by Agent at
      any
      time, in its Permitted Discretion equal to (x) the lesser of (i) the Maximum
      Original Revolver Amount and (ii) the sum of the U.S. Borrowing Base
plus
      the
      Canadian Borrowing Base, minus
      (y) the
      sum of U.S. Revolver Usage plus
      Canadian
      Revolver Usage (in each case, determined after giving effect to all sublimits
      and Reserves then applicable hereunder).

    

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

     

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

    

    “Maximum
      Revolver Amount”
means
      the aggregate amount of all Advances and other Obligations that may be borrowed
      by or made to Borrowers under this Agreement, as such amount may be increased
      or
      decreased from time to time in accordance with this Agreement; provided,
      however,
      that
      the Maximum Revolver Amount shall in no event exceed (a) $135,000,000 prior
      to
      an Accordion Activation and (b) $185,000,000 after an Accordion Activation,
      as may be reduced by Borrowers from time to time in accordance with Section
      3.6.

     

    “Minimum
      Adjusted Availability Requirement”
means,
      as of any date of determination, the lesser of (a) $10,000,000 and (b) 7.5%
      of
      the sum of the U.S. Borrowing Base plus
      the
      Canadian Borrowing Base.

    

    “Required
      Lenders”
means,
      at any time, Lenders whose aggregate Pro Rata Shares (calculated under clause
      (d) of the definition of Pro Rata Shares) equal or exceed 51%; provided,
      however,
      that if
      a single Lender holds more than 51% of the aggregate Pro Rata Shares of all
      Lenders, then “Required Lenders” shall mean such Lender plus one other
      Lender.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Revolver
      Usage”
means
      U.S. Revolver Usage, Canadian Revolver Usage and Real Property Revolver
      Usage.

    

    “Seasonal
      Period”
means
      the period commencing on September 15 through and including December 15 of
      each
      Fiscal Year.

    

    “U.S.
      Borrowing Base”
means,
      as of any date of determination, an amount equal to:

    (a)  the
      lesser of (i) 85% of the Net Retail Liquidation Value of Eligible Inventory
      or
      (ii) 75% of the Cost of Eligible Inventory owned by a U.S. Borrower;
provided,
      however,
      that
 during the Seasonal Period, the advance rate shall be the lesser of 90% of
      the Net Retail Liquidation Value of Eligible Inventory owned by a U.S. Borrower
      and 80% of the Cost of Eligible Inventory owned by a U.S. Borrower (as to any
      amounts attributable to this clause (a) the “Base
      Inventory Amount”),
      plus

     

    (b)  85%
      of
      the face amount of Eligible Credit Card Receivables of a U.S. Borrower,
plus

     

    (c)  during
      the Adjusted Seasonal Period, the Adjusted Seasonal Period Amount, plus

     

    (d)  during
      the Incremental Seasonal Period, the Incremental Seasonal Period Amount,
minus

     

    (e)  the
      aggregate of such Reserves as may have been established by Agent.

     

    §21.  Amendment
      to Section 1.1 of the Loan Agreement (New Definitions). Section 1.1
      of the
      Loan Agreement is hereby amended by inserting the following new definitions
      in
      the proper alphabetical order:

     

    “Appraised
      Value”
means
      the fair market value as determined by a FIRREA conforming appraisal report
      in
      form and substance and from independent appraisers satisfactory to Agent in
      its
      Permitted Discretion.

    

    “Base
      Inventory Amount”
has
      the
      meaning set forth in clause (a) of the definition of U.S. Borrowing
      Base.

     

    “Canadian
      Eligible In-Transit Inventory”
means
      Inventory of Bombay Canada that does not qualify as Eligible Inventory under
      clause (b) of the definition of Eligible Inventory solely because it is not
      at a
      location in Canada set forth on Schedule
      E-1
      or in
      transit among such locations in Canada and that meets the following criteria,
      which criteria may be revised by Agent in its Permitted Discretion from time
      to
      time after the Closing Date:

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

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

     

    (b)  such
      Inventory currently is in transit (whether by vessel, air, or land) to a
      location set forth on Schedule
      E-1
      in
      Canada that is the subject of a Bailee Acknowledgment or a Collateral Access
      Agreement,

     

    (c)  title
      to
      such Inventory has passed to Bombay Canada,

     

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

     

    (e)  such
      Inventory is either (1) the subject of a negotiable document of title that
      (x)
      is in the name of the Agent or an Approved Customs Broker and has not been
      consigned to any third parties other than to the Agent or an Approved Customs
      Broker (either directly or by means of endorsements), (y) was issued by the
      carrier or consolidator respecting the subject Inventory, and (z) is either
      (I)
      in the possession of the Borrowers (and held at a location in Canada listed
      on
Schedule
      E-1),
      the
      Agent or an Approved Customs Broker or (II) the subject of a telefacsimile
      copy
      that Agent or Bombay Canada has received from the Underlying Issuer which issued
      the Underlying Letter of Credit and as to which Agent or Bombay Canada also
      has
      received a confirmation from such Underlying Issuer that such document is
      in-transit by air-courier to Agent, Bombay Canada or an Approved Customs Broker;
      or (2) at a port of entry in a Province of Canada,

     

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

     

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

     

    Notwithstanding
      the foregoing, Inventory located at a port of entry in a Province of Canada
      pursuant to clause (e)(2) above shall not be included in the Canadian Borrowing
      Base unless and until (i) Agent has completed a review of such Inventory the
      results of which shall be satisfactory to Agent in it’s reasonable discretion
      and (ii) Agent has notified Administrative Borrower in writing of its consent
      to
      such inclusion and to the amount of any Reserves which shall be taken in
      connection with such inclusion.

     

    Agent
      may
      revise from time to time the foregoing criteria with respect to Inventory being
      subject to a negotiable document of title and modify such criteria to include
      Inventory subject to non-negotiable documents and other related parameters
      so
      long as Agent shall be satisfied in its sole discretion that (i) Agent shall
      have a valid and perfected first priority Lien in such Inventory and (ii)
      Borrowers shall provide to Agent all other documentation, including opinions
      of
      counsel, satisfactory to Agent which in Agent’s opinion is appropriate to
      evidence Agent’s perfected first priority Lien in such Inventory.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “FIRREA”
means
      the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as
      amended.

    

    “Incremental
      Facility”
means
      U.S. Advances made by each U.S. Lender to the Borrowers pursuant to clause
      (d)
      of the definition of U.S. Borrowing Base.

     

    “Incremental
      Revolver Usage”
means
      as of any date of determination, U.S. Advances in an amount equal to the
      difference between the U.S. Borrowing Base minus
      the
      Non-Incremental Borrowing Base.

     

    “Incremental
      Seasonal Period”
means
      the period commencing on September 15 through and including December 15 of
      each
      of Fiscal Year 2006 and Fiscal Year 2007.

     

    “Incremental
      Seasonal Period Amount”
means
      the lesser of (a) $7,500,000 and (b) an amount equal to 95% of the Net Retail
      Liquidation Value of Eligible Inventory minus the Base Inventory
      Amount.

     

    “Instrument
      of Accession”
has
      the
      meaning set forth in Section
      2.2.A(h)
      and
      substantially in the form of Exhibit
      C-3
      annexed
      hereto.

    

    “Maximum
      Original Revolver Amount”
means
      the aggregate amount of all U.S. Advances and Canadian Advances that may be
      borrowed by or made to Borrowers under this Agreement, as such amount may be
      increased or decreased from time to time in accordance with this Agreement;
      provided,
      however,
      that
      the Maximum Original Revolver Amount shall in no event exceed (a) $125,000,000
      prior to an Accordion Activation and (b) $175,000,000 after an Accordion
      Activation, as may be reduced by Borrowers from time to time in accordance
      with
Section
      3.6.

     

    “Maximum
      Real Property Revolver Amount”
means
      the aggregate amount of all Real Property Advances that may be borrowed by
      or
      made to U.S. Borrowers under this Agreement; provided,
      however,
      that
      the Maximum Real Property Revolver Amount shall in no event exceed
      $10,000,000.

     

    “Mortgage”
means
      the deed of trust, security agreement and assignment of leases and fixture
      filing from the applicable Borrower to the Agent, with respect to the Real
      Property Collateral and in form and substance satisfactory to Agent in its
      Permitted Discretion.

     

    “Mortgage
      Documents”
means,
      collectively, the Mortgage, mortgagee title insurance policies (in amounts
      and
      with endorsements acceptable to the Agent), surveys, environmental
      questionnaires, flood hazard certifications, evidence of flood insurance, if
      required, and other mortgage-related documents as the Agent may reasonably
      request now or hereafter encumbering the Real Estate Collateral and in form
      and
      substance satisfactory to Agent in its Permitted Discretion, and as such
      Mortgage Documents may be amended, amended and restated, supplemented, replaced,
      or otherwise modified.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    “Non-Incremental
      Borrowing Base”
means,
      as of any date of determination, an amount equal to:

     

    (a)  the
      lesser of (i) 85% of the Net Retail Liquidation Value of Eligible Inventory
      or
      (ii) 75% of the Cost of Eligible Inventory owned by a U.S. Borrower;
provided,
      however,
      that
 during the Seasonal Period, the advance rate shall be the lesser of 90% of
      the Net Retail Liquidation Value of Eligible Inventory owned by a U.S. Borrower
      and 80% of the Cost of Eligible Inventory owned by a U.S. Borrower, plus

     

    (b)  85%
      of
      the face amount of Eligible Credit Card Receivables of a U.S. Borrower,
plus

     

    (c)  during
      the Adjusted Seasonal Period, the Adjusted Seasonal Period Amount, minus

     

    (d)  the
      aggregate of such Reserves as may have been established by Agent.

     

     

    “Real
      Property Advances”
has
      the
      meaning set forth in Section
      2.1.C.

     

    “Real
      Property Availability”
means
      as of any date of determination, if such date is a Business Day, and determined
      at the close of business on the immediately preceding Business Day, the amount
      determined by Agent at any time in its Permitted Discretion equal to the lesser
      of (i) the Maximum Real Property Revolver Amount, or (ii) the Real Property
      Borrowing Base minus
      the Real
      Property Revolver Usage (in each case, determined after giving effect to all
      sublimits and Reserves then applicable hereunder).

     

    “Real
      Property Borrowing Base”
means,
      as of any date of determination, an amount equal to (a) 60% of the Appraised
      Value of the Real Property Collateral minus
      (b)
      without duplication, the aggregate of such Reserves applicable to the Real
      Property Collateral as may have been established by the Agent.

     

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

     

    “Real
      Property Commitment”
means
      with respect to each Real Property Lender, its Real Property Commitment, as
      such
      Dollar amount is set forth beside such Real Property Lender’s name under the
      applicable heading on Schedule
      C-1.

     

    “Real
      Property Lenders”
means
      Lenders which make Real Property Advances to U.S. Borrowers pursuant to such
      Real Property Lender’s Real Property Commitment.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    “Real
      Property Revolver Usage”
means,
      as of any date of determination, the sum of the then extant amount of
      outstanding Real Property Advances.

     

    “U.S.
      Eligible In-Transit Inventory”
means
      Inventory of U.S. Borrowers that does not qualify as Eligible Inventory under
      clause (b) of the definition of Eligible Inventory solely because it is not
      at a
      location in the United States set forth on Schedule
      E-1
      or in
      transit among such locations in the United States and that meets the following
      criteria, which criteria may be revised by Agent in its Permitted Discretion
      from time to time after the Closing Date:

     

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

     

    (b)  such
      Inventory currently is in transit (whether by vessel, air, or land) to a
      location set forth on Schedule
      E-1
      in the
      United States that is the subject of a Bailee Acknowledgment or a Collateral
      Access Agreement,

     

    (c)  title
      to
      such Inventory has passed to the applicable U.S. Borrower,

     

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

     

    (e)  such
      Inventory is either (1) the subject of a negotiable document of title that
      (x)
      is in the name of the Agent, a U.S. Borrower or an Approved Customs Broker
      and
      has not been consigned to any third parties other than to the Agent, a U.S.
      Borrower or an Approved Customs Broker (either directly or by means of
      endorsements), (y) was issued by the carrier or consolidator respecting the
      subject Inventory, and (z) is either (I) in the possession of the Borrowers
      (and
      held at a location in the United States listed on Schedule
      E-1),
      the
      Agent or an Approved Customs Broker or (II) the subject of a telefacsimile
      copy
      that Agent or a U.S. Borrower has received from the Underlying Issuer which
      issued the Underlying Letter of Credit and as to which Agent or a U.S. Borrower
      also has received a confirmation from such Underlying Issuer that such document
      is in-transit by air-courier to Agent, U.S. Borrower or an Approved Customs
      Broker; or (2) at a port of entry in a State of the United States,

     

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

     

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

     

    Agent
      may
      revise from time to time the foregoing criteria with respect to Inventory being
      subject to a negotiable document of title and modify such criteria to include
      Inventory subject to non-negotiable documents and other related parameters
      so
      long as Agent shall be satisfied in its sole discretion that (i) Agent shall
      have a valid and perfected first priority Lien in such Inventory and (ii)
      Borrowers shall provide to Agent all other documentation, including opinions
      of
      counsel, satisfactory to Agent which in Agent’s opinion is appropriate to
      evidence Agent’s perfected first priority Lien in such Inventory.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    §22.  Amendment
      to Section 2.1.A of the Loan Agreement (U.S. Revolver
      Advances).
      Section
      2.1.A(a)
      of the
      Loan Agreement is hereby amended by deleting clause (A) therein in its entirety
      and substituting the following therefore:

     

    (A)
      the
      Maximum Original Revolver Amount, minus the sum of (x) U.S. Revolver Usage
      and
      (y) Canadian Revolver Usage, or

    

    §23.  Amendment
      to Section 2.1.B of the Loan Agreement (Canadian Revolver
      Advances).
      Section
      2.1.B(a)
      of the
      Loan Agreement is hereby amended by (a) deleting clause (C) therein in its
      entirety and substituting the following clause (C) therefore and (b) deleting
      clause (1) there in its entirety and substituting the following clause (1)
      therefore:

     

    (C)
      the
      Maximum Original Revolver Amount, minus
      the sum
      of U.S. Revolver Usage plus
      Canadian
      Revolver Usage;

     

    (1)
      Canadian Advances pursuant to this clause (a) shall only be made by Canadian
      Lenders at such times as U.S. Availability and Real Property Availability are
      each equal to $0.

    

    §24.  Amendment
      to Section 2.1 of the Loan Agreement (Revolver
      Advances).
      Section
      2.1
      of the
      Loan Agreement is hereby amended by inserting the following new Section
      2.1.C
      therein
      in the proper numerical order:

     

    2.1.C Real
      Property Advances.

    

    (a) Subject
      to the terms and conditions of this Agreement, and during the term of this
      Agreement, the Real Property Lenders agree to make advances (“Real
      Property Advances”)
      to
      U.S. Borrowers in an amount at any one time outstanding not to exceed such
      Real
      Property Lender’s Pro Rata Share of an amount equal to the lesser of (i) the
      Maximum Real Property Revolver Amount or (ii) the Real Property Borrowing Base
      less Real Property Revolver Usage. Each Borrowing of a Real Property Advance
      shall be in a principal amount of $1,000,000 or a whole multiple of $500,000
      in
      excess thereof (or, as of such date of determination, such lesser multiple
      amount of Real Property Availability remaining undrawn as necessary to enable
      the U.S. Borrowers to borrow all funds available pursuant to Real Property
      Availability).

    

    (b) Anything
      to the contrary in this Section
      2.1.C
      notwithstanding, Agent shall have the right without declaring an Event of
      Default, to reduce its Real Property Collateral advance rates or establish
      Reserves in such amounts, and with respect to such matters, as Agent in its
      Permitted Discretion shall deem necessary or appropriate, against the Real
      Property Borrowing Base, including Reserves with respect to (i) sums that U.S.
      Borrowers are required to pay (such as taxes, assessments, insurance premiums)
      and has failed to pay under any Section of this Agreement or any other Loan
      Document, (ii) amounts as determined by Agent in its Permitted Discretion based
      on noncompliance with the covenants set forth in Sections
      6
      and
7,
      and
      (iii) amounts owing by U.S. Borrowers or their Subsidiaries to any Person to
      the
      extent secured by a Lien on, or trust over, the Real Property Collateral (other
      than any existing Permitted Lien set forth on Schedule
      P-1
      which is
      specifically identified thereon as entitled to have priority over Agent’s
      Liens), which Lien or trust, in the Permitted Discretion of Agent likely would
      have a priority superior to Agent’s Liens (such as Liens or trusts in favor of
      mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
      valorem, excise, or other taxes where given priority under applicable law)
      in
      and to the Real Property Collateral.

    

    (c) Amounts
      borrowed pursuant to this Section
      2.1.C
      may be
      repaid in a minimum principal amount of $1,000,000 or a whole multiple of
      $500,000 in excess thereof (or in an amount equal to the then extant amount
      of
      outstanding Real Property Advances) and, subject to the terms and conditions
      of
      this Agreement, reborrowed at any time during the term of this
      Agreement.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    §25.  Amendment
      to Section 2.2.A(f) of the Loan Agreement (Settlement).
      Section
      2.2.A(f)
      of the
      Loan Agreement is hereby amended by inserting “Subject
      to Section 2.3(b),
“
      immediately at the beginning of clause (ii) therein and substituting a lower
      case “i” for the capital “I” in the first word therein.

     

    §26.  Amendment
      to Section 2.2.A(h) of the Loan Agreement (Accordion
      Option).
      Section
      2.2.A(h)
      of the
      Loan Agreement is hereby amended by deleting such paragraph in its entirety
      and
      substituting the following therefore:

     

    (h) Accordion
      Option. Unless
      a
      Default or an Event of Default has occurred and is then continuing, so long
      as
      Borrowers shall not have elected to permanently reduce the Commitments hereunder
      and except as otherwise provided herein, Administrative Borrower may solicit
      the
      Lenders and any other lending institutions to provide the Borrowers with
      additional commitments to make U.S. Advances under this Agreement in an
      aggregate amount not to exceed the Accordion Amount and subject to the
      limitations set forth below. Any agreement by a Lender to increase its
      commitment to make U.S. Advances hereunder shall be an Accordion Activation
      (“Accordion
      Activation”).
      Neither the Agent nor any Lender shall have any obligation to provide the
      Borrowers with all or any part of such additional U.S. Commitment; provided,
      that
      by
      execution of this Agreement, the Agent and the Lenders shall be deemed to have
      consented, without the need for further or subsequent consent to such additional
      U.S. Commitments which any other Lender or lending institution may agree to
      provide for the U.S. Advances which may be advanced in respect thereof and
      any
      resulting changes in the Pro Rata Share. Any such additional U.S. Commitments
      (and the U.S. Advances funded pursuant thereto) shall be otherwise treated
      (and
      be subject to the same terms and conditions) as U.S. Commitments and U.S.
      Advances hereunder. Additional U.S. Advances may not be advanced in respect
      thereof, (1) if the aggregate U.S. Commitment to be increased pursuant to this
      Section
      2.2.A(h)
      is in
      an amount which exceeds, in the aggregate, the Accordion Amount and (2) if
      a
      Default or Event of Default will occur as a result of such Accordion Activation.
      In addition, to the extent any Lender hereunder agrees to make U.S. Advances
      pursuant to a request for an Accordion Activation, U.S. Borrowers shall pay
      Agent (for the ratable benefit of the Accordion Lenders, subject to any letter
      agreement between Agent and Accordion Lenders), a fee in an amount to be agreed
      upon by the U.S. Borrowers and the Agent. Any Lender agreeing to increase its
      Commitment pursuant to this Section
      2.2.A(h)
      shall
      execute a Confirmation of Increase in Commitment in the form of Exhibit
      C-2
      attached
      hereto (a “Confirmation
      of Increase in Commitment”)
      and
      any lending institution not yet a party hereto providing additional commitments
      shall become a party to this Agreement (and become subject to all the rights
      and
      obligations of a U.S. Lender hereunder) by executing and delivering to the
      Agent
      an original, executed Instrument of Accession in the form of Exhibit
      C-3
      attached
      hereto (an “Instrument
      of Accession”).
      On
      the effective date of the Accordion Activation effected in accordance with
      this
Section
      2.2.A(h),
      Schedule
      C-1
      annexed
      hereto shall be deemed to be amended to reflect (x) the name, address,
      Commitment, and Pro Rata Share of each U.S. Lender after giving effect to such
      Accordion Activation, and (y) the Maximum Revolver Amount and U.S.
      Commitments as increased by such Accordion Activation.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    §27.  Amendment
      to Section 2.2.B of the Loan Agreement (Canadian Borrowing Procedures and
      Settlements).
      Section
      2.2.B
      of the
      Loan Agreement is hereby amended by deleting clause (ii) in paragraph (f)
      therein in its entirety and substituting the following therefore:

     

    (ii)
      Bombay Canada shall not have any liabilities in respect of U.S. Advances or
      Real
      Property Advances made by the U.S. Lenders or Real Property Lenders, as the
      case
      may be, to the U.S. Borrowers or in respect or any other Obligations of the
      U.S.
      Borrowers to Agent or Lenders arising from or related to U.S. Advances or Real
      Property Advances

     

    §28.  Amendment
      to Section 2.2.C of the Loan Agreement (Defaulting Lender; Notations; Failure
      to
      Perform; Notes; Additional Advances).
      Section
      2.2.C(a)
      of the
      Loan Agreement is hereby amended by inserting “, Real Property Lenders”
immediately after the reference to “U.S. Lenders” in each of lines six, eight
      and twelve therein.

     

    §29.  Amendment
      to Section 2.2.C(d) of the Loan Agreement (Notes).
      Section
      2.2.C(d)
      of the
      Loan Agreement is hereby amended by deleting such Section in its entirety and
      substituting the following therefore:

     

    (d) Notes.
      (i)
      Each U.S. Borrower shall execute and deliver on the Closing Date (or such other
      date on which a U.S. Lender may become a party hereto in accordance with
Section
      14.1
      or an
      Accordion Lender in accordance with Section
      2.1.A(h))
      to
      Agent for each U.S. Lender which so requests a Note to evidence that U.S.
      Lender’s U.S. Advances, in the principal amount of that U.S. Lender’s U.S.
      Commitment and with appropriate insertions.

     

    (ii) Upon
      the
      request of any Real Property Lender, each U.S. Borrower shall execute and
      deliver to Agent for such Real Property Lender, a new or substituted Note (as
      applicable) to evidence that Real Property Lender’s Real Property Advances, in
      the principal amount of that Real Property Lender’s Real Property Commitment and
      with appropriate insertions.

     

    (iii) Bombay
      Canada shall execute and deliver on the Closing Date (or such other date on
      which a Canadian Lender may become a party hereto in accordance with
Section
      14.1)
      to
      Canadian Agent for each Canadian Lender which so requests a Note to evidence
      that Canadian Lender’s Canadian Advances, in the principal amount of that
      Canadian Lender’s Canadian Commitment and with appropriate
      insertions.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    §30.  Amendment
      to Section 2.2.C(e) of the Loan Agreement (Additional
      Advances).
      Section
      2.2.C(e)
      of the
      Loan Agreement is hereby amended by deleting such Section in its entirety and
      substituting the following therefore:

     

    (e) Additional
      Advances.
      (i)
      U.S. Lenders and Canadian Lenders shall have no obligation to make additional
      U.S. Advances or Canadian Advances, as the case may be, hereunder to the extent
      such additional U.S. Advances or Canadian Advances would cause the sum of the
      U.S. Revolver Usage plus
      the
      Canadian Revolver Usage to exceed the Maximum Original Revolver
      Amount.

    

    (ii) Real
      Property Lenders shall have no obligation to make additional Real Property
      Advances hereunder to the extent such additional Real Property Advances would
      cause the Real Property Revolver Usage to exceed the Maximum Real Property
      Revolver Amount.

    

    §31.  Amendment
      to Section 2.2 of the Loan Agreement (Borrowing Procedures and
      Settlements).
      Section
      2.2
      of the
      Loan Agreement is hereby amended by inserting the following new Section
      2.2.D
      therein
      in the proper numerical order:

     

    2.2.D Real
      Property Borrowing Procedures.

    

    (a)  Procedure
      for Borrowing.
      Each
      Borrowing of a Real Property Advance shall be made by an irrevocable written
      request by an Authorized Person of the Administrative Borrower delivered to
      Agent (which notice must be received by Agent no later than 1:00 p.m. (New
      York,
      New York time) on the Business Day that is the requested Funding Date with
      respect to Prime Rate Loans and subject to Section
      2.12(b)
      with
      respect to LIBOR Rate Loans, specifying (i) the amount of such Borrowing of
      Real
      Property Advances, and (ii) the requested Funding Date, which shall be a
      Business Day. At Agent’s election, in lieu of delivering the above-described
      written request, any Authorized Person of the Administrative Borrower may give
      Agent telephonic notice of such request by the required time. In such
      circumstances, the Administrative Borrower agrees that any such telephonic
      notice will be confirmed in writing to Agent within 24 hours of the giving
      of
      such notice and failure to provide such written confirmation shall not affect
      the validity of the request.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (b)  Making
      of Loans.
      

     

    (i) Promptly
      after receipt of a request for a Borrowing pursuant to Section
      2.2.D(a),
      Agent
      shall notify the Real Property Lenders, not later than 2:00 p.m. (New York,
      New
      York time) on the Funding Date applicable thereto, by telecopy, telephone,
      or
      other similar form of transmission, of the requested Borrowing of Real Property
      Advances. Each Real Property Lender shall make the amount of such Real Property
      Lender’s Pro Rata Share of the requested Borrowing of Real Property Advances
      available to Agent in immediately available funds, as specified by Agent, not
      later than 3:00 p.m. (New York, New York time) on the Funding Date applicable
      thereto. After Agent’s receipt of the proceeds of such Real Property Advances,
      upon satisfaction of the applicable conditions precedent set forth in
Section
      3
      hereof,
      Agent shall make the proceeds thereof available to the U.S. Borrowers on the
      applicable Funding Date by transferring immediately available funds equal to
      such proceeds received by Agent to Administrative Borrower’s Designated Account;
provided,
      however,
      that
      Agent shall not request any Real Property Lender to make, and no Real Property
      Lender shall have the obligation to make, any Real Property Advance if Agent
      shall have actual knowledge that (1) one or more of the applicable conditions
      precedent set forth in Section
      3
      will not
      be satisfied on the requested Funding Date for the applicable Borrowing of
      Real
      Property Advances unless such condition has been waived, or (2) the requested
      Borrowing of Real Property Advances would result in Real Property Availability
      being less than $0 on such Funding Date.

     

    (ii) Unless
      Agent receives notice from a Real Property Lender prior to 3:00 p.m. (New York,
      New York time) on the date of such Borrowing of Real Property Advances, that
      such Real Property Lender will not make available as and when required hereunder
      to Agent for the account of U.S. Borrowers the amount of that Real Property
      Lender’s Pro Rata Share of the Borrowing of Real Property Advances, Agent may
      assume that each Real Property Lender has made or will make such amount
      available to Agent in immediately available funds on the Funding Date and Agent
      may (but shall not be so required), in reliance upon such assumption, make
      available to U.S. Borrowers on such date a corresponding amount. If and to
      the
      extent any Real Property Lender shall not have made its full amount available
      to
      Agent in immediately available funds and Agent in such circumstances has made
      available to U.S. Borrowers such amount, that Real Property Lender shall on
      the
      Business Day following such Funding Date make such amount available to Agent,
      together with interest at the Defaulting Lender Rate for each day during such
      period. A notice submitted by Agent to any Real Property Lender with respect
      to
      amounts owing under this subsection shall be conclusive, absent manifest error.
      If such amount is so made available, such payment to Agent shall constitute
      such
      Real Property Lender’s Real Property Advance on the date of Borrowing of Real
      Property Advances for all purposes of this Agreement. If such amount is not
      made
      available to Agent on the Business Day following the Funding Date, Agent will
      notify Administrative Borrower of such failure to fund and, upon demand by
      Agent, U.S. Borrowers shall pay such amount to Agent for Agent’s account,
      together with interest thereon for each day elapsed since the date of such
      Borrowing of Real Property Advances, at a rate per annum equal to the interest
      rate applicable at the time to the Real Property Advances composing such
      Borrowing of Real Property Advances. The failure of any Real Property Lender
      to
      make any Real Property Advance on any Funding Date shall not relieve any other
      Real Property Lender of any obligation hereunder to make a Real Property Advance
      on such Funding Date, but no Real Property Lender shall be responsible for
      the
      failure of any other Real Property Lender to make the Real Property Advance
      to
      be made by such other Real Property Lender on any Funding Date.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    §32.  Amendments
      to Section 2.3(a) of the Loan Agreement (Payments by
      Borrowers).
      Section
      2.3(a)
      of the
      Loan Agreement is hereby amended by deleting clause (i) therein in its entirety
      and substituting the following therefore:

     

    (i) Except
      as
      otherwise expressly provided herein, all payments by U.S. Borrowers shall be
      made to Agent’s Account for the account of Agent, U.S. Lenders or Real Property
      Lenders, as applicable, and all payments by Bombay Canada shall be made to
      the
      account specified by Canadian Agent for the account of Canadian Lenders and
      in
      each case, such payments shall be made in immediately available funds, no later
      than 1:00 p.m. (New York, New York time) on the date specified herein. Any
      payment received by Agent or Canadian Agent, as the case may be, later than
      1:00
      p.m. (New York, New York time), shall be deemed to have been received on the
      following Business Day and any applicable interest or fee shall continue to
      accrue until such following Business Day.

    

    §33.  Amendments
      to Section 2.3(b) of the Loan Agreement (Apportionment and Application of
      Payments).
      Section
      2.3(b)
      of the
      Loan Agreement is hereby amended by deleting clause (i) therein in its entirety
      and substituting the following therefore:

     

    (i)  A.Except
      as
      otherwise provided with respect to Defaulting Lenders and subject to
Section
      2.1.B.,
      aggregate principal and interest payments shall be apportioned ratably among
      Lenders (according to the unpaid principal balance of the Obligations to which
      such payments relate held by each Lender) and payments of fees and expenses
      (other than fees or expenses that are for Agent’s separate account, after giving
      effect to any letter agreements between Agent and individual Lenders) shall
      be
      apportioned ratably among Lenders having a Pro Rata Share of the type of
      Commitment or Obligation to which a particular fee relates. Subject to
Section
      2.1.B.,
      all
      payments shall be remitted to Agent and all such payments (other than payments
      received while no Default or Event of Default has occurred and is continuing
      and
      which relate to the payment of principal or interest of specific Obligations
      or
      which relate to the payment of specific fees), and all proceeds of Accounts
      or
      other Collateral (other than the Real Property Collateral which shall be applied
      in accordance with Section
      2.3(b)(i)B
      below)
      received by Agent, shall be applied as follows:

     

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

     

    2.  second,
      to pay
      any fees then due to Agent or Canadian Agent (for their separate accounts,
      after
      giving effect to any letter  agreements between Agent or Canadian Agent and
      the individual Lenders) under the Loan Documents, until paid in
      full,

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    3.  third,
      to pay
      the principal of all Canadian Swing Loans, until paid in full,

     

    4.  fourth,
      ratably
      to pay interest due in respect of the Canadian Advances, until paid in
      full,

     

    5.  fifth,
      to pay
      the principal of all Canadian Advances, until paid in full,

     

    6.  sixth,
      to pay
      any fees then due to any or all of 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,

     

    7.  seventh,
      to pay
      interest due in respect of all Agent Advances, until paid in full,

     

    8.  eighth,
      ratably
      to pay interest due in respect of the U.S. Advances (other than Agent Advances),
      until paid in full,

     

    9.  ninth,
      to pay
      the principal of all Swing Loans, until paid in full,

     

    10.  tenth,
      to pay
      the principal of all Agent Advances, until paid in full,

     

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

     

    12.  twelfth,
      so long
      as no Cash Dominion Event has occurred and is continuing, and at Agent’s
      election (which election Agent agrees will not be made if an Overadvance would
      be created thereby), to pay amounts then due and owing by Administrative
      Borrower or its Subsidiaries in respect of Bank Products, until paid in
      full,

     

    13.  thirteenth,
      so long
      as no Cash Dominion Event has occurred and is continuing, to pay the principal
      of all U.S. Advances, until paid in full,

     

    14.  fourteenth,
      if a
      Cash Dominion Event has occurred and is continuing, ratably (i) to pay the
      principal of all U.S. Advances, until paid in full, (ii) to Agent, to be held
      by
      Agent, for the ratable benefit of Issuing Lender and Lenders, as cash collateral
      in an amount up to 103% of the then extant Letter of Credit Usage until paid
      in
      full, (iii) to Agent, to be held by Agent, for the ratable benefit of Issuing
      Lender, as cash collateral in an amount up to 103% of the then extant Acceptance
      Face Amount until paid in full, and (iv) to Agent, to be held by Agent, for
      the
      benefit of the Agent Bank Product Provider, as cash collateral in an amount
      up
      to the amount of the Bank Product Reserve established prior to the occurrence
      of, and not in contemplation of, the subject Event of Default until
      Administrative Borrower’s and its Subsidiaries’ obligations in respect to the
      then extant Bank Products extended by Agent Bank Product Provider have been
      paid
      in full or the cash collateral amount has been exhausted,

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    15.  fifteenth,
      so long
      as no Cash Dominion Event has occurred and is continuing, and at Agent’s
      election (which election Agent agrees will not be made if an Overadvance would
      be created thereby), to pay amounts then due and owing by Administrative
      Borrower or its Subsidiaries in respect of Bank Products extended by Other
      Bank
      Product Providers, until paid in full,

     

    16.  sixteenth,
      to pay
      the interest due in respect of all Real Property Advances, until paid in full,
      

     

    17.  seventeenth,
      to pay
      the principal of all Real Property Advances, until paid in full,

     

    18.  eighteenth,
      if a
      Cash Dominion Event has occurred and is continuing, to pay any other Obligations
      (including the provision of amounts to Agent, to be held by Agent, for the
      benefit of the Bank Product Providers, as cash collateral in an amount up to
      the
      amount determined by Agent in its Permitted Discretion as the amount necessary
      to secure Administrative Borrower’s and its Subsidiaries’ obligations in respect
      of the then extant Bank Products), and

     

    19.  nineteenth,
      to
      Borrowers (to be wired to the Designated Account) or such other Person entitled
      thereto under applicable law.

     

    B. All
      proceeds of the Real Property Collateral received by the Agent, shall be applied
      as follows:

    

    1.  first,
      to pay
      the reasonable costs and expenses paid or incurred by the Agent in gaining
      possession of, maintaining, preserving, selling, preparing for sale, or
      advertising to sell the Real Property Collateral, irrespective of whether a
      sale
      is consummated,

     

    2.  second,
      to pay
      the interest due in respect of all Real Property Advances, until paid in full,
      

     

    3.  third,
      to pay
      the principal of all Real Property Advances, until paid in full,

     

    4.  fourth,
      to pay
      any other Lender Group Expenses then due to Agent under the Loan Documents,
      until paid in full,

     

    5.  fifth,
      to pay
      any fees then due to Agent or Canadian Agent (for their separate accounts,
      after
      giving effect to any letter agreements between Agent or Canadian Agent and
      the
      individual Lenders) under the Loan Documents, until paid in full,

     

    6.  sixth,
      to pay
      the principal of all Canadian Swing Loans, until paid in full,

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    7.  seventh,
      ratably
      to pay interest due in respect of the Canadian Advances, until paid in
      full,

     

    8.  eighth,
      to pay
      the principal of all Canadian Advances, until paid in full,

     

    9.  ninth,
      to pay
      any fees then due to any or all of 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,

     

    10.  tenth,
      to pay
      interest due in respect of all Agent Advances, until paid in full,

     

    11.  eleventh,
      ratably
      to pay interest due in respect of the U.S. Advances (other than Agent Advances),
      until paid in full,

     

    12.  twelfth,
      to pay
      the principal of all Swing Loans, until paid in full,

     

    13.  thirteenth,
      to pay
      the principal of all Agent Advances, until paid in full,

     

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

     

    15.  fifteenth,
      so long
      as no Cash Dominion Event has occurred and is continuing, and at Agent’s
      election (which election Agent agrees will not be made if an Overadvance would
      be created thereby), to pay amounts then due and owing by Administrative
      Borrower or its Subsidiaries in respect of Bank Products, until paid in
      full,

     

    16.  sixteenth,
      so long
      as no Cash Dominion Event has occurred and is continuing, to pay the principal
      of all U.S. Advances, until paid in full,

     

    17.  seventeenth,
      if a
      Cash Dominion Event has occurred and is continuing, ratably (i) to pay the
      principal of all U.S. Advances, until paid in full, (ii) to Agent, to be held
      by
      Agent, for the ratable benefit of Issuing Lender and Lenders, as cash collateral
      in an amount up to 103% of the then extant Letter of Credit Usage until paid
      in
      full, (iii) to Agent, to be held by Agent, for the ratable benefit of Issuing
      Lender, as cash collateral in an amount up to 103% of the then extant Acceptance
      Face Amount until paid in full, and (iv) to Agent, to be held by Agent, for
      the
      benefit of the Agent Bank Product Provider, as cash collateral in an amount
      up
      to the amount of the Bank Product Reserve established prior to the occurrence
      of, and not in contemplation of, the subject Event of Default until
      Administrative Borrower’s and its Subsidiaries’ obligations in respect to the
      then extant Bank Products extended by Agent Bank Product Provider have been
      paid
      in full or the cash collateral amount has been exhausted,

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    18.  eighteenth,
      so long
      as no Cash Dominion Event has occurred and is continuing, and at Agent’s
      election (which election Agent agrees will not be made if an Overadvance would
      be created thereby), to pay amounts then due and owing by Administrative
      Borrower or its Subsidiaries in respect of Bank Products extended by Other
      Bank
      Product Providers, until paid in full,

     

    19.  nineteenth,
      if a
      Cash Dominion Event has occurred and is continuing, to pay any other Obligations
      (including the provision of amounts to Agent, to be held by Agent, for the
      benefit of the Bank Product Providers, as cash collateral in an amount up to
      the
      amount determined by Agent in its Permitted Discretion as the amount necessary
      to secure Administrative Borrower’s and its Subsidiaries’ obligations in respect
      of the then extant Bank Products), and

     

    20.  twentieth,
      to
      Borrowers (to be wired to the Designated Account) or such other Person entitled
      thereto under applicable law.

     

    §34.  Amendments
      to Section 2.11 of the Loan Agreement (Credit
      Instruments).
      

     

    (a)  Section
      2.11(a)(iii)
      of the
      Loan Agreement is hereby amended by deleting such Section in its entirety and
      substituting the following therefore:

     

    (iii) the
      Letter of Credit Usage would exceed the Maximum Original Revolver Amount less
      the then extant amount of outstanding U.S. Advances plus
      Canadian
      Advances plus
      the then
      extant Acceptance Face Amount.

    

    (b)  Section
      2.11(c)
      of the
      Loan Agreement is hereby amended by inserting “Original” immediately after
“Maximum” and before “Revolver” in clause (ii)(B) therein.

     

    §35.  Amendment
      to Section 2.12(b) of the Loan Agreement (LIBOR
      Election).
      Section
      2.12(b)
      of the
      Loan Agreement is hereby amended by inserting the following new phrase “or Real
      Property Advances” immediately after the reference to “U.S. Advances” in the
      first line of paragraph (i) therein. 

     

    §36.  Amendment
      to Section 4.6 of the Loan Agreement (Right to Inspect; Inventories, Appraisals
      and Audits, Environmental Assessments).
      Section
      4.6
      of the
      Loan Agreement is hereby amended by inserting the following new paragraph (d)
      therein:

     

    (d) Notwithstanding
      anything in this Section
      4.6
      to the
      contrary, Agent shall not have the right to perform or have performed an
      appraisal of the Real Property Collateral more frequently than once in a twelve
      month period, absent the written consent of the Parent.

     

    §37.  Amendment
      to Section 5.8(c) of the Loan Agreement (Due Authorization: No
      Conflict).
      The
      Loan Agreement is hereby amended by inserting “and the recording of the
      Mortgage” immediately following the word “Canada” in the second line
      therein.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    §38.  Amendment
      to Section 6.18 of the Loan Agreement (Inactive
      Subsidiaries).
      Section
      6.18
      of the
      Loan Agreement is hereby amended by inserting “Bailey Street and” immediately
      before the reference to “BMAJ, Inc.” in the first line therein.

     

     

    §39.  Section
      6.20 of the Loan Agreement (Real Estate Collateral).
      The
      Loan Agreement is hereby amended to insert a new Section 6.20
      thereto
      immediately following Section 6.19
      thereof
      to read as follows:

     

    6.20. Real
      Property Collateral.
      Following the Administrative Borrower’s written request therefor, Agent shall
      release its Lien upon the Real Property Collateral, at the expense of the
      Borrowers, so long as (a) Borrowers shall have provided Agent with fifteen
      (15)
      Business Days’ prior notice thereof, (b) there shall not exist any extant Real
      Property Advances and Real Property Revolver Usage shall be equal to $0, (c)
      at
      the time of such request and after giving effect thereto no Default or Event
      of
      Default shall have occurred and be continuing, (d) immediately after giving
      effect thereto, Availability shall be at least equal to $20,000,000 and the
      Administrative Borrower shall have delivered to Agent updated Projections and
      a
      Compliance Certificate evidencing the maintenance of Availability of at least
      $20,000,000 for the period from the date of such release through the end of
      the
      Fiscal Period ending immediately subsequent to the Fiscal Period in which such
      release shall have occurred, and (e) Section 2.2.D hereof and references to
      Real
      Property Availability, Real Property Borrowing Base and Real Property Commitment
      shall be of no further force and effect.

     

    §40.  Amendment
      to Section 7.1 of the Loan Agreement (Indebtedness).
      Section
      7.1
      of the
      Loan Agreement is hereby amended by inserting “at any time following the release
      of the Real Property Collateral in accordance with Section
      6.20,”
      immediately before “Permitted Office Building Indebtedness” in clause (e)
      therein.

     

    §41.  Amendment
      to Section 7.3 of the Loan Agreement (Restrictions on Negative Pledges and
      Upstream Limitations).
      Section
      7.3
      of the
      Loan Agreement is hereby amended by inserting “at any time following the release
      of the Real Property Collateral in accordance with Section
      6.20,”
      immediately before “Permitted Office Building Indebtedness” in clause (i) in the
      last paragraph therein.

     

    §42.  Amendment
      to Section 7.4 of the Loan Agreement (Restrictions on Fundamental
      Changes).
      Section
      7.4
      of the
      Loan Agreement is hereby amended by deleting clause (iv) of paragraph (c)
      therein in its entirety and substituting the following therefore:

     

    (iv)
      the
      sale, in one transaction or a series of transactions, of the Real Property
      Collateral, provided,
      however,
      that
      prior to a release of the Real Property Collateral in accordance with
Section
      6.20,
      the
      Borrowers shall comply with the following subclauses (A) through (D): (A) no
      Event of Default has occurred and is continuing or would result therefrom,
      (B)
      before entering into a written commitment or enforceable contract for the sale
      of the Real Property Collateral, the Administrative Borrower shall have provided
      the Agent with ten (10) Business Days’ prior written notice thereof, (C)
      immediately after giving effect thereto, Availability shall be at least equal
      to
      $20,000,000 and the Administrative Borrower shall have delivered to Agent
      updated Projections and a Compliance Certificate evidencing the maintenance
      of
      Availability of at least $20,000,000 for the period from the date of such sale
      through the end of the Fiscal Period ending immediately subsequent to the Fiscal
      Period in which such sale shall have occurred, and (D) the net proceeds of
      such
      sale transaction(s) shall be deposited directly into Agent’s Account to be
      applied on account of the Obligations in accordance with Section 2.3(b)
      as
      proceeds of Collateral;

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    §43.  Amendment
      to Section 7.5 of the Loan Agreement (Disposal of Assets; Sale and
      Leaseback).
      Section
      7.5
      of the
      Loan Agreement is hereby amended by deleting clause (a) therein in its entirety
      and substituting the following therefore:

     

    (a)
      a
      sale leaseback transaction in respect of the Real Property Collateral,
provided,
      however,
      that
      prior to a release of the Real Property Collateral in accordance with
Section
      6.20,
      the
      Borrowers shall comply with the following subclauses (i) through (iv): (i)
      no
      Event of Default has occurred and is continuing or would result therefrom,
      (ii)
      before entering into a written commitment or enforceable contract for the sale
      and leaseback of the Real Property Collateral, the Administrative Borrower
      shall
      have provided the Agent with ten (10) Business Days’ prior written notice
      thereof, (iii) immediately after giving effect thereto, Availability shall
      be at
      least equal to $20,000,000 and the Administrative Borrower shall have delivered
      to Agent updated Projections and a Compliance Certificate evidencing the
      maintenance of Availability of at least $20,000,000 for the period from the
      date
      of such transaction through the end of the Fiscal Period ending immediately
      subsequent to the Fiscal Period in which such transaction shall have occurred,
      and (iv) the net proceeds of such sale leaseback transaction shall be deposited
      directly into Agent’s Account to be applied on account of the Obligations in
      accordance with Section 2.3(b)
      as
      proceeds of Collateral, and

     

    §44.  Amendment
      to Section 7.14 of the Loan Agreement (Suspension).
      Section
      7.14
      of the
      Loan Agreement is hereby amended by deleting such Section in its entirety and
      substituting the following therefore:

     

     

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

     

     

    §45.  Amendment
      to Section 14.1 of the Loan Agreement (Assignments and
      Participations).
      Section
      14.1(a)
      of the
      Loan Agreement is hereby amended by inserting “in respect of the U.S. Commitment
      or the Canadian Commitment, and $2,500,000 in respect of the Real Property
      Commitment ” immediately after the reference “$10,000,000” in the fourth line
      therein.

     

     

    §46.  Amendment
      to Section 15.1 of the Loan Agreement (Amendments and
      Waivers).
      Section
      15.1
      of the
      Loan Agreement is hereby amended by deleting clause (j) therein in its entirety
      and substituting the following clause (j) therefore:

     

    (j) change
      the definition of “Aggregate Borrowing Base” “U.S. Borrowing Base”, “Canadian
      Borrowing Base” or the definitions of “Eligible Accounts”, “Eligible Credit Card
      Receivables”, “Eligible Inventory”, “Maximum Original Revolver Amount” “Maximum
      Revolver Amount” or any component definition contained in the foregoing terms,
      or change Section
      2.1(b);
      or

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    §47.  Amendment
      to Section 16.15 (Collateral Matters).
      Section
      16.15
      of the
      Loan Agreement is hereby amended by deleting the word “or” immediately prior to
      clause (iv) in paragraph (a) therein and inserting the following immediately
      at
      the end of such clause (iv) “or (v) in accordance with Section 6.20.”
      

     

     

    §48.  Amendment
      to Exhibit B-1 to the Loan Agreement (Form of Borrowing Base
      Certificate).
      Exhibit
      B-1 to the Loan Agreement is hereby amended by deleting Exhibit B-1 attached
      thereto in its entirety and replacing such Exhibit B-1 with the Exhibit B-1
      attached hereto as Exhibit
      A.

     

    §49.  Amendment
      to Exhibits to the Loan Agreement (New Exhibit C-3).
      The
Exhibits
      to the Loan Agreement are hereby amended by adding Exhibit C-3, Form of
      Instrument of Accession, in the from of Exhibit C-3 attached hereto as
Exhibit
      B.

     

    §50.  Amendment
      to Schedule C-1 to the Loan Agreement (Commitments).
      Schedule
      C-1 to the Loan Agreement is hereby amended by deleting Schedule C-1 attached
      thereto in its entirety and replacing such Schedule C-1 with the Schedule C-1
      attached hereto as Exhibit
      C.

     

    §51.  Amendment
      to Schedule E-1 to the Loan Agreement (Eligible Inventory
      Locations).
      Schedule
      E-1 to the Loan Agreement is hereby amended by deleting Schedule E-1 attached
      thereto in its entirety and replacing such Schedule E-1 with the Schedule E-1
      attached hereto as Exhibit
      D.

     

    §52.  Amendment
      to Schedule P-1 to the Loan Agreement (Permitted Liens).
      Schedule P-1 to the Loan Agreement is hereby amended by deleting Schedule P-1
      attached thereto
      in its entirety and replacing such Schedule P-1 with the Schedule P-1 attached
      hereto as Exhibit
      E.

     

    §53.  Acknowledgement
      of the Lenders Regarding Bailey Street.
      Each of
      the Lenders and the Borrowers acknowledge and agree that Bailey Street shall
      no
      longer be deemed a “Borrower” under the Loan Agreement.

     

    §54.  Conditions
      to Effectiveness.
      This
      Second Amendment shall not be effective until each of the following conditions
      precedent have been fulfilled to the satisfaction of the Agent:

     

    (a)  This
      Second Amendment shall have been duly executed and delivered by the Borrowers,
      the Agent, and the Lenders. The Agent shall have received a fully executed
      copy
      hereof.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (b)  The
      Borrowers shall have paid to the Agent, for the account of the Lenders, an
      amendment fee in an amount equal to $75,000.

     

    (c)  The
      Agent
      shall have received the Mortgage duly executed by the parties thereto and all
      related Mortgage Documents, as applicable.

     

    (d)  The
      Agent
      shall have received a new Note duly executed by the Borrowers for each Lender
      requesting a new Note.

     

    (e)  The
      Agent
      shall have completed its business, legal, and collateral due diligence,
      including obtaining, a report of an independent collateral auditor satisfactory
      to Agent (which may be affiliated with one of the Lenders) with respect to
      the
      Books and Accounts and Inventory components included in the Aggregate Borrowing
      Base, including Eligible In-Transit Inventory (in Canada) and verification
      of
      Borrowers’ representations and warranties to the Lender Group, the results of
      which shall be satisfactory to the Agent.

     

    (f)  This
      Second Amendment or any additional instruments and documents that the Agent
      and
      its counsel may have reasonably requested shall have been delivered and/or
      executed and shall be in form and substance satisfactory to Agent in its
      Permitted Discretion.

     

    (g)  Agent
      shall have received a certificate
      satisfactory to Agent certifying that, as of the date hereof, there has been
      no
      change, amendment or other modification to
      each
      Borrower’s Governing Documents as of the Closing Date.

     

    (h)  Agent
      shall have received a certificate from the Secretary of each Borrower attesting
      to the resolutions of such Borrower’s Board of Directors authorizing its
      execution, delivery, and performance of this Second Amendment and the other
      Loan
      Documents to which such Borrower is a party and authorizing specific officers
      of
      such Borrower to execute the same.

     

    (i)  Agent
      shall have received a certificate of status with respect to each Borrower,
      dated
      on or about the date hereof, such certificate to be issued by the appropriate
      officer of the jurisdiction of organization of such Borrower, which certificate
      shall indicate that such Borrower is in good standing in such
      jurisdiction.

     

    (j)  No
      Default or Event of Default shall have occurred and be continuing, both before
      and immediately after giving effect to the execution of this Second
      Amendment.

     

    (k)  No
      Material Adverse Change shall have occurred.

     

    §55.  Representations
      and Warranties.
      Each of
      the Borrowers hereby represents and warrants to the Lenders as
      follows:

     

    (a)  Representations
      and Warranties in the Loan Agreement.
      The
      representations and warranties of each of the Borrowers contained in the Loan
      Agreement, after giving effect to this Second Amendment, are true and correct
      in
      all material respects on the date hereof, except to the extent of changes
      resulting from transactions or events contemplated or permitted by the Loan
      Agreement and the other Loan Documents, or to the extent that such
      representations and warranties relate expressly to an earlier date.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (b)  Ratification,
      Etc.
      Except
      as expressly amended hereby, the Loan Agreement, the First Amendment, the other
      Loan Documents and all documents, instruments and agreements related thereto,
      are hereby ratified and confirmed in all respects and shall continue in full
      force and effect. The Loan Agreement and First Amendment, together with this
      Second Amendment, shall be read and construed as a single agreement. All
      references in the Loan Documents to the Loan Agreement or any other Loan
      Document shall hereafter refer to the Loan Agreement or any other Loan Document
      as amended hereby.

     

    (c)  Authority,
      Etc.
      The
      execution and delivery by each of the Borrowers of this Second Amendment and
      the
      performance by each of the Borrowers of all of their agreements and obligations
      under the Loan Agreement as amended and the other Loan Documents hereby are
      within the corporate authority of each of the Borrowers and have been duly
      authorized by all necessary corporate action on the part of the
      Borrowers.

     

    (d)  Enforceability
      of Obligations.
      This
      Second Amendment and the Loan Agreement as amended by the First Amendment and
      the other Loan Documents hereby constitute the legal, valid and binding
      obligations of the Borrowers enforceable against the Borrowers in accordance
      with their terms, except as enforceability is limited by bankruptcy, insolvency,
      reorganization, moratorium or other laws relating to or affecting generally
      the
      enforcement of, creditors’ rights and except to the extent that availability of
      the remedy of specific performance or injunctive relief is subject to the
      discretion of the court before which any proceeding therefor may be
      brought.

     

    §56.  No
      Other Amendments.
      Except
      as expressly provided in this Second Amendment, all of the terms and conditions
      of the Loan Agreement as amended by the First Amendment and the other Loan
      Documents remain in full force and effect. Nothing contained in this Second
      Amendment shall in any way prejudice, impair or effect any rights or remedies
      of
      any Lender or the Borrowers under the Loan Agreement or the other Loan
      Documents.

     

    §57.  Execution
      in Counterparts.
      This
      Second Amendment may be executed in any number of counterparts, each of which
      shall be deemed an original, but which together shall constitute one instrument.
      Delivery of an executed counterpart of this Amendment by telefacsimile shall
      be
      equally as effective as delivery of an original executed counterpart of this
      Amendment. 

     

    §58.  Miscellaneous.
      THIS SECOND AMENDMENT SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED
      IN
      ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION,
      SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
The
      captions in this Second Amendment are for convenience of reference only and
      shall not define or limit the provisions hereof.

     

    [THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused their duly authorized officers
      to execute and deliver this Second Amendment as of the date first above
      written.

     

    BORROWERS:

     

    THE
      BOMBAY COMPANY, INC.

     

    By:   
      /S/ELAINE D. CROWLEY

    Name:
      Elaine D. Crowley

    Title:
      Senior Vice President, Chief Financial Officer and Treasurer

     

    BBA
      HOLDINGS, INC.

     

     

    By:    
      /S/JEFFREY J. WALKER

    Name:
      Jeffrey J. Walker 

    Title: 
      President

    

     

    BOMBAY
      INTERNATIONAL, INC.

     

    By:    
      /s/ELAINE D. CROWLEY

    Name:
      Elaine D. Crowley

    Title: 
      Vice President

     

    THE
      BOMBAY FURNITURE COMPANY OF CANADA INC.

     

    By:     
      /s/ELAINE D. CROWLEY

    Name: Elaine
      D. Crowley

    Title:  
      Vice President

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    WELLS
      FARGO RETAIL FINANCE, LLC,
      as Agent
      and as a U.S. Lender

     

    By:      
      /s/LYNN WHITMORE

    Name: 
Lynn
      Whitmore

    Title:   
      Senior Vice President

     

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    NATIONAL
      CITY BUSINESS CREDIT, INC.,
      as
      Syndication Agent and as a U.S. Lender

     

    By:      
      /s/KATHY ELLERO

    Name: 
Kathy
      Ellero

    Title:   
      Vice President

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    

    

    CONGRESS
      FINANCIAL CORPORATION (SOUTHWEST), as
      Documentation Agent and as a U.S. Lender

     

    By:      
       /s/MARK GALOVIC

    Name: 
Mark
      Galvovic

    Title:   
      Vice President

     

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    WELLS
      FARGO FINANCIAL CANADA (f/d/b
      as
      Trans Canada Credit Corporation), as Canadian Agent and as Canadian
      Lender

     

     

    By:      
      /s/NICK SCARFO

    Name: 
Nick
      Scarfo

    Title:   
      Vice President

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    RATIFICATION
      OF GUARANTY 

    

    Each
      of
      the undersigned Guarantors hereby acknowledges and consents to the foregoing
      Second Amendment, and agrees that its Guaranty, as applicable, from such
      Guarantor in favor of the Agent for the benefit of the Lenders and all other
      Loan Documents to which each of the Guarantors is a party remain in full force
      and effect, and each of the Guarantors confirms and ratifies all of its
      obligations thereunder.

    

    THE
      BOMBAY COMPANY, INC.

     

    By:   
      /s/ELAINE D. CROWLEY

    Name: Elaine
      D. Crowley

    Title:
      Senior Vice President, Chief Financial Officer and Treasurer

     

    BBA
      HOLDINGS, INC.

     

     

    By:   
      /s/JEFFERY J. WALKER

    Name: Jeffrey
      J. Walker

    Title:
      President

    

     

    BOMBAY
      INTERNATIONAL, INC.

     

    By:   
      /s/ELAINE D. CROWLEY

    Name: Elaine
      D. Crowley

    Title:
      Vice President

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    

    Exhibit
      B-1 - Form of Borrowing Base Certificate

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    

    Exhibit
      B

    Exhibit
      C-3

    Form
      of
      Instrument of Accession

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    

    Exhibit
      C

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    

    

    

    Schedule
      C-1

    Commitments
      as of August 31, 2006

     

    

     

    
      	
              Lender

            	
              Canadian
                Commitment

            	
              U.S.
                

              Commitment
                

            	
              Real
                Property Commitment

            
	
              Wells
                Fargo Retail Finance, LLC

            	
              $0

            	
              $65,000,000*

            	
              $10,000,000

            
	
              National
                City Business Credit, Inc.

            	
              $0

            	
              $25,000,000

            	
              $0

            
	
              Congress
                Financial Corporation (Southwest)

            	
              $0

            	
              $35,000,000

            	
              $0

            
	
              Trans
                Canada Credit Corporation

            	
              $18,000,000*

            	
              $0

            	
              $0

            
	
              All
                Lenders

            	
              $18,000,000

            	
              $125,000,000

            	
              $10,000,000

            

    

    

     

    *
      The
      Commitments of Wells Fargo Retail Finance, LLC and Trans Canada Credit
      Corporation

    are
      more
      specifically subject to Section
      2.1.B(a).

    

    

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    Exhibit
      D

    

    Schedule
      E-1 - Eligible Inventory Locations

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    Exhibit
      E

    

    Schedule
      P-1 - Permitted Liens

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